<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 25, 1997
VISTA 2000, INC.
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(Exact Name of Registrant as Specified in its Charter
State of Delaware
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(State or Other Jurisdiction of Incorporation)
0-23204 58-1972066
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(Commission File Number) (I.R.S. Employer Identification Number)
221 West First Street, Kewanee, Illinois 61443
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(Address of Principal Executive Offices) (Zip Code)
(309) 856-8068
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 25, 1997, Vista 2000, Inc. (the "Company") completed the sale of
certain assets of its wholly owned subsidiary American Consumer Products, Inc.
("ACPI") to Axxess Technologies, Inc. (the "Purchaser"). These assets comprised
primarily ACPI's key, key manufacturing, letters, numbers and signs
manufacturing, real estate and related businesses. The Company retains Boss
Manufacturing, Inc., Boss Balloon, Inc. and the ACPI Warren Pet Division. The
businesses and assets being sold accounted for approximately $57,000,000 of the
Company's consolidated sales for the year ended December 28, 1996. Based on a
preliminary purchase price, which is subject to post closing adjustment to
reflect changes in the values of the assets and liabilities through the closing
date, the Company expects to recognize a pre-tax loss of approximately
($1,200,000) on the sale, after accounting for legal and other transaction
expenses.
Consideration for the sale consisted of cash of approximately $24,800,000
and the assumption of approximately $3,600,000 of liabilities by the Purchaser.
Except for approximately $3,000,000, which was retained by the Company to pay,
among other things, closing costs and other expenses associated with the
transaction, the balance of the cash proceeds were used to retire debt,
including a payment of approximately $18,600,000 against ACPI's revolving line
of credit. Immediately after this payment the ACPI revolving line of credit had
an outstanding balance of approximately $3,400,000. As a result of this sale of
ACPI's assets, including inventory and accounts receivable, which comprised a
significant portion of the revolving line of credit borrowing base, ACPI's
borrowing limit was reduced from $30,000,000 to $10,000,000.
There is no material relationship between the Purchaser, its officers or
representatives and the Company or any of its affiliates, any director or
officer of the Company or any associate of any such director or officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
The following unaudited pro forma condensed consolidated financial
statements are filed with this report:
Pro Forma Condensed Consolidated Balance Sheet as of June 28, 1997 . . Page F-1
Pro Forma Condensed Consolidated Statements of Earnings:
Year ended December 28, 1996 . . . . . . . . .. . . . . . . . . . Page F-2
Six months ended June 28, 1997 . . . . . . . . .. . . . . . . . . Page F-3
The Pro Forma Condensed Consolidated Balance Statement of the Company as of June
28, 1997 reflects the financial position of the Company after giving effect to
the disposition of assets and
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liabilities resulting from the sale of certain assets of its ACPI subsidiary, as
discussed in Item 2, and assumes the disposition took place on June 28, 1997.
The Pro Forma Condensed Consolidated Statement of Earnings for the fiscal year
ended December 28, 1996 and the six months ended June 28, 1997 assume that the
disposition occurred on December 30, 1995 and are based on the operations of the
Company for the year ended December 28, 1996 and the six months ended June 28,
1997.
The unaudited pro forma condensed consolidated financial statements have been
prepared by the Company based upon assumptions deemed proper by it. The
unaudited pro forma condensed consolidated financial statements presented herein
are shown for illustrative purposes only and are not necessarily indicative of
the future financial position or future results of operations of the Company, or
of the financial position or results of operations of the Company that would
have actually occurred had the transaction been in effect as of the date or for
the periods presented. In addition, it should be noted that the Company's
financial statements will reflect the disposition only from August 25, 1997, the
closing date.
The unaudited pro forma condensed consolidated financial statements should be
read in conjunction with the historical financial statements and related notes
of the Company.
(c) EXHIBITS.
No. Description
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2.1 Asset Purchase Agreement dated June 30, 1997 by and between the
Company and the Purchaser.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VISTA 2000, INC.
By: /s/ G. Louis Graziadio, III
------------------------------------------
G. Louis Graziadio, III, President
Dated: September 23, 1997
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PRO FORMA FINANCIAL INFORMATION
VISTA 2000, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 28, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS PRO FORMA ADJUSTMENTS
-----------------------------------------------
HISTORICAL ACPI(a) OTHER(b) PRO FORMA
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............ $ 453 $ $ 3,187 $ 3,640
Accounts receivable.................. 13,049 7,200 5,849
Inventories.......................... 25,231 10,526 14,705
Other current assets................. 1,374 561 813
-------- ------- ------- ---------
TOTAL CURRENT ASSETS................ 40,107 18,287 3,187 25,007
Property, Plant and Equipment......... 20,737 11,928 8,809
Accumulated depreciation and
amortization........................ (3,086) (2,197) (889)
-------- ------- ------- ---------
Net property and equipment.......... 17,651 9,731 -- 7,920
Other Assets........................ 149 5 144
-------- ------- ------- ---------
TOTAL ASSETS....................... $57,907 $28,023 $3,187 $ 33,071
-------- ------- ------- ---------
-------- ------- ------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable.......................... $ 1,058 $ 1,058
Current portion of long-term debt..... 578 198 380
Accounts payable...................... 4,939 2,359 2,580
Accrued expenses...................... 5,374 1,512 1,708 5,570
-------- ------- ------- ---------
Total current liabilities............ 11,949 4,069 1,708 9,588
Long-term debt, net of current
portion.............................. 22,013 21,301 712
-------- ------- ------- ---------
TOTAL LIABILITIES.................... 33,962 25,370 1,708 10,300
TOTAL STOCKHOLDERS' EQUITY........... 23,945 2,653 1,479 22,771
-------- ------- ------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY.............................. $57,907 $28,023 $ 3,187 $ 33,071
-------- ------- ------- ---------
-------- ------- ------- ---------
</TABLE>
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(a) To eliminate certain assets and liabilities of the Company's ACPI subsidiary
as of June 28, 1997.
(b) To reflect the proceeds from the sale certain assets of ACPI; $3,187,000 in
cash less approximately $1,708,000 projected for closing costs and other
expenses associated with the transaction.
F-1
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PRO FORMA FINANCIAL INFORMATION
VISTA 2000, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 28, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
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HISTORICAL ACPI(A) ALABASTER(B) PRO FORMA
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Net Sales........................................ $ 110,955 $ 57,206 8,891 $ 44,858
Cost of Sales.................................... 82,563 38,071 8,169 36,323
------------ ------------ ------------ -----------
Gross profit..................................... 28,392 19,135 722 8,535
Operating expenses............................... 34,235 16,190 2,125 15,920
------------ ------------ ------------ -----------
(5,843) 2,945 (1,403) (7,385)
Profit (Loss) on sale and writedown of
operating assets............................... (10,787) 472 (1,817) (9,442)
------------ ------------ ------------ -----------
(Loss) from Operations........................... (16,630) 3,417 (3,220) (16,827)
Other income and (expense)
Interest....................................... (2,174) (1,903) (68) (203)
Other.......................................... (351) (121) (230)
------------ ------------ ------------ -----------
Net (loss) before income taxes................... (19,155) 1,514 (3,409) (17,260)
Income tax expense............................... 246 46 200
------------ ------------ ------------ -----------
Net (loss)..................................... $ (19,401) $ 1,468 $ (3,409) $ (17,460)
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
Weighted average shares outstanding.............. 16,133,508 16,133,508
Loss per common share:
Net (loss)..................................... $ (1.20) $ (1.08)
------------ -----------
------------ -----------
</TABLE>
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(a) To eliminate the profit and loss associated with the certain businesses and
assets of the Company's ACPI subsidiary for the entire period.
(b) To eliminate the profit and loss of the Company's Alabaster Industries, Inc.
(Alabaster) subsidiary (which was sold and previously reported on a form 8-K
dated June 19, 1997) for the entire period.
F-2
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PRO FORMA FINANCIAL INFORMATION
VISTA 2000, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE SIX MONTHS ENDED JUNE 28, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
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HISTORICAL ACPI(A) ALABASTER(B) PRO FORMA
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Net Sales........................................ $ 47,291 $ 25,135 2,801 $ 19,355
Cost of Sales.................................... 34,121 16,484 2,427 15,210
------------ ------------ ------------ -----------
Gross profit..................................... 13,170 8,651 374 4,145
Operating expenses............................... 12,559 7,112 911 4,536
------------ ------------ ------------ -----------
611 1,539 (537) (391)
(Loss) on sale of operating assets............... (1,355) (1,385) 30
------------ ------------ ------------ -----------
Profit (loss) from operations.................... (744) 1,539 (1,922) (361)
Other income and (expense)
Interest....................................... (1,111) (989) (72) (50)
Other.......................................... (20) (33 13
------------ ------------ ------------ -----------
Net profit (loss) before income taxes............ (1,875) 550 (2,027) (398)
Income tax expense............................... 27 (1) 28
------------ ------------ ------------ -----------
Net (loss)..................................... $ (1,902) $ 551 $ (2,027) $ (426)
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
Weighted average shares outstanding.............. 22,329,050 22,329,050
Loss per common share:
Net (loss)..................................... $ (0.09) $ (0.02)
------------ ------------
------------ ------------
</TABLE>
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(a) To eliminate the profit and loss associated with the certain businesses and
assets of the Company's ACPI subsidiary for the entire period.
(b) To eliminate the profit and loss of the Company's Alabaster Industries, Inc.
(Alabaster) subsidiary (which was sold and previously reported on a form 8-K
dated June 19, 1997) for the entire period.
F-3
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EXHIBIT 2.1
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AMERICAN CONSUMER PRODUCTS, INC.,
ACPI REAL ESTATE, INC.,
PMI, INC.
VISTA 2000, INC.
as Sellers
and
AXXESS TECHNOLOGIES, INC.
as Buyer
______________________________
ASSET PURCHASE AGREEMENT
______________________________
___________________________
Dated as of June 30, 1997
___________________________
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TABLE OF CONTENTS
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RECITALS....................................................................... 1
SECTION 1. DEFINITIONS......................................................... 1
SECTION 2. PURCHASE AND SALE OF THE PURCHASED PROPERTY......................... 9
2.1. Transfer of Assets.................................................. 9
2.2. Sale at Closing Date................................................ 11
2.3. Subsequent Documentation............................................ 11
2.4. Assumed Liabilities and Excluded Liabilities........................ 12
2.5. Warren Pet Division................................................. 13
SECTION 3. PURCHASE PRICE...................................................... 13
3.1. Purchase Price...................................................... 13
3.2. Payment of Purchase Price........................................... 13
3.3. Adjustments to Purchase Price....................................... 13
SECTION 4. CLOSING............................................................. 15
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE SELLERS....................... 15
5.1. Corporate Organization.............................................. 15
5.2. Qualification to Do Business........................................ 16
5.3. Authorization and Validity of Agreement............................. 16
5.4. No Conflict or Violation............................................ 16
5.5. Consents and Approvals.............................................. 16
5.6. Financial Statements................................................ 16
5.7. Absence of Certain Changes or Events................................ 17
5.8. Tax Matters......................................................... 18
5.9. Real Property....................................................... 19
5.10. Equipment and Machinery............................................. 21
5.11. Intellectual Property............................................... 21
5.12. Licenses, Permits and Governmental Approvals........................ 23
5.13. Compliance with Law; Licenses....................................... 23
5.14. Litigation.......................................................... 23
5.15. Contracts........................................................... 24
5.16. Receivables......................................................... 25
5.17. Employee Plans...................................................... 25
5.18. Customers and Suppliers............................................. 26
5.19. Insurance........................................................... 26
5.20. Transactions with Directors, Officers and Affiliates................ 26
5.21. Labor Matters....................................................... 26
5.22. Environmental Matters............................................... 27
5.23. Ownership of Purchased Property by Vista and its Affiliates......... 28
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5.24. Survival............................................................ 28
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER......................... 28
6.1. Corporate Organization.............................................. 28
6.2. Qualification to Do Business........................................ 28
6.3. Authorization and Validity of Agreement............................. 29
6.4. No Conflict or Violation............................................ 29
6.5. Approvals and Consents.............................................. 29
6.6. Financing........................................................... 29
SECTION 7. COVENANTS OF THE SELLERS............................................ 29
7.1. Conduct of Business Before the Closing Date......................... 29
7.2. Consents and Approvals.............................................. 31
7.3. Access to Properties and Records.................................... 31
7.4. Negotiations........................................................ 32
7.5. Further Assurances.................................................. 32
7.6. Best Efforts........................................................ 32
7.7. Covenant Not To Compete............................................. 32
7.8. Non-Solicitation of Employees....................................... 33
7.9. Notice to the Buyer................................................. 33
7.10. Bulk Sales Compliance.............................................. 33
7.11. Assignment of Contracts and Warranties............................. 33
7.12. Surveys............................................................ 34
7.13. Title Affidavits................................................... 34
7.14. Change of Name..................................................... 34
7.15. Review of Contracts................................................ 34
SECTION 8. COVENANTS OF THE BUYER.............................................. 35
8.1. Actions Before Closing Date......................................... 35
8.2. Consents and Approvals.............................................. 35
8.3. Best Efforts........................................................ 35
8.4. Covenant Not To Compete............................................. 35
8.5. Non-Solicitation of Employees....................................... 36
8.6. Notice of Breach.................................................... 36
8.7. Environmental Studies............................................... 36
8.8. Confidential Information............................................ 37
SECTION 9. EMPLOYEES AND EMPLOYEE PLANS........................................ 37
9.1. Offers of Employment................................................ 37
9.2. Employee Benefits................................................... 37
9.3. Rights.............................................................. 39
9.4. Collective Bargaining............................................... 39
SECTION 10. TAXES.............................................................. 39
10.1. Allocation of Purchase Price and Purchase Price Allocation Forms... 39
</TABLE>
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10.2. Indemnification Payments........................................... 40
10.3. Proration of Personal Property Taxes............................... 40
SECTION 11. INDEMNIFICATION AND ARBITRATION.................................... 40
11.1. Indemnification by the Sellers..................................... 40
11.2. Procedures for Indemnification by the Sellers...................... 41
11.3. Indemnification by the Buyer....................................... 42
11.4. Procedures for Indemnification by the Buyer........................ 42
11.5. Successors and Assigns............................................. 43
11.6. Arbitration........................................................ 43
SECTION 12. CONDITIONS TO OBLIGATIONS OF THE SELLERS........................... 45
12.1. Representations and Warranties of the Buyer........................ 45
12.2. Performance of the Obligations of the Buyer........................ 45
12.3. Consents and Approvals............................................. 45
12.4. No Violation of Orders............................................. 46
12.5. Opinion of Counsel................................................. 46
12.6. Servicing Agreement; Lock Box Agreement; L/C Procedures Agreement.. 46
12.7. Buyer Closing Documents............................................ 46
SECTION 13. CONDITIONS TO THE OBLIGATIONS OF THE BUYER......................... 47
13.1. Representations and Warranties of the Sellers...................... 47
13.2. Performance of the Obligations of the Sellers...................... 47
13.3. Consents and Approvals............................................. 47
13.4. No Violation of Orders............................................. 47
13.5. [Reserved]......................................................... 47
13.6. Opinions of Counsel................................................ 47
13.7. Servicing Agreement; Lock Box Agreement; L/C Procedures Agreement.. 47
13.8. Letters of Credit.................................................. 47
13.9. State Taxes........................................................ 47
13.10. Agreements Not to Compete.......................................... 48
13.11. Fleet Facility Liens............................................... 48
13.12. Sellers Closing Items.............................................. 48
13.13. Survey............................................................. 49
13.14. Legal Matters...................................................... 49
SECTION 14. TERMINATION........................................................ 49
14.1. Conditions of Termination.......................................... 49
14.2. Effect of Termination.............................................. 49
SECTION 15. MISCELLANEOUS...................................................... 49
15.1. Confidentiality.................................................... 49
15.2. Successors and Assigns............................................. 50
15.3. Governing Law; Jurisdiction........................................ 50
15.4. Expenses........................................................... 50
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15.5. Survival of Covenants and Agreements............................... 51
15.6. Broker's and Finder's Fees......................................... 51
15.7. Severability....................................................... 51
15.8. Notices............................................................ 51
15.9. Amendments; Waivers................................................ 52
15.10. Public Announcements............................................... 52
15.11. Entire Agreement................................................... 52
15.12. Parties in Interest................................................ 52
15.13. Scheduled Disclosures.............................................. 53
15.14. Section and Paragraph Headings..................................... 53
15.15. Counterparts....................................................... 53
EXHIBITS:
Exhibit A -- L/C Procedures Agreement
Exhibit B -- Lock Box Agreement
Exhibit C -- Servicing Agreement
Exhibit D -- Opinion of Willkie Farr & Gallagher
Exhibit E-1 -- Opinion of Robert E. Altenbach, Esq.
Exhibit E-2 -- Opinion of Weil, Gotshal & Manges LLP
INDEX TO SCHEDULES:
5.2 Qualification
5.5 Consents, Waivers, Authorizations and Approvals of Sellers
5.6 Financial Statements
5.7 Material Changes or Events
5.8 Tax Matter Exceptions
5.9 Real Property Related Matters
5.10 Equipment and Machinery
5.11 Intellectual Property
5.12 Licenses, Permits and Governmental Approvals
5.13 Exceptions to Compliance with Law
5.14 Litigation
5.15 Contracts
5.17 Employee Plans; ERISA Funding Matters
5.18 Customers, Suppliers and Competitors
5.20 Transactions with Directors, Officers and Affiliates
5.21 Employment and Labor Agreements; Exceptions to Compliance with Employment Laws
5.22 Environmental Matters
6.5 Consents, Waivers, Authorizations and Approvals of Buyer
7.1 Separation of Warren Pet Division
9.2 Sellers' Severance Plan
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<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of June 30, 1997 by and
among AMERICAN CONSUMER PRODUCTS, INC., a Delaware corporation (the
"Company"), ACPI REAL ESTATE, INC., a Delaware corporation ("REAL ESTATE
CO."), PMI, INC., a Minnesota corporation, formerly known as Product
Merchandisers, Inc. ("PMI") and VISTA 2000, INC., a Delaware corporation
("VISTA" and, together with the Company, Real Estate Co. and PMI, the
"sELLERS"), and AXXESS TECHNOLOGIES, INC., a Delaware corporation (the
"BUYER").
W I T N E S S E T H:
WHEREAS, the Company, Real Estate Co. and PMI are engaged in the
business of the manufacture, distribution and sale of keys, key accessories, key
making/copying machines, letters, numbers, signs, knives, WESSEL hardware
products and snow shovels; and
WHEREAS, the Buyer desires to purchase substantially all of the assets
of the Companies from the Sellers, other than any assets relating to the Warren
Pet division of the Company, and the Sellers desire to sell such assets to the
Buyer, in each case upon the terms and subject to the conditions set forth in
the Transaction Documents;
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements hereinafter contained, the parties hereto hereby agree
as follows:
SECTION 1. DEFINITIONS.
As used in this Agreement (including the recitals and Schedules
hereto), the following terms shall have the following meanings (such meanings to
be applicable equally to both singular and plural forms of the terms defined):
"ACCOUNTS RECEIVABLE" shall mean all accounts and notes receivable of
any of the Companies existing on the Closing Date, other than those (i) relating
to or derived from the Company's Warren Pet Division or (ii) inter-company
accounts receivable;
"ACTUAL KNOWLEDGE" shall mean the conscious awareness of a fact or
other matter, (i) with respect to the Sellers, by any of Larry G. Kerr, Sharon
Hughes or Glen Pirie and (ii) with respect to the Buyer, by any of Stephen W.
