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): May 31, 1996
LaCrosse Footwear, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 0-238001 39-1446816
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
1319 St. Andrew Street, La Crosse, Wisconsin 54603
(Address of principal executive offices, including zip code)
(608) 782-3020
(Registrant's telephone number)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On May 31, 1996, a joint venture formed by LaCrosse Footwear, Inc.
("LaCrosse") and Craig L. Leipold ("Mr. Leipold"), Chief Executive Officer
and principal shareholder of Rainfair, Inc. ("Rainfair"), consummated the
purchase of substantially all of the assets of Rainfair for cash
consideration of approximately $11.1 million and the assumption of certain
liabilities of Rainfair, based upon the net book value of the acquired
assets.
Mr. Leipold is the Chief Executive Officer of the joint venture,
which will continue Rainfair's business of designing, manufacturing and
marketing protective clothing and footwear for the safety, industrial and
uniform markets, as well as producing branded, private label and licensed
rainwear for consumer markets (the "Acquired Business").
LaCrosse and Mr. Leipold each purchased one-half of the joint
venture's common stock, in each case for $1.25 million, and LaCrosse also
purchased all of the joint venture's outstanding preferred stock for
$500,000. The remaining portion of the cash purchase price was, and the
joint venture's ongoing working capital needs will be, provided by
LaCrosse under a revolving credit facility. The class of common stock
purchased by LaCrosse has the right to elect three members of the joint
venture's five member board of directors, while the class of common stock
purchased by Mr. Leipold has the right to elect the remaining two members.
LaCrosse used its credit facility with Firstar Bank Milwaukee, N.A.
to fund its purchase of securities from and loans to the joint venture.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
It is impracticable for LaCrosse to provide the required financial
statements for the Acquired Business and pro forma financial information
at the time this Current Report on Form 8-K is filed. The required
financial statements for the Acquired Business and pro forma financial
information will be filed as soon as practicable, but in no event later
than August 14, 1996.
(b) Exhibits.
The exhibits listed in the accompanying Exhibit Index are filed as
part of this Current Report on Form 8-K.
<PAGE>
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 thereunto duly authorized.
LACROSSE FOOTWEAR, INC.
Date: June 14, 1996 By: /s/ Robert J. Sullivan
Robert J. Sullivan
Vice President - Finance and
Administration
<PAGE>
LACROSSE FOOTWEAR, INC.
EXHIBIT INDEX TO FORM 8-K REPORT
Dated June 14, 1996
Exhibit
(2.1) Asset Purchase Agreement dated May 16,
1996, by and among Rainco, Inc., LaCrosse
Footwear, Inc., Rainfair, Inc. and Craig
L. Leipold*
(2.2) Shareholders' Agreement dated as of May
31, 1996 by and between Craig L. Leipold,
LaCrosse Footwear, Inc. and Rainco, Inc.
_______________
* The schedules and exhibits to this document are not being filed
herewith. The registrant agrees to furnish supplementally a copy of any
such schedule or exhibit to the Securities and Exchange Commission upon
request.
ASSET PURCHASE AGREEMENT
BY
AND
AMONG
RAINCO, INC.,
LaCROSSE FOOTWEAR, INC.
RAINFAIR, INC.
AND
CRAIG L. LEIPOLD
May 16, 1996
<PAGE>
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . 1
1.1. Assets to be Transferred . . . . . . . . . . . . . . . . 1
1.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . 3
2. ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . . . . 5
2.1. Liabilities to be Assumed . . . . . . . . . . . . . . . . 5
2.2. Liabilities Not to be Assumed . . . . . . . . . . . . . . 6
3. PURCHASE PRICE - PAYMENT . . . . . . . . . . . . . . . . . . . . 7
3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . 7
3.2. Payment of Purchase Price . . . . . . . . . . . . . . . . 8
3.3. Determination of Net Asset Value . . . . . . . . . . . . 10
3.4. Prorations . . . . . . . . . . . . . . . . . . . . . . . 11
3.5. Other Payments and Adjustments . . . . . . . . . . . . . 12
3.6. Allocation of Purchase Price . . . . . . . . . . . . . . 12
3.7. Additional Post-Closing Adjustment For Accounts
Receivable . . . . . . . . . . . . . . . . . . . . . . . 12
4. REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHAREHOLDER . . . 13
4.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3. No Violation . . . . . . . . . . . . . . . . . . . . . . 14
4.4. Financial Statements . . . . . . . . . . . . . . . . . . 15
4.5. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 15
4.6. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . 16
4.7. Inventory . . . . . . . . . . . . . . . . . . . . . . . . 16
4.8. Absence of Certain Changes . . . . . . . . . . . . . . . 16
4.9. Absence of Undisclosed Liabilities . . . . . . . . . . . 18
4.10. No Litigation . . . . . . . . . . . . . . . . . . . . . . 18
4.11. Compliance With Laws and Orders . . . . . . . . . . . . . 18
4.12. Title to and Condition of Properties . . . . . . . . . . 20
4.13. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 21
4.14. Contracts and Commitments . . . . . . . . . . . . . . . . 22
4.15. Labor Matters . . . . . . . . . . . . . . . . . . . . . . 24
4.16. Employee Benefit Plans . . . . . . . . . . . . . . . . . 24
4.17. Employment Compensation . . . . . . . . . . . . . . . . . 27
4.18. Trade Rights . . . . . . . . . . . . . . . . . . . . . . 27
4.19. Major Customers and Suppliers . . . . . . . . . . . . . . 27
4.20. Product Warranty and Product Liability . . . . . . . . . 28
4.21. Affiliates' Relationships to Company . . . . . . . . . . 29
4.22. Shareholder List . . . . . . . . . . . . . . . . . . . . 29
4.23. Assets Necessary to Business . . . . . . . . . . . . . . 29
4.24. No Brokers or Finders . . . . . . . . . . . . . . . . . . 29
4.25. Disclosure . . . . . . . . . . . . . . . . . . . . . . . 29
5. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . 30
5.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . . 30
5.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . 30
5.3. No Violation . . . . . . . . . . . . . . . . . . . . . . 30
5.4. No Brokers or Finders . . . . . . . . . . . . . . . . . . 30
5.5. Disclosure . . . . . . . . . . . . . . . . . . . . . . . 31
6. EMPLOYEES - EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . 31
6.1. Affected Employees . . . . . . . . . . . . . . . . . . . 31
6.2. Retained Responsibilities . . . . . . . . . . . . . . . . 31
6.3. Payroll Tax . . . . . . . . . . . . . . . . . . . . . . . 31
6.4. Termination Benefits . . . . . . . . . . . . . . . . . . 31
6.5. Employee Benefit Plans . . . . . . . . . . . . . . . . . 32
7. OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.1. Employment Agreement . . . . . . . . . . . . . . . . . . 33
7.2. Noncompetition . . . . . . . . . . . . . . . . . . . . . 33
7.3. Confidential Information . . . . . . . . . . . . . . . . 34
7.4. General Releases . . . . . . . . . . . . . . . . . . . . 35
7.5. Product Liability Matters . . . . . . . . . . . . . . . . 35
7.6. Use of Company's Name . . . . . . . . . . . . . . . . . . 35
7.7. Sales Tax Matters . . . . . . . . . . . . . . . . . . . . 35
7.8. Unemployment Compensation . . . . . . . . . . . . . . . . 35
7.9. Shareholders Agreement . . . . . . . . . . . . . . . . . 36
7.10. Determination of Purchase Price for Facility . . . . . . 36
7.11. Accounts Receivable Payments After Closing . . . . . . . 36
8. FURTHER COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 36
8.1. Change of Corporate Name . . . . . . . . . . . . . . . . 36
8.2. Consents . . . . . . . . . . . . . . . . . . . . . . . . 36
8.3. Other Action . . . . . . . . . . . . . . . . . . . . . . 36
8.4. Disclosure . . . . . . . . . . . . . . . . . . . . . . . 37
8.5. Limited Guaranty of Pension Liability . . . . . . . . . . 37
8.6. Access to Information and Records . . . . . . . . . . . . 37
8.7. Conduct of Business Pending the Closing . . . . . . . . . 37
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS . . . . . . . . . . 38
9.1. Representations and Warranties True on the Closing Date . 38
9.2. Compliance With Agreement . . . . . . . . . . . . . . . . 38
9.3. Absence of Litigation . . . . . . . . . . . . . . . . . . 39
9.4. Consents and Approvals . . . . . . . . . . . . . . . . . 39
9.5. Sublease . . . . . . . . . . . . . . . . . . . . . . . . 39
9.6. Environmental Audit . . . . . . . . . . . . . . . . . . . 39
9.7. Financial Performance . . . . . . . . . . . . . . . . . . 39
9.8. Consent and Waiver . . . . . . . . . . . . . . . . . . . 39
9.9. Consent of Union . . . . . . . . . . . . . . . . . . . . 39
10. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS . . . . . . . . . 40
10.1. Representations and Warranties True on the Closing Date . 40
10.2. Compliance With Agreement . . . . . . . . . . . . . . . . 40
10.3. Absence of Litigation . . . . . . . . . . . . . . . . . . 40
10.4. Sublease . . . . . . . . . . . . . . . . . . . . . . . . 40
10.5. Consent of Union . . . . . . . . . . . . . . . . . . . . 40
11. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 40
11.1. By Company and Shareholder . . . . . . . . . . . . . . . 40
11.2. By Buyer . . . . . . . . . . . . . . . . . . . . . . . . 41
11.3. Indemnification of Third-Party Claims . . . . . . . . . . 41
11.4. Payment . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.5. Indemnification for Environmental Matters . . . . . . . . 43
11.6. Limitations on Indemnification . . . . . . . . . . . . . 43
11.7. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . 45
12. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.1. Documents to be Delivered by Company and Shareholder . . 45
12.2. Documents to be Delivered by Buyer . . . . . . . . . . . 46
13. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.1. Right of Termination Without Breach . . . . . . . . . . . 47
13.2. Termination for Breach . . . . . . . . . . . . . . . . . 47
14. RESOLUTION OF DISPUTES . . . . . . . . . . . . . . . . . . . . . 48
14.1. Arbitration . . . . . . . . . . . . . . . . . . . . . . . 48
14.2. Arbitrators . . . . . . . . . . . . . . . . . . . . . . . 49
14.3. Procedures; No Appeal . . . . . . . . . . . . . . . . . . 49
14.4. Authority . . . . . . . . . . . . . . . . . . . . . . . . 49
14.5. Entry of Judgment . . . . . . . . . . . . . . . . . . . . 49
14.6. Confidentiality . . . . . . . . . . . . . . . . . . . . . 49
14.7. Continued Performance . . . . . . . . . . . . . . . . . . 49
14.8. Tolling . . . . . . . . . . . . . . . . . . . . . . . . . 49
15. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 49
15.1. Disclosure Schedule . . . . . . . . . . . . . . . . . . . 49
15.2. Further Assurance . . . . . . . . . . . . . . . . . . . . 50
15.3. Disclosures and Announcements . . . . . . . . . . . . . . 50
15.4. Assignment; Parties in Interest . . . . . . . . . . . . . 50
15.5. Equitable Relief . . . . . . . . . . . . . . . . . . . . 50
15.6. Law Governing Agreement . . . . . . . . . . . . . . . . . 51
15.7. Amendment and Modification . . . . . . . . . . . . . . . 51
15.8. Notice . . . . . . . . . . . . . . . . . . . . . . . . . 51
15.9. Expenses . . . . . . . . . . . . . . . . . . . . . . . . 52
15.10. Entire Agreement . . . . . . . . . . . . . . . . . . . . 53
15.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . 53
15.12. Headings . . . . . . . . . . . . . . . . . . . . . . . . 53
15.13. Facsimile Copies . . . . . . . . . . . . . . . . . . . . 53
15.14. Limited Obligation of LaCrosse . . . . . . . . . . . . . 53
Disclosure Schedule
Schedule 1.1.(c) - Personal Property Leases
Schedule 1.2.(g) - Shareholder Property
Schedule 2.1.(b) - Assumed Contracts
Schedule 2.1.(f) - Other Assumed Liabilities
Schedule 3.6 - Purchase Price Allocation
Schedule 4.1.(c) - Foreign Corporation Qualification
Schedule 4.3 - Violation, Conflict, Default
Schedule 4.4 - Financial Statements
Schedule 4.5.(b) - Tax Returns (Exceptions to Representations)
Schedule 4.5.(c) - Tax Audits
Schedule 4.5.(d) - Consolidated Groups
Schedule 4.5.(e) - Tax, Other
Schedule 4.7 - Inventory Off Premises
Schedule 4.8 - Certain Changes
Schedule 4.10 - Litigation Matters
Schedule 4.11.(a) - Non-Compliance with Laws
Schedule 4.11.(b) - Licenses and Permits
Schedule 4.11.(c) - Environmental Matters
Schedule 4.12.(a)(i) - Pre-Closing Liens
Schedule 4.12.(a)(ii) - Post-Closing Liens
Schedule 4.12.(c) - Real Property Used by Company
Schedule 4.13 - Insurance
Schedule 4.14.(c) - Purchase Commitments
Schedule 4.14.(d) - Sales Commitments
Schedule 4.14.(e) - Contracts for Services
Schedule 4.14.(g) - Collective Bargaining Agreements
Schedule 4.14.(h) - Loan Agreements, etc.