Miller, Bradley M. Lines or Stephen E. Poludniak;
"AFFILIATE" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of securities
or partnership or other ownership interests, by contract or otherwise) of such
Person;
<PAGE>
"ALLOCATION STATEMENT" shall have the meaning set forth in Section
10.1 hereof;
"ASSIGNED CONTRACTS" shall mean the rights of any of the Sellers, as
the case may be, under the Contracts;
"ASSUMED LIABILITIES" shall have the meaning set forth in Section
2.4(a) hereof;
"BALANCE SHEET REPORT" shall have the meaning set forth in Section
3.3(b) hereof;
"BANK PRIME LOAN" shall have the meaning set forth in Section 11.6(g)
hereof;
"BUSINESS" shall mean the business activities and operations of any of
the Companies, relating to the service of fasteners, the manufacture,
distribution and sale of keys, key making/copying machines, letters, numbers,
signs, knives, WESSEL hardware products and snow shovels; PROVIDED, that
Business shall not mean any business activities or operations of the Companies
relating to the Warren Pet division of the Company;
"BUSINESS DAY" shall mean days other than Saturdays, Sundays and other
legal holidays or days on which the principal office of Citibank, N.A. is
closed;
"BUYER" shall have the meaning set forth in the Preamble hereto;
"BUYER EVENTS OF BREACH" shall have the meaning set forth in Section
11.3 hereof;
"BUYER INDEMNITEES" shall have the meaning set forth in Section 11.1
hereof;
"BUYER LOSSES" shall have the meaning set forth in Section 11.1
hereof;
"BUYER REQUIRED CONSENTS" shall have the meaning set forth in Section
6.5;
"BUYER'S ARBITRATOR" shall have the meaning set forth in Section
11.6(c) hereof;
"CBA" shall have the meaning set forth in Section 9.4 hereof;
"CLOSING" shall have the meaning set forth in Section 4 hereof;
"CLOSING BALANCE SHEET" shall have the meaning set forth in Section
3.3(b) hereof;
"CLOSING CASH PORTION" shall have the meaning set forth in Section
3.3(c) hereof;
"CLOSING DATE" shall have the meaning set forth in Section 4;
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"CLOSING PURCHASE PRICE" shall have the meaning set forth in Section
3.3(c) hereof;
"CLOSING TOTAL ASSETS VALUE" shall have the meaning set forth in
Section 3.3(b) hereof;
"COMPANY" shall have the meaning set forth in the Preamble hereto;
"COMPANIES" shall mean the Company, Real Estate Co. and PMI;
"CODE" shall mean the Internal Revenue Code of 1986, as amended;
"CONFIDENTIALITY AGREEMENT" shall mean that certain confidentiality
agreement, dated March 10, 1997, between the Buyer and the Company;
"CONTRACTS" shall mean, collectively, Purchase Orders, Sales Orders
and Other Contracts;
"DISPUTES" shall have the meaning set forth in Section 11.6(a) hereof;
"DISPUTING PERSON" shall have the meaning set forth in Section 11.6(b)
hereof;
"DECEMBER BALANCE SHEET" shall have the meaning set forth in Section
5.6 hereof;
"DOCUMENTS OF RECORD" shall mean the copies of all documents referred
to in the Title Commitments;
"EMPLOYMENT AND LABOR AGREEMENTS" shall have the meaning set forth in
Section 5.21(a) hereof;
"ENVIRONMENTAL COSTS" shall have the meaning set forth in Section 8.7
hereof;
"ENVIRONMENTAL LAWS" shall have the meaning set forth in Section 5.22
hereof;
"EQUIPMENT AND MACHINERY" shall mean (i) all the equipment, machinery,
furniture, fixtures and improvements, supplies and vehicles used in the Business
and owned or leased by any of the Companies on the Closing Date (including,
without limitation, all such items as set forth on the December Balance Sheet
with additions thereto (net of dispositions) in the ordinary course of
business), (ii) all the replacements for any of the foregoing owned or leased by
any of the Companies, (iii) any rights of any of the Companies to the warranties
(to the extent assignable) and licenses received from manufacturers and sellers
of the aforesaid items and (iv) any related claims, credits, rights of recovery
and set-off with respect thereto;
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended;
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"ERISA AFFILIATE" shall have the meaning set forth in Section 5.17(b)
hereof;
"EXCLUDED ASSETS" shall have the meaning set forth in Section 2.1(b)
hereof;
"EXCLUDED LIABILITIES" shall have the meaning set forth in Section
2.4(b) hereof;
"FILES AND RECORDS" shall mean all files and records, whether in hard
copy or magnetic format, of any of the Sellers specifically relating to the
Business or the Purchased Property, including, without limitation, the following
types of files and records specifically relating to the Business: Intellectual
Property records and files, customer and supplier files, equipment maintenance
records, equipment warranty information, plant plans, specifications and
drawings, trade secrets and customer specifications and all files relating to
Transferred Employees, correspondence with federal, state and local governmental
agencies relating to the operation of the Business and related files and records
of any of the Companies;
"FINAL DETERMINATION" shall have the meaning set forth in Section
11.6(e) hereof;
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section 5.6
hereof;
"FLEET FACILITY" shall mean the secured credit facility of the Company
provided by Fleet Capital Corporation;
"GAAP" shall mean United States generally accepted accounting
principles as in effect on the date on which the document or calculation to
which it refers relates, applied on a consistent basis throughout the periods
covered thereby;
"GAINED BUSINESS" shall mean since May 8, 1997, incremental business
from an existing customer or business from a new customer, which has either been
placed with the Companies or for which the Companies have received notice to be
placed with the Companies; PROVIDED, HOWEVER, that the Gained Business shall not
include any business from such customer that is lost by the Buyer or an
Affiliate of the Buyer, whether or not disclosed by any party hereto;
"GOVERNMENT" shall mean any agency, division, subdivision, audit group
or procuring office of the Government of the United States, any state of the
United States, any county or municipality of any state of the United States or
any foreign government, including the employees or agents thereof;
"HAZARDOUS MATERIALS" shall have the meaning set forth in Section 5.22
hereto;
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended;
"INDEPENDENT ACCOUNTING FIRM" shall have the meaning set forth in
Section 3.3(b) hereto;
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"INTANGIBLE ASSETS" shall mean all intangible personal property
rights, including, without limitation, all rights on the part of any of the
Companies to proceeds of any insurance policies and all claims on the part of
any of the Companies for recoupment, reimbursement and coverage under any
insurance policies, in each case in connection with the Business and all
goodwill of the Sellers relating to the Business;
"INTELLECTUAL PROPERTY" shall have the meaning set forth in Section
5.11 hereof;
"INVENTORY" shall mean (i) all the finished goods, raw materials, work
in progress and inventoriable supplies of the Business owned by any of the
Companies on the Closing Date (including, without limitation, all such items as
set forth on the December Balance Sheet with additions thereto (net of
dispositions) in the ordinary course of business) specifically for use in the
operations of the Business and (ii) any and all rights of any of the Companies
to the warranties received from its suppliers with respect to such inventory (to
the extent assignable) and related claims, credits, rights of recovery and
set-off with respect thereto;
"L/C PROCEDURES AGREEMENT" shall mean that certain L/C Procedures
Agreement, dated as of the date hereof between the Sellers and the Buyer with
respect to the procedures for the establishment, maintenance and renewal of the
Letters of Credit in the form attached hereto as Exhibit A;
"LEASED PROPERTY" shall have the meaning set forth in Section 5.9(b)
hereof;
"LETTERS OF CREDIT" shall have the meaning ascribed to that term in
the L/C Procedures Agreement, the form of which is attached hereto as Exhibit A;
"LICENSES" shall have the meaning set forth in Section 5.11(d) hereof;
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or other) or conditional sale agreement;
"LISTED EMPLOYEE" shall have the meaning set forth in Section 9.1
hereof;
"LOCK BOX ACCOUNTS" shall mean those certain lock box accounts (i)
maintained by PMI and designated by the address P.O. Box 74562, Chicago, IL
60690 and (ii) maintained by the Company and designated by P.O. Box 73524,
Cleveland, OH 44193-0888 and P.O. Box 931877, Cleveland, OH 44193-0888, and each
relating to the Business;
"LOCK BOX CASH" shall mean the cash balance of the Lock Box Accounts
as of the close of Business on the Business Day preceding the Closing Date.
"LOCK BOX AGREEMENT" shall mean that Lock Box Sharing Agreement, dated
as of the Closing Date, among the parties hereto relating to that certain lock
box account maintained by the American Consumer Products, Inc. and designated by
the address P.O. Box 931095, Cleveland, OH 44193-0888 relating to the Business
and outlining the parties agreement with
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respect to the maintenance of such account for the period after the Closing
Date, in the form attached hereto as Exhibit B.
"LOST BUSINESS" shall mean since May 8, 1997, business of a customer
of the Companies that is lost, or as to which notice to the Companies has been
given that such business will be lost; PROVIDED, HOWEVER, that Lost Business
shall not include any business of such customer that is gained by the Buyer or
an Affiliate of the Buyer, whether or not disclosed by any party hereto;
"MATERIAL ADVERSE CHANGE" shall mean a material adverse change in the
business, operations, assets, properties, financial condition or customers of
the Business taken as a whole; PROVIDED, HOWEVER, that for purposes of
determining whether or not a Material Adverse Change has occurred as a result of
the loss of customers on the business, operations, assets, properties, financial
condition or customers shall only be determined with reference to Lost Business
(as defined herein) and the amount of Lost Business will be offset by the amount
of Gained Business;
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
business, operations, assets, properties, financial condition or customers of
the Business taken as a whole; provided, however, that for purposes of
determining whether or not a Material Adverse Effect has occurred as a result of
the loss of customers on the business, operations, assets, properties, financial
condition or customers shall only be determined with reference to Lost Business
(as defined herein) and the amount of Lost Business will be offset by the amount
of Gained Business;
"MATERIAL CONTRACT" shall have the meaning set forth in Section
5.15(b) hereof;
"MULTIEMPLOYER PENSION PLAN" shall have the meaning set forth in
Section (3)(37) of ERISA;
"NLRB" shall have the meaning set forth in Section 5.21(b) hereof;
"NONMATERIAL CONTRACTS" shall have the meaning set forth in Section
2.4(a)(ii) hereof;
"NOTICE OF ARBITRATION" shall have the meaning set forth in Section
11.6(b) hereof;
"OBSOLETE INVENTORY" shall mean Inventory which, at the Closing Date,
was not usable or saleable in the lawful and ordinary course of business of the
Business as now conducted, because of: legal restrictions; failure to meet
specifications; loss of market; damage; physical deterioration; or for any other
cause;
"OTHER CONTRACTS" shall mean all Equipment and Machinery leases, and
all indentures, loan agreements, security agreements, and all other contracts,
commitments, partnership or joint venture agreements, license agreements,
service contracts, employment,
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commission, and consulting agreements, suretyship contracts, letters of
credit, reimbursement agreements, contracts or commitments limiting or
restraining any of the Companies with respect to the Business from engaging
or competing in any lines of business or with any person, firm or
corporation, documents granting the power of attorney with respect to the
affairs of any of the Companies, agreements not made in the ordinary course
of business of the Business, options to purchase any assets or property
rights of the Business, working capital maintenance or other form of guaranty
agreements, and all other agreements to which any of the Companies are a
party and which are related to the operation of the Business, but excluding
Real Property Leases, Purchase Orders, Sales Orders and Plans;
"OWNED REAL PROPERTY" shall have the meaning set forth in Section
5.9(a) hereof and include all improvements, fixtures and all other appurtenances
thereto and rights in respect thereof;
"PERMITS" shall have the meaning set forth in Section 5.12 hereof;
"PERMITTED LIENS" shall mean (i) statutory liens for current taxes,
assessments or other governmental charges not yet delinquent or due and payable
or the amount or validity of which is being contested in good faith by
appropriate proceedings; PROVIDED, that an appropriate reserve is established
therefor in accordance with GAAP, (ii) mechanics', carriers', workers',
repairers' and similar liens arising or incurred in the ordinary course of
business that are not material to the business, operations and financial
condition of the property so encumbered, (iii) zoning, entitlement and other
land use regulations provided that such regulations have not been violated and
(iv) such other imperfections in title, charges, easements, restrictions and
encumbrances which do not materially detract from the value of or materially
interfere with the present use of any of the Purchased Property subject thereto
or affected thereby.
"PERSON" shall mean and include any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock company,
trust, any other unincorporated organization or Government;
"PLANS" shall have the meaning set forth in Section 5.17(a) hereof;
"PMI" shall have the meaning set forth in the Preamble hereto;
"PRELIMINARY CLOSING BALANCE SHEET" shall have the meaning set forth
in Section 3.3(a) hereof;
"PRELIMINARY CASH PORTION" shall have the meaning set forth in Section
3.3(a) hereof;
"PRELIMINARY PURCHASE PRICE" shall have the meaning set forth in
Section 3.3(a) hereof;
"PRELIMINARY TOTAL ASSETS VALUE" shall have the meaning set forth in
Section 3.3(a) hereof;
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"PURCHASE ORDERS" shall mean all the Companies' outstanding purchase
orders, contracts or other commitments to suppliers of goods and services for
materials, supplies or other items used in the Business;
"PURCHASE PRICE" shall have the meaning set forth in Section 3.1
hereof;
"PURCHASED PROPERTY" shall have the meaning set forth in Section
2.1(a) hereof;
"PROCEEDING" shall have the meaning set forth in Section 11.2 hereof;
"REAL ESTATE CO." shall have the meaning set forth in the Preamble
hereto;
"REAL PROPERTY LEASES" shall have the meaning set forth in Section
5.9(b) hereof;
"REQUIRED CONSENTS" shall have the meaning set forth in Section 5.5
hereof;
"RESTRICTED PERIOD" shall have the meaning set forth in Section 7.7(a)
hereof;
"SALES ORDERS" shall mean all the Companies' sales orders, contracts
or other commitments to purchasers of goods and services of the Business;
"SELLER INDEMNITEES" shall have the meaning set forth in Section 11.3
hereof;
"SELLER LOSSES" shall have the meaning set forth in Section 11.3
hereof;
"SELLERS" shall have the meaning set forth in the Preamble hereto;
"SELLERS' ARBITRATOR" shall have the meaning set forth in Section
11.6(c) hereof;
"SELLERS' EVENT OF BREACH" shall have the meaning set forth in Section
11.1 hereof;
"SERVICING AGREEMENT" shall mean the Transitional Services and
Facilities Agreement between the Buyer, Vista and the Company, in the form
attached hereto as Exhibit C;
"SURPLUS INVENTORY" shall mean Inventory that, at the Closing Date is
the amount of Inventory that is in excess of the amount of Inventory that would
constitute 12 months of supply based upon the prior year's historical rate of
sales of the Business; PROVIDED, that Surplus Inventory shall only be calculated
with regard to any products which have been introduced more than twelve (12)
months prior to the date of the Closing Balance Sheet;
"SURVEYS" shall have the meaning set forth in Section 7.12 hereof;
"TAXES" shall mean all federal, state, local or foreign taxes,
including, but not limited to, income, gross income, gross receipts, capital,
production, excise, employment, sales, use, transfer, transfer gain, ad valorem,
premium, profits, license, capital stock, franchise, severance, stamp,
withholding, Social Security, employment, unemployment, disability, worker's
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compensation, payroll, utility, windfall profit, custom duties, personal
property, real property, environmental, registration, alternative or add-on
minimum, estimated and other taxes, governmental fees or like charges of any
kind whatsoever, including any interest, penalties or additions thereto whether
disputed or not;
"TAX RETURNS" shall mean any return, report, information return or
other document (including any related or supporting information) filed or
required to be filed with any governmental body in connection with the
determination, assessment, collection or administration of any Taxes.
"TITLE COMMITMENT" shall mean that certain title insurance commitment,
effective as of June 2, 1997 and bearing Title # 1350H21359, issued by the Title
Insurance Company;
"TITLE INSURANCE COMPANY" shall mean First American Title Insurance
Company;
"TOTAL ASSETS VALUE" shall mean the value of all assets included in
the Purchased Property, to the extent each is properly set forth on the
Preliminary Closing Balance Sheet or Closing Balance Sheet, as applicable,
determined in accordance with GAAP and the methodology utilized to derive the
balance sheet contained in SCHEDULE 5.6(b) and SCHEDULE 5.6(c);
"TRANSACTION DOCUMENTS" shall mean this Agreement, the Letters of
Credit, the Servicing Agreement, the Lock Box Agreement, the L/C Procedures
Agreement, the exhibits and schedules hereto, and all other agreements,
instruments, certificates and other documents to be entered into or delivered by
any party in connection with the transactions contemplated to be consummated
pursuant to any of the foregoing;
"TRANSFERRED EMPLOYEES" shall have the meaning set forth in Section
9.1 hereof;
"UNION" shall have the meaning set forth in Section 9.4 hereof;
"VISTA" shall have the meaning set forth in the Preamble hereto;
"WARN" shall have the meaning set forth in Section 9.1(b) hereof.
SECTION 2. PURCHASE AND SALE OF THE PURCHASED PROPERTY.
SECTION 2.1 TRANSFER OF ASSETS.
(a) Subject to the terms and conditions herein set forth, the
Companies shall sell, convey, transfer, assign and deliver to the Buyer, free
and clear of any Lien other than, with respect to Owned Real Property, Liens set
forth on the Title Commitment (other than Liens listed as numbers 10, 11, 12 and
13 on SCHEDULE B (Section II thereof) and statutory liens for current taxes,
assessments or other governmental charges not yet delinquent or due and payable,
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and the Buyer shall purchase and accept from the Companies, on the Closing Date,
all right, title and interest of the Companies in and to all of the Companies'
assets, properties, rights and business, tangible and intangible, of every type
and description, wherever located, used or employed in connection with the
Business as they exist or shall exist on the Closing Date (all of such assets,
properties, rights and business being hereinafter collectively referred to as
the "PURCHASED PROPERTY"), including without limitation:
(i) the Accounts Receivable, Assigned Contracts, Equipment and
Machinery, Files and Records, Intangible Assets, Intellectual Property,
Inventory, Licenses, Owned Real Property, Permits, Real Property Leases and
any prepaid expenses and other assets of the Business on the Closing Date
(including, without limitation, all such items as are set forth on the
December Balance Sheet with additions thereto (net of dispositions) in the
ordinary course of business) and including all the tangible and intangible
assets of the Companies used in the Business and related thereto;
(ii) all databases, software, software programs, object codes,
source codes, systems documentation and user manuals used in connection
with the Business, and all proprietary information, trade secrets, research
records, test information, market surveys, marketing know-how, inventions,
processes and procedures owned or licensed to the Companies and used in
connection with the Business;
(iii) all of the Companies' claims, refunds, causes of action,
choses in action, rights of recovery and rights of setoff of any kind
relating to the Business;
(iv) the right to receive and retain mail, Accounts Receivable
payments and other communications relating to the Business;
(v) the right to bill and receive payment for products shipped or
delivered and services performed but unbilled or unpaid as of the Closing;
(vi) all lists, records and other information pertaining to
accounts, personnel and referral sources, all lists and records pertaining
to suppliers and customers; and all books, ledgers, files, business
records, legal files and legal records of every kind; whether evidenced in
writing, electronically (including, without limitation, by computer) or
otherwise;
(vii) all advertising, marketing and promotional materials, studies,
reports and all other printed or written materials;
(viii) to the extent transferable, all telephone numbers (e.g., toll
free numbers), fax numbers, Internet addresses and similar numbers or
addresses;
(ix) the legal names "American Consumer Products, Inc." and "PMI,
Inc.";
(x) the Lock Box Accounts, including the Lock Box Cash; and
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(xi) all other assets, properties, and rights of every kind used
primarily in the Business, on the Closing Date, known or unknown, fixed or
unfixed, accrued, absolute, contingent or otherwise, whether or not
specifically referred to in this Agreement.
(b) Notwithstanding anything herein to the contrary, the Purchased
Property shall not include the following assets (the "EXCLUDED ASSETS"):
(i) any cash and cash equivalent items, including without
limitation, checking accounts, bank accounts, certificates of deposit, time
deposits and securities of the Sellers on or prior to the Closing Date, but
excluding the Lock Box Cash;
(ii) any minute books, Tax Returns, or other corporate documents
(other than those relating to the Business) of the Sellers;
(iii) tax refunds;
(iv) all of the outstanding shares of capital stock of all
subsidiaries of the Company (including, without limitation, Boss
Manufacturing Company and its subsidiaries);
(v) all assets of the Warren Pet division of the Company and all
assets of Boss Manufacturing Company;
(vi) the life insurance policies covering Stephen Cole and Richard
Bern (including the cash surrender value thereof); and
(vii) insurance policies of the Business and claims related
thereto, except to the extent provided for in the balance sheet included in
SCHEDULE 5.6(d).
SECTION 2.2. SALE AT CLOSING DATE. The sale, transfer, assignment
and delivery by the Sellers of the Purchased Property to the Buyer, as herein
provided, shall be effected on the Closing Date by deeds, bills of sale,
endorsements, assignments and other instruments of transfer and conveyance
reasonably satisfactory in form and substance to counsel for the Buyer and the
Sellers.
SECTION 2.3. SUBSEQUENT DOCUMENTATION. The Sellers shall, at any
time and from time to time after the Closing Date, upon the request of the Buyer
and at the reasonable expense of the Sellers, do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, all such
further deeds, assignments, transfers and conveyances as may be reasonably
required for the assigning, transferring, granting, conveying and confirming to
the Buyer or its successors and assigns, or for aiding and assisting in
collecting and reducing to possession, any or all of the Purchased Property.
The Sellers hereby constitute and appoint, effective as of the Closing Date, the
Buyer, its successors and assigns as the true and lawful attorney of the Sellers
with full power of substitution in the name of the Buyer or in the name of the
Sellers but for the benefit of the Buyer (a) to collect for the account of the
Buyer all Accounts Receivable and any other item of Purchased Property and (b)
to institute and prosecute all
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proceedings which the Buyer may in its discretion deem proper in order to
collect the Accounts Receivable or to assert or enforce any right, title or
interest in, to or under the Purchased Property and to defend or compromise
(subject to Section 11 hereof, if applicable) any and all actions, suits or
proceedings in respect of any of the Purchased Property. The Buyer shall be
entitled to retain for its own account any amounts collected pursuant to the
foregoing powers, including any amounts payable as interest in respect
thereof.
SECTION 2.4. ASSUMED LIABILITIES AND EXCLUDED LIABILITIES.
(a) ASSUMPTION OF LIABILITIES. As additional consideration for the
Purchased Property, from and after the Closing, the Buyer shall assume and the
Buyer hereby agrees to pay, perform and discharge when due (collectively, the
"ASSUMED LIABILITIES"):
(i) all current liabilities (other than Taxes and other than current
liabilities of the Warren Pet division of the Company) of the Companies (a)
to the extent set forth on the face of the December Balance Sheet (rather
than in any notes thereto) or (b) incurred in the ordinary course of
business since the December Balance Sheet;
(ii) (A) all obligations of the Companies arising pursuant to the
terms of Contracts listed as being assumed by the Buyer on SCHEDULE 5.15
hereof (subject to Section 7.15 and other than liabilities relating to any
breach or default of any Contract prior to the Closing Date), (B) any
Contract that requires payments by the Buyer of less than or equal to
$25,000 or that is terminable without penalty or payment on not more than
30 days prior notice ("NONMATERIAL CONTRACTS") and (C) purchase and sales
orders of short duration and in the ordinary course of business.
(iii) all obligations of the Buyer arising out of the conduct of the
Business after the Closing Date.
(b) EXCLUDED LIABILITIES. Anything in this Agreement to the contrary
notwithstanding, the Sellers shall be responsible for all of the liabilities and
obligations not hereby expressly assumed by Buyer and Buyer shall not assume, or
in any way be liable or responsible for, any liabilities or obligations of the
Sellers except as specifically provided by this Section 2.4 (the "EXCLUDED
LIABILITIES"). Without limiting the generality of the foregoing, Buyer shall
not assume any of the following:
(i) any liability or obligation under Contracts or other agreements
to which any of the Sellers is a party or by or to which any of them or any
of their assets, properties or rights are bound or subject which are not
reflected on SCHEDULE 5.15, other than Nonmaterial Contracts;
(ii) any liability or obligation arising out of (A) except as
otherwise specifically provided in this Agreement, the conduct of the
Business prior to the Closing Date or (B) except as specifically set forth
in Section 9 of this Agreement, the employment by the Sellers of any
employees, whether before or after the Closing Date and whether or not such
employees become Transferred Employees;
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(iii) any liability or obligation of the Companies owing to any
stockholder, subsidiary or Affiliate thereof;
(iv) any liabilities related to (A) federal, state or local income
taxes of any kind whatsoever of any of the Sellers, (B) all Taxes
attributable to periods ending on or prior to the Closing Date, and (C)
Taxes of any other Person pursuant to an agreement or otherwise;
(v) any liabilities arising under Environmental Laws attributable to
or incurred as a result of any acts, omissions, or conditions first
occurring or in existence as of or prior to the Closing Date, including,
but not limited to, liabilities for the release, handling, discharge
treatment, storage, disposal, arrangement for the disposal or presence of
Hazardous Materials first occurring on or in existence as of or prior to
the Closing Date;
(vi) any liability for Taxes imposed on any of the Sellers; and
(vii) any liability or obligation of any of the Sellers under any
Plan.
Section 2.5. WARREN PET DIVISION. Notwithstanding any other
provision of this Agreement to the contrary, the Purchased Property and the
Assumed Liabilities shall not include any assets or liabilities relating to the
business of the Warren Pet division of the Company, and that all such assets and
liabilities shall be deemed to be Excluded Assets or Excluded Liabilities,
respectively, for all purposes of this Agreement.
SECTION 3. PURCHASE PRICE.
SECTION 3.1. PURCHASE PRICE. Upon the terms and subject to the
conditions set forth in this Agreement, in reliance on the representations,
warranties, covenants and agreements of the parties contained herein, the
aggregate purchase price for the sale and transfer of the Purchased Property to
be delivered at Closing by the Buyer to the Sellers shall be $28,300,442 (the
"Purchase Price") and shall consist of (i) the Preliminary Cash Portion (as
defined below) in cash, which is subject to adjustment as provided in Section
3.3 hereof and (ii) the assumption by the Buyer of the Assumed Liabilities. In
addition, the Buyer shall deliver at Closing to the Sellers the Lock Box Cash.
SECTION 3.2. PAYMENT OF PURCHASE PRICE. On the Closing Date, the
Buyer shall (i) pay the Preliminary Cash Portion by wire transfer of immediately
available funds to an account designated in writing by the Company at least two
(2) Business Days prior to the Closing Date and (ii) execute and deliver to the
Sellers an instrument of assumption of liabilities with respect to the Assumed
Liabilities.
SECTION 3.3. ADJUSTMENTS TO PURCHASE PRICE. The Purchase Price
shall be subject to adjustment as follows:
(a) CLOSING DATE ADJUSTMENT. At the Closing, the Purchase Price will
be adjusted on a dollar for dollar basis as set forth in this Section 3.3. The
preliminary closing balance sheet
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shall be prepared by the Sellers, in consultation with representatives of the
Buyer, not more than three (3) Business Days before the Closing Date, and
shall consist of the most recent monthly balance sheet of the Company,
adjusted to be the most recent monthly balance sheet of the Business, with
such adjustments to be made in a manner that is consistent with the
adjustments set forth on SCHEDULE 5.6(b) and SCHEDULE 5.6(c) hereof (the
"PRELIMINARY CLOSING BALANCE SHEET") and shall set forth the Total Assets
Value (the "PRELIMINARY TOTAL ASSETS VALUE") as of such date. If the
Preliminary Total Assets Value is less than $27,766,312, the Purchase Price
shall be decreased by the amount of such deficiency, and if the Preliminary
Total Assets Value exceeds $27,766,312, the Purchase Price shall be increased
by the amount of such excess (the result of such calculation being, in either
case being referred to as, the "PRELIMINARY PURCHASE PRICE"). The amount of
the Cash Portion at Closing (the "PRELIMINARY CASH PORTION") shall be
determined by subtracting the Assumed Liabilities on the Preliminary Closing
Balance Sheet from the Preliminary Purchase Price.
(b) POST-CLOSING DETERMINATION. Within sixty (60) days after the
Closing Date, the Buyer shall prepare a balance sheet of the Business as of the
open of business on the Closing Date (the "CLOSING BALANCE SHEET") and will
prepare and deliver to the Sellers a computation of Total Assets Value as of the
open of business on the Closing Date (the "CLOSING TOTAL ASSETS VALUE"). The
Closing Balance Sheet shall be prepared by the Buyer, in consultation with
representatives of the Sellers, in a manner that is consistent with the
adjustments set forth on SCHEDULE 5.6(b) and SCHEDULE 5.6(c) hereof. During the
period of any dispute with respect to the application of this Section 3.3, the
Buyer shall provide the Sellers full access to the books, records, facilities
and employees of the Business, and shall cooperate with the Sellers to the
extent reasonably requested by the Sellers to investigate the basis for such
dispute. Not later than forty-five (45) calendar days after receipt of the
Closing Balance Sheet, the Sellers shall provide the Buyer with a list of those
items, if any, to which the Sellers take exception and the Sellers' proposed
adjustment (the "BALANCE SHEET REPORT"). If the Sellers fail to deliver to the
Buyer the Balance Sheet Report within forty-five (45) calendar days following
receipt of the Closing Balance Sheet, the Sellers shall be deemed to have
accepted the Closing Balance Sheet for the purposes of any Purchase Price
adjustment under Section 3.3(c) hereof. If the Buyer does not give the Sellers
notice of objections within thirty (30) calendar days following receipt of the
Balance Sheet Report, the Buyer shall be deemed to have accepted the Balance
Sheet Report for the purposes of any Purchase Price adjustment under Section
3.3(c) hereof. If the Buyer gives the Sellers notice of objections to the
Balance Sheet Report, and if the Buyer and the Sellers are unable, within
fifteen (15) calendar days after receipt by the Sellers of the notice by the
Buyer of objections, to resolve the disputed exceptions, such disputed
exceptions will be referred to a firm of independent certified public
accountants ("INDEPENDENT ACCOUNTING FIRM") mutually acceptable to the Buyer and
the Sellers. The Independent Accounting Firm shall, within sixty (60) days
following its selection, deliver to the Buyer and the Sellers a written report
determining such disputed exceptions, and its determinations will be conclusive
and binding upon the parties thereto for the purposes of any Purchase Price
adjustment under Section 3.3(c) hereof. The fees and disbursements of the
Independent Accounting Firm acting under this Section shall be shared equally by
the Buyer and the Sellers. The written report of the Independent Accounting
Firm or any written agreement of the Buyer and the Sellers pursuant to this
Section 3.3(c) shall be referred to as the "Working Capital Final Determination"
for purposes of the L/C Agreement.
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(c) PURCHASE PRICE ADJUSTMENT. If, within three (3) calendar days
following the preparation or computation and final determination, pursuant to
Section 3.3(b) hereof, of the Closing Balance Sheet, and based upon such final
determination, the Closing Total Assets Value exceeds the Preliminary Total
Assets Value, the Preliminary Purchase Price shall be increased by the amount of
such excess, and if the Closing Total Assets Value is less than the Preliminary
Total Assets Value, the Preliminary Purchase Price shall be decreased by the
amount of such deficiency (the result of such calculation being, in either case,
referred to as the "CLOSING PURCHASE PRICE"). The amount of cash paid upon
determination of the purchase price adjustment described in this Section 3.3(c)
(the "CLOSING CASH PORTION") shall be determined by subtracting the Assumed
Liabilities on the Closing Balance Sheet from the Closing Purchase Price. If
the Closing Cash Portion is greater than the Preliminary Cash Portion, the Buyer
shall pay to the Sellers an amount equal to such surplus. If the Closing Cash
Portion is less than the Preliminary Cash Portion, the Sellers shall pay to the
Buyer an amount equal to such deficiency. Any such payment shall be made by
wire transfer of immediately available funds.
(d) VALUATION OF INVENTORY. Notwithstanding any other provision of
this Agreement to the contrary, for purposes of preparing the Closing Balance
Sheet and the Closing Total Assets Value, the Buyer and the Sellers acknowledge
and agree that the value of the Inventory shall be the result of the gross value
of the Inventory (prior to the application of any reserves) minus the value of
the sum of any (i) Obsolete Inventory and (ii) Surplus Inventory.
(e) LETTERS OF CREDIT. On the Closing Date, the Sellers shall
deliver to the Buyer the Letters of Credit, the procedures for the drawing
against which are set forth in the L/C Procedures Agreement.
SECTION 4. CLOSING. The closing of the sale and purchase of the
Purchased Property (the "CLOSING") shall take place at the offices of Willkie
Farr & Gallagher at One Citicorp Center, 153 East 53rd Street, New York, New
York 10022, no later than five (5) Business Days after satisfaction or waiver of
all conditions to Closing set forth in this Agreement, or at such other place
and time as may be mutually agreed to by the parties hereto (the "CLOSING
DATE").
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. The
Sellers hereby, jointly and severally, represent and warrant to the Buyer as
follows:
SECTION 5.1. CORPORATE ORGANIZATION. Each of the Sellers is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of incorporation, and has all requisite corporate power and
authority to own their respective properties and assets and to conduct their
businesses as now conducted. Copies of the Certificate or Articles of
Incorporation and By-laws (or equivalent documents) of the Company, Real Estate
Co. and PMI, with all amendments thereto to the date hereof, have been furnished
to the Buyer or its representatives, and such copies are accurate and complete
as of the date hereof. Product Merchandisers, Inc. is the former corporate name
of PMI.
SECTION 5.2. QUALIFICATION TO DO BUSINESS. Each of the Companies is
duly qualified to do business as a foreign corporation and is in good standing
in every jurisdiction in
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which the character of the properties owned or leased by it or the nature of
the business conducted by it makes such qualification necessary, except where
the failure to be so qualified would not have a Material Adverse Effect.
SCHEDULE 5.2 sets forth all jurisdictions in which the Companies are
qualified to do business.
SECTION 5.3. AUTHORIZATION AND VALIDITY OF AGREEMENT. The Sellers
have all requisite corporate power and authority to enter into the Transaction
Documents and to carry out their respective obligations thereunder. The
execution and delivery of Transaction Documents and the performance of the
Sellers' obligations thereunder have been duly authorized by all necessary
corporate action by the Board of Directors and stockholders of each Seller, and
no other corporate proceedings on the part of each Seller are necessary to
authorize such execution, delivery and performance. The Transaction Documents
have been duly executed by the Sellers and constitute their valid and binding
obligations, enforceable against each of them in accordance with their terms,
except as may be limited by applicable bankruptcy, insolvency, moratorium or
similar laws of general application relating to or affecting creditors' rights
generally and except for the limitations imposed by general principles of
equity.
SECTION 5.4. NO CONFLICT OR VIOLATION. The execution, delivery and
performance by each of the Sellers of the Transaction Documents do not and will
not violate or conflict with any provision of the Certificate or Articles of
Incorporation or By-laws (or equivalent documents) of any of the Sellers and do
not and will not violate any provision of law, or any order, judgment or decree
of any court or other governmental or regulatory authority binding on any of the
Sellers, nor violate nor will result in a breach of or constitute (with due
notice or lapse of time or both) a default under any contract, lease, loan
agreement, mortgage, security agreement, trust indenture or other agreement or
instrument material to the Business, nor will result in the creation or
imposition of any Lien upon any of the Purchased Property, nor will result in
the cancellation, modification, revocation or suspension of any of the licenses,
franchises, Permits, authorizations or approvals referred to in Sections 5.12 or
5.13 hereof.
SECTION 5.5. CONSENTS AND APPROVALS. SCHEDULE 5.5 sets forth a true
and complete list of each material consent, waiver, authorization or approval of
any governmental or regulatory authority, or of any other Person, and each
material declaration to or filing or registration with any such governmental or
regulatory authority (collectively, the "REQUIRED CONSENTS"), that is required
in connection with the execution and delivery of the Transaction Documents by
the Sellers or the performance by the Sellers of their obligations thereunder.
SECTION 5.6. FINANCIAL STATEMENTS. SCHEDULE 5.6(a) presents the
audited consolidated balance sheet of the Company and its subsidiaries as of
December 28, 1996 and the audited related statements of income, retained
earnings and changes in cash flows for the period ended December 28, 1996.
SCHEDULE 5.6(b) presents the consolidating balance sheet of the Company as of
December 28, 1996, and the consolidating income statement of the Company for the
period ended December 28, 1996. SCHEDULE 5.6(c) presents the balance sheet of
the Business as of December 28, 1996 (the "DECEMBER BALANCE SHEET"), and
demonstrates the methodology used to derive the balance sheet of the Business
from the column labeled "Subtotal" from the balance sheet included in
SCHEDULE 5.6(b). SCHEDULE 5.6(d) presents the balance sheet of the
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Business as of March 29, 1997. The financial statements in Schedules 5.6(a),
5.6(b), 5.6(c) and 5.6(d) are collectively referred to herein as the
"FINANCIAL STATEMENTS." The Financial Statements, including, where
applicable, the schedules and notes thereto, and in the case of SCHEDULE
5.6(d), subject to customary year-end adjustments, (i) were prepared in
accordance with GAAP, (ii) present fairly the financial condition of the
Company and its subsidiaries, the Company, or the Business, as the case may
be, and (iii) are complete, correct and in accordance with the books of
account and records of the Company. The financial statements in SCHEDULE
5.6(a) are audited, and an audit opinion from the Seller's accountants is
provided with regard thereto. The financial statements provided in SCHEDULE
5.6(b) are audited and an audit opinion from the Seller's accountants is
provided with regard thereto, with the exception that the consolidating
information presented in SCHEDULE 5.6(b) is presented for purposes of
additional analysis and is not a required part of the basic financial
statements. The consolidating information has been subjected to the auditing
procedures applied in the audits of the consolidated financial statements
and, in the opinion of the Seller's accountants is fairly stated in all
material respects in relation to the consolidated financial statements taken
as a whole.
SECTION 5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as set forth in SCHEDULE 5.7 or reflected in SCHEDULE
5.6(d), since December 28, 1996, there has not been:
(i) any Material Adverse Change;
(ii) any material loss, damage, destruction or other casualty to the
Purchased Property (whether or not insurance awards have been received or
guaranteed); or
(iii) any change in any method of accounting or accounting practice,
used in the preparation of the Financial Statements, of any of the
Companies.
(b) Since December 28, 1996, the Sellers have operated the Business
in the ordinary course of business and consistent with past practice and, except
as set forth in SCHEDULE 5.7 hereto, have not with respect to the Business:
(i) incurred any material obligation or liability (whether absolute,
accrued, contingent or otherwise) relating to the operations of any of the
Companies except in the ordinary course of business consistent with past
practice;
(ii) failed to discharge or satisfy any Lien or pay or satisfy any
obligation or liability arising from the operation of the Business, other
than Permitted Liens;
(iii) mortgaged, pledged or subjected to any Lien any of the
Purchased Property, except for Permitted Liens;
(iv) sold or transferred any of the assets of the Business material
to the Business or canceled any debts or claims or waived any rights
material to the Business, except in the ordinary course of business
consistent with past practice;
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(v) disposed of any patents, trademarks or copyrights or any patent,
trademark, or copyright applications used in or relating to the operations
of the Business;
(vi) defaulted on any material obligation relating to the operations
of the Business;
(vii) entered into any transaction material to the Business, except
in the ordinary course of business consistent with past practice;
(viii) granted any increase in the compensation or benefits of
employees of the Business other than increases in accordance with past
practice not exceeding 5% or entered into any employment or severance
agreement or arrangement with any of them;
(ix) made any capital expenditure as of the date indicated on
Schedule 5.7 (ix) in excess of $50,000, or additions to property, plant and
equipment used in the operations of the Business other than ordinary
repairs and maintenance;
(x) separated any employee from employment either temporarily or
permanently, except for cause;
(xi) incurred any obligation or liability for the payment of
severance benefits; or
(xii) entered into any agreement or made any commitment to do any of
the foregoing.