Schedule 4.14.(i) - Guarantees
Schedule 4.14.(l) - Material Contracts
Schedule 4.15 - Labor Matters
Schedule 4.16.(a) - Employee Plans/Agreements
Schedule 4.16.(e) - Controlled Groups
Schedule 4.16.(f) - Exceptions to Employee Plan/Agreement
Representations
Schedule 4.16.(g) - Post-Retirement Benefits
Schedule 4.17 - Employment Compensation
Schedule 4.18 - Trade Rights
Schedule 4.19.(a) - Major Customers
Schedule 4.19.(b) - Major Suppliers
Schedule 4.19.(c) - Dealers and Distributors
Schedule 4.20 - Product Warranty, Warranty Expense and
Liability Claims
Schedule 4.21.(a) - Contracts with Affiliates
Schedule 4.21.(c) - Obligations of and to Affiliates
Schedule 4.22 - Shareholder List
Schedule 9.4 - Certain Consents
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated May 16, 1996,
by and among Rainco, Inc., a Wisconsin corporation ("Buyer"), Rainfair,
Inc., a Wisconsin corporation ("Company"), LaCrosse Footwear, Inc., a
Wisconsin corporation ("LaCrosse"), and Craig L. Leipold, an individual
resident of Wisconsin (the "Shareholder").
RECITALS
A. Company is engaged in the design, manufacture, marketing and
sale of industrial and consumer rainwear, outerwear, boots, aprons and
other protective clothing (the "Business"). Shareholder owns 94% of the
issued and outstanding capital stock of Company.
B. Company's facilities consist of a 104,160 sq. ft. one story
concrete block building located on twelve acres of land at 3600 S.
Memorial Drive, Racine, Wisconsin (the "Facility").
C. Buyer desires to purchase from Company, Company desires to
sell to Buyer, and the Shareholder desires to cause Company to sell to
Buyer, the business and substantially all of the property and assets of
Company.
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and
conditions hereinafter set forth, and intending to be legally bound
hereby, the parties hereto agree as follows.
1. PURCHASE AND SALE OF ASSETS
1.1. Assets to be Transferred. Subject to the terms and conditions
of this Agreement, on the Closing Date (as hereinafter defined) Company
shall, and Shareholder shall cause Company to, sell, transfer, convey,
assign, and deliver to Buyer, and Buyer shall purchase and accept all of
the business, rights, claims and assets (of every kind, nature, character
and description, whether real, personal or mixed, whether tangible or
intangible, whether accrued, contingent or otherwise, and wherever
situated) of Company, together with all rights and privileges associated
with such assets and with the business of the Company, other than the
Excluded Assets (as hereinafter defined) (collectively the "Purchased
Assets"). The Purchased Assets shall include, but not be limited to, the
following:
1.1.(a) Personal Property. All machinery, equipment,
vehicles, tools, supplies, spare parts, furniture and all other
personal property (other than personal property leased pursuant to
Personal Property Leases as hereinafter defined) owned, utilized or
held for use by Company on the Closing Date.
1.1.(b) Inventory. All inventories of raw materials,
work-in-process and finished goods (including all such in transit),
and service and repair parts, supplies and components held for
resale by Company on the Closing Date, together with related
packaging materials (collectively the "Inventory").
1.1.(c) Personal Property Leases. All leases of
machinery, equipment, vehicles, furniture and other personal
property leased by Company, including all such leases (the
"Personal Property Leases") described in Schedule 1.1.(c).
1.1.(d) Trade Rights. All the Company's interest in any
Trade Rights. As used herein, the term "Trade Rights" shall mean
and include: (i) all trademark rights, business identifiers, trade
dress, service marks, trade names, and brand names; (ii) all
copyrights and all other rights associated therewith and the
underlying works of authorship; (iii) all patents and all
proprietary rights associated therewith; (iv) all contracts or
agreements granting any right, title, license or privilege under
the intellectual property rights of any third party; (v) all
inventions, know-how, discoveries, improvements, designs, trade
secrets, shop and royalty rights, employee covenants and agreements
respecting intellectual property and non-competition and all other
types of intellectual property; and (vi) all registrations of any
of the foregoing, all applications therefor, all goodwill
associated with any of the foregoing, and all claims for
infringement or breach thereof.
1.1.(e) Contracts. All the Company's rights in, to and
under all contracts, purchase orders and sales orders (hereinafter
"Contracts") of Company. To the extent that any Contract for which
assignment to Buyer is provided herein is not assignable without
the consent of another party, this Agreement shall not constitute
an assignment or an attempted assignment thereof if such assignment
or attempted assignment would constitute a breach thereof.
Shareholder, Company and Buyer agree to use their reasonable best
efforts (without any requirement on the part of any party to pay
any money or agree to any change in the terms of any such Contract)
to obtain the consent of such other party to the assignment of any
such Contract to Buyer in all cases in which such consent is or may
be required for such assignment. If any such consent shall not be
obtained, Shareholder and Company agree to cooperate with Buyer in
any reasonable arrangement designed to provide for Buyer the
benefits intended to be assigned to Buyer under the relevant
Contract, including enforcement at the cost and for the account of
Buyer of any and all rights of Company against the other party
thereto arising out of the breach or cancellation thereof by such
other party or otherwise. If and to the extent that such
arrangement cannot be made, Buyer, upon notice to Company, shall
have no obligation pursuant to Section 2.1 or otherwise with
respect to any such Contract and any such Contract shall not be
deemed to be a Purchased Asset hereunder.
1.1.(f) Computer Software. All computer source codes,
programs and other software of Company to the extent assignable by
Company, including all machine readable code, printed listings of
code, documentation and related property and information of
Company.
1.1.(g) Literature. All sales literature, promotional
literature, catalogs and similar materials of Company.
1.1.(h) Records and Files. All records and files of
Company of every kind including, without limitation, invoices,
customer and vendor lists, blueprints, specifications, designs,
drawings, and operating and marketing plans, and all other
documents, tapes, discs, programs or other embodiments of
information of Company; provided, however, that Company and
Shareholder shall be provided access and copies of such records and
files upon reasonable request (including as necessary to prepare
tax returns and respond to tax audits) so long as such access is
during normal business hours and does not interfere with Buyer's
operation of the Business.
1.1.(i) Notes and Accounts Receivable. All notes, drafts
and accounts receivable of Company.
1.1.(j) Licenses; Permits. All licenses, permits,
approvals, certifications and listings of Company.
1.1.(k) Corporate Name. The name "Rainfair," and all
rights to use or allow others to use such name.
1.1.(l) General Intangibles. All prepaid items, all
causes of action arising out of occurrences before or after the
Closing, and other intangible rights and assets.
1.2. Excluded Assets. The provisions of Section 1.1
notwithstanding, Company shall not sell, transfer, assign, convey or
deliver to Buyer, and Buyer will not purchase or accept the following
assets of Company (collectively the "Excluded Assets"):
1.2.(a) Cash and Cash Equivalents. All cash and cash
equivalents, other than petty cash balances at Company's various
places of business.
1.2.(b) VOC Credits. Company's 67 tons of emission
reduction credits for volatile organic compounds (VOCs) associated
with its former facilities located at 1501 Albert Street, 1500
Hamilton Street and 1205 N. Memorial Drive, Racine, Wisconsin, and
any contract for the sale of any VOCs.
1.2.(c) Consideration. The consideration delivered by
Buyer to Company pursuant to this Agreement.
1.2.(d) Tax Credits and Records. Federal, state and
local income and franchise tax credits and tax refund claims and
associated returns and records. Buyer shall have reasonable access
to such returns and records and may make excerpts therefrom and
copies thereof for the purpose of preparing Buyer's tax returns.
1.2.(e) Corporate Franchise. Company's franchise to be a
corporation, its certificate of incorporation, corporate seal,
stock books, minute books and other corporate records having
exclusively to do with the corporate organization and
capitalization of Company. Buyer shall have reasonable access as
necessary to conduct the Business following the Closing Date to
such books and records relating to all periods prior to and
including the Closing Date and may make excerpts therefrom and
copies thereof.
1.2.(f) Obligations of Affiliates. Notes, drafts,
accounts receivable or other obligations for the payment of money,
made or owed by any Affiliate of Company. For purposes of this
Agreement, the term "Affiliate" shall mean and include all
shareholders, directors and officers of a party; the spouse of any
such person; any person who would be the heir or descendant of any
such person if he or she were not living; and any entity in which
any of the foregoing has a direct or indirect interest (except
through ownership of less than 5% of the outstanding shares of any
entity whose securities are listed on a national securities
exchange or traded in the national over-the-counter market).
1.2.(g) Shareholder Property. The items set forth on
Schedule 1.2.(g).
1.2.(h) Agreement with City of Racine. That certain
Agreement dated May 1, 1989 between Company and the City of Racine
related to the transfer of Company's former facilities located at
1501 Albert Street, 1500 Hamilton Street and 1205 North Memorial
Drive, Racine, Wisconsin.
1.2.(i) Insurance Policies. All insurance policies,
together with all claims, refunds and credits due or to become due
with respect to such policies.
1.2.(j) Assets Related to Excluded Liabilities. All
claims and counterclaims with respect to rights of offset against
liabilities of Company not assumed by Buyer, or which Buyer fails
to assume and discharge as provided in this Agreement.
1.2.(k) Assets Related to Excluded Assets. Any asset
resulting from the sale of any Excluded Asset.
1.2.(l) Excluded Liabilities. Any contract, agreement,
commitment, credit or other asset that relates to a Liability other
than an Assumed Liability.
1.2.(m) Certain Records. Any assets and business records
of Company that do not pertain to the Business.
2. ASSUMPTION OF LIABILITIES
2.1. Liabilities to be Assumed. As used in this Agreement, the
term "Liability" shall mean and include any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
cost, expense, obligation or responsibility, fixed or unfixed, known or
unknown, asserted or unasserted, liquidated or unliquidated, secured or
unsecured. Subject to the terms and conditions of this Agreement, on the
Closing Date, Buyer shall assume and agree to perform and discharge the
following, and only the following Liabilities of Company (collectively the
"Assumed Liabilities"):
2.1.(a) Final Closing Balance Sheet Liabilities. The
accounts payable and accrued Liabilities reflected or reserved
against on the Final Closing Balance Sheet (as hereinafter
defined), but only in the amounts so reflected or reserved.
2.1.(b) Contractual Liabilities. Company's Liabilities
arising from and after the Closing Date under and pursuant to the
following Contracts:
(i) All Contracts described in any of Schedules
1.1.(c), 2.1.(b) or 4.14.(l).
(ii) Every Contract entered into by Company in the
ordinary course of its business which does not involve
consideration or other expenditure by Company payable or
performable on or after the Closing Date in excess of $25,000
or performance over a period of more than 12 months.
(iii) Liabilities associated with any contract that is
a Purchased Asset, except for Liabilities identified in
Section 2.2 hereof.
The Contracts described in subsections 2.1.(b)(i) and (ii) above,
and 2.1.(e) and 2.1.(g) below, are hereinafter collectively
described as the "Assumed Contracts."
2.1.(c) Liabilities Under Permits and Licenses.
Company's Liabilities arising from and after the Closing Date under
any permits or licenses listed in Schedule 4.11.(b) and assigned to
Buyer at the Closing.
2.1.(d) Pension Liability. Company's Liabilities under
the Rainfair, Inc. Employees' Union Retirement Plan, whether or not
reserved for on the Final Closing Balance Sheet.
2.1.(e) Collective Bargaining Agreement. The Collective
Bargaining Agreement dated August 1, 1994 between Company and Local
#187, International Ladies' Garment Workers' Union, as amended or
supplemented in writing.
2.1.(f) Other Assumed Liabilities. Company's liabilities
set forth on Schedule 2.1.(f).
2.1.(g) Employee Plans/Agreements. Any Liabilities under
the Employee Plans/Agreements as provided in Section 6.5.(b).