SECTION 5.8. TAX MATTERS. Except as set forth in SCHEDULE 5.8, all
Tax Returns required to be filed before the Closing Date in respect of the
Companies have been (or will have been by the Closing Date) filed, and the
Sellers have (or will have by the Closing Date) paid, accrued or otherwise
adequately reserved for the payment of all Taxes required to be paid in respect
of the periods covered by such returns and have (or will have by the Closing
Date) adequately reserved for the payment of all Taxes with respect to periods
ended on or before the Closing Date for which tax returns have not yet been
filed. All Taxes of the Sellers have been paid or adequately provided for and
the Sellers do not have Actual Knowledge of any proposed additional tax
assessment against them. In addition, (i) Sellers have withheld and paid all
Taxes required to be withheld with respect to amounts paid or owing to any
employee, creditor, independent contractor or other third party, (ii) none of
the Purchased Property is subject to any Lien, and (iii) none of the Purchased
Property is "tax-exempt use property" within the meaning of Section 168(h) of
the Code.
SECTION 5.9. REAL PROPERTY.
(a) OWNED REAL PROPERTY. SCHEDULE 5.9(a) lists all real property
owned by any of the Companies and used or occupied in connection with the
Business (the "OWNED REAL PROPERTY"). The Companies', as the case may be, title
to the Owned Real Property and improvements thereon is as set forth in the Title
Commitment, subject only to the title exceptions specified therein. None of the
Owned Real Property is subject to any right or option of any other
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person, firm, corporation or other entity to purchase or otherwise obtain
title to such property. No Person other than the Companies has any right to
use, occupy or lease all or any portion of the Owned Real Property. The real
property comprising the Owned Real Property is designated as a separate tax
lot.
(b) LEASE OBLIGATIONS. SCHEDULE 5.9(b) contains a list of all
leases, licenses, permits, subleases, and occupancy agreements, together with
any amendments thereto (the "REAL PROPERTY LEASES"), with respect to (i) all
real property leased by the Companies (whether as lessor or lessee and
including those in the names of nominees or other entities) and used or
occupied in connection with the Business (the "LEASED PROPERTY"), and (ii)
all real property constituting part of the Purchased Assets and leased or
subleased by the Companies, as lessor or sublessor, to third parties. Except
as identified on SCHEDULE 5.9(b) true, complete and accurate copies of the
Real Property Leases have been delivered to the Buyer, and each of such Real
Property Leases is in full force and effect without modification or amendment
from the form delivered. No option has been exercised by any Company under
any of such Real Property Leases, except options whose exercise has been
evidenced by a written document, a true, complete and accurate copy of which
has been delivered to the Buyer with the corresponding Real Property Lease
(and Sellers have received no written notice from, and have no Actual
Knowledge of, any other party exercising any such options). Except as
identified on SCHEDULE 5.9(b), the transfer of the Real Property Leases to
the Buyer does not require the consent or approval of the other party to the
Real Property Lease (or required consent has been obtained). None of the
Companies nor, to Sellers' Actual Knowledge, any of the other parties to the
Real Property Leases, is in material default under any of the Real Property
Leases, and no material amount due under the Real Property Leases remains
unpaid, no material controversy, claim, dispute or disagreement exists
between the parties to the Real Property Leases, and to Sellers' Actual
Knowledge no event has occurred which with the passage of time or giving of
notice, or both would constitute a material default thereunder.
(c) RESTRICTIVE COVENANTS. The covenants, easements or rights-of-way
affecting the Owned Real Property do not with respect to each Owned Real
Property materially impair the Companies', as the case may be, ability to use
any such Owned Real Property in the operation of the Business as presently
conducted. The Companies, as the case may be, have access to public roads,
streets or the like or valid easements over private streets, roads or other
private property for such ingress to and egress from the Owned Real Property,
except as would not materially impair the Companies', as the case may be,
ability to use any such Owned Real Property in the operation of the Business as
presently conducted.
(d) TITLE COMMITMENT. Buyer has received Documents of Record for all
of the Owned Real Property. Without limiting the rights of the Title Insurance
Company with respect to any affidavits and indemnities executed by Sellers at
Closing, the title insurance policy or policies issued to the Buyer for the
Owned Real Property shall be conclusive evidence of good title to the portion of
the Owned Real Property as therein shown as to all matters insured by the
policy, subject only to the exceptions as therein stated.
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(e) ZONING. Except as set forth on SCHEDULE 5.9(e) or as disclosed
on the Surveys to be delivered pursuant to Section 7.12: (i) Sellers have not
received any written notice and have no Actual Knowledge of any violation of any
applicable building, zoning, land use or other similar statutes, laws,
ordinances, regulations, permits or other requirements (including, without
limitation, the American With Disabilities Act) in respect of the Owned Real
Property or Leased Property, which has not been heretofore remedied; (ii)
Sellers have not received any written notice and have no Actual Knowledge that
any operations on or uses of the Owned Real Property or Leased Property
constitute non-conforming uses under any applicable building, zoning, land use
or other similar statutes, laws, ordinances, regulations, permits or other
requirements; and (iii) Sellers have no Actual Knowledge of and have not
received any written notice of any pending or contemplated rezoning proceeding
affecting the Owned Real Property or Leased Property.
(f) INSURANCE NOTICES. Except as set forth in SCHEDULE 5.9(f), the
Sellers have received no written notice from any insurance carrier, and have no
Actual Knowledge of, any defects or inadequacies in the Owned Real Property or
Leased Property, which, if not corrected, would result in termination of the
insurance coverage therefor or an increase in the cost thereof.
(g) EMINENT DOMAIN.
(i) Except as set forth on SCHEDULE 5.9(g), there is no pending or, to
the Sellers' Actual Knowledge, threatened: (A) condemnation of any part of
the Owned Real Property by any governmental authority; (B) special
assessment against any part of the Owned Real Property; or (C) litigation
against the Sellers for breach of any restrictive covenant affecting any
part of the Owned Real Property.
(ii) Except as set forth on SCHEDULE 5.9(g), to the Sellers' Actual
Knowledge there is no pending or threatened: (A) condemnation of any part
of the Leased Property by any governmental authority; (B) special
assessment against any part of the Leased Property; or (C) litigation
against the Sellers for breach of any restrictive covenant affecting any
part of the Leased Property.
(h) UTILITIES. The Sellers have not received any written notice from
any utility company or municipality of, and have no Actual Knowledge of, any
fact or condition which could result in the discontinuation of presently
available or otherwise necessary sewer, water, electric, gas, telephone or other
utilities or services for the Owned Real Property or Leased Property. To
Seller's Actual Knowledge, the Owned Real Property has adequate rights of access
to public ways and all water, sewer, sanitary sewer and storm drain facilities
and community services.
(i) FOREIGN INVESTMENTS. None of the Sellers is a "foreign person"
within the meaning of Section 1445(f) of the Code.
(j) NO COMMISSIONS. All brokerage commissions and other compensation
and fees incurred by Sellers and payable by reason of the Leases or the Owned
Real Property, have been paid in full or are reflected in the December Balance
Sheet, except for such commissions
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and other compensation related to options or extensions in the Real Property
Leases which are not yet exercised.
SECTION 5.10. EQUIPMENT AND MACHINERY. Schedule 5.10 sets forth a
complete and correct list and brief description of each item of Equipment and
Machinery having an original purchase cost or aggregate lease cost exceeding
$50,000. Except as set forth in SCHEDULE 5.10, the Companies have good title,
free and clear of all title defects, objections and Liens (other than Permitted
Liens), to the Equipment and Machinery reflected on the balance sheet contained
in SCHEDULE 5.6(d), except for sales and dispositions in the ordinary course of
business since the date of such balance sheet. None of the title defects,
objections or Liens (if any) listed in SCHEDULE 5.10 adversely affects the value
of any of the items of Equipment and Machinery or interferes in a material
respect with its use in the conduct of the Business. Except as set forth in
SCHEDULE 5.10, the Companies hold good and transferable leaseholds in all of the
Equipment and Machinery leased by it, in each case under valid and enforceable
leases. None of the Companies is in default with respect to any material item
of Equipment and Machinery purported to be leased by it, and no event has
occurred that constitutes or with due notice or lapse of time or both may
constitute a material default under any lease thereof. The Equipment and
Machinery is sufficient and adequate to carry on the Business as presently
conducted and all material items thereof are in good operating condition and
repair, ordinary wear and tear excepted.
SECTION 5.11. INTELLECTUAL PROPERTY.
(a) "INTELLECTUAL PROPERTY" shall mean all of the following that are
owned or used in the operations of the Business or relating to the Purchased
Property: (i) trademarks and service marks (registered or unregistered), trade
dress, trade names and other names and slogans embodying business or product
goodwill or indications of origin, all applications or registrations in any
jurisdiction pertaining to the foregoing and all goodwill associated therewith,
including without limitation, the tradenames COLE, COLOR PLUS and WESSEL
(hereinafter collectively the "TRADEMARKS"); (ii) patents, patentable
inventions, discoveries, improvements, ideas, know-how, formula methodology,
processes, technology and computer programs, software and databases (including
source code, object code, development documentation, programming tools,
drawings, specifications and data) and all applications or registrations in any
jurisdiction pertaining to the foregoing, including all reissues, continuations,
divisions, continuations-in-part, renewals or extensions thereof, including
without limitation any of the foregoing rights relating to any proprietary key
identification and duplication machines of any of the Sellers or any employee of
any of the Sellers (hereinafter collectively the "PATENTS"); (iii) trade
secrets, including confidential and other non-public information, and the right
in any jurisdiction to limit the use or disclosure thereof (hereinafter
collectively the "TRADE SECRETS"); (iv) copyrights in writings, designs, mask
works or other works, and registrations or applications for registration of
copyrights in any jurisdiction (hereinafter collectively the "COPYRIGHTS"); (v)
Internet Web sites, domain names and registrations or applications for
registration thereof (hereinafter collectively, the "WEB SITES"; (vi) licenses,
immunities, covenants not to sue and the like relating to any of the foregoing;
(vii) books and records describing or used in connection with any of the
foregoing (hereinafter collectively the "BOOKS"); and (viii) claims or causes
of action arising out of or
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related to infringement or misappropriation of any of the foregoing
(hereinafter collectively the "CLAIMS").
(b) SCHEDULE 5.11(b) sets forth a complete and accurate list of the
Intellectual Property, the jurisdictions in which the Intellectual Property has
been registered or patented or in which an application for such registration or
patent has been filed, and any licenses, sublicenses and other agreements in
which any of the Companies grants a license to any other Person to use the
Intellectual Property.
(c) The Companies are the sole and exclusive owners of all right,
title and interest in the Trademarks, Trade Secrets, Copyrights, Web Sites,
Books and Claims in the United States, and their rights thereon are free and
clear of all liens, claims and encumbrances (including, without limitation,
liens, claims and encumbrances by current or former employees of any of the
Sellers and independent contractors or consultants retained by any of the
Sellers in connection with the design or development of any of the Intellectual
Property). The Trademarks, Trade Secrets and Copyrights are valid, unexpired
and enforceable and all renewal fees and other maintenance fees which have
fallen due on or prior to the effective date of this Agreement have been paid.
The use of Trademarks, Trade Secrets, Copyrights and Web Sites in connection
with the Business does not infringe any rights of any Person in the United
States with respect to the Business as currently operated. The validity and
enforceability of the Intellectual property and the registration thereof has not
been impaired or otherwise affected adversely as a result of the consummation of
the transactions contemplated by this Agreement. No former or present
employees, officers or directors of the Sellers and independent contractors or
consultants retained by any of the Sellers hold any right, title or interest
directly or indirectly, in whole or in part, in or to any Intellectual Property.
(d) LICENSES. Except as disclosed on SCHEDULE 5.11(d), none of the
Sellers or any Affiliate of them has licensed to, or been granted by, any third
party any right to use or exploit any of the Intellectual Property in any
jurisdiction. All rights in any of the Intellectual Property granted to, and
granted by, third parties are or have been set forth in written and executed
contracts that, to the Actual Knowledge of Sellers have not been breached by
said third parties. SCHEDULE 5.11(d) sets forth each agreement, contract or
license under which the Companies have licensed, or been licensed, any rights in
any of the Intellectual Property to another Person (such agreements, contracts
or licenses and those referred to in clause (i) of Section 5.11(b) hereof, being
referred to collectively as the "LICENSES").
(e) CLAIMS. Except as set forth on SCHEDULE 5.11(d), no claims are
pending, or, to the Actual Knowledge of Sellers, threatened, against or by the
Companies by or against any Person with respect to the Companies' or the
Companies' licensees' use of any Intellectual Property or otherwise challenging
or questioning the validity or effectiveness of any such Intellectual Property
except for any such claims that individually, or in the aggregate, have not had,
and would not be reasonably expected to have, a Material Adverse Effect. Except
as set forth on SCHEDULE 5.11(d), no claims are pending, or, to the Actual
Knowledge of the Sellers, threatened, by or against the Companies or the
Companies licensees against or by any Person in which such Person alleges that
any activities or conduct of the Business infringes upon the
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intellectual property rights of any Person or that any product packaging
design infringes upon a proprietary packaging design of any Person, except
for any such claims that individually, or in the aggregate, have not had, and
would not be reasonably expected to have, a Material Adverse Effect.
SECTION 5.12. LICENSES, PERMITS AND GOVERNMENTAL APPROVALS. SCHEDULE
5.12 sets forth a true and complete list of all licenses, permits, franchises,
authorizations and approvals issued or granted to the Sellers with respect to
the Business by the Government, any state or local government, any foreign
national or local government, or any department, agency, board, commission,
bureau or instrumentality of any of the foregoing (the "PERMITS"), and all
pending applications therefor. Such list contains a summary description of each
such item and, where applicable, specifies the expiration date and the current
status thereof. Each Permit has been duly obtained, is valid and in full force
and effect, and is not subject to any pending or, to the Sellers' Actual
Knowledge, threatened administrative or judicial proceeding to revoke, cancel or
declare such Permit invalid in any respect. Except as set forth in SCHEDULE
5.12, no Permit will in any way be materially impaired, or terminate or lapse by
reason of, the transactions contemplated by the Transaction Documents.
SECTION 5.13. COMPLIANCE WITH LAW; LICENSES. Except as set forth in
SCHEDULE 5.13, and except for certain matters concerning Environmental Laws
(which are discussed in Section 5.22 hereof), the operations of the Business
have been conducted in all material respects in accordance with all applicable
laws, regulations, orders and other requirements of all courts and other
governmental or regulatory authorities having jurisdiction over any of the
Companies and their respective assets, properties and operations, including,
without limitation, those relating to health and safety. Except as set forth in
SCHEDULE 5.13, none of the Sellers has received written notice of and has no
Actual Knowledge of, any violation of any such law, regulation, order or other
legal requirement, and none of the Companies is in material default with respect
to any order, writ, judgment, award, injunction or decree of any federal, state
or local court or governmental or regulatory authority or arbitrator, domestic
or foreign, applicable to the Business.
SECTION 5.14. LITIGATION. Except as set forth in SCHEDULE 5.14,
there are no claims, actions, suits, proceedings, labor disputes or
investigations pending or, to the Actual Knowledge of the Sellers, threatened,
before any federal, state or local court or governmental or regulatory
authority, domestic or foreign, or before any arbitrator of any nature, brought
by or against any of the Companies or any of their respective officers,
directors, employees, agents or Affiliates involving, affecting or relating to
(i) the Business that have a reasonable likelihood of success and that, if
successful, would result in a liability of more than $50,000 or that seeks
injunctive relief or (ii) the transactions contemplated by the Transaction
Documents. SCHEDULE 5.14 sets forth a list and a summary description of all
such pending actions, suits, proceedings, disputes or investigations. Neither
the Business nor the Purchased Property is subject to any order, writ, judgment,
award, injunction or decree of any national, state or local court or
governmental or regulatory authority or arbitrator, domestic or foreign, that
directly affects the Business or the Purchased Property, or would interfere with
the transactions contemplated by the Transaction Documents.
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SECTION 5.15. CONTRACTS.
(a) Other than this Agreement or as described on SCHEDULE 5.15, none
of the Companies is a party to any written or oral:
(i) pension, profit sharing, stock option, employee stock purchase or
other plan or arrangement providing for deferred or other compensation
(other than any payroll practices and leave policies as described in the
Companies' employee handbooks) to employees of the Business or any other
employee benefit, welfare or stock plan or arrangement, or severance
agreement relating to such employees which is not listed on the SCHEDULE
5.17(a), or any contract or agreement with any labor union which is not
listed on SCHEDULE 5.21(a);
(ii) contract for the employment or engagement as an independent
contractor for the Business of any Person on a full-time, part-time,
consulting or other basis;
(iii) contract pursuant to which the Companies have advanced or
loaned funds or agreed to advance or loan funds, to any other Person in
relation to the Business;
(iv) contract or indenture relating to any indebtedness or the
mortgaging, pledging or otherwise placing a Lien on any of the Purchased
Property;
(v) contract pursuant to which the Companies are the lessor of, or
permit any third party (other than employees or independent sales
representatives) to hold or operate, any real or personal property (with a
value of $50,000 or more) owned by the Companies or of which the Companies
are a lessee;
(vi) contract or agreement with respect to services rendered or goods
sold or leased to or from others, other than any customer purchase order
accepted in the ordinary course of business and in accordance with the
Seller's past practice, but only if such customer purchase order (A)
requires delivery before the date that is six months after the Closing Date
and (B) involves a sale price of less than $50,000;
(vii) contract prohibiting the Companies from freely engaging in any
business anywhere in the world;
(viii) independent sales representative or distributorship agreement
with respect to the Business;
(ix) contract, whether or not in writing, with, to the Sellers'
Actual Knowledge, (A) a customer that has purchased products or services
with a value of $500,000 or more during the most recent fiscal year, which
calls for reductions in prices or increases in allowances in the future,
independent of changes in outside circumstances, (B) customers of the
business generally, which calls for reductions in prices or increases in
allowances in the future, independent of changes in outside circumstances,
or (C) a supplier that has supplied products or services with a value of
$500,000 or more during the most recent
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fiscal year, which calls for increases in prices or decreases in allowances
in the future, independent of changes in outside circumstances; PROVIDED,
HOWEVER, that this Section 5.15(a)(ix) specifically does not apply to
escalators already agreed to or which are based on changes in raw material
costs or similar factors; or
(x) any other contract which is material to the Business or involves
a consideration in excess of $50,000.
(b) With respect to each contract that is listed on SCHEDULE 5.15
(the "MATERIAL CONTRACTS"), that is a lease of personal property, the Companies
hold a valid and existing leasehold interest under such lease for the term set
forth with respect to such lease on SCHEDULE 5.15.
(c) Each Material Contract is valid, binding and enforceable against
the Companies party thereto, and to the Actual Knowledge of the Sellers, the
other parties thereto, in accordance with its terms, and in full force and
effect on the date hereof. The Companies have performed all material
obligations required to be performed by them to date under, and are not in
material default or delinquent in performance, status or any other respect
(claimed or actual) in connection with, any Material Contract, and no event has
occurred which, with due notice or lapse of time or both, would constitute such
a default. To the Actual Knowledge of the Sellers, no other party to any
Material Contract is in material default in respect thereof, and no event has
occurred which, with due notice or lapse of time or both, would constitute such
a default. The Sellers have delivered to the Buyer or its representatives true
and complete originals or copies of all the Material Contracts.
SECTION 5.16. RECEIVABLES. All customer accounts receivable of the
Business, whether reflected on the December Balance Sheet or subsequently
created, have arisen from bona fide transactions in the ordinary course of
business, subject to customary reserves therefor. The Accounts Receivable of
the Business are reflected on the Financial Statements and in the books and
records of the Companies in accordance with GAAP applied on a basis consistent
with past practice.
SECTION 5.17. EMPLOYEE PLANS.
(a) SCHEDULE 5.17(a) lists all employee benefit plans, including
Multiemployer Plans, whether or not covered by ERISA and whether or not
maintained pursuant to collective bargaining agreements, and any executive
compensation arrangement, change in control agreement, vacation pay plan and
severance pay plan or arrangement, maintained or contributed to by any Seller
for the benefit of any current or former employee who performed services for the
Business (the "PLANS"). The Sellers have delivered to the Buyer complete and
accurate copies of each of the Plans or a summary plan description thereof. The
Buyer assumes no liability or obligation with respect to, and receives no right
or interest in, any of such Plans.
(b) Except as set forth on SCHEDULE 5.17(b), neither the Company nor
any member of the Company's "controlled group" (within the meaning of Section
4971(e)(2)(B) of the Code) that includes the Company (hereinafter referred to as
an "ERISA AFFILIATE") has, with
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respect to any "employee benefit plan," as that term is defined in Section
3(2) of ERISA, ever within the six (6) years preceding the Closing Date
maintained or contributed to any such Plan that is subject to Section 412 of
the Code or Title IV of ERISA. Neither the Company nor any ERISA Affiliate
which was the employer of any Listed Employee has maintained any "employee
benefit plan," as that term is defined in Section 3(2) of ERISA, which
provides medical benefits after termination of employment, other than as may
be required under Part 6 of Title I of ERISA or Section 4980B of the Code.
SECTION 5.18. CUSTOMERS AND SUPPLIERS. SCHEDULE 5.18 sets forth a
complete and correct list of (a) all customers whose purchases exceeded two
percent (2%) of the aggregate net sales of the Business during fiscal year 1996,
and (b) the suppliers by dollar volume of the Business and the aggregate dollar
volume of purchases by the Business from such suppliers for such periods.
Except as set forth in SCHEDULE 5.18, as of the date of this Agreement no such
customers and no material suppliers have terminated or adversely changed
significantly, or to the Actual Knowledge of the Sellers, informed or given
notice of its intent to terminate or adversely change significantly its
relationship with the Business.
SECTION 5.19. INSURANCE. None of the Sellers is in material default
under any provisions of any policy of insurance insuring the Business and the
Purchased Property nor has received notice of cancellation of any such
insurance. There is no material claim pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds.
SECTION 5.20. TRANSACTIONS WITH DIRECTORS, OFFICERS AND AFFILIATES.
Except as set forth on SCHEDULE 5.20, (a) since January 1, 1997, other than
transactions upon arms-length terms and conditions, there have been no
transactions between any of the Companies and any director, officer, stockholder
or other Affiliate of any of the Companies, (b) during the past three years none
of the officers or directors of any of the Companies, or any spouse or relative
of any of such persons, has been a director or officer of, or has had any direct
or indirect interest in, any firm, corporation, association or business
enterprise which during such period has been a supplier, customer or sales agent
of any of the Companies or has competed with or been engaged in any business of
the kind being conducted by the Business, other than upon arms-length terms and
conditions.
SECTION 5.21. LABOR MATTERS.
(a) Except as set forth in SCHEDULE 5.21(a): (i) none of the
Companies is a party to any outstanding employment or consulting agreements or
change in control or other contracts with officers or employees of the Business
that are not terminable at will without payment of compensation beyond what is
owed for services performed through the date of termination, or that require the
payment of any bonus or commission; (ii) none of the Companies is a party to any
agreement, policy or practice that requires it to pay termination or severance
pay to salaried, non-exempt or hourly employees of the Business (other than as
required by law); (iii) none of the Companies is a party to any collective
bargaining agreement or other labor union contract applicable to employees of
the Business nor, within the last three years have there been
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any organizational activities with respect to the employees of the Business
not covered by a collective bargaining agreement nor does any of the Sellers
have Actual Knowledge of any pending or threatened activities or proceedings
of any labor union to organize any such employees. The Sellers have
furnished to the Buyer complete and correct copies of all such agreements,
collective bargaining agreements, ancillary memoranda of understanding or
other written materials relating to the construction or interpretation of any
collective bargaining agreement, personnel manuals, employee handbooks and
all agreements set forth on SCHEDULE 5.21(a) ("EMPLOYMENT AND LABOR
AGREEMENTS"). None of the Companies has breached or otherwise failed to
comply with any provisions of any Employment or Labor Agreement, and there
are no grievances outstanding thereunder. The prior negotiating history
regarding Article 13, Section 2 of the CBA (as defined in Section 9.4) does
not supersede the Company's rights under such section.
(b) Except as set forth in SCHEDULE 5.21(b): (i) the Companies are
in material compliance with all applicable laws relating to employment and
employment practices, wages, hours, and terms and conditions of employment; (ii)
there is no unfair labor practice charge or complaint pending before the
National Labor Relations Board ("NLRB") or, to Sellers' Actual Knowledge,
threatened, against any Seller, brought by or on behalf of any of the Sellers'
current or former employees or any current or former collective bargaining
representative of any current or former employees of any Seller; (iii) there is
no labor strike, slowdown, work stoppage or lockout, pending or, to the Actual
Knowledge of the Sellers, threatened against or affecting the Business, and none
of the Companies has experienced any strike, slow down or work stoppage, lockout
or other collective labor action since December 1, 1994; (iv) there is no
representation claim or petition pending before the NLRB or any similar foreign
agency and no question concerning representation exists relating to the
employees of the Business; (v) there are no charges with respect to or relating
to any of the Companies or the Business pending before the Equal Employment
Opportunity Commission or any state, local or foreign agency responsible for the
prevention of unlawful employment practices and (vi) none of the Sellers has
received any notice from any federal, state, local or foreign agency responsible
for the enforcement of labor or employment laws of an intention to conduct an
investigation of any of the Companies and no such investigation is in progress.
SECTION 5.22. ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE
5.22, or in the Phase I environmental assessment referred to in Section 8.7, the
Companies have obtained, maintained in effect and are in compliance with all
licenses, permits and other authorizations required under all applicable laws,
regulations and other requirements of governmental or regulatory authorities
relating to pollution or to the protection of the environment ("ENVIRONMENTAL
LAWS") and are in compliance with all Environmental Laws. None of the Companies
has performed or suffered any act which could give rise to, or has otherwise
incurred, material liability to any Person (governmental or not) under the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq. or any other Environmental Laws, nor have the Sellers
received notice of any such liability or any claim therefor or submitted notice
pursuant to Section 103 of such Act or any analogous state or local statute,
rule or regulation to any governmental agency with respect to any of its assets.
No hazardous substance, hazardous waste, contaminant, pollutant or toxic
substance (as
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such terms are defined in any applicable Environmental Law, "HAZARDOUS
MATERIALS") has been released, placed, dumped or otherwise come to be located
on, at, beneath or near any of the Purchased Property or any surface waters
or groundwaters thereon or thereunder in material violation of any
Environmental Law, or which could result in material liability pursuant to
any Environmental Law. Except as disclosed on SCHEDULE 5.22 or in the Phase
I environmental assessment referred to Section 8.7, none of the Companies own
or operate, and have never owned or operated, an underground storage tank
containing a regulated substance, as such term is defined in Subchapter IX of
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6991 et seq.,
or a surface impoundment, lagoon, landfill containing a Hazardous Material,
electrical equipment containing PCBs in excess of 50 parts per million, or
asbestos containing materials. This Section 5.22 contains the sole
representations and warranties of the Sellers with respect to Environmental
Laws.
SECTION 5.23. OWNERSHIP OF PURCHASED PROPERTY BY VISTA AND ITS
AFFILIATES. As of the date hereof, none of Vista nor any of its Affiliates
(other than the Companies) owns or has any rights to use any of the assets,
properties, Intellectual Property, rights and business, tangible and intangible,
of every type and description, wherever located, used or employed in connection
with the Business whether or not such assets, properties, Intellectual Property
or rights and business, tangible and intangible are set forth on the balance
sheet contained in SCHEDULE 5.6(d).
SECTION 5.24. SURVIVAL. Each of the representations and warranties
set forth in this Article 5 shall be deemed represented and made by the Sellers
at the Closing as if made at such time and shall survive the Closing
notwithstanding any investigation on the part of the Buyer for a period
terminating on the second (2nd) anniversary the Closing Date, PROVIDED, HOWEVER,
that the representations and warranties contained in (i) Section 5.8 and Section
10 shall survive until the expiration of the statute of limitations with respect
to the matters addressed by such Sections and (ii) Section 5.22 shall survive
until the seventh (7th) anniversary of the Closing Date.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
hereby represents and warrants to the Sellers as follows:
SECTION 6.1. CORPORATE ORGANIZATION. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to own its
properties and assets and to conduct its businesses as now conducted.
SECTION 6.2. QUALIFICATION TO DO BUSINESS. The Buyer is duly
qualified to do business as a foreign corporation and is in good standing in
every jurisdiction in which the character of the properties owned or leased by
it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified would not have a material
adverse affect on the business, operations, assets, properties, condition
(financial or otherwise) or prospects of the Buyer.
SECTION 6.3. AUTHORIZATION AND VALIDITY OF AGREEMENT. The Buyer has
all requisite power and authority to enter into the Transaction Documents and to
carry out its
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obligations thereunder. The execution and delivery of the Transaction
Documents and the performance of the Buyer's obligations thereunder have been
duly authorized by all necessary corporate action by the Buyer, and no other
proceedings on the part of the Buyer are necessary to authorize such
execution, delivery and performance. Each of the Transaction Documents has
been duly executed by the Buyer and constitutes its valid and binding
obligation, enforceable against it in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, moratorium or similar
laws of general application relating to or affecting creditors' rights
generally and except for the limitations imposed by general principles of
equity.
SECTION 6.4. NO CONFLICT OR VIOLATION. The execution, delivery and
performance by the Buyer of the Transaction Documents do not and will not
violate or conflict with any provision of the Certificate of Incorporation and
the By-laws of the Buyer and do not and will not violate any provision of law,
or any order, judgment or decree of any court or other governmental or
regulatory authority binding on the Buyer, nor violate nor will result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any contract, lease, loan agreement, mortgage, security agreement, trust
indenture or other agreement or instrument material to the Buyer.
SECTION 6.5. APPROVALS AND CONSENTS. Except (i) as set forth on
SCHEDULE 6.5, (the "BUYER REQUIRED CONSENTS") (ii) as may be required to
transfer any Permits, and (iii) such consents, approvals and filings, the
failure to obtain or make would not, individually or in the aggregate, have a
material adverse effect on the ability of the Buyer to consummate the
transactions contemplated hereby, the execution, delivery and performance of the
Transaction Documents on behalf of the Buyer do not require the consent or
approval of, or filing with, any government, governmental body or agency or
other entity or Person.
SECTION 6.6. FINANCING. On or prior to the Closing Date, the Buyer
shall have available sufficient cash to pay the Cash Purchase Price to the
Sellers.
SECTION 7. COVENANTS OF THE SELLERS.
The Sellers covenant as follows:
SECTION 7.1. CONDUCT OF BUSINESS BEFORE THE CLOSING DATE.
(a) Without the prior written consent of the Buyer (which in
connection with clause (ii) below shall not be unreasonably withheld), between
the date hereof and the Closing Date, the Sellers shall conduct the Business in
the ordinary course and shall not, except as required or expressly permitted
pursuant to the terms hereof:
(i) make any material change in the conduct of the Business or enter
into any transaction relating to the Business, in each case, other than in
the ordinary course of business consistent with past practices;
(ii) make any sale, assignment, transfer, abandonment or other
conveyance of all of the Purchased Property or any material part thereof,
except (A) transactions pursuant to
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existing contracts set forth in the Schedules hereto or transactions that
involve the payment to the owner of such portion of the Purchased Property
of less than $10,000 and (B) dispositions of inventory or of worn-out or
obsolete equipment for fair or reasonable value in the ordinary course of
business consistent with past practice;
(iii) subject the Purchased Property, or any material part thereof,
to any Lien or suffer such to exist (other than Permitted Liens and Liens
relating to Fleet Facility);
(iv) acquire any assets, raw materials or properties, or enter into
any other transaction, other than in the ordinary course of business
consistent with past practice;
(v) enter into any new (or amend any existing) Plan or employment,
severance or consulting agreement, grant any general increase in the
compensation of officers or employees (including any such increase pursuant
to any Plan or grant any increase in the compensation payable or to become
payable to any employee, except in accordance with pre-existing contractual
provisions or consistent with past practice;
(vi) commit to make, for any 30-day period, any capital expenditures
in excess of $110,000 in the aggregate for such 30-day period; PROVIDED,
that, consistent with the terms of Section 7.3 as such Section relates to
the sharing of competitive information, the Sellers shall consult with the
Buyer in good faith in connection with the planning for capital
expenditures;
(vii) pay, lend or advance any amount to, or sell, transfer or lease
any properties or assets to, or enter into any agreement or arrangement
with, any of their respective Affiliates (other than as set forth on
SCHEDULE 7.1(a) hereto to effectuate the separation of the business of the
Warren Pet division of the Company from the Company consistent with the
financial presentation shown on SCHEDULE 5.6(b) and SCHEDULE 5.6(c)
hereof);
(viii) make any change in any method of accounting or accounting
principle, method, estimate or practice except for any such change required
by reason of a concurrent change in GAAP or write down the value of any
inventory or write off as uncollectible any accounts receivable except in
the ordinary course of business consistent with past practice;
(ix) settle, release or forgive any material claim or litigation or
waive any right relating to the Purchased Property or Assumed Liabilities,
or that would otherwise bind the Buyer;
(x) make, enter into, modify, amend in any material respect or
terminate any Contract or expenditure with respect to the Business, where
such Contract, bid or expenditure is for a Contract entailing payments in
excess of $50,000 (excluding renewal of existing contracts on similar
terms; PROVIDED, that Sellers shall consult with the Buyer in good faith in
connection with regard to such renewal); and
(xi) commit to do any of the foregoing.
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SECTION 7.2. CONSENTS AND APPROVALS.
(a) The Sellers shall use their best efforts to file as soon as
practicable a notification under the HSR Act in connection with the transactions
contemplated by the Transaction Documents, and to respond as promptly as
practicable to any inquiries received from the Federal Trade Commission and the
Antitrust Division of the Department of Justice for additional information or
documentation and to respond as promptly as practicable to all inquiries and
requests received from any State Attorney General or other governmental
authority in connection with antitrust matters.
(b) The Sellers (i) shall, at their cost and expense, use their
reasonable best efforts to obtain the Required Consents; PROVIDED, that the
Sellers shall not be required to pay any amounts to any third party to obtain
any Required Consent, and (ii) shall diligently assist and cooperate with the
Buyer in preparing and filing all documents (including, without limitation, all
filings under the HSR Act) required to be submitted by the Buyer to any
governmental or regulatory authority, domestic or foreign, in connection with
such transactions and in obtaining any governmental consents, waivers,
authorizations or approvals which may be required to be obtained by the Buyer in
connection with such transactions (which assistance and cooperation shall
include, without limitation, timely furnishing to the Buyer all information
concerning the Sellers that counsel to the Buyer determines is required to be
included in such documents or would be helpful in obtaining any such required
consent, waiver, authorization or approval).
SECTION 7.3. ACCESS TO PROPERTIES AND RECORDS. The Sellers shall
afford to the Buyer, and to the accountants, counsel and representatives of the
Buyer, reasonable access upon reasonable advance notice during normal business
hours throughout the period prior to the Closing Date (or the earlier
termination of this Agreement pursuant to Section 14 hereof) to all properties,
books, contracts, commitments, Listed Employees and records of the Sellers
relating to the Business and any Listed Employee and, during such period, shall
furnish promptly to the Buyer all other information concerning the Business, its
properties and its personnel as the Buyer may reasonably request; PROVIDED that
no investigation or receipt of information pursuant to this Section 7.3 shall
qualify any representation or warranty of the Sellers or the conditions to the
obligations of the Buyer, and PROVIDED further, that the Buyer's ability to
receive information pursuant to this Section 7.3 shall not include the ability
to review information that in the Sellers' good faith determination relates to
issues of competition between the Sellers and the Buyer. The Sellers shall also
afford the Buyer reasonable access upon reasonable advance notice during normal
business hours to the Business, all operations of the Business and to all
Purchased Property throughout the period prior to the Closing Date; PROVIDED,
that the Sellers shall not afford to the Buyer access to the operations of the
Business and the Purchased Property that in the Sellers' good faith
determination relate to areas of competition between the Sellers and the Buyer.
The Sellers shall allow the Buyer, and the accountants, counsel and
representatives of the Buyer, reasonable access to the internal Company
accounting work papers and shall request the Sellers' independent accountants to
provide to the Buyer and the accountants, counsel and representatives of the
Buyer such independent accountants' work papers, all upon reasonable advance
notice during normal business hours throughout the period prior to the Closing
Date (and will provide any customary indemnification required by such
accountants). The Buyer shall
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forward all requests for information and access pursuant to this Section 7.3
(whether oral or written) to Ken Fristad or Robert E. Altenbach; such persons
shall be responsible for coordinating the Buyer's receipt of, or access to,
such information.
SECTION 7.4. NEGOTIATIONS. From and after the date hereof, neither
the Sellers, any Affiliate of the Sellers, nor any of their respective officers
or directors nor anyone acting on behalf of the Sellers or such persons shall,
directly or indirectly, encourage, solicit, engage in discussions or
negotiations with, or provide any information to, any Person, firm, or other
entity or group (other than the Buyer or its representatives) concerning any
merger, sale of substantial assets, purchase or sale of shares of capital stock
or similar transaction involving the Sellers, the Business or any other
transaction inconsistent with the transactions contemplated hereby.
SECTION 7.5. FURTHER ASSURANCES. Upon the request of the Buyer at any
time after the Closing Date, the Sellers shall forthwith execute and deliver
such further instruments of assignment, transfer, conveyance, endorsement,
direction or authorization and other documents as the Buyer or its counsel may
reasonably request to perfect title of the Buyer and its successors and assigns
to the Purchased Property or otherwise to effectuate the purposes of the
Transaction Documents.
SECTION 7.6. BEST EFFORTS. Upon the terms and subject to the
conditions of this Agreement, the Sellers will use their reasonable best efforts
to take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable consistent with applicable law to
consummate and make effective in the most expeditious manner practicable the
transactions contemplated hereby.
SECTION 7.7. COVENANT NOT TO COMPETE.
(a) The Sellers acknowledges that the agreements and covenants
contained in this Section 7.7 are essential to protect the value of the Business
being acquired by the Buyer. Therefore, the Sellers agree that for the period
commencing on the Closing Date and ending on the fifth (5th) anniversary of the
Closing Date (such period is hereinafter referred to as the "RESTRICTED
PERIOD"), the Sellers shall not anywhere in the United States and Canada
participate or engage, directly or indirectly, for themselves or on behalf of or
in conjunction with any Person, whether as an employee, agent, officer,
consultant, director, shareholder, partner, joint venturer, investor or
otherwise, in the business of the Business; PROVIDED, HOWEVER, that the
foregoing shall not prohibit the ownership by the Sellers of equity securities
of a public company in an amount not to exceed 2% of the issued and outstanding
shares of such company.
(b) The Sellers agree that a monetary remedy for a breach of the
agreement set forth in Section 7.7(a) hereof will be inadequate and
impracticable and further agree that such a breach would cause the Buyer
irreparable harm, and that the Buyer shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damages. In
the event of such a breach, the Sellers agree that the Buyer shall be entitled
to such injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions as a court of competent jurisdiction shall
determine.
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(c) If any provision of this Section 7.7 is invalid in part, it shall
be curtailed, as to time, location or scope, to the minimum extent required for
its validity under the laws of the United States and shall be binding and
enforceable with respect to the Sellers as so curtailed.
SECTION 7.8. NON-SOLICITATION OF EMPLOYEES. The Sellers agree, for
the Restricted Period, not to make, offer, solicit or induce to enter into, any
written or oral arrangement, agreement or understanding regarding employment or
retention as a consultant with any person who was, on the date hereof, a
full-time employee of the Business, and in each case to cause its Affiliates not
to engage in any such action, without the written consent of the Buyer.
SECTION 7.9. NOTICE TO THE BUYER. Through the Closing Date, the
Sellers shall promptly give the Buyer written notice with particularity upon
having Actual Knowledge (a) of any matter that may constitute a breach of any
representation, warranty, agreement or covenant contained in this Agreement, or
(b) that any customer listed on SCHEDULE 5.18 or any material supplier has
informed or given notice of its intent to terminate or adversely change
significantly its relationship with the Business; PROVIDED, that the notice
required pursuant to this Section 7.9(b) shall not require the disclosure of
competitive information.