2.2. Liabilities Not to be Assumed. Except as and to the extent
specifically set forth in Section 2.1, Buyer is not assuming any
Liabilities of Company and all such Liabilities shall be and remain the
responsibility of Company. Notwithstanding the provisions of Section 2.1,
Buyer is not assuming and Company shall not be deemed to have transferred
to Buyer the following Liabilities of Company:
2.2.(a) Certain Contracts. The Liabilities of Company
under and pursuant to the following contracts and leases:
(i) The Lease dated March 24, 1989 between Company
and Leipold Enterprises, Ltd., except to the
extent such Liabilities are included in the
Sublease.
2.2.(b) Taxes Arising from Transaction. Any taxes
applicable to, imposed upon or arising out of the sale or transfer
of the Purchased Assets to Buyer and the other transactions
contemplated by this Agreement, including but not limited to any
income, transfer, sales, use, gross receipts or documentary stamp
taxes.
2.2.(c) Income and Franchise Taxes. Any Liability of
Company for Federal income taxes and any state or local income,
profit or franchise taxes (and any penalties or interest due on
account thereof).
2.2.(d) Insured Claims. Any Liability of Company insured
against, to the extent such Liability is or will be paid by an
insurer.
2.2.(e) Product Liability. Except as provided in Section
2.1.(f), any Liability of Company arising out of or in any way
relating to or resulting from any product manufactured, assembled
or sold prior to the Closing Date (including any Liability of
Company for claims made for injury to person, damage to property or
other damage, whether made in product liability, tort, breach of
warranty or otherwise).
2.2.(f) Litigation Matters. Any Liability of Company
with respect to any action, suit, proceeding, arbitration,
investigation or inquiry, whether civil, criminal or administrative
("Litigation"), whether or not described in Schedule 4.10.
2.2.(g) Infringements. Any Liability of Company to a
third party for infringement of such third party's Trade Rights.
2.2.(h) Transaction Expenses. All Liabilities incurred
by Company in connection with this Agreement and the transactions
contemplated herein.
2.2.(i) Liability For Breach. Liabilities of Company for
any breach or failure to perform any of Company's covenants and
agreements contained in, or made pursuant to, this Agreement, or,
prior to the Closing, any other contract, whether or not assumed
hereunder, including breach arising from assignment of contracts
hereunder without consent of third parties.
2.2.(j) Liabilities to Affiliates. Liabilities of
Company to its present or former Affiliates, except obligations for
compensation for services rendered as an employee pursuant to plans
or practices disclosed in Schedule 4.16.(a).
2.2.(k) Violation of Laws or Orders. Liabilities of
Company for any violation of or failure to comply with any statute,
law, ordinance, rule or regulation (collectively, "Laws") or any
order, writ, injunction, judgment, plan or decree (collectively,
"Orders") of any court, arbitrator, department, commission, board,
bureau, agency, authority, instrumentality or other body, whether
federal, state, municipal, foreign or other (collectively,
"Government Entities").
2.2.(l) Funded Debt. Liabilities of Company for loans
from Firstar Bank Milwaukee, N.A., the Wisconsin Department of
Development and the City of Racine.
2.2.(m) Deferred Compensation Arrangement. Liabilities
of Company relating to all deferred compensation arrangements with
William A. Meade.
3. PURCHASE PRICE - PAYMENT
3.1. Purchase Price.
3.1.(a) Determination of Purchase Price. The purchase
price (the "Purchase Price") for the Purchased Assets shall be (i) the
assumption of the Assumed Liabilities, and (ii) the sum of the Net Asset
Value (as hereinafter defined), plus $500,000, less the amount, if any, by
which (i) the aggregate amount of cash received by the Company on or
before the Closing Date as a result of the collection of receivables or
the sale of other Purchased Assets subsequent to the date of the Final
Closing Balance Sheet exceeds (ii) the aggregate amount of cash expended
by the Company subsequent to the date of the Final Closing Balance Sheet
through the Closing Date to pay Assumed Liabilities and expenses incurred
by the Company in the ordinary course of business subsequent to the date
of the Final Closing Balance Sheet (other than payments made with respect
to liabilities which are not Assumed Liabilities), or plus the amount if
any by which (x) the aggregate amount of cash expended by the Company
subsequent to the date of the Final Closing Balance Sheet through the
Closing Date to pay Assumed Liabilities and expenses incurred by the
Company in the ordinary course of business subsequent to the date of the
Final Closing Balance Sheet (other than payments made with respect to
liabilities which are not Assumed Liabilities) exceeds (y) the aggregate
amount cash received by the Company on or before the Closing Date as a
result of the collection of receivables or the sale of other Purchased
Assets subsequent to the date of the Final Closing Balance Sheet.
3.1.(b) Adjustment to Purchase Price. The Purchase Price
provided for in Section 3.1.(a) shall be subject to adjustment as provided
for in Section 3.2.(c) to correct for any errors made in the allocation of
net book value of Company's assets and liabilities in the calculation of
Net Asset Value that are discovered between the Closing and the earlier of
(i) the date 45 days after the Closing Date, and (ii) Buyer's delivery of
the written notice of the Adjustment Amount to Company, as provided for in
Section 3.2.(c).
3.2. Payment of Purchase Price. The Purchase Price shall be paid
by Buyer as follows:
3.2.(a) Assumption of Liabilities. At the Closing, Buyer
shall deliver to Company such documents and instruments as are
reasonably required to evidence the assumption of the Assumed
Liabilities.
3.2.(b) Cash to Company. At the Closing, Buyer shall
deliver to Company the sum of the Net Asset Value as reflected on
the Final Closing Balance Sheet (as hereinafter defined), plus
$500,000.
3.2.(c) Adjustment Amount.
(i) Within 45 days after the Closing Date, Buyer
shall determine the adjustment of the Purchase Price required
by Section 3.1 above (the "Adjustment Amount") and notify
Company in writing of the Adjustment Amount and the party
responsible for payment. Such notice shall contain a detailed
breakout of the calculation of the Adjustment Amount.
(ii) Within 10 days following the notice referred to
in (i) above, Company or its independent accountants
("Company's Accountants") may object to any of the information
contained in said notice which could affect the necessity or
amount of the Adjustment Amount. Any such objection shall be
made in writing and shall state Company's determination of the
Adjustment Amount.
(iii) In the event of a dispute or disagreement
relating to the Adjustment Amount which Buyer and Company are
unable to resolve, either party may elect to have all such
disputes or disagreements resolved by an accounting firm of
nationally recognized standing (the "Third Accounting Firm")
to be mutually selected by Company and Buyer or, if no
agreement is reached, by Company's Accountants and Buyer's
independent accountants ("Buyer's Accountants"). The Third
Accounting Firm shall make a resolution of the Adjustment
Amount, which shall be final and binding for purposes of this
Article 3. The Third Accounting Firm shall be instructed to
use every reasonable effort to perform its services within 10
days of submission of the balance sheet to it and, in any
case, as soon as practicable after such submission. The fees
and expenses for the services of the Third Accounting Firm
shall be shared by Buyer and Company as follows:
Company shall pay a percentage of such fees and
expenses equal to A/(A+B) and Buyer shall pay a percentage of
such fees and expenses equal to B/(A+B), where A is equal to
the absolute value of the difference (in dollars) between the
Adjustment Amount as finally determined by the Third
Accounting Firm and the Adjustment Amount as reflected in the
objection prepared and delivered by Company in accordance with
Section 3.2.(c)(ii), and B is equal to the absolute value of
the difference (in dollars) between the Adjustment Amount as
finally determined by the Third Accounting Firm and the
Adjustment Amount as reflected in the report prepared and
delivered by Buyer in accordance with Section 3.2.(c)(i).
(iv) The Adjustment Amount shall be paid by the party
responsible therefore in the amount determined in accordance
with Section 3.2.(c) within 3 business days of such
determination without interest or penalty of any kind, if paid
as provided herein. Any portion of the Adjustment Amount not
paid as provided herein shall accrue interest until paid at
the then current prime interest rate charged by Firstar Bank
Milwaukee, N.A.
(v) Buyer agrees to permit Company, Company's
Accountants and the Third Accounting Firm, and their
respective representatives, during normal business hours, to
have reasonable access to, and to examine and make copies of,
all books and records of Company, including but not limited to
the books, records, schedules, work papers and audit programs
of Buyer and Buyer's Accountants and access to representatives
of Buyer's Accountants, which documents and access are
necessary to review the calculation of the Adjustment Amount
delivered by Buyer in accordance with Section 3.2.(c)(i).
Company similarly agrees to permit Buyer's Accountants and the
Third Accounting Firm and their respective representatives,
during normal business hours, to have reasonable access to any
books and records of Company which do not constitute Purchased
Assets, in order to enable them to prepare such calculation of
the Adjustment Amount.
3.2.(d) Method of Payment. All payments under this
Section 3.2 shall be made in the form of certified or bank
cashier's check payable to the order of the recipient or, at the
recipient's option, by wire transfer of immediately available funds
to an account designated by the recipient not less than 24 hours
prior to the time for such payment specified herein.
3.3. Determination of Net Asset Value.
3.3.(a) Definition of Net Asset Value. The term "Net
Asset Value" shall mean the dollar amount by which the net book
value of the Purchased Assets exceeds the net book value of the
Assumed Liabilities, both as reflected in the Final Closing Balance
Sheet. Only Purchased Assets and Assumed Liabilities shall be
considered in the calculation of Net Asset Value.
3.3.(b) Final Closing Balance Sheet. The balance sheet
of Company prepared as of Company's April 30, 1996 fiscal year end,
certified by Company's independent accountants ("Company's
Accountants"), shall be prepared as follows and delivered to Buyer
not less than 1 business day prior to the Closing (the "Final
Closing Balance Sheet"):
(i) The Final Closing Balance Sheet shall be prepared
in accordance with generally accepted accounting principles
from the books and records of Company, on a basis consistent
with the generally accepted accounting principles theretofore
followed by Company in the preparation of its historical
balance sheets and in accordance with this Section 3.3, and
shall fairly present the financial position of Company as of
the Company's April 30, 1996 fiscal year end. The balance
sheet shall be accompanied by detailed schedules of the
Purchased Assets and Assumed Liabilities and by a report of
Company's Accountants (1) setting forth the amount of Net
Asset Value (as defined above) reflected in the balance sheet,
and (2) stating that (a) the examination of the balance sheet
has been made in accordance with generally accepted auditing
standards and (b) the balance sheet has been prepared in
accordance with generally accepted accounting principles, on a
basis consistent with the accounting principles theretofore
followed by Company, except as otherwise provided in this
Section 3.3.
(ii) Until the Closing Date, Company shall permit
Buyer, Buyer's independent accountants ("Buyer's
Accountants"), and their respective representatives, during
normal business hours, to have reasonable access to, and to
examine and make copies of (except in the case of the work
paper of Company's Accountants), all books and records of
Company, including but not limited to the books, records,
schedules and work papers of Company and Company's Accountants
and access to representatives of Company's Accountants, which
documents and access are necessary to review the balance sheet
delivered by Company in accordance with Section 3.3.(b)(i).
In addition, Buyer and Buyer's Accountants had the opportunity
to observe the taking of the inventory in connection with the
preparation of such balance sheet.
(iii) Notwithstanding any provision contained herein
requiring that the Final Closing Balance Sheet be prepared in
a manner consistent with Company's past practices or in
accordance with generally accepted accounting principles, the
Final Closing Balance Sheet shall be prepared utilizing the
following criteria:
(A) Prepaid expenses shall be valued at not more
than the net realizable value which Buyer can obtain
from such assets.
(B) Inventory shall be valued in accordance with
the following standards:
A physical inventory was taken as of April 30, 1996.
Finished goods inventory is net of a $350,000 reserve
for obsolete and slow moving inventory.
Except to the extent otherwise provided for herein,
inventory is valued in accordance with generally
accepted accounting principles on the basis of the lower
of cost or market.
No LIFO reserve shall be included on the Final Closing
Balance Sheet.
(C) All accrued liabilities are sufficient for
the payment in full of the liabilities to which they
relate and accrued expenses reflect all year-end
accruals.
(D) Accounts receivable and notes receivable
shall be stated net of an appropriate reserve for
doubtful accounts and anticipated collection expenses
(the "Accounts Reserve").
(E) No warranty reserve shall be established.
(F) The net unfunded pension liability for the
Rainfair, Inc. Employees' Union Retirement Plan (i.e.,
the unfunded pension liability less the unamortized
pension cost) shall be reflected as $410,000 on the
Final Closing Balance Sheet.