SECTION 7.10. BULK SALES COMPLIANCE. The Buyer hereby waives
compliance by the Sellers with any applicable laws relating to bulk transfers in
connection with the transactions contemplated hereby. The Sellers shall
indemnify the Buyer with respect to any failure to comply with such bulk
transfer laws.
SECTION 7.11. ASSIGNMENT OF CONTRACTS AND WARRANTIES. At the Closing
and effective as of the Closing Date, the Sellers shall assign to the Buyer all
their rights under the Contracts. Notwithstanding the foregoing, no Contract
shall be assigned contrary to law or the terms of such Contract and, with
respect to Contracts that cannot be assigned to the Buyer at the Closing Date,
the performance obligations of the Companies, as the case may be, thereunder
shall, unless not permitted by such Contract, be deemed to be subleased or
subcontracted to the Buyer until such Contract has been assigned. Sellers shall
(i) use their commercially reasonable efforts to obtain all necessary consents,
(ii) cooperate with the Buyer in any arrangement designed to provide to the
Buyer the benefits (including the exercise of rights) under any such Contracts,
including enforcement for the benefit of the Buyer (and at the Buyer's expense)
of any and all rights of Sellers against a third party thereto arising out of
the breach or cancellation by such third party or otherwise, (iii) hold all
monies paid thereunder in trust for the account of the Buyer and (iv) remit all
such money without set-off of any kind whatsoever to the Buyer as promptly as
possible.
Section 7.12. SURVEYS. At least ten (10) days prior to Closing, the
Buyer shall have received an as-built survey or surveys (the "SURVEYS") of all
of the Owned Real Property (and buildings and improvements thereon), prepared by
a surveyor, engineer or surveying or engineering firm selected by the Buyer and
licensed in the state or states in which the surveyed property is located in
accordance with the Minimum Standard Detail Requirements for ALTA/ASCM Land
Title Surveys adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1992 which shall be certified to the Title
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Insurance Company, the Buyers, any mortgagee of the Buyer and such other parties
as the Buyer may designate, (which certification shall be in the form previously
delivered to Sellers by Buyer's counsel or shall otherwise be in form reasonably
satisfactory to the Buyer and any mortgagee of the Buyer) and sufficient to
induce the Title Insurance Company to issue a final title policy pursuant to the
Title Commitment with respect to the Owned Real Property, and which Surveys
shall show that (i) all facilities used and owned by the Sellers in the Business
as now conducted at that location are located within the Owned Real Property
described in the Title Commitment and (ii) all public utilities necessary or
convenient to the full use, occupancy, disposition and enjoyment of the Owned
Real Property are located in the public right-of-way abutting the Owned Real
Property and all such utilities are connected so as to serve the Owned Real
Property without passing over other property or are within easements acceptable
to Buyer.
Section 7.13. TITLE AFFIDAVITS. The Buyer and the Sellers shall each
execute and deliver to the Title Insurance Company any and all title affidavits
and indemnities customarily delivered by a purchaser or seller, as the case may
reasonably be, required by the Title Insurance Company to issue, at the Buyer's
cost and expense, a title insurance policy or title insurance policies in form
and substance satisfactory to Buyer, together with any endorsements or
affirmative insurance required by Buyer, for all Owned Real Property.
Section 7.14. CHANGE OF NAME. As soon as practicable after the
Closing Date, the Sellers shall take all action necessary to change the
corporation name of American Consumer Products, Inc. and PMI, Inc. to a name
that is not (and that is not confusingly similar to) American Consumer Products,
Inc. and PMI, Inc., it being the intent of the parties hereto that from and
after the Closing Date, the Buyer will have the sole and exclusive right as
against the Sellers and all other Persons to conduct business under such names
and that the Buyer may commence doing so at time of the Closing.
Section 7.15. REVIEW OF CONTRACTS. As soon as practicable after the
date of this Agreement and prior to the Closing Date, the Sellers and the Buyer
shall review all Contracts listed on SCHEDULE 5.15 that relate to products or
services that are used in the Sellers' operations other than the Business to
allocate between the Buyer and the Sellers, in good faith and in a manner
consistent with past practice and the income statements included in the
Financial Statements, the liabilities associated with such Contract based upon
the usage of such Contract in the Business and thereby identify the benefits and
liabilities that shall be deemed to be Assumed Liabilities under this Agreement.
The Sellers and the Buyer shall thereafter make any necessary amendment or
modification to this Agreement or the Schedules hereto, pursuant to the terms of
Section 15.8 hereof, to reflect such allocation.
SECTION 8. COVENANTS OF THE BUYER.
SECTION 8.1. ACTIONS BEFORE CLOSING DATE. The Buyer shall use its
best efforts to file as soon as practicable a notification under the HSR Act in
connection with the transactions contemplated by the Transaction Documents, and
to respond as promptly as practicable to any inquiries received from the Federal
Trade Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
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practicable to all inquiries and requests received from any State Attorney
General or other governmental authority in connection with antitrust matters.
The Buyer shall use its best efforts to perform and satisfy all conditions to
Closing to be performed or satisfied by the Buyer under this Agreement as soon
as possible, but in no event later than the Closing Date.
SECTION 8.2. CONSENTS AND APPROVALS. The Buyer shall use its
reasonable best efforts to obtain all Buyer Required Consents; PROVIDED, that
the Buyer shall not be required to pay any amounts to any third party to obtain
any Buyer Required Consent.
SECTION 8.3. BEST EFFORTS. Upon the terms and subject to the
conditions of this Agreement, the Buyer will use its reasonable best efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable consistent with applicable law to
consummate and make effective in the most expeditious manner practicable the
transactions contemplated hereby.
SECTION 8.4. COVENANT NOT TO COMPETE.
(a) The Buyer acknowledges that the Purchased Property includes
certain assets (for example, certain business records and other proprietary
information) that relate in part to the businesses of the Companies other than
the Business, and that the agreements and covenants contained in this Section
8.4 are essential to protect the value of the portions of the Sellers business
(including the Warren Pet division of the Company) that are not being acquired
by the Buyer. Therefore, the Buyer agrees that for the Restricted Period, the
Buyer and its Affiliates (other than Warburg, Pincus Investors, L.P. and its
portfolio companies), shall not anywhere in the United States or Canada
participate or engage, directly or indirectly, for themselves or on behalf of or
in conjunction with any Person, whether as an employee, agent, officer,
consultant, director, shareholder, partner, joint venturer, investor or
otherwise, in the business of the manufacture and distribution of chains, leads,
collars, tie-outs, dishes, rawhide products and pet toys conducted by the Warren
Pet division of the Company as of the Closing Date and the manufacture and
distribution of gloves, balloons, industrial footwear, rainwear and industrial
protection equipment conducted by Boss Manufacturing Company conducted as of the
Closing Date; PROVIDED, HOWEVER, that the foregoing shall not prohibit the
ownership by the Buyer of equity securities of a public company in an amount not
to exceed 2% of the issued and outstanding shares of such company and shall not
prohibit the Buyer's current business as it relates to pet tags and pet
tags-related cross-promotional or marketing activities with pet care
manufacturers and distributors.
(b) The Buyer agrees that a monetary remedy for a breach of the
agreement set forth in Section 8.4(a) hereof will be inadequate and
impracticable and further agree that such a breach would cause the Companies
irreparable harm, and that the Companies shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damages. In
the event of such a breach, the Buyer agrees that the Companies shall be
entitled to such injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions as a court of competent
jurisdiction shall determine.
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(c) If any provision of this Section 8.4 is invalid in part, it shall
be curtailed, as to time, location or scope, to the minimum extent required for
its validity under the laws of the United States and shall be binding and
enforceable with respect to the Buyer as so curtailed.
SECTION 8.5. NON-SOLICITATION OF EMPLOYEES. The Buyer agrees, for
the Restricted Period, not to make, offer, solicit or induce to enter into, any
written or oral arrangement, agreement or understanding regarding employment or
retention as a consultant with any person who was, on the date hereof, a
full-time employee of Boss Manufacturing Company or the Warren Pet division of
the Company, other than Transferred Employees, and in each case to cause its
Affiliates not to engage in any such action, without the written consent of the
Sellers.
Section 8.6. NOTICE OF BREACH. Through the Closing Date, the Buyer
shall promptly give the Sellers written notice with particularity upon having
Actual Knowledge of any matter that may constitute a breach of any
representation, warranty, covenant or agreement contained in this Agreement.
SECTION 8.7. ENVIRONMENTAL STUDIES. Prior to the date hereof, the
Buyer has completed, at its expense, a Phase I environmental assessment of the
Owned Real Property. As a result of the recommendation of consultant performing
such Phase I environmental assessment, within thirty (30) calendar days after
the Closing Date, or at such other time as reasonably agreed to by the Sellers
and the Buyer, the Buyer shall direct the consultant, at the Buyer's cost and
expense, to perform a Phase II environmental assessment, which may include,
without limitation, sampling and analysis of soil, water and air at the subject
properties, but shall be limited in scope reasonably necessary to determine
whether any liability exists arising from the conditions as to which
recommendations for further study were made in the Phase I environmental
assessment. Prior to the submission of a written report by the consultant, such
consultant shall consult with the Buyer and the Sellers regarding the results of
the Phase II environmental assessment. Upon completion of the Phase II
environmental assessment, the consultant shall provide the Buyer with a written
report which estimates the cost of remediating, mitigating or curing any adverse
conditions or violations of Environmental Laws discovered ("ENVIRONMENTAL
COSTS"). Within thirty (30) days after the delivery of the written report that
describes the result of the Phase II environmental assessment, the Sellers shall
have the option to repurchase the Owned Real Property at a purchase price of
$4,000,000; PROVIDED, HOWEVER, that the Sellers shall, at the time of such
repurchase, enter into a triple net lease with the Buyer of the Owned Real
Property consistent with historical practices as reflected in the income
statement portion of the Financial Statements; and PROVIDED FURTHER, that the
Sellers shall indemnify the Buyer against any and all liability arising under
Environmental Law from its ownership of the Owned Real Property.
SECTION 8.8. CONFIDENTIAL INFORMATION. The Buyer will not, pursuant
to its rights under SECTION 7.3 hereof, request any information that in the
Buyer's good faith determination relates to issues of competition between the
Buyer and the Sellers.
SECTION 8.9. CONTACT WITH CERTAIN THIRD PARTIES. Through the Closing
Date, neither the Buyer nor any of its Affiliates shall, without the prior
written consent of the Sellers, initiate or respond to any communication or
inquiry from the Union or
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any members or representatives of the Union; PROVIDED, that the Buyer is
permitted to respond to a request by the Union to confirm that the Buyer has
agreed to be bound by the terms of the CBA as provided in Article XXI of the
CBA.
SECTION 9. EMPLOYEES AND EMPLOYEE PLANS.
SECTION 9.1. OFFERS OF EMPLOYMENT.
(a) No less than 30 days prior to the Closing Date, the Sellers
shall, upon consultation with the Buyer, provide the Buyer with a complete and
accurate list of all individuals whose services are performed primarily for the
Business as of the date hereof and whose terms and conditions of employment are
not covered by a collective bargaining agreement ("LISTED EMPLOYEES"), along
with their current salary or wage rate, job title, date of hire and work
location. The Buyer shall offer to hire, effective as of the Closing Date, each
Listed Employee who is actively employed by Sellers on the Closing Date. All
employment offers required to be made by the Buyer shall be made, subject to
Closing, not less than five Business Days prior to the Closing Date and shall be
at a salary not less than that provided by the Sellers to such Employee as of
the date hereto. Unless a Listed Employee declines to accept such offer, each
such Listed Employee shall be deemed to have accepted such offer of employment,
shall be referred to herein as a "TRANSFERRED EMPLOYEE" and shall become an
employee of the Buyer as of the Closing Date. The Sellers acknowledge and agree
that, commencing with the signing of this Agreement, neither the Sellers nor any
of their Affiliates, representatives or agents will make any employment or
reassignment offers to any Listed Employee until the Buyer has had an
opportunity to hire all such Listed Employees to whom an offer of employment is
required.
(b) TERMINATION OF NON-LISTED EMPLOYEES. The Sellers shall retain
liabilities and obligations with respect to severance or other compensation or
benefit payments (including, without limitation, unemployment insurance
premiums, severance liabilities and liabilities under the Workers Adjustment and
Retraining Notification Act ("WARN")) and all related costs arising out of the
termination of employees of any Seller who are not Listed Employees or who
decline the Buyer's offer of employment.
SECTION 9.2. EMPLOYEE BENEFITS.
(a) SEVERANCE. The Buyer agrees to pay any severance and related
costs arising under any employee benefit plan, policy or arrangement maintained
by the Buyer, which costs arise as a result of the termination of any
Transferred Employee, and, in the case of Transferred Employees terminated
within one year of the Closing Date, the amount of severance due under the
applicable severance plan of the Buyer shall not be less than the amount that
would have been due upon termination of employment from the Sellers, had such
termination met the conditions for entitlement to benefits under the Buyer's
severance plan. A copy of the Companies' severance policy is attached as
SCHEDULE 9.2, and, if no formal written policy exists, the Buyer's obligation
under this SECTION 9.2 shall be subject to verification of the severance
benefits paid to the Companies' employees who terminated within the two-year
period prior to the Closing Date. In no event shall the Buyer have any
obligation to pay severance benefits to any Transferred Employee whose
employment with the Buyer is terminated, if such employee
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was not covered by any severance plan, policy or arrangement maintained by
the Sellers prior to the date hereof.
(b) SICK LEAVE; VACATION. Except as otherwise provided in the
following sentence, with respect to any accrued but unused vacation time and
sick leave to which any Transferred Employee is entitled pursuant to the
vacation and sick leave policy applicable to such employee immediately prior to
the Closing Date, the Buyer shall allow such employee to utilize such accrued
vacation time and sick leave; PROVIDED, HOWEVER, that if the Buyer deems it
necessary to disallow such employee from taking such accrued time off or the
employment of such employee terminates for any reason prior to the time such
time off can be utilized, the Buyer shall be liable for and pay in cash to each
such employee an amount equal to salary or wages in respect of such accrued time
off; and FURTHER PROVIDED that the Buyer shall in all events pay or provide to
the Transferred Employees their accrued but unused vacation time not later than
the date prescribed by applicable law. The Buyer shall have no liability
pursuant to the preceding sentence except to the extent that accrued but unused
vacation and sick leave (i) was reflected on the December Balance Sheet or the
Closing Balance Sheet, (ii) was due in accordance with written policies
established by the Sellers on or prior to December 28, 1996, and (iii) but for
the Closing, could have been carried over in accordance with the terms of such
policies notwithstanding the failure to have used such accrued leave prior to
the Closing Date.
(c) BENEFIT PLANS.
(i) MEDICAL AND DENTAL PLANS. Effective as of the Closing Date, the
Buyer shall provide Transferred Employees with medical and dental benefits
substantially equivalent to those the Seller provides to similarly situated
employees of the Seller as of the Closing Date. For purposes of providing
medical and dental coverage to the Transferred Employees, the Buyer shall
consider service for the Companies prior to the Closing Date as service
toward satisfying any waiting period, eligibility period, or preexisting
condition limitation under the Buyer's medical and dental plans. In
addition, the Buyer shall credit all payments made by the Transferred
Employees toward deductible limits under the Companies' medical and dental
plans for the plan year which includes the Closing Date, as if such
payments had been made for similar purposes under the Buyer's medical and
dental plans during the plan year which includes the Closing Date, with
respect to Transferred Employees.
(ii) 401(k) PLAN. Effective as of the Closing Date, the Buyer shall
maintain a 401(k) plan (the "BUYER'S 401(k) PLAN") in which Transferred
Employees will be eligible to participate. The Buyer's 401(k) Plan shall
be substantially equivalent to the 401(k) Profit Sharing Retirement Plan
maintained by the Sellers immediately prior to the Closing Date, PROVIDED,
HOWEVER, that the investment options available under the Buyer's 401(k)
Plan shall be selected by the Buyer in its sole discretion and eligibility
to participate in the Buyer's 401(k) plan shall be limited to Transferred
Employees who are eligible to participate in the 401(k) Profit Sharing
Retirement Plan maintained by the Sellers immediately prior to the Closing
Date.
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(iii) OTHER INSURED WELFARE PLANS. Effective as of the Closing Date,
the Buyer shall maintain the following plans in which Transferred Employees
shall be eligible to participate: a life and accidental death and
dismemberment insurance plan, a long term disability insurance plan, a
short-term disability insurance plan, a travel accident insurance plan, a
prescription drug insurance plan and a pre-tax premium plan. The Buyer
shall implement such plans on a basis so that they provide substantially
equivalent coverage with respect to claims arising after the Closing Date
to the coverage provided under the equivalent Buyer's plans on the date of
this Agreement; PROVIDED, HOWEVER, that eligibility to participate in any
such Buyer's plans shall be limited to Transferred Employees who are
eligible to participate in comparable plans maintained by the Sellers
immediately prior to the Closing Date.
SECTION 9.3. RIGHTS. Nothing herein expressed or implied shall
confer upon any Transferred Employee or other employee or former employee of the
Sellers or legal representatives thereof, any rights or remedies, including,
without limitation, right to employment or continued employment for any
specified period, under or by reason of this Agreement.
SECTION 9.4. COLLECTIVE BARGAINING. Buyer agrees (i) to assume as of
the Closing Date all of the rights and obligations of the Company under its
Collective Bargaining Agreement (the "CBA") with the International Brotherhood
of Teamsters, Local 507 (the "UNION"), effective as of December 1, 1994 and (ii)
to hire on the Closing Date all employees who are covered by the CBA. To the
Sellers' Actual Knowledge, the Buyer's sole obligation with respect to the
Cleveland Bakers and Teamsters Pension Fund shall be to make the contributions
required to be made after the Closing Date pursuant to Article XVII of the CBA.
To the Sellers' Actual Knowledge, the Buyer shall have no liability for any
withdrawal liability asserted by such Fund in connection with any events
occurring prior to the Closing Date or in connection with the purchase and sale
of the Purchased Property.
SECTION 10. TAXES.
The parties hereto hereby covenant and agree as follows:
SECTION 10.1. ALLOCATION OF PURCHASE PRICE AND PURCHASE PRICE
ALLOCATION FORMS. The Buyer shall, as promptly as practicable after the Closing
Date, submit to the Sellers a statement of the Buyer's allocation of the
Purchase Price to the different items of Purchased Property (the "ALLOCATION
STATEMENT"). The Allocation Statement shall be, subject to further adjustment
on the basis of the Post-Closing Adjustment pursuant to Section 3.3 hereof,
binding and conclusive upon the parties hereto, unless the Sellers object in
writing to any item or items shown on the Allocation Statement within ten
Business Days after delivery thereof to the Sellers. If the Buyer and the
Sellers shall be unable to resolve any dispute with regard to the Allocation
Statement within ten Business Days after delivery of the Sellers' written
objections, the matter or matters in dispute shall be submitted (at the expense
of the Buyer) to an independent accountant selected by the Buyer and the
Sellers. The decision of such accountant shall be conclusive and binding upon
the Buyer and the Seller.
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Promptly after the Closing Date (but not before a resolution of all
disputes, if any, with regard to the Allocation Statement and the Post Closing
Adjustment Statement), the Buyer's Accountant shall prepare, in consultation
with the Sellers or the Sellers' Accountant, those statements or forms
(including Form 8594 if available) required by Section 1060 of the Code and the
Treasury regulations promulgated thereunder with respect to the allocation of
the Purchase Price. Such statements or forms shall be prepared consistently
with the allocation of Purchase Price. Such statements or forms shall be filed
by the parties on their respective federal income tax returns as required by
Section 1060 of the Code and the Treasury regulations promulgated thereunder and
each party shall provide the other party with a copy of such statement or form
as filed.