3.4. Prorations. The following prorations relating to the
Purchased Assets will be made as of the close of business on the day
before the Closing Date (the "Effective Time"), with Company liable to the
extent such items relate to any time period up to and including the
Effective Time if not already taken into account on the Final Closing
Balance Sheet and Buyer liable to the extent such items relate to periods
subsequent to the Effective Time. Except as otherwise specifically
provided herein, the net amount of all such prorations will be deducted
from the Net Asset Value:
3.4.(a) Personal property taxes and other taxes, if any,
on or with respect to the Purchased Assets; provided that special
assessments for work actually commenced or levied prior to the date
of this Agreement shall be paid by Company.
3.4.(b) The amount of rents, taxes and charges for sewer,
water, fuel, telephone, electricity and other utilities; provided
that if practicable, meter readings shall be taken at the Effective
Time and the respective obligations of the parties determined in
accordance with such readings.
3.4.(c) All other items normally adjusted in connection
with similar transactions.
If the actual expense of any of the above items for the billing
period within which the Effective Time falls is not known at the Effective
Time, the proration shall be made based on the expense incurred in the
previous billing period, for expenses billed less often than quarterly,
and on the average expense incurred in the preceding three billing
periods, for expenses billed quarterly or more often. Company agrees to
furnish Buyer with such documents and other records as shall be reasonably
requested in order to confirm all proration calculations.
3.5. Other Payments and Adjustments. Except to the extent taken
into account on the Final Closing Balance Sheet, Buyer shall receive a
credit against Net Asset Value in an amount equal to all vacation, holiday
and sick pay unpaid by Company as of the Effective Time attributable to
any period or partial period of employment by Company prior to April 30,
1996, plus employee payroll taxes applicable thereto due or to become due,
for those employees of Company who will be employed by Buyer after the
Closing and (i) who have not as of the Effective Time taken vacation,
holiday or sick time earned prior to April 30, 1996, or (ii) who have not
earned vacation, holiday or sick time as of the Effective Time but who
would have earned vacation, holiday or sick time for any such period or
partial period of employment prior to April 30, 1996 (on a pro rata basis)
had they continued as employees of Company to the date when such vacation,
holiday or sick pay would have accrued to them.
3.6. Allocation of Purchase Price. The aggregate Purchase Price
(including the assumption by Buyer of the Assumed Liabilities) shall be
allocated among the Purchased Assets for tax purposes in accordance with
Schedule 3.6. Company and Buyer will follow and use such allocation in
all tax returns, filings or other related reports made by them to any
governmental agencies. To the extent that disclosures of this allocation
are required to be made by the parties to the Internal Revenue Service
("IRS") under the provisions of Section 1060 of the Internal Revenue Code
of 1986, as amended (the "Code") or any regulations thereunder, Buyer and
Company will disclose such reports to the other prior to filing with the
IRS.
3.7. Additional Post-Closing Adjustment For Accounts Receivable.
As of the first annual anniversary of the Closing Date, Buyer shall
determine the amount of the accounts receivable and notes receivable that
were included on the Final Closing Balance Sheet (disregarding the
Accounts Reserve) that remain outstanding (the "Outstanding Accounts").
In the event the Accounts Reserve exceeds the Outstanding Accounts, Buyer
shall pay to Company such difference. In the event the Outstanding
Accounts exceed the Accounts Reserve, Company shall pay to Buyer such
difference. Coincident with such payment, Buyer shall transfer to Company
all of the Outstanding Accounts, without recourse, which Outstanding
Accounts Company may then collect in a manner designed to minimize adverse
effects on the Business (provided that turning over the Outstanding
Accounts to a reputable collection agency is permitted). In the event
Buyer receives payment for any of the Outstanding Accounts after such
Outstanding Accounts have been assigned to Company pursuant to the terms
of this Section 3.7, such payment shall be promptly paid over to Company
(or its designees). The determination of Outstanding Accounts shall be
made by Buyer within sixty (60) days following the first anniversary of
the Closing Date, and Company's Accountants will be provided access to all
related books and records related to verify such determination by Buyer.
The payment of any adjustment shall be made within thirty (30) days after
such determination. Notwithstanding the foregoing in this Section 3.7,
Buyer may elect to retain the Outstanding Accounts in exchange for making
a payment to Company in the amount of the Accounts Reserve and in such
event no other adjustment payment will be made by Buyer or Company and
Buyer may thereafter deal with the Outstanding Accounts as it determines
in its sole and unqualified discretion. For purposes of determining the
amount of the Outstanding Accounts, any payment received by Buyer
following the Closing Date from a customer of the Business shall be
allocated among the outstanding invoices of such customer as follows:
first, to the invoice referenced on the customer's payment or transmittal
correspondence; or if there is no invoice so referenced, then to the
customer's invoice in the same amount as the payment, if such matching is
possible; or if it is not, then such payment shall be applied against the
customer's outstanding balance, with the invoices that have been
outstanding for the longest period of time being credited first. Buyer
shall render a report to Company within twenty (20) days following the end
of each quarter (with the first such report due September 20, 1996 with
respect to the quarter ending August 30, 1996) of the accounts receivable
and notes receivable that constitute Outstanding Accounts at the end of
such quarter.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHAREHOLDER
Company and Shareholder, jointly and severally, make the following
representations and warranties to Buyer, each of which is true and correct
on the date hereof, shall remain true and correct to and including the
Closing Date, shall be unaffected by any investigation heretofore or
hereafter made by Buyer, or any knowledge of Buyer other than as
specifically disclosed in the Disclosure Schedule delivered to Buyer at
the time of execution of this Agreement, and shall survive the Closing of
the transactions provided for herein. Throughout this Agreement, the
phrase "to the knowledge of Company" shall mean the actual knowledge of
Craig L. Leipold, Bruce Bartelt and Sara Vidian.
4.1. Corporate.
4.1.(a) Organization. Company is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Wisconsin.
4.1.(b) Corporate Power. Company has all requisite
corporate power and authority to own, operate and lease its
properties, to carry on its business as and where such is now being
conducted, to enter into this Agreement and the other documents and
instruments to be executed and delivered by Company pursuant hereto
and to carry out the transactions contemplated hereby and thereby.
4.1.(c) Qualification. Company is duly licensed or
qualified to do business as a foreign corporation, and is in good
standing, in each jurisdiction wherein the character of the
properties owned or leased by it, or the nature of its business,
makes such licensing or qualification necessary. The states in
which Company is licensed or qualified to do business are listed in
Schedule 4.1.(c).
4.1.(d) No Subsidiaries. Company does not own any
interest in any corporation, partnership or other entity.
4.2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by
Company pursuant hereto and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors and shareholders of Company. No other or further corporate act
or proceeding on the part of Company is necessary to authorize this
Agreement or the other documents and instruments to be executed and
delivered by Company pursuant hereto or the consummation of the
transactions contemplated hereby and thereby. This Agreement constitutes,
and when executed and delivered, the other documents and instruments to be
executed and delivered by Company pursuant hereto will constitute, valid
binding agreements of Company, enforceable in accordance with their
respective terms.
4.3. No Violation. Except as set forth on Schedule 4.3, neither
the execution and delivery of this Agreement or the other documents and
instruments to be executed and delivered by Company pursuant hereto, nor
the consummation by Company of the transactions contemplated hereby and
thereby (a) will violate any applicable Law or Order, (b) will require any
authorization, consent, approval, exemption or other action by or notice
to any Government Entity (including, without limitation, under any
"plant-closing" or similar law), or (c) subject to obtaining the consents
referred to in Schedule 4.3 (the "Required Consents"), will violate or
conflict with, or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or will result
in the termination of, or accelerate the performance required by, or
result in the creation of any Lien (as defined in Section 4.12.(a)) upon
any of the assets of Company under, any term or provision of the Articles
of Incorporation or By-laws of Company or of any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or
character to which Company is a party or by which Company or any of its
assets or properties may be bound or affected.
4.4. Financial Statements. Included as Schedule 4.4 are true and
complete copies of the financial statements of Company consisting of
balance sheets of Company as of April 30, 1992, 1993, 1994 and 1995, and
the related statements of income and cash flows for the years then ended
(including the notes contained therein or annexed thereto), which
financial statements have been reported on, and are accompanied by, the
signed, unqualified opinions of Clifton, Gunderson & Co., independent
auditors for Company for such years. Schedule 4.4 includes an unaudited
balance sheet of Company as of April 30, 1996 and the related unaudited
statement of income for the year then ended (the "Recent Balance Sheet").
All of such financial statements (including all notes and schedules
contained therein or annexed thereto) are complete and accurate, have been
prepared in accordance with generally accepted accounting principles
(except, in the case of the Recent Balance Sheet, for normal year-end
adjustments and the absence of footnote disclosure) applied on a
consistent basis, have been prepared in accordance with the books and
records of Company, and fairly present, in accordance with generally
accepted accounting principles, the assets, liabilities and financial
position, the results of operations and cash flows of Company as of the
dates and for the years and periods indicated. The financial statements
of Company consisting of a balance sheet of Company as of April 30, 1996,
and the related statements of income and cash flow for the year then ended
(including the notes contained therein or annexed thereto), which
financial statements will be reported on, and will be accompanied by, a
signed, unqualified opinion of Clifton, Gunderson & Co., will be complete
and accurate, will be prepared in accordance with generally accepted
accounting principles applied on a consistent basis, will be prepared in
accordance with the books and records of the Company, and will fairly
present, in accordance with generally accepted accounting principles, the
assets, liabilities and financial position, the results of operations and
cash flows of Company as of the date and for the period intended.
4.5. Tax Matters.
4.5.(a) Provision For Taxes. The provision made for
taxes on the Final Closing Balance Sheet will be sufficient for the
payment of all federal, state, foreign, county, local and other
income, ad valorem, excise, profits, franchise, occupation,
property, payroll, sales, use, gross receipts and other taxes (and
any interest and penalties) and assessments, whether or not
disputed at the date of the Final Closing Balance Sheet, and for
all years and periods prior thereto. Since the date of the Final
Closing Balance Sheet, Company has not incurred any taxes other
than taxes incurred in the ordinary course of business consistent
in type and amount with past practices of Company.
4.5.(b) Tax Returns Filed. Except as set forth on
Schedule 4.5.(b), all federal, state, foreign, county, local and
other tax returns required to be filed by or on behalf of Company
have been timely filed and when filed were true and correct in all
material respects, and the taxes shown as due thereon were paid or
adequately accrued. Company has duly withheld and paid all taxes
which it is required to withhold and pay relating to salaries and
other compensation heretofore paid to the employees of Company.
4.5.(c) Tax Audits. The federal and state income tax
returns of Company have been audited by the Internal Revenue
Service and appropriate state taxing authorities for the periods
and to the extent set forth in Schedule 4.5.(c), and Company has
not received from the Internal Revenue Service or from the tax
authorities of any state, county, local or other jurisdiction any
notice of underpayment of taxes or other deficiency which has not
been paid nor any objection to any return or report filed by
Company. There are outstanding no agreements or waivers extending
the statutory period of limitations applicable to any tax return or
report.
4.5.(d) Consolidated Group. Except as set forth in
Schedule 4.5.(d), during the preceding six years, Company has not
been a member of an affiliated group of corporations that filed a
consolidated tax return.
4.5.(e) Other. Except as set forth in Schedule 4.5.(e),
during the preceding five years, Company has not (i) filed any
consent or agreement under Section 341(f) of the Code, (ii) applied
for any tax ruling, (iii) entered into a closing agreement with any
taxing authority, (iv) filed an election under Section 338(g) or
Section 338(h)(10) of the Code (nor has a deemed election under
Section 338(e) of the Code occurred), (v) made any payments, or
been a party to an agreement (including this Agreement) that under
any circumstances could obligate it to make payments that will not
be deductible because of Section 280G of the Code, or (vi) been a
party to any tax allocation or tax sharing agreement.
4.6. [Reserved]
4.7. Inventory. Except to the extent of a $350,000 reserve taken
with respect thereto, the inventory of Company reflected on the Final
Closing Balance Sheet consists of a quality usable and saleable in the
ordinary course of business, had an aggregate commercial value at least
equal to the value shown on such balance sheet and is valued in accordance
with generally accepted accounting principles at the lower of cost (on a
LIFO basis) or market. All inventory purchased since the date of such
balance sheet consists of a quality usable and saleable in the ordinary
course of business. Except as set forth in Schedule 4.7, all inventory of
Company is located on premises owned or leased by Company as reflected in
this Agreement.