SECTION 10.2. INDEMNIFICATION PAYMENTS. Any indemnification payments
made pursuant to Section 11.1 shall constitute a purchase price adjustment for
Tax purposes.
SECTION 10.3. PRORATION OF REAL AND PERSONAL PROPERTY TAXES. Real
and personal property Taxes and assessments on the Purchased Property shall be
prorated between the Buyer and the Sellers as of the Closing Date. All such
prorations shall be allocated so that items relating to time periods ending on
or prior to the Closing Date shall be allocated to the Sellers and items
relating to time periods beginning after the Closing Date shall be allocated to
the Buyer; PROVIDED, HOWEVER, that the parties shall allocate any real property
Tax in accordance with Section 164(d) of the Code. The amount of all such
prorations shall be settled and paid on the Closing Date, provided that final
payments with respect to prorations that are not able to be calculated as of the
Closing Date shall be calculated and paid as soon as practicable thereafter.
SECTION 11. INDEMNIFICATION AND ARBITRATION.
SECTION 11.1. INDEMNIFICATION BY THE SELLERS. Notwithstanding the
Closing or the delivery of the Purchased Property and regardless of any
investigation at any time made by or on behalf of the Buyer or of any knowledge
or information that the Buyer may have, the Sellers shall, jointly and
severally, indemnify and fully defend, save and hold the Buyer, any Affiliate of
the Buyer and its directors, officers and employees (the "BUYER INDEMNITEES"),
harmless if any Buyer Indemnitee shall at any time or from time to time suffer
any damage, liability, loss, cost, expense (including all reasonable attorneys'
fees and expenses of investigation incurred by the Buyer Indemnitees in any
action or proceeding between the Sellers and the Buyer Indemnitees or between
the Buyer Indemnitees and any third party or otherwise), deficiency, interest,
penalty, impositions, assessments or fines (collectively, "BUYER LOSSES")
arising out of or resulting from, or shall pay or become obliged to pay any sum
on account of, any and all the Sellers' Events of Breach. As used herein,
"SELLERS' EVENT OF BREACH" shall be and mean any one or more of the following:
(a) any untruth or inaccuracy in any representation of the Sellers or
the breach of any warranty of the Sellers contained in the Transaction
Documents;
(b) any failure of the Sellers duly to perform or observe any term,
provision, covenant, agreement contained herein or in the Transaction Documents
on the part of the Sellers to be performed or observed;
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(c) any claim or cause of action by any party against any Buyer
Indemnitee, with respect to the Excluded Liabilities or the Retained Assets;
(d) any claim or cause of action pursuant to Environmental Laws
arising out of acts, omissions or conditions first occurring or in existence
as of or prior to the Closing Date, including, but not limited to,
liabilities for the release, handling discharge, treatment, disposal,
arrangement for the disposal or presence of Hazardous Materials first
occurring or in existence as of or prior to the Closing Date;
(e) any Environmental Costs;
PROVIDED, HOWEVER, that the Sellers shall have no obligation to make any
payment under Section 11.1(a) hereof with respect to any representation or
warranty until all Buyer Indemnitees have suffered Buyer Losses by reason of
all such claims exceeds One Hundred Fifty Thousand Dollars ($150,000), it
being understood that once such $150,000 amount is exceeded, only such Buyer
Losses in excess of such $150,000 shall be payable jointly and severally by
the Sellers on demand by the Buyer. Notwithstanding anything contained in
this Agreement to the contrary, to the extent the Sellers have paid to the
Buyer in respect of aggregate Buyer Losses of $14,000,000, the Sellers will
have no obligation to indemnify the Buyer from and against any further Buyer
Losses in excess of $14,000,000.
SECTION 11.2. PROCEDURES FOR INDEMNIFICATION BY THE SELLERS. If
with respect to a third party a Sellers' Event of Breach occurs or is alleged
and a Buyer Indemnitee asserts that the Sellers have become obligated to such
Buyer Indemnitee pursuant to Section 11.1 hereof, or if any suit, action,
investigation, claim or proceeding (a "PROCEEDING") is begun, made or
instituted by a third party as a result of which the Sellers may become
obligated to a Buyer Indemnitee hereunder, such Buyer Indemnitee shall give
written notice to the Sellers. The Sellers agree to defend, contest or
otherwise protect the Buyer Indemnitee against any Proceeding at their sole
cost and expense. The Buyer Indemnitee shall have the right, but not the
obligation, to participate at its own expense in the defense thereof by
counsel of the Buyer Indemnitee's choice and shall in any event cooperate
with and assist the Sellers to the extent reasonably possible. If the
Sellers fail timely to defend, contest or otherwise protect against such
Proceeding, the Buyer Indemnitee shall have the right to do so, including,
without limitation, the right to make any compromise or settlement thereof,
and the Buyer Indemnitee shall be entitled to recover the entire cost thereof
from the Seller, including, without limitation, reasonable attorneys' fees,
disbursements and amounts paid as the result of such Proceeding, and the
Sellers shall be bound by any determination made in such Proceeding or any
compromise or settlement effected by the Buyer. If the Sellers assume the
defense of any Proceeding, (a) it will be conclusively established for
purposes of this Agreement that the claims made in that Proceeding are within
the scope of and subject to indemnification, (b) no compromise or settlement
of such claims may be effected by the Sellers without the Buyer Indemnitee's
consent unless (i) there is no finding or admission of any violation of
federal, state, local, municipal, foreign, international, multinational or
other administrative order, law, ordinance, principal of common law,
regulation, statute or treaty or any violation of the rights of any Person
and no effect on any other claims that may be made against the Buyer
Indemnitee and (ii) the sole relief provided is monetary damages
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that are paid in full by the Sellers; and (c) the Buyer Indemnitee will have
no liability with respect to any compromise or settlement of such claims
effected without its consent.
SECTION 11.3. INDEMNIFICATION BY THE BUYER. Notwithstanding the
Closing or the delivery of the Purchased Property, the Buyer shall indemnify
and agree to fully defend, save and hold the Sellers, any Affiliate of the
Sellers, and their directors, officers and employees (the "SELLER
INDEMNITEES"), harmless if any Seller Indemnitee shall at any time or from
time to time suffer any damage, liability, loss, cost, expense (including all
reasonable attorneys' fees and expenses of investigation incurred by the
Seller Indemnitees in any action or proceeding between the Buyer and the
Seller Indemnitees or between the Seller Indemnitees and any third party or
otherwise), deficiency, interest, penalty, impositions, assessments or fines
(collectively, "SELLER LOSSES") arising out of or resulting from, or shall
pay or become obligated to pay any sum on account of, any and all the Buyer
Events of Breach. As used herein, "BUYER EVENTS OF BREACH" shall be and mean
any one or more of the following:
(a) any untruth or inaccuracy in any representation of the Buyer or
the breach of any warranty of the Buyer contained in the Transaction
Documents;
(b) any failure of the Buyer duly to perform or observe any term,
provision, covenant, agreement or condition contained herein or in the
Transaction Documents on the part of the Buyer to be performed or observed;
(c) any claim or cause of action by any party arising after the
Closing Date against any Seller Indemnitee with respect to the Assumed
Liabilities,
(d) any claim or cause of action pursuant to Environmental Laws
arising out of acts or omissions first occurring after the Closing Date,
including, but not limited to, liabilities for the releasing, handling,
discharge, treatment, disposal or arrangement for disposal of Hazardous
Materials generated after the Closing Date;
(e) any claim or cause of action by any third party arising after
the Closing Date against any Seller Indemnitee with respect to the actions by
the Buyer as the Sellers' attorney-in-fact as contemplated by the provisions
of Section 2.3 hereof.
SECTION 11.4. PROCEDURES FOR INDEMNIFICATION BY THE BUYER. If with
respect to a third party a Buyer Event of Breach occurs or is alleged and a
Seller Indemnitee asserts that the Buyer has become obligated to such Seller
Indemnitee pursuant to Section 11.3 hereof, or if any Proceeding is begun,
made or instituted by a third party as a result of which the Buyer may become
obligated to a Seller Indemnitee hereunder, such Seller Indemnitee shall give
written notice to the Buyer. The Buyer agrees to defend, contest or
otherwise protect the Seller Indemnitee against any Proceeding at its sole
cost and expense. The Seller Indemnitee shall have the right, but not the
obligation, to participate at its own expense in the defense thereof by
counsel of the Seller Indemnitee's choice and shall in any event cooperate
with and assist the Buyer to the extent reasonably possible. If the Buyer
fails timely to defend, contest or otherwise protect against such Proceeding,
the Seller Indemnitee shall have the right to do so, including, without
limitation, the right to make any compromise or settlement thereof, and the
Seller
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Indemnitee shall be entitled to recover the entire cost thereof from the
Buyer, including, without limitation, reasonable attorneys' fees,
disbursements and amounts paid as the result of such Proceeding, and the
Buyer shall be bound by any determination made in such Proceeding or any
compromise or settlement effected by the Sellers. If the Buyer assumes the
defense of any Proceeding, (a) it will be conclusively established for
purposes of this Agreement that the claims made in that Proceeding are within
the scope of and subject to indemnification, (b) no compromise or settlement
of such claims may be effected by the Buyer without the Seller Indemnitee's
consent unless (i) there is no finding or admission of any violation of
federal, state, local, municipal, foreign, international, multinational or
other administrative order, law, ordinance, principal of common law,
regulation, statute or treaty or any violation of the rights of any Person
and no effect on any other claims that may be made against the Seller
Indemnitee and (ii) the sole relief provided is monetary damages that are
paid in full by the Sellers; and (c) the Seller Indemnitee will have no
liability with respect to any compromise or settlement of such claims
effected without its consent.
SECTION 11.5. SUCCESSORS AND ASSIGNS. All of the rights and
obligations of the Sellers and the Buyer pursuant to this Section 11 shall
survive any sale, assignment or other transfer by the Buyer of title to or
interest in any of the Purchased Property or any part thereof and shall apply
to and bind each and every successor and assign of the Buyer to any of the
Purchased Property.
SECTION 11.6. ARBITRATION.
(a) The Buyer and the Sellers agree that the arbitration procedure
set forth below shall be the sole and exclusive method for resolving and
remedying claims for money damages arising out of the provisions of this
Agreement (the "DISPUTES"). Nothing in this Section 11.6 shall prohibit
either Buyer or the Sellers from instituting litigation to enforce any Final
Determination (as defined below). The parties hereby agree and acknowledge
that, except as otherwise provided in this Section 11.6 or in the
Comprehensive Arbitration Rules and Procedures or Streamlined Arbitration
Rules and Procedures, as the case may be, of JAMS/Endispute as in effect from
time to time, the arbitration procedures and any Final Determination
hereunder shall be governed by, and shall be enforced pursuant to applicable
New York law.
(b) In the event that either the Buyer or the Sellers assert that
there exists a Dispute, such party shall deliver a written notice to each
other party involved therein specifying the nature of the asserted Dispute
and requesting a meeting to attempt to resolve the same. If no such
resolution is reached within ten Business Days after such delivery of such
notice, the party delivering such notice of Dispute (the "DISPUTING PERSON")
may, within 45 Business Days after delivery of such notice, commence
arbitration hereunder by delivering to each other party involved therein a
notice of arbitration (a "NOTICE OF ARBITRATION"). Such Notice of
Arbitration shall specify the matters as to which arbitration is sought, the
nature of any Dispute, the claims of each party to the arbitration and shall
specify the amount and nature of any damages, if any, sought to be recovered
as a result of any alleged claim, and any other matters required by the
Comprehensive Arbitration Rules and Procedures or Streamlined Arbitration
Rules and
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Procedures, as the case may be, of JAMS/Endispute in effect from time to time
to be included therein, if any.
(c) The Buyer and the Sellers each shall select one arbitrator
expert in the subject matter of the Dispute (the arbitrators so selected
shall be referred to herein as the "BUYER'S ARBITRATOR" and the "SELLERS'
ARBITRATOR," respectively). In the event that either party fails to select
an arbitrator as set forth herein within 20 calendar days from the delivery
of a Notice of Arbitration, then the matter shall be resolved by the
arbitrator selected by the other party. The Sellers' Arbitrator and the
Buyer's Arbitrator shall select a third independent, neutral arbitrator
expert in the subject matter of the dispute, and the three arbitrators so
selected shall resolve the matter according to the procedures set forth in
this Section 11.6. If the Sellers' Arbitrator and the Buyer's Arbitrator are
unable to agree on a third arbitrator within 20 calendar days after their
selection, the Sellers' Arbitrator and the Buyer's Arbitrator shall each
prepare a list of three independent arbitrators. The Sellers' Arbitrator and
the Buyer's Arbitrator shall each have the opportunity to designate as
objectionable and eliminate one arbitrator from the other arbitrator's list
within seven calendar days after submission thereof, and the third arbitrator
shall then be selected by lot from the arbitrators remaining on the lists
submitted by the Sellers' Arbitrator and the Buyer's Arbitrator.
(d) The arbitrator(s) selected pursuant to Section 11.6(c) above
will determine the allocation of the costs and expenses of arbitration based
upon the percentage which the portion of the contested amount not awarded to
each party bears to the amount actually contested by such party. For
example, if the Buyer submits a claim for $1,000 and if the Sellers contest
only $500 of the amount claimed by the Buyer, and if the arbitrator(s)
ultimately resolves the dispute by awarding the Buyer $300 of the $500
contested, then the costs and expenses of arbitration will be allocated 60%
(that is, 300 divided by 500) to the Sellers and 40% (that is, 200 divided by
500) to the Buyer.
(e) The arbitration shall be conducted in New York, New York under
the Comprehensive Arbitration Rules and Procedures or Streamlined Arbitration
Rules and Procedures, as the case may be, of JAMS/Endispute as in effect from
time to time, except as modified by the agreement of all of the parties to
this Agreement. The arbitrator(s) shall so conduct the arbitration that a
final result, determination, finding, judgment and/or award (the "FINAL
DETERMINATION") is made or rendered as soon as practicable, but in no event
later than 90 Business Days after the delivery of the Notice of Arbitration
nor later than 10 calendar days following completion of the arbitration. The
Final Determination must be agreed upon and signed by the sole arbitrator or
by at least two of the three arbitrators (as the case may be). The Final
Determination shall be final and binding on all parties and there shall be no
appeal from or reexamination of the Final Determination, except for fraud,
perjury, evident partiality or misconduct by an arbitrator prejudicing the
rights of any party and to correct manifest clerical errors.
(f) The Buyer and the Sellers may enforce any Final Determination in
any state or federal court located in New York, New York. For the purpose of
any action or proceeding instituted with respect to any Final Determination,
each party hereto hereby irrevocably submits to the jurisdiction of such
courts, irrevocably consents to the service of process by registered mail
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or personal service and hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may have or hereafter have as to
personal jurisdiction, the laying of the venue of any such action or
proceeding brought in any such court and any claim that any such action or
proceeding brought in any court has been brought in an inconvenient forum.
(g) Any party required to make a payment pursuant to this Section
11.6 shall pay the party entitled to receive such payment within ten calendar
days of the delivery of the Final Determination to such responsible party.
If any party shall fail to pay the amount of any damages, if any, assessed
against it within such ten calendar day period, the unpaid amount shall bear
interest from the date of such delivery at the lesser of (i) the prime rate
of interest published by the Board of Governors of the Federal Reserve System
as the "BANK PRIME LOAN" rate, in effect from time to time (which rate shall
be adjusted on the effective date of each change in such prime rate) plus
2.00% and (ii) the maximum rate permitted by applicable usury laws. Interest
on any such unpaid amount shall be compounded semi-annually, computed on the
basis of a 360-day year consisting of twelve 30-day months and shall be
payable on demand. In addition, such party shall promptly reimburse the
other party for any and all costs and expenses of any nature or kind
whatsoever (including but not limited to all attorney's fees) incurred in
seeking to collect such damages or to enforce any Final Determination.
SECTION 12. CONDITIONS TO OBLIGATIONS OF THE SELLERS. The
obligations of the Sellers to consummate the transactions contemplated by the
Transaction Documents are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be
waived by the Sellers in their sole discretion:
SECTION 12.1. REPRESENTATIONS AND WARRANTIES OF THE BUYER. All
representations and warranties made by the Buyer in this Agreement shall be
true and correct in all material respects on and as of the Closing Date as if
again made by the Buyer on and as of such date, and the Seller shall have
received a certificate dated the Closing Date and signed by a duly authorized
representative of the Buyer to that effect.
SECTION 12.2. PERFORMANCE OF THE OBLIGATIONS OF THE BUYER. The
Buyer shall have performed in all material respects all obligations required
under this Agreement to be performed by it on or before the Closing Date, and
the Sellers shall have received a certificate dated the Closing Date and
signed by a duly authorized representative of the Buyer to that effect.
SECTION 12.3. CONSENTS AND APPROVALS. All Buyer Required Consents
shall have been duly obtained and shall be in full force and effect on the
Closing Date.
SECTION 12.4. NO VIOLATION OF ORDERS. No preliminary or permanent
injunction or other order issued by any court or other governmental or
regulatory authority, domestic or foreign, nor any statute, rule, regulation,
decree or executive order promulgated or enacted by any government or
governmental or regulatory authority, domestic or foreign, that declares any
of the Transaction Documents invalid or unenforceable in any respect or which
prevents the consummation of the transactions contemplated hereby shall be in
effect.
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SECTION 12.5. OPINION OF COUNSEL. The Seller shall have received a
favorable opinion, dated as of the Closing Date, from Willkie Farr &
Gallagher, special counsel to the Buyer, in form and substance reasonably
satisfactory to the Sellers and their counsel substantially to the effect as
set forth on Exhibit D hereto.
SECTION 12.6. SERVICING AGREEMENT; LOCK BOX AGREEMENT; L/C
PROCEDURES AGREEMENT. The Buyer shall have executed and delivered to the
Sellers the Servicing Agreement, the Lock Box Agreement and the L/C
Procedures Agreement, and the Buyer and the Sellers shall have entered into a
mutually acceptable escrow agreement with respect thereto.
Section 12.7. BUYER CLOSING DOCUMENTS. The Buyer shall have
delivered to the Sellers the following documents:
(a) a copy of the resolutions duly adopted by the Buyer's Board of
Directors authorizing the execution, delivery and performance of the
Transaction Documents to which it is a party and the consummation of the
transactions contemplated thereby, as in effect as of the Closing Date,
certified by an officer of the Buyer;
(b) a certificate (dated not less than 5 Business Days prior to the
Closing Date) of the Secretary of State of the jurisdiction of the Buyer's
incorporation as to the good standing of the Buyer in such jurisdiction;
(c) all instruments that are necessary or desirable to effect the
assumption by Buyer of the Assumed Liabilities; and
(d) such other documents relating to the transactions contemplated
by the Transaction Documents to be consummated at the Closing as the Sellers
shall reasonably request.
All corporate and other proceedings or actions taken or required to be taken
by the Buyer in connection with the transactions contemplated by Transaction
Documents, and all documents incident thereto, must be reasonably
satisfactory in form and substance to the Sellers and their legal counsel.
SECTION 13. CONDITIONS TO OBLIGATIONS OF THE BUYER. The
obligations of the Buyer to consummate the transactions contemplated by the
Transaction Documents are subject to the fulfillment, at or before the
Closing Date, of the following conditions, any one or more of which may be
waived by the Buyer in its sole discretion:
SECTION 13.1. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. All
representations and warranties made by the Sellers in this Agreement shall be
true and correct in all material respects on and as of the Closing Date as if
again made by the Sellers on and as of such date, and the Buyer shall have
received a certificate dated the Closing Date and signed by a duly authorized
officer of each of the Sellers to that effect.
SECTION 13.2. PERFORMANCE OF THE OBLIGATIONS OF THE SELLERS. The
Sellers shall have performed in all material respects all obligations
required under this Agreement to be
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performed by them on or before the Closing Date, and the Buyer shall have
received a certificate dated the Closing Date and signed by a duly authorized
officer of each of the Companies and Vista to that effect.
SECTION 13.3. CONSENTS AND APPROVALS. All Required Consents shall
have been duly obtained and shall be in full force and effect on the Closing
Date.