4.8. Absence of Certain Changes. Except as and to the extent set
forth in Schedule 4.8, since the date of the Final Closing Balance Sheet
there has not been:
4.8.(a) No Adverse Change. Any material adverse change
in the financial condition, assets, Liabilities, business,
prospects or operations of Company (a "Material Adverse Effect");
4.8.(b) No Damage. Any material loss, damage or
destruction, whether covered by insurance or not, adversely
affecting Company's business or properties;
4.8.(c) No Increase in Compensation. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee or agent of Company (including, without limitation, any
increase or change pursuant to any bonus, pension, profit sharing,
retirement or other plan or commitment), or any bonus or other
employee benefit granted, made or accrued, all except in the
ordinary course of business consistent with past practice;
4.8.(d) No Labor Disputes. Any labor dispute or
disturbance, other than routine individual grievances which are not
material to the business, financial condition or results of
operations of Company;
4.8.(e) No Commitments. Any commitment or transaction by
Company (including, without limitation, any borrowing or capital
expenditure) other than in the ordinary course of business
consistent with past practice;
4.8.(f) [Reserved]
4.8.(g) No Disposition of Property. Any sale, lease or
other transfer or disposition of any properties or assets of
Company, except for the sale of inventory items in the ordinary
course of business;
4.8.(h) No Indebtedness. Excluding bank borrowings and
other indebtedness incurred under credit facilities existing on
April 30, 1996 and in the ordinary course of business, any
indebtedness for borrowed money incurred, assumed or guaranteed by
Company;
4.8.(i) [Reserved]
4.8.(j) No Amendment of Contracts. Any entering into,
amendment or termination by Company of any contract, or any waiver
of material rights thereunder, other than in the ordinary course of
business;
4.8.(k) Loans and Advances. Any loan or advance (other
than advances to employees in the ordinary course of business for
travel and entertainment and credit terms to customers, all in
accordance with past practice) to any person including, but not
limited to, any officer, director or employee of Company, or
Shareholder or Affiliate;
4.8.(l) Credit. Any grant of credit to any customer or
distributor on terms or in amounts more favorable than those which
have been extended to such customer or distributor in the past, any
other change in the terms of any credit heretofore extended, or any
other change of Company's policies or practices with respect to the
granting of credit; or
4.8.(m) No Unusual Events. Any other event or condition
not in the ordinary course of business of Company.
4.9. Absence of Undisclosed Liabilities. Except as and to the
extent specifically disclosed in the Final Closing Balance Sheet, or in
the Disclosure Schedules, Company does not have any Liabilities, other
than commercial liabilities and obligations incurred since the date of the
Final Closing Balance Sheet in the ordinary course of business and
consistent with past practice, or which individually and in the aggregate
will not have a Material Adverse Effect. Except as and to the extent
described in the Final Closing Balance Sheet or in the Disclosure
Schedules, to the knowledge of Company there is no basis for the assertion
against Company of any Liability except commercial liabilities and
obligations incurred in the ordinary course of Company's business and
consistent with past practice.
4.10. No Litigation. Except as set forth in Schedule 4.10
there is no Litigation pending or overtly threatened against Company, its
directors (in such capacity), its business or any of its assets, nor, to
the knowledge of Company, is there any basis for any Litigation. Schedule
4.10 also identifies all Litigation to which Company or any of its
directors have been parties since January 1, 1992. Except as set forth in
Schedule 4.10, neither Company nor its business or assets is subject to
any Order.
4.11. Compliance With Laws and Orders.
4.11.(a) Compliance. Except as set forth in Schedule
4.11.(a), Company (including each and all of its operations,
practices, properties and assets) is in compliance with all
applicable Laws and Orders, including, without limitation, those
applicable to discrimination in employment, occupational safety and
health, trade practices, competition and pricing, product
warranties, zoning, building and sanitation, employment, retirement
and labor relations, product advertising and the Environmental Laws
as hereinafter defined, where non-compliance would result in a
Material Adverse Effect. Except as set forth in Schedule 4.11.(a),
Company has not received written notice of any violation or alleged
violation of, and is subject to no Liability for past or continuing
violation of, any Laws or Orders, except where any such past or
continuing violations, individually and in the aggregate, would not
have a Material Adverse Effect. All reports and returns required
to be filed by Company with any Government Entity have been filed,
and were accurate and complete in all material respects when filed.
The general representations contained in this Section 4.11.(a)
shall not apply to subject matter more specifically addressed
elsewhere in this Section 4.11. Without limiting the generality of
the foregoing:
(i) The operation of Company's business as it is now
conducted does not, nor does any condition existing at the
Facility, in any manner which could have a Material Adverse
Effect, constitute a nuisance or other tortious interference
with the rights of any person or persons in such a manner as
to give rise to or constitute the grounds for a suit, action,
claim or demand by any such person or persons seeking
compensation or damages or seeking to restrain, enjoin or
otherwise prohibit any aspect of the conduct of such business
or the manner in which it is now conducted.
(ii) Company has made all required payments to its
unemployment compensation reserve accounts with the
appropriate governmental departments of the states where it is
required to maintain such accounts, and none of such accounts
has a negative balance.
(iii) Company has delivered to Buyer copies of all
reports of Company for the past five (5) years required under
the federal Occupational Safety and Health Act of 1970, as
amended, and under all other applicable health and safety laws
and regulations. The deficiencies, if any, noted on such
reports have been corrected.
4.11.(b) Licenses and Permits. Company has all licenses,
permits, approvals, authorizations and consents of all Government
Entities and all certification organizations required for the
conduct of the business (as presently conducted and as proposed to
be conducted) and operation of the Facility, except where the
failure to have any of the foregoing would have a Material Adverse
Effect. All such licenses, permits, approvals, authorizations and
consents are described in Schedule 4.11.(b), are in full force and
effect. Except as set forth in Schedule 4.11.(b), Company
(including its operations, properties and assets) is and has been
in compliance with all such permits and licenses, approvals,
authorizations and consents, where non-compliance would have a
Material Adverse Effect.
4.11.(c) Environmental Matters. The applicable Laws
relating to pollution or protection of the environment, including
Laws relating to emissions, discharges, generation, storage,
releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic, hazardous or petroleum or
petroleum-based substances or wastes ("Waste") into the environment
(including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Waste including, without
limitation, the Clean Water Act, the Clean Air Act, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act and
the Comprehensive Environmental Response Compensation Liability Act
("CERCLA"), as amended, and their state and local counterparts are
herein collectively referred to as the "Environmental Laws".
Company is in compliance with all limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws or
contained in any regulations, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or
approved thereunder, where non-compliance would result in a
Material Adverse Effect. Except as set forth in Schedule 4.11.(c),
there is no Litigation nor any demand, claim, hearing or notice of
violation pending or overtly threatened against Company relating in
any way to the Environmental Laws or any Order issued, entered,
promulgated or approved thereunder. Except as set forth in
Schedule 4.11.(c), there are no past or present events, conditions,
circumstances, activities, practices, incidents, actions, omissions
or plans created or caused by Company's operations at the Facility
or, to the knowledge of Company, any other party, which may
interfere with or prevent compliance or continued compliance with
the Environmental Laws or with any Order issued, entered,
promulgated or approved thereunder by the Business at the Facility,
or which may give rise to any Liability, including, without
limitation, Liability under CERCLA or similar state or local Laws,
or otherwise form the basis of any Litigation, hearing, notice of
violation, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge,
release or threatened release into the environment, of any Waste at
or from the Facility.
4.12. Title to and Condition of Properties.
4.12.(a) Marketable Title. Company has good and
marketable title to all the Purchased Assets, free and clear of all
mortgages, liens (statutory or otherwise), security interests,
claims, pledges, licenses, equities, options, conditional sales
contracts, assessments, levies, easements, covenants, reservations,
restrictions, rights-of-way, exceptions, limitations, charges or
encumbrances of any nature whatsoever (collectively, "Liens")
except those described in Schedule 4.12.(a)(i). Except as
identified in Schedule 4.12.(a)(i) and except for the Required
Consents, none of the Purchased Assets are subject to any
restrictions with respect to the transferability thereof. At
Closing, Buyer will receive good and marketable title to all the
Purchased Assets, free and clear of all Liens of any nature
whatsoever except those described in Schedule 4.12.(a)(ii).
4.12.(b) Condition. All tangible assets constituting
Purchased Assets hereunder are in good operating condition and
repair, free from any defects (except for ordinary wear and tear
and such minor defects as do not interfere with the use thereof in
the conduct of the normal operations of Company), have been
maintained consistent with the standards generally followed in the
industry and are sufficient to carry on the business of Company as
conducted during the preceding 12 months. All buildings, plants
and other structures utilized by Company are in good condition and
repair and have no structural defects or defects affecting the
plumbing, electrical, sewerage, or heating, ventilating or air
conditioning systems (except for ordinary wear and tear and such
minor defects as do not interfere with the use thereof in the
conduct of the normal operations of the Business).
4.12.(c) Real Property. Schedule 4.12.(c) sets forth all
real property used or occupied by Company (the "Real Property"),
including a description of all land, and all encumbrances,
easements or rights of way of record (or, if not of record, of
which Company has notice or actual knowledge) granted on or
appurtenant to or otherwise affecting such Real Property, the
zoning classification thereof, and all plants, buildings or other
structures located thereon. There are now in full force and effect
duly issued certificates of occupancy permitting the Real Property
and improvements located thereon to be legally used and occupied as
the same are now constituted. All of the Real Property has
permanent rights of access to dedicated public highways. No fact
or condition exists which would prohibit or adversely affect the
ordinary rights of access to and from the Real Property from and to
the existing highways and roads and there is no pending or overtly
threatened restriction or denial, governmental or otherwise, upon
such ingress and egress, except such as would not materially
adversely affect any Real Property. There is not (i) any claim of
adverse possession or prescriptive rights involving any of the Real
Property, (ii) any structure located on any Real Property which
encroaches on or over the boundaries of neighboring or adjacent
properties or (iii) any structure of any other party which
encroaches on or over the boundaries of any of such Real Property,
except, in each case, such as would not materially adversely affect
any Real Property. None of the Real Property is located in a flood
plain, flood hazard area, wetland or lakeshore erosion area within
the meaning of any Law. No public improvements have been commenced
and to the knowledge of Company, none are planned which in either
case may result in special assessments against or otherwise
materially adversely affect any Real Property. To the knowledge of
Company, there is no (i) planned or proposed increase in assessed
valuations of any Real Property other than in the ordinary course,
(ii) Order requiring repair, alteration, or correction of any
existing condition affecting any Real Property or the systems or
improvements thereat, (iii) condition or defect which could give
rise to an order of the sort referred to in "(ii)" above, or (iv)
underground storage tanks.
4.12.(d) No Condemnation or Expropriation. Neither the
whole nor any portion of the property or any other assets of
Company is subject to any Order to be sold or is being condemned,
expropriated or otherwise taken by any Government Entity with or
without payment of compensation therefor, nor to the knowledge of
Company has any such condemnation, expropriation or taking been
proposed.
4.13. Insurance. Set forth in Schedule 4.13 is a complete and
accurate list and description of all policies of fire, liability, product
liability, workers compensation, health and other forms of insurance
presently in effect with respect to the business and properties of
Company, true and correct copies of which have heretofore been delivered
to Buyer. All such policies are valid, outstanding and enforceable
policies and provide insurance coverage for the properties, assets and
operations of Company, of the kinds, in the amounts and against the risks
customarily maintained by organizations similarly situated; and no such
policy (nor any previous policy) provides for or is subject to any
currently enforceable retroactive rate or premium adjustment, loss sharing
arrangement or other actual or contingent liability (excluding policy
deductibles) arising wholly or partially out of events arising prior to
the date hereof. Schedule 4.13 indicates each policy as to which (a) the
coverage limit has been reached or (b) the total incurred losses to date
equal 75% or more of the coverage limit. No notice of cancellation or
termination has been received with respect to any such policy and there is
no act or omission of Company which could result in cancellation of any
such policy prior to its scheduled expiration date. Company has not been
refused any insurance with respect to any aspect of the operations of the
business nor has its coverage been limited by any insurance carrier to
which it has applied for insurance or with which it has carried insurance
during the last three years. Since 1989 all products liability and
general liability policies maintained by or for the benefit of Company
have been "occurrence" policies and not "claims made" policies. There is
no claim by Company pending under any such policies as to which coverage
has been questioned, denied or disputed by the underwriters of such
policies, and neither Company nor Shareholder has actual knowledge of any
basis for denial of any claim under any such policy. Company has not
received any written notice from or on behalf of any insurance carrier
issuing any such policy that insurance rates therefor will hereafter be
substantially increased (except to the extent that insurance rates may be
increased for all similarly situated risks) or that there will hereafter
be a cancellation or an increase in a deductible (or an increase in
premiums in order to maintain an existing deductible) or nonrenewal of any
such policy. Such policies are sufficient in all material respects for
compliance by Company with all requirements of law and with the
requirements of all material contracts to which Company is a party.
4.14. Contracts and Commitments.
4.14.(a) Real Property Leases. Except as set forth in
Schedule 4.12.(c), Company has no leases of real property.
4.14.(b) Personal Property Leases. Except as set forth in
Schedule 1.1.(c), Company has no leases of personal property
involving consideration or other expenditure in excess of $10,000
or involving performance over a period of more than 12 months.
4.14.(c) Purchase Commitments. Except as set forth on
Schedule 4.14.(c), Company has no purchase commitments for
inventory items or supplies.
4.14.(d) Sales Commitments. Except as set forth on
Schedule 4.14.(d), Company has no sales contracts or commitments to
customers or distributors which aggregate in excess of $25,000 to
any one customer or distributor (or group of affiliated customers
or distributors). Company has no sales contracts or commitments
except those made in the ordinary course of business, at arm's
length.
4.14.(e) Contracts for Services. Except as set forth in
Schedule 4.14.(e), Company has no agreement, understanding,
contract or commitment (written or oral) with any officer,
employee, agent, consultant, distributor, dealer or franchisee that
is not cancelable by Company on notice of not longer than 30 days
without liability, penalty or premium of any nature or kind
whatsoever.
4.14.(f) Powers of Attorney. Except for customs agents
and for tax matters, the Company has not given a power of attorney,
which is currently in effect, to any person, firm or corporation
for any purpose whatsoever.
4.14.(g) Collective Bargaining Agreements. Except as set
forth in Schedule 4.14.(g), Company is not a party to any
collective bargaining agreements with any unions, guilds, shop
committees or other collective bargaining groups. Copies of all
such agreements have heretofore been delivered to Buyer.
4.14.(h) Loan Agreements. Except as set forth in Schedule
4.14.(h), Company is not obligated under any loan agreement,
promissory note, letter of credit, or other evidence of
indebtedness as a signatory, guarantor or otherwise.
4.14.(i) Guarantees. Except as disclosed on Schedule
4.14.(i), Company has not guaranteed the payment or performance of
any person, firm or corporation, agreed to indemnify any person or
act as a surety, or otherwise agreed to be contingently or
secondarily liable for the obligations of any person.
4.14.(j) Contracts Subject to Renegotiation. Company is
not a party to any contract with any governmental body which is
subject to renegotiation.
4.14.(k) Burdensome or Restrictive Agreements. Company is
not a party to nor is it bound by any agreement, deed, lease or
other instrument which is so burdensome as to materially affect or
impair the operation of Company. Without limiting the generality
of the foregoing, Company is not a party to nor is it bound by any
agreement requiring Company to assign any interest in any trade
secret or proprietary information, or prohibiting or restricting
Company from competing in any business or geographical area or
soliciting customers or otherwise restricting it from carrying on
its business anywhere in the world.
4.14.(l) Other Material Contracts. Company has no lease,
license, contract or commitment of any nature involving
consideration or other expenditure in excess of $10,000 or
involving performance over a period of more than 12 months, or
which is otherwise individually material to the operations of
Company, except as explicitly described in Schedule 4.14.(l) or in
any other Schedule.
4.14.(m) No Default. Company is not in default under any
lease, contract or commitment, nor has any event or omission
occurred which through the passage of time or the giving of notice,
or both, would constitute a default thereunder or cause the
acceleration of any of Company's obligations or result in the
creation of any Lien on any of the assets owned, used or occupied
by Company. To the knowledge of Company, no third party is in
default under any lease, contract or commitment to which Company is
a party, nor has any event or omission occurred which, through the
passage of time or the giving of notice, or both, would constitute
a default thereunder or give rise to an automatic termination, or
the right of discretionary termination, thereof.
4.15. Labor Matters. Except as set forth in Schedule 4.15,
within the last five years Company has not experienced any labor disputes,
union organization attempts or any work stoppage due to labor
disagreements in connection with its business. Except to the extent set
forth in Schedule 4.15, (a) Company is in compliance with all applicable
laws respecting employment and employment practices, terms and conditions
of employment and wages and hours, and is not engaged in any unfair labor
practices, except where such non-compliance would not have a Material
Adverse Effect; (b) there is no unfair labor practice charge or complaint
against Company pending or, to the knowledge of Company, threatened; (c)
there is no labor strike, dispute, request for representation, slowdown or
stoppage actually pending or, to the knowledge of Company, threatened
against or affecting Company nor any secondary boycott with respect to
products of Company; (d) no question concerning representation has been
raised or is threatened respecting the employees of Company; (e) no
grievance which might have a material adverse effect on Company, nor any
arbitration proceeding arising out of or under collective bargaining
agreements, is pending and, to the knowledge of Company, no such claim
therefor exists; (f) there are no administrative charges or court
complaints against Company concerning alleged employment discrimination or
other employment related matters pending or, to the knowledge of Company,
threatened, or before the U.S. Equal Employment Opportunity Commission,
the Wisconsin Equal Rights Division or any other Government Entity; and
(g) there are no OSHA claims or DOL wage and hour claims against the
Company either pending or, to the knowledge of Company, threatened.
4.16. Employee Benefit Plans.
4.16.(a) Disclosure. Schedule 4.16.(a) lists all pension,
thrift, savings, profit sharing, retirement, incentive bonus or
other bonus, medical, dental, life, accident, welfare, disability,
group insurance, stock purchase, stock option, stock appreciation,
stock bonus, executive or deferred compensation, hospitalization,
cafeteria, dependent care, educational assistance and other fringe
or employee benefit plans, programs and arrangements, and any
employment or consulting contracts, "golden parachutes," collective
bargaining agreements, severance agreements or plans, vacation and
sick leave plans, programs, arrangements and policies, including,
without limitation, all "employee benefit plans" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), which are maintained by Company, or to
which Company contributes or is liable, or to which Company has
contributed or has been liable, for the benefit of any employees
and/or former employees (collectively, "Employee Plans/Agreements,"
and, individually, the "Employee Plan/Agreement"). No Employee
Plan/Agreement is or has ever been a "multiemployer plan" (as
defined in Section 4001 of ERISA), and Company has never
contributed nor been obligated to contribute to a multiemployer
plan.
4.16.(b) Terminations, Proceedings, Penalties, etc. Other
than the Rainfair, Inc. Employees' Union Retirement Plan, for which
a net pension liability of $410,000 will be recognized on the Final
Closing Balance Sheet in accordance with Section 3.3(b)(iii)(F), no
Employee Plan/Agreement is or has been subject to Title IV of
ERISA. With respect to the Rainfair, Inc. Employees' Union
Retirement Plan:
(i) such plan has not been terminated so as to
subject, directly or indirectly, any assets of Company to any
Liability or the imposition of any Lien under Title IV of
ERISA;
(ii) no proceeding has been initiated or, to Company's
knowledge, threatened by any person (including the Pension
Benefit Guaranty Corporation ("PBGC")) to terminate such plan;
and
(iii) no "reportable event" (as defined in Section 4043
of ERISA) has occurred with respect to such plan other than a
reportable event that may occur as a result of the
transactions contemplated by this Agreement or any reportable
event for which the PBGC has waived the otherwise applicable
notice requirement.
4.16.(c) Prohibited Transactions, etc. There have been no
"prohibited transactions" within the meaning of Section 406 or 407
of ERISA or Section 4975 of the Code for which a statutory or
administrative exemption does not exist with respect to any
Employee Plan/Agreement.
4.16.(d) Pension Plan Funding. According to the most
recent actuarial valuation of the Rainfair, Inc. Employees' Union
Retirement Plan, which was prepared by Benefits Consultants, Inc.,
Company's unfunded projected benefit obligation with respect to
such plan was $410,043 as of April 30, 1996. There is no factual
information that Company failed to provide that, if known by
Benefits Consultants, Inc. when preparing such valuation, would
have materially increased the amount of Company's unfunded
projected benefit obligation as of such date, and there has not
been any development subsequent to such date that caused or
resulted in a material increase in the amount of Company's unfunded
projected benefit obligation with respect to such plan.
4.16.(e) Controlled Group; Affiliated Service Group.
Except as set forth in Schedule 4.16(e), Company is not and never
has been a member of a "controlled group of corporations" (as
defined in Section 414(b) of the Code) or under common control with
any unincorporated trade or business as determined under Section
414(c) of the Code. Company is not and never has been a member of
an "affiliated service group" (as defined in Section 414(m) of the
Code).
4.16.(f) Payments and Compliance. Except as set forth in
Schedule 4.16(f) with respect to each Employee Plan/Agreement, (i)
subject to Section 3.3.(b)(iii)(F), all payments due from Company
to date have been made and all amounts properly accrued to date as
Liabilities of Company which have not been paid have been properly
recorded on the books of Company and are reflected in the Final
Closing Balance Sheet; (ii) Company has complied in all material
respects with, and the Employee Plan/Agreement conforms in all
material respects, both in form and operation, to all applicable
laws and regulations, including but not limited to ERISA and the
Code; (iii) all reports and information relating to the Employee
Plan/Agreement required to be filed with any governmental entity
have been timely filed, except where the failure to do so would not
result in material liability; (iv) any reports and information
relating to the Employee Plan/Agreement required to be disclosed or
provided to participants or their beneficiaries have been timely
disclosed or provided, except where the failure to do so would not
result in material liability; (v) the Employee Plan/Agreement
intended to qualify under Section 401 of the Code has received a
favorable determination letter from the Internal Revenue Service
("IRS") with respect to such qualification (which letter covers,
without limitation, all amendments to the Employee Plan/Agreement
required by the Tax Reform Act of 1986, as amended, and related
regulations), and, to the knowledge of Company, nothing has
occurred since the date of such letter that adversely affects such
qualification; (vi) there are no actions, suits or claims pending
(other than routine claims for benefits) or, to the knowledge of
Company, threatened with respect to the Employee Plan/Agreement or
against the assets of the Employee Plan/Agreement; and (vii) no
Employee Plan/Agreement is a plan that is established and
maintained outside the United States primarily for the benefit of
individuals substantially all of whom are nonresident aliens.
4.16.(g) Post-Retirement Benefits. Except as set forth in
Schedule 4.16.(g), no Employee Plan/Agreement provides benefits,
including, without limitation, death or medical benefits (whether
or not insured) with respect to current or former Company employees
beyond their retirement or other termination of service other than
(i) coverage mandated by applicable law, (ii) death or retirement
benefits under any Employee Plan/Agreement that is an employee
pension benefit plan, (iii) deferred compensation benefits accrued
as liabilities on the books of Company (including the Final Closing
Balance Sheet), (iv) disability benefits under any Employee
Plan/Agreement that is an employee welfare benefit plan and which
have been fully provided for by insurance or otherwise or (v)
benefits in the nature of severance pay.
4.16.(h) No Triggering of Obligations. The consummation
of the transactions contemplated by this Agreement will not (i)
entitle any current or former employee of Company to severance pay,
(ii) accelerate the time of payment or vesting of or funding for,
or increase the amount of, compensation due to any such employee or
former employee or (iii) result in any prohibited transaction for
which an exemption is not available.
4.16.(i) Future Commitments. Company has no announced
plan or legally binding commitment to create any additional
Employee Plans/Agreements or to amend or modify any existing
Employee Plan/Agreement.
4.16.(j) Self-Funded Plans. Except as set forth in
Schedule 4.16.(a), no benefits under any Employee
Plan/Agreement are funded or payable, in whole or in part,
from the assets of Company.
4.17. Employment Compensation. Schedule 4.17 contains a true
and correct list of all employees of Company. In the case of non-union
employees, such list identifies the current annual rate of base
compensation for each employee, and in the case of union employees, such
list includes the classification and seniority of each employee. Such
list also identifies all non-union employees who have since November 1,
1995, received an increase in base compensation of more than 5% and the
amount of such increase.
4.18. Trade Rights. Schedule 4.18 lists all Trade Rights of
the type described in clauses (i), (ii), (iii) or (iv) of Section 1.1.(d)
in which Company now has any interest, specifying whether such Trade
Rights are owned, controlled, used or held (under license or otherwise) by
Company, and also indicating which of such Trade Rights are registered.
All Trade Rights shown as registered in Schedule 4.18 have been properly
registered, all pending registrations and applications have been properly
made and filed and all annuity, maintenance, renewal and other fees
relating to registrations or applications are current. In order to
conduct the business of Company, as such is currently being conducted,
Company does not require any Trade Rights that it does not already have.
Company is not infringing and has not infringed any Trade Rights of
another in the operation of the business of Company, nor, to the knowledge
of Company, is any other person infringing the Trade Rights of Company.