SECTION 13.4. NO VIOLATION OF ORDERS. No preliminary or permanent
injunction or other order issued by any court or other governmental or
regulatory authority, domestic or foreign, nor any statute, rule, regulation,
decree or executive order promulgated or enacted by any government or
governmental or regulatory authority, domestic or foreign, that declares any
of the Transaction Documents invalid or unenforceable in any respect or which
prevents the consummation of the transactions contemplated hereby shall be in
effect.
SECTION 13.5. [Reserved]
SECTION 13.6. OPINIONS OF COUNSEL. The Buyer shall have received a
favorable opinion, dated as of the Closing Date, (i) from Robert E.
Altenbach, Esq., General Counsel to the Seller and Weil, Gotshal & Manges
LLP, counsel to the Sellers, in form and substance reasonably satisfactory to
the Buyer and its counsel, substantially in the form of Exhibits E-1 and E-2,
respectively, hereto and (ii) from local counsel in Minnesota regarding PMI,
in form and substance reasonably satisfactory to Buyer and its counsel.
SECTION 13.7. SERVICING AGREEMENT; LOCK BOX AGREEMENT; L/C
PROCEDURES AGREEMENT. Each of the Sellers shall have executed and delivered
to the Buyer the Servicing Agreement, the Lock Box Agreement and the L/C
Procedures Agreement, and the Buyer and the Sellers shall have entered into a
mutually acceptable escrow agreement with respect thereto.
SECTION 13.8. LETTERS OF CREDIT. The Buyer shall have received the
Letters of Credit in form and substance reasonably satisfactory to the Buyer.
SECTION 13.9. STATE TAXES. The Buyer shall have received any and
all clearance certificates or similar documents that may be required by any
state Tax authority in order to relieve the Buyer of any obligation to
withhold any portion of the Purchase Price; provided that the Buyer has
applied for such certificates or documents in a timely manner. The Sellers
shall provide reasonable assistance to the Buyer in obtaining appropriate
certificates or documents and shall provide to the Buyer a list of the states
in which the Business is conducted.
SECTION 13.10. AGREEMENTS NOT TO COMPETE. The Sellers shall have
assigned to the Buyer, in form satisfactory to the Buyer and its counsel, the
agreements not to compete with the Sellers executed by Stephen W. Cole and
Richard F. Bern.
SECTION 13.11. FLEET FACILITY LIENS. All Liens on the Purchased
Property relating to the Fleet Facility shall have been terminated.
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SECTION 13.12. SELLERS CLOSING ITEMS. The Sellers shall have
delivered to the Buyer the following documents:
(a) with respect to each of the Sellers, a copy of the resolutions
duly adopted by each Seller's Board of Directors and stockholders authorizing
the execution, delivery and performance of the Transaction Documents to which
it is a party and the consummation of the transactions contemplated thereby,
as in effect as of the Closing Date, certified by an officer of each such
Seller;
(b) a certificate (dated not less than 5 Business Days prior to the
Closing Date) of the Secretary of State of the jurisdiction of each Seller's
incorporation as to the good standing of such Seller in such jurisdiction;
(c) the Files and Records forming a part of the Purchased Property;
(d) such bills of sale, special warranty deeds, assignments of
leases and all other instruments of conveyance that are necessary to effect
the purchase and sale of the Purchased Property;
(e) copies of the Required Consents;
(f) an affidavit of the Sellers in accordance with Section 1445 of
the Code and such documentation as shall be required to comply with the
reporting requirements of Section 1099-S of the Code;
(g) a termination agreement, duly executed and acknowledged by the
Company and Real Estate Co., in recordable form and otherwise in form
reasonably satisfactory to the Buyer, of that certain Sublease Agreement,
dated as of February 24, 1988, between 31100 Solon Road, Inc. and the
Company, as amended by First Amendment to Sublease, dated as of August 31,
1989, between 31100 Solon Road, Inc. and the Company, as further described in
that certain Memorandum of Sublease and Option to Purchase by and between
31100 Solon Road, Inc. and American Consumer Products, Inc., dated as of
February 24, 1988, and that certain First Amendment to Memorandum of Sublease
and Option to Purchase by and between 31100 Solon Road, Inc. and American
Consumer Products, Inc., dated as of August 31, 1989, and as assigned by
Assignment and Assumption of Sublease by and between 31100 Solon Road, Inc.
and the Company, dated as of October 18, 1996;
(h) evidence satisfactory to the Buyer of the separation of the Lock
Box Accounts from the bank account designated as Fleet Capital Corporation,
National City Bank, Cleveland, OH, Account No. 2128280 or such other account
that the proceeds of the Lock Box Accounts shall be deposited on or prior to
the Closing Date;
(i) such other documents relating to the transactions contemplated
by the Transaction Documents as the Buyer reasonably requests.
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SECTION 13.13. SURVEY. The Buyer shall have received Surveys in
accordance with the provisions of Section 7.12 hereof.
SECTION 13.14. LEGAL MATTERS. All certificates, instruments,
opinions and other documents required to be executed or delivered by or on
behalf of the Sellers under the provisions of the Transaction Documents, and
all other actions and proceedings required to be taken by or on behalf of the
Sellers in furtherance of the transactions contemplated hereby and thereby,
shall be reasonably satisfactory in form and substance to counsel for the
Buyer.
SECTION 14. TERMINATION.
SECTION 14.1. CONDITIONS OF TERMINATION. Notwithstanding anything
to the contrary contained herein, this Agreement may be terminated at any
time before the Closing (a) by mutual consent of the Sellers and the Buyer,
(b) by the Sellers if the conditions set forth in Section 12 hereof are not
satisfied or waived by the Closing Date, (c) by the Buyer if the conditions
set forth in Section 13 hereof are not satisfied or waived by the Closing
Date or (d) by either party hereto if the Closing shall not have occurred on
or prior the date that is one-hundred twenty (120) days from the date of this
Agreement.
SECTION 14.2. EFFECT OF TERMINATION. Each party's right of
termination under Section 14.1 is in addition to any other rights it may have
under this Agreement or otherwise, and the exercise of a right of termination
will not be an election of remedies. If this Agreement is terminated
pursuant to Section 14.1, all further obligations of the parties under this
Agreement will terminate, except that the obligations in Sections 15.1 and
15.4 will survive; PROVIDED, HOWEVER, that if this Agreement is terminated by
a party because of the breach of this Agreement by the other party or because
one or more of the conditions to the terminating party's obligations under
this Agreement is not satisfied as a result of the other party's failure to
comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
SECTION 15. MISCELLANEOUS.
SECTION 15.1. CONFIDENTIALITY.
(a) From the date of this Agreement through the Restricted Period,
the Buyer and the Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of the Buyer and the
Sellers to maintain in confidence, and not use to the detriment of another
party any written, oral, or other information obtained in confidence from
another party in connection with this Agreement or the transactions
contemplated by the Transaction Documents, unless (a) such information is
already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available through no
fault of such party, (b) the use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval
required for the consummation of the transactions contemplated by the
Transaction Documents, or (c) the furnishing or use of such information is
required by or necessary or appropriate in connection with legal proceedings.
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(b) If the transactions contemplated by the Transaction Documents
are not consummated, each party will return or destroy as much of such
written information as the other party may reasonably request.
(c) No competitive information with regard to Boss Manufacturing
Company or the Warren Pet division of the Company will be shared with
Warburg, Pincus Investors, L.P. or any of its portfolio companies.
SECTION 15.2. SUCCESSORS AND ASSIGNS. Except as otherwise provided
in this Agreement, no party hereto shall assign this Agreement or any rights
or obligations hereunder without the prior written consent of the other
parties hereto and any such attempted assignment without such prior written
consent shall be void and of no force and effect, PROVIDED, that the Buyer
may assign its rights hereunder to a wholly owned subsidiary of the Buyer or
any party providing financing in connection with the transactions
contemplated hereby, and, PROVIDED FURTHER, that no such assignment shall
reduce or otherwise vitiate any of the obligations of the Buyers or the
Sellers, as the case may be, hereunder. This Agreement shall inure to the
benefit of and shall be binding upon the successors and permitted assigns of
the parties hereto.
SECTION 15.3. GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE
CONSTRUED, PERFORMED AND ENFORCED IN ACCORDANCE WITH, AND GOVERNED BY, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAWS THEREOF. THE PARTIES HERETO IRREVOCABLY ELECT AS THE SOLE
JUDICIAL FORUM FOR THE ADJUDICATION OF ANY MATTERS ARISING UNDER OR IN
CONNECTION WITH THIS AGREEMENT, AND CONSENT TO THE JURISDICTION OF, THE
COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK, NEW YORK.
SECTION 15.4. EXPENSES. Except as otherwise provided herein, each
of the parties hereto shall pay its own expenses in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, any legal and accounting fees, whether or not the transactions
contemplated hereby are consummated. The Buyer and the Sellers shall each
pay one-half of the cost of the Surveys, Title Commitment, all state and
local sales, transfer, excise, value-added or other similar taxes, and all
recording and filing fees that may be imposed by reason of the sale,
transfer, assignment and delivery of the Purchased Property, the initial
filing fees under the HSR Act as well as all fees, costs and expenses
(including, without limitation, all attorneys' fees, costs and expenses of
the issuing bank, but not the fees and expenses of Sellers' counsel with
respect thereto) incurred in connection with the establishment, maintenance
and renewal of the Letters of Credit. The Sellers agree to accept
appropriate re-sale certificates, bulk sale documents or similar exception
certificates and provide reasonable assistance in complying with applicable
transfer taxes.
SECTION 15.5. SURVIVAL OF COVENANTS AND AGREEMENTS. All covenants
and agreements contained in this Agreement shall survive in accordance with
their terms.
SECTION 15.6. BROKER'S AND FINDER'S FEES. There are no claims for
brokerage commissions or finder's fees or similar compensation in connection
with the transactions contemplated by the Transaction Documents based on any
arrangement made by or on behalf of
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any of the parties hereto. Each party indemnifies the other for any costs or
damages incurred by the other party as a result of any such claim.
SECTION 15.7. SEVERABILITY. In the event that any part of this
Agreement is declared by any court or other judicial or administrative body
to be null, void or unenforceable, said provision shall survive to the extent
it is not so declared, and all of the other provisions of this Agreement
shall remain in full force and effect.
SECTION 15.8. NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed
to have been duly given (i) on the date of service if served personally on
the party to whom notice is to be given, (ii) on the day of transmission if
sent via facsimile transmission to the facsimile number given below, and
telephonic confirmation of receipt is obtained promptly after completion of
transmission, (iii) on the day after delivery to Federal Express or similar
overnight courier or the Express Mail service maintained by the U.S. Postal
Service or (iv) on the fifth day after mailing, if mailed to the party to
whom notice is to be given, by first class mail, registered or certified,
postage prepaid and properly addressed, to the party as follows:
If to the Sellers:
VISTA 2000, INC.
736 John Ferry Road
Building C275
Atlanta, Georgia 30062
Attention: Robert E. Altenbach
Telecopy: (770) 977-7673
Copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Dennis J. Block, Esq.
Telecopy: (212) 310-8007
If to the Buyer:
AXXESS TECHNOLOGIES, INC.
1555 West 10th Place
Tempe, Arizona 85281-5243
Attention: Stephen W. Miller
Telecopy: (602) 731-6974
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Copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Steven J. Gartner, Esq.
Telecopy: (212) 821-8111
Any party may change its address for the purpose of this Section by giving
the other party written notice of its new address in the manner set forth
above.
SECTION 15.9. AMENDMENTS; WAIVERS. This Agreement may be amended
or modified, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
parties hereto, or in the case of a waiver, by the party waiving compliance.
Any waiver by any party of any condition, or of the breach of any provision,
term, covenant, representation or warranty contained in this Agreement, in
any one or more instances, shall not be deemed to be nor construed as further
or continuing waiver of any such condition, or of the breach of any other
provision, term, covenant, representation or warranty of this Agreement.
SECTION 15.10. PUBLIC ANNOUNCEMENTS. The parties agree that after
the signing of this Agreement, neither party shall make any press release or
public announcement concerning the transactions contemplated by the
Transaction Documents without the prior written approval of the other parties
unless a press release or public announcement is required by law. If any
such announcement or other disclosure is required by law, the disclosing
party agrees to give the nondisclosing parties prior notice and an
opportunity to comment on the proposed disclosure.
SECTION 15.11. ENTIRE AGREEMENT. This Agreement, the Transaction
Documents and the Exhibits hereto and thereto contain the entire
understanding between the parties hereto with respect to the transactions
contemplated hereby and thereby and supersedes and replaces all prior and
contemporaneous agreements and understandings, oral or written (other than
the Confidentiality Agreement through the date hereof), with regard to such
transactions. All schedules hereto and any documents and instruments
delivered pursuant to any provision hereof are expressly made a part of this
Agreement as fully as though completely set forth herein.
SECTION 15.12. PARTIES IN INTEREST. Nothing in this Agreement is
intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the Sellers, and the Buyer and their
respective successors and permitted assigns. Nothing in this Agreement is
intended to relieve or discharge the obligations or liability of any third
persons to the Sellers or the Buyer. No provision of this Agreement shall
give any third persons any right of subrogation or action over or against the
Sellers or the Buyer.
SECTION 15.13. SCHEDULED DISCLOSURES. Disclosure of any matter,
fact or circumstance in a Schedule to this Agreement shall not be deemed to
be disclosure thereof for purposes of any other Schedule hereto.
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SECTION 15.14. SECTION AND PARAGRAPH HEADINGS. The section and
paragraph headings in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
SECTION 15.15. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
shall constitute the same instrument.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
AMERICAN CONSUMER PRODUCTS, INC.
By: \s\ ROBERT E. ALTENBACH
----------------------------------
Name: Robert E. Altenbach
Title: Secretary
VISTA 2000, INC.
By: \s\ ROBERT E. ALTENBACH
----------------------------------
Name: Robert E. Altenbach
Title: Secretary
ACPI REAL ESTATE, INC.
By: \s\ ROBERT E. ALTENBACH
----------------------------------
Name: Robert E. Altenbach
Title: Secretary
PMI, INC.
By: \s\ ROBERT E. ALTENBACH
----------------------------------
Name: Robert E. Altenbach
Title: Secretary
AXXESS TECHNOLOGIES, INC.
By: \s\ STEPHEN W. MILLER
----------------------------------
Name: Stephen W. Miller
Title: Chairman of the Board and Chief
Executive Officer
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EXHIBIT D - FORM OF OPINION OF WILLKIE FARR & GALLAGHER
(a) The Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and has the
corporate power and authority to enter into the Transaction Documents that
are contracts or agreements and to carry out its obligations thereunder. The
execution and delivery of the Transaction Documents that are contracts or
agreements and the performance of the Buyer's obligations thereunder have
been duly authorized by all necessary corporate action by the Board of
Directors of the Buyer, and no other corporate proceedings on the part of the
Buyer are necessary to authorize such execution, delivery and performance.
The Transaction Documents that are contracts or agreements have been duly
executed by the Buyer.
(b) The execution, delivery and performance by the Buyer of the
Transaction Documents do not and will not violate or conflict with any
provision of the charter documents or by-laws of the Buyer.
(c) No order, consent, permit or approval of any federal, Delaware
or New York authority is required on the part of the Buyer for the execution
and delivery by the Buyer of the Transaction Documents to which the Buyer is
a party that are contracts or agreements and the consummation of the
transactions contemplated thereby, except such as have been obtained and
except such counsel need express no opinion as to the federal securities laws.
(d) The Transaction Documents that are contracts or agreements
constitute the legal, valid and binding obligations of the Buyer, enforceable
against the Buyer in accordance with their terms, except that no opinion is
given with respect to the non-competition provision of the Asset Purchase
Agreement, and except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting the
enforceability of creditors' rights generally and except that the remedy of
specific performance or similar equitable relief may be subject to equitable
defenses and to the discretion of the court before which enforcement is
sought.
In rendering such opinion, such counsel may rely upon certificates
of public officials and, as to matters of fact, upon certificates of officers
of the Buyer or its Affiliates, and such counsel may assume that the
Transaction Documents have been duly authorized, executed and delivered by
the Sellers and are enforceable against the Sellers in accordance with their
terms.
<PAGE>
EXHIBIT E-1 - FORM OF OPINION OF ROBERT E. ALTENBACH
(a) Each of the Sellers (exclusive of PMI) is a corporation duly
organized, validly existing and in good standing under the laws of their
respective jurisdiction of incorporation, and have all requisite corporate
power and authority to own their properties and assets and to conduct their
respective business as now conducted.
(b) The Sellers (exclusive of PMI) have the corporate power and
authority to enter into the Transaction Documents and to carry out their
respective obligations thereunder. The execution and delivery of the
Transaction Documents and the performance of the Sellers' obligations
thereunder (exclusive of PMI) have been duly authorized by all necessary
corporate action by the Board of Directors and stockholders of each Seller
(exclusive of PMI), and no other corporate proceedings on the part of each
Seller (exclusive of PMI) are necessary to authorize such execution, delivery
and performance. The Transaction Documents have been duly executed by the
Sellers (exclusive of PMI).
(c) The execution, delivery and performance by each of the Sellers
of the Transaction Documents do not and will not violate or conflict with any
provision of the respective charter documents or By-laws of such Seller and
does not and will not violate any provision of violate nor will result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any contract set forth on Schedule 5.15 of the Asset Purchase Agreement.
(d) No order, consent, permit or approval of any federal or
Delaware authority is required on the part of the Sellers for the execution
and delivery of the Transaction Documents and the consummation of the
transactions contemplated thereby, except such as have been obtained and
except no opinion is given with regard to federal securities laws.
In rendering such opinion, such counsel may rely upon certificates
of public officials, upon opinions of local counsel and, as to matters of
fact, upon certificates of officers of the Seller or its Affiliates, and such
counsel may assume that the Transaction Documents have been duly authorized,
executed and delivered by the Buyer.
<PAGE>
EXHIBIT E-2 - FORM OF OPINION OF WEIL, GOTSHAL AND MANGES
The Transaction Documents that are contracts or agreements
constitute the legal, valid and binding obligation of the Sellers,
enforceable against each Seller in accordance with their terms, except that
no opinion is given with respect to the non-competition provision of the
Asset Purchase Agreement, and except as the same may be limited by
bankruptcy, insolvency, reorganization or other laws relating to or affecting
the enforceability of creditors' rights generally and except that the remedy
of specific performance or similar equitable relief may be subject to
equitable defenses and to the discretion of the court before which
enforcement is sought.
No order, consent, permit or approval of any New York authority is
required on the part of the Sellers for the execution and delivery of the
Transaction Documents that are contracts or agreements and the consummation
of the transactions contemplated thereby, except such as have been obtained.
In rendering such opinion, such counsel may rely upon certificates of public
officials, upon opinions of Minnesota local counsel and of Robert E.
Altenbach, Esq. and, as to matters of fact, upon certificates of officers of
the Seller or its Affiliates, and such counsel may assume that the
Transaction Documents have been duly authorized, executed and delivered by
the Buyer.
<PAGE>
NOTE: NOT EXHIBIT TO APA --- TO BE DELIVERED BY MINNESOTA COUNSEL:
(a) PMI is a corporation duly organized, validly existing and in
good standing under the laws of Minnesota, and has all requisite corporate
power and authority to own their properties and assets and to conduct its
business as now conducted.
(b) The execution, delivery and performance by PMI of the
Transaction Documents do not and will not violate or conflict with any
provision of its charter documents or By-laws and does not and will not
violate any provision of Minnesota law.
(c) No order, consent, permit or approval of any Minnesota
authority is required on the part of PMI for the execution and delivery of
the Transaction Documents and the consummation of the transactions
contemplated thereby, except such as have been obtained and except no opinion
is given with respect to federal securities laws.
In rendering such opinion, such counsel may rely upon certificates of public
officials, upon opinions of local counsel and, as to matters of fact, upon
certificates of officers of the Seller or its Affiliates, and such counsel
may assume that the Transaction Documents have been duly authorized, executed
and delivered by the Buyer.