Except as identified in Schedule 4.18, Company has not granted any license
or made any assignment of any Trade Right listed on such Schedule, and no
other person has any right to use any Trade Right owned or held by
Company. Schedule 4.18 contains the aggregate annual amount of royalties
or other payments received by Company in the last two years with respect
to any such license. Except as identified in Schedule 4.18, Company does
not pay any royalties or other consideration for the right to use any
Trade Rights of others. There is no Litigation pending or overtly
threatened to challenge Company's right, title and interest with respect
to its continued use and right to preclude others from using any Trade
Rights of Company. All Trade Rights of Company are valid, enforceable and
in good standing and there are no equitable defenses to enforcement based
on any act or omission of Company.
4.19. Major Customers and Suppliers.
4.19.(a) Major Customers. Schedule 4.19.(a) contains a
list of the 10 largest customers, including distributors, of each
division of Company for each of the two (2) most recent fiscal
years (determined on the basis of the total dollar amount of net
sales) showing the total dollar amount of net sales to each such
customer during each such year. To the knowledge of Company, none
of the customers listed on Schedule 4.19.(a) has indicated an
unwillingness to continue to be a customer of the Business after
the Closing at substantially the same level of purchases as
heretofore.
4.19.(b) Major Suppliers. Schedule 4.19.(b) contains a
list of the 10 largest suppliers to each division of Company for
each of the two (2) most recent fiscal years (determined on the
basis of the total dollar amount of purchases) showing the total
dollar amount of purchases from each such supplier during each such
year. To the knowledge of Company, none of the suppliers listed on
Schedule 4.19.(b) has indicated an unwillingness to continue to be
a supplier to the business of Company after the Closing or to
continue to supply the business with substantially the same
quantity and quality of goods at competitive prices.
4.19.(c) Dealers and Distributors. Schedule 4.19.(c)
contains a list by product line of all sales representatives,
dealers, distributors and franchisees of Company, together with
representative copies of all sales representative, dealer,
distributor and franchise contracts and policy statements, and a
description of all substantial modifications or exceptions.
4.20. Product Warranty and Product Liability. Schedule 4.20
contains a true, correct and complete copy of Company's standard warranty
or warranties for sales of Products (as defined below) and, except as
stated therein, there are no warranties, commitments or obligations with
respect to the return, repair or replacement of Products. Schedule 4.20
sets forth the estimated aggregate annual cost to Company of performing
warranty obligations for customers for each of the three (3) preceding
fiscal years. Schedule 4.20 contains a description of all product
liability claims and similar Litigation relating to Products manufactured
or sold, or services rendered, which are presently pending or which, to
the knowledge of Company, are threatened, or which have been asserted or
commenced against Company within the last three (3) years, in which a
party thereto either requests injunctive relief or alleges damages
(whether or not covered by insurance). There are no defects in design,
construction or manufacture of Products which would adversely affect
performance or create an unusual risk of injury to persons or property.
Other than rework in the ordinary course of business, none of the Products
has been the subject of any replacement, field fix, retrofit, modification
or recall campaign and, to the knowledge of Company, no facts or
conditions exist which could reasonably be expected to result in such a
recall campaign. The Products have been designed and manufactured so as
to meet and comply with all governmental standards and specifications
currently in effect, and have received all governmental approvals
necessary to allow their sale and use. As used in this Section 4.20, the
term "Products" means any and all products currently or at any time within
the last five years manufactured, distributed or sold by Company, or by
any predecessor of Company under any brand name or mark under which
products are or have been manufactured, distributed or sold by Company.
4.21. Affiliates' Relationships to Company.
4.21.(a) Contracts With Affiliates. All leases,
contracts, agreements or other arrangements between Company and any
Affiliate are described on Schedule 4.21.(a).
4.21.(b) No Adverse Interests. Except as described in
Schedule 4.21.(a), no Affiliate has any direct or indirect interest
in (i) any entity which does business with Company or is
competitive with Company's business, or (ii) any property, asset or
right which is used by Company in the conduct of its business.
4.21.(c) Obligations. All obligations of any Affiliate to
Company, and all obligations of Company to any Affiliate, are
listed on Schedule 4.21.(c).
4.22. Shareholder List. Schedule 4.22 sets forth a complete
list of all the holders of capital stock of Company issued and outstanding
on the date hereof, together with the number of shares held by each
shareholder. Except as set forth in Schedule 4.22, each person so listed
is a competent adult and is the record and the beneficial owner of all
shares so listed in his or her name, with the sole right to vote, dispose
of, and receive dividends or distributions with respect to such shares.
4.23. Assets Necessary to Business. Subject to obtaining the
Required Consents, the Purchased Assets include all property and assets
(except for the Excluded Assets), tangible and intangible, and all leases,
licenses and other agreements, which are necessary to permit Buyer to
carry on, or currently used or held for use in, the business of Company as
presently conducted.
4.24. No Brokers or Finders. Neither Company nor any of its
directors, officers, employees, Shareholder or agents have retained,
employed or used any broker or finder in connection with the transactions
provided for herein or the negotiation thereof.
4.25. Disclosure. No representation or warranty by Company
and/or Shareholder in this Agreement, nor any statement, certificate,
schedule, document or exhibit hereto furnished or to be furnished by or on
behalf of Company or Shareholder pursuant to this Agreement or in
connection with transactions contemplated hereby, contains or shall
contain any untrue statement of material fact or omits or shall omit a
material fact necessary to make the statements contained therein not
misleading. All statements and information contained in any certificate,
instrument, Disclosure Schedule or document delivered by or on behalf of
Company and/or Shareholder and expressly referenced herein shall be deemed
representations and warranties by Company and Shareholder; provided,
however, that notwithstanding anything to the contrary (i) projections
which have been provided concerning future performance of the Company have
been prepared in "good faith" but no specific representations or
warranties concerning their accuracy have been made and none shall be
implied or construed, and (ii) such information shall not include the
"Offering Memorandum" prepared by Company.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to Company
and Shareholder, each of which is true and correct on the date hereof,
shall remain true and correct to and including the Closing Date, shall be
unaffected by any investigation heretofore or hereafter made by Company or
any notice to Company, and shall survive the Closing of the transactions
provided for herein.
5.1. Corporate.
5.1.(a) Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Wisconsin.
5.1.(b) Corporate Power. Buyer has all requisite
corporate power to enter into this Agreement and the other
documents and instruments to be executed and delivered by Buyer and
to carry out the transactions contemplated hereby and thereby.
5.2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by Buyer
pursuant hereto and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors of
Buyer. No other corporate act or proceeding on the part of Buyer or its
shareholders is necessary to authorize this Agreement or the other
documents and instruments to be executed and delivered by Buyer pursuant
hereto or the consummation of the transactions contemplated hereby and
thereby. This Agreement constitutes, and when executed and delivered, the
other documents and instruments to be executed and delivered by Buyer
pursuant hereto will constitute, valid and binding agreements of Buyer,
enforceable in accordance with their respective terms.
5.3. No Violation. Neither Buyer's execution and delivery of this
Agreement or the other documents and instruments to be executed and
delivered by Buyer pursuant hereto, nor the consummation by Buyer of the
transactions contemplated hereby and thereby (a) will violate any
applicable Law or Order, (b) will require any authorization, consent,
approval, exemption or other action by or noticed to any Government
Entity, or (c) will violate or conflict with, or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, any term or provision of the Articles of Incorporation or
By-laws of Buyer or of any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character material to
Buyer's business and to which Buyer is a party or by which Buyer or any of
its assets or properties may be bound or affected.
5.4. No Brokers or Finders. Neither Buyer nor any of its
directors, officers, employees or agents have retained, employed or used
any broker or finder in connection with the transactions provided for
herein or the negotiation thereof.
5.5. Disclosure. No representation or warranty by Buyer in this
Agreement, nor any statement, certificate, schedule, document or exhibit
hereto furnished or to be furnished by or on behalf of Buyer pursuant to
this Agreement or in connection with transactions contemplated hereby,
contains or shall contain any untrue statement of material fact or omits
or shall omit a material fact necessary to make the statements contained
therein not misleading.
6. EMPLOYEES - EMPLOYEE BENEFITS
6.1. Affected Employees. As of the Closing Date, Buyer shall offer
employment to all employees employed by Company in the operation of the
Business as of the Closing Date. Such employment shall include benefits
equivalent to those in effect on the Closing Date. "Affected Employees"
shall mean employees of the Company who are employed by Buyer immediately
after the Closing.
6.2. Retained Responsibilities. Company agrees to satisfy, or
cause its insurance carriers to satisfy, all claims for benefits, whether
insured or otherwise (including, but not limited to, workers'
compensation, life insurance, medical and disability programs), under
Company's employee benefit programs brought by, or in respect of, Affected
Employees and other employees and former employees of the Company, which
claims arise out of events occurring on or prior to the Closing Date, in
accordance with the terms and conditions of such programs or applicable
workers' compensation statutes without interruption as a result of the
employment by Buyer of any such employees. Buyer agrees to satisfy, or
cause its insurance carriers to satisfy, all claims for benefits, whether
insured or otherwise (including, but not limited to, workers'
compensation, life insurance, medical and disability programs), under
Buyer's employee benefit programs brought by, or in respect of, Affected
Employees, which claims arise out of events occurring on or after the
Closing Date, in accordance with the terms and conditions of such programs
or applicable workers' compensation statutes.
6.3. Payroll Tax. Company agrees to make a clean cut-off of
payroll and payroll tax reporting with respect to the Affected Employees
paying over to the federal, state and city governments those amounts
respectively withheld or required to be withheld for periods ending on or
prior to the Effective Time. Company also agrees to issue, by the date
prescribed by IRS Regulations, Forms W-2 for wages paid through the
Effective Time. Buyer shall be responsible for all payroll and payroll
tax obligations after the Effective Time for Affected Employees.
6.4. Termination Benefits. Buyer shall be solely responsible for,
and shall pay or cause to be paid, severance payments and other
termination benefits, if any, to Affected Employees who may become
entitled to such benefits by reason of any events occurring after Closing.
Subject to Buyer's compliance with its obligations herein, if any action
on the part of Company prior to the Closing, or if the sale to Buyer of
the business and assets of Company pursuant to this Agreement or the
transactions contemplated hereby, shall directly or indirectly result in
any Liability (i) for severance payments or termination benefits or (ii)
by virtue of any state, federal or local "plant-closing" or similar law,
such Liability shall be the sole responsibility of Company, and Company
and Shareholder shall, jointly and severally, indemnify and hold harmless
Buyer against such Liability.
6.5. Employee Benefit Plans.
6.5.(a) Delivery of Documents. Within ten days after the
date of this Agreement, Company shall deliver to the Buyer, with
respect to each Employee Plan/Agreement:
(i) the Employee Benefit Plan/Agreement,
including all amendments and the applicable trust, insurance
or other funding documents (or, in the absence of any written
documentation, a description of all material terms and
conditions of the Employee Benefit Plan);
(ii) all administrative service agreements
and investment management contracts;
(iii) all reports, including attachments,
filed during the six-year period ending December 31, 1995,
with the United States Department of Labor ("DOL"), the IRS,
PBGC or any other federal or state regulatory agency;
(iv) all summary plan descriptions;
(v) all actuarial, accounting and/or financial
reports or statements prepared during the six-year period
ending December 31, 1995;
(vi) all currently effective IRS, DOL, PBGC,
Securities and Exchange Commission and Equal Employment
Opportunity Commission rulings or determination letters;
(vii) all administrative forms;
(viii) a description of any IRS, DOL or PBGC
audit of any Employee Benefit Plan/Agreement pending or closed
within the six-year period immediately preceding the date of
this Agreement; and
(ix) if the Employee Benefit Plan/Agreement
is a "defined contribution plan" (as defined in Section 3(34)
of ERISA), a description of the investment funds for plan
assets and the annual rate of return for each such fund for
each plan year during the six-year period ending December 31,
1995.
With respect to each Employee Plan/Agreement for which an annual
report has been or is delivered to the Buyer pursuant to clause
(iii) of this Section 6.5.(a) no material adverse change shall have
occurred with respect to the matters covered by the latest such
annual report since the date thereof.
6.5.(b) Assumptions of Employee Plans/Agreements. As of
the Closing Date, the Buyer shall assume all of the Employee
Plans/Agreements. The Buyer and Company shall take such action as
may be necessary or appropriate in order to establish the Buyer as
successor to the Company as to all rights, assets, duties,
liabilities and obligations under, or with respect to, the
aforementioned plans, including, but not limited to, Company's
rights, duties, liabilities and obligations under or with respect
to, any and all annuity or insurance contracts and/or trust
agreements which form a part of any Employee Plan/Agreement, but
not including any Liabilities identified in Section 2.2 to the
extent that such Liabilities are attributable to the Rainfair, Inc.
Discretionary Pension Plan.
7. OTHER MATTERS
7.1. Employment Agreement. At the Closing, Shareholder shall
deliver to Buyer an Employment Agreement, substantially in the form of
Exhibit A hereto, duly executed by Shareholder.
7.2. Noncompetition. Subject to the Closing, and as an inducement
to Buyer to execute this Agreement and complete the transactions
contemplated hereby, and in order to preserve the goodwill associated with
the business of Company being acquired pursuant to this Agreement, and in
addition to and not in limitation of any covenants contained in any
agreement executed and delivered pursuant to Section 7.1 hereof, Company
and Shareholder hereby covenant and agree that for a period of seven (7)
years from the Closing Date, they will not, directly or indirectly:
(i) engage in, continue in or carry on any business
which competes with the Business or is substantially similar
thereto, including owning or controlling any financial
interest in any corporation, partnership, firm or other form
of business organization which is so engaged;
(ii) consult with, advise or assist in any way,
whether or not for consideration, any corporation,
partnership, firm or other business organization which is now
or becomes a competitor of Buyer in any aspect with respect to
the Business including, but not limited to, advertising or
otherwise endorsing the products of any such competitor;
soliciting customers or otherwise serving as an intermediary
for any such competitor; loaning money or rendering any other
form of financial assistance to or engaging in any form of
business transaction on other than an arm's length basis with
any such competitor;
(iii) hire, offer to hire, or solicit for employment
any person who, at any time during such seven (7) year period,
has been an employee of Buyer engaged in the Business, without
the prior consent of Buyer, until such person has been
separated from employment by the Buyer for at least 180 days;
or
(iv) engage in any practice the purpose of which is to
evade the provisions of this covenant not to compete or to
commit any act which adversely affects the Business, Purchased
Assets or Assumed Liabilities;
provided, however, that the foregoing shall not prohibit the
ownership of securities of corporations which are listed on a
national securities exchange or traded in the national
over-the-counter market in an amount which shall not exceed 5% of
the outstanding shares of any such corporation or the legal or
beneficial ownership of Johnson Worldwide Associates, Inc. or any
of its controlled subsidiaries. The parties agree that the
geographic scope of this covenant not to compete shall extend to
the United States and Canada. The parties agree that Buyer may
sell, assign or otherwise transfer this covenant not to compete, in
whole or in part, to any person, corporation, firm or entity that
purchases all or part of the Business or the Purchased Assets being
acquired by Buyer hereunder. In the event a court of competent
jurisdiction determines that the provisions of this covenant not to
compete are excessively broad as to duration, geographical scope or
activity, it is expressly agreed that this covenant not to compete
shall be construed so that the remaining provisions shall not be
affected, but shall remain in full force and effect, and any such
over broad provisions shall be deemed, without further action on
the part of any person, to be modified, amended and/or limited, but
only to the extent necessary to render the same valid and
enforceable in such jurisdiction.
7.3. Confidential Information. Neither Company nor Shareholder
shall at any time subsequent to the Closing, except as explicitly
requested by Buyer, use for any purpose, disclose to any person, or keep
or make copies of documents, tapes, discs, programs or other information
storage media ("records") containing, any confidential information
concerning the Business, the Purchased Assets, or the Assumed Liabilities,
all such information being deemed to be transferred to the Buyer
hereunder. For purposes hereof, "confidential information" shall mean and
include, without limitation, all Trade Rights in which Company has an
interest, all customer and vendor lists and related information, all
information concerning Company's processes, products, costs, prices,
sales, marketing and distribution methods, properties and assets,
liabilities, finances, employees, all privileged communications and work
product, and any other information not previously disclosed to the public
directly by Company. The foregoing provisions shall not apply to any
information (i) which is an "Excluded Asset" as defined in Section 1.2, or
which relates solely to one or more Excluded Assets, or (ii) which is in
the public domain or publicly available through no fault of Company or
Shareholder. If at any time after Closing Company or Shareholder should
discover that it is in possession of any records containing the
confidential information of Buyer, then the party making such discovery
shall immediately turn such records over to Buyer, which shall upon
request make available to the surrendering party any information contained
therein which is not confidential information. Company and Shareholder
severally agree that they will not assert a waiver or loss of confidential
or privileged status of the information based upon such possession or
discovery. Company hereby consents to Buyer's consultation with legal,
accounting and other professional advisors to Company concerning advice
rendered to Company prior to the Closing regarding the Business, the
Purchased Assets or the Assumed Liabilities, excluding, however, the
negotiation and drafting of this Agreement and the transactions entered
into pursuant hereto.
7.4. General Releases. At the Closing, Shareholder shall deliver,
and shall cause the Craig L. Leipold 1995 Children's Trust u/a dated
November 15, 1995 f/b/o Jonathan Kyle Leipold and the Craig L. Leipold
1995 Children's Trust u/a dated November 15, 1995 f/b/o Christopher Louis
Leipold to deliver, general releases to Buyer, in form and substance
satisfactory to Buyer and its counsel ("General Releases"), releasing
Company and the directors, officers, agents and employees of Company from
all Liabilities to the Closing Date related in any manner to the
transactions contemplated hereby.
7.5. Product Liability Matters. At or prior to the Closing,
Company at its expense shall cause Buyer to be named as an additional
insured under each of its occurrence-type policy or policies of insurance
insuring against claims for personal injury and property damage arising
out of or resulting from any products manufactured by Company prior to the
Closing Date. At the Closing, Company shall deliver to Buyer one or more
certificates of insurance evidencing that the insurance to be obtained by
it pursuant to this Section is in effect and providing for notification to
Buyer at least ten (10) days prior to the effective date of any
termination or cancellation of such insurance. The insurance coverage set
forth in this Section shall be maintained by Company for a period of two
(2) years following the Closing, in an amount and with a deductible that
is reasonable under the circumstances. Following such two-year period,
Company shall, at Buyer's option and expense, purchase extensions of such
insurance coverage, unless such coverage is not commercially available.
7.6. Use of Company's Name. Following the Closing, neither Company
nor any Affiliate shall, without the prior written consent of Buyer, make
any use of the name "Rainfair" or any other name confusingly similar
thereto, except as may be necessary for Company to pay its liabilities,
prepare tax returns and other reports, and to otherwise change its
corporate name.
7.7. Sales Tax Matters. At or prior to the Closing Company shall
surrender to the Wisconsin Department of Revenue its Wisconsin seller's
permit so as to cause Company to qualify for the occasional sale exemption
contained in Section 77.51(9)(am) of the Wisconsin Statutes.
7.8. Unemployment Compensation. Company shall, upon the request of
Buyer, cooperate with Buyer in any efforts by Buyer to obtain the transfer
of Company's portion of the Wisconsin unemployment compensation fund[s]
applicable to Affected Employees, to the extent Buyer elects to transfer
and assume such amounts. In connection therewith, Company will execute
such documents as Buyer may reasonably request in order to effectuate such
transfer.
7.9. Shareholders Agreement. On or before the Closing Date, Buyer,
LaCrosse and Shareholder shall enter into a Shareholders Agreement in the
form of Exhibit B hereto.
7.10. Determination of Purchase Price for Facility. The
amount to be inserted as the Exercise Price in Paragraph 17 of the
Sublease described in Section 9.5 hereof shall be determined prior to the
Closing in the following manner: each of Buyer and Company shall select
an MAI (i.e., a member of the American Institute of Real Estate Appraisers
holding the "Member Appraisal Institute" designation, and hereinafter
referred to as an "Appraiser"). The Appraisers selected by Buyer and
Company shall submit their written appraisals of the Facility within 30
days following the Closing Date. In the event the difference of the
valuations set forth in the appraisals submitted by the Appraisers is
greater than 10%, the Appraisers selected by the parties shall mutually
select a third Appraiser, who shall be instructed to prepare and deliver
an appraisal for the Facility on or before the date 15 days after
engagement. The average of the appraisals prepared by the Appraisers
selected by Buyer and Company, or the average of the three appraisals in
the event a third Appraiser is required, shall be the amount inserted as
the Exercise Price in Paragraph 17 of the Sublease. In the event two
Appraisers are selected by the parties but one Appraiser fails to submit
its appraisal as required hereunder, then the Exercise Price under the
Sublease shall equal the valuation set forth in the appraisal which was
properly submitted as required hereunder. For purposes hereof, any
Appraiser valuing the Facility shall determine its "fair market value,"
which shall be deemed to mean the average of the three standard methods of
valuation, those being the cost approach, the comparison approach, and the
income approach.
7.11. Accounts Receivable Payments After Closing. After the
Closing Date, Company and Shareholder shall forward to Buyer within five
(5) business days of receipt any and all amounts they receive with respect
to (i) Company's accounts receivable created prior to the Closing Date and
(ii) Buyer's accounts receivable.
8. FURTHER COVENANTS
8.1. Change of Corporate Name. Concurrently with the Closing,
Company shall change its corporate name to a new name bearing no
resemblance to its present name so as to permit the use of its present
name or a similar name by Buyer.
8.2. Consents. Company, LaCrosse, Shareholder and Buyer will use
their best efforts prior to Closing to obtain all consents necessary for
the consummation of the transactions contemplated hereby.
8.3. Other Action. Each party hereto shall use their best efforts
to cause the fulfillment at the earliest practicable date of all of the
conditions to the parties' obligations to consummate the transactions
contemplated in this Agreement.
8.4. Disclosure. Company and Shareholder shall have a continuing
obligation to promptly notify Buyer in writing with respect to any matter
hereafter arising or discovered which, if existing or known at the date of
this Agreement, would have been required to be set forth or described in
the Disclosure Schedule, but no such disclosure shall cure any breach of
any representation or warranty which is inaccurate.
8.5. Limited Guaranty of Pension Liability. LaCrosse hereby
guarantees the payment and funding of, and agrees to indemnify, defend and
hold harmless Company and Shareholder from and against, the Liabilities
under the Rainfair, Inc. Employees' Union Retirement Plan that are assumed
by Buyer pursuant to Sections 2.1 and 6.5.(b) hereof, but not including
any Liabilities identified in Section 2.2 hereof; provided, however, that
LaCrosse shall not be required to pay an aggregate of more than $410,000
pursuant to all Liabilities provided for under this limited guarantee.
Except as provided above, the indemnification provided in this Section 8.5
shall be subject to the provisions of Article 11 hereof as though LaCrosse
were named as an Indemnifying Party therein.
8.6. Access to Information and Records. During the period prior to
the Closing, Company shall, and shall cause its officers, employees,
agents, independent accountants and advisors to, furnish to Buyer, its
officers, employees, agents, independent accountants and advisors, at
reasonable times and places, all information in their possession
concerning Company as may be requested, and give such persons access to
all of the properties, books, records, contracts and other documents of or
pertaining to Company that Company or its officers, employees, agents,
independent accountants or advisors shall have in their custody; provided,
however, that Buyer shall conduct all such inspections so as to cause
minimal disruption and interference with the day-to-day business and
operations of Company. Every contact with the Company and its employees
shall be coordinated with Bruce Bartelt.
8.7. Conduct of Business Pending the Closing. From the date hereof
until the Closing, except as otherwise approved in writing by the Buyer:
8.7.(a) No Changes. Company will carry on its business
diligently and in the same manner as heretofore and will not make
or institute any changes in its methods of purchase, sale,
management, accounting or operation.
8.7.(b) Maintain Organization. Company will take such
action as may be necessary to maintain, preserve, renew and keep in
favor and effect the existence, rights and franchises of Company
and will use its best efforts to preserve the business organization
of Company intact, to keep available to Buyer the present officers
and employees, and to preserve for Buyer its present relationships
with suppliers and customers and others having business
relationships with Company.
8.7.(c) No Breach. Company and Shareholders will not do
or omit any act, or permit any omission to act, which may cause a
breach of any material contract, commitment or obligation, or any
breach of any representation, warranty, covenant or agreement made
by Company and/or the Shareholders herein, or which would have
required disclosure on Schedule 4.8 had it occurred after the date
of the Recent Balance Sheet and prior to the date of this
Agreement.
8.7.(d) No Material Contracts. No contract or commitment
will be entered into, and no purchase of raw materials or supplies
and no sale of goods or services (real, personal, or mixed,
tangible or intangible) will be made, by or on behalf of Company,
except contracts, commitments, purchases or sales which are in the
ordinary course of business and consistent with past practice and
would not have been required to be disclosed in the Disclosure
Schedule had they been in existence on the date of this Agreement.
8.7.(e) Maintenance of Insurance. Company shall maintain
all of the insurance in effect as of the date hereof.
8.7.(f) Maintenance of Property. Company shall use,
operate, maintain and repair all property of Company in a normal
business manner.
8.7.(g) No Negotiations. Neither Company nor any
Shareholder will directly or indirectly (through a representative
or otherwise) solicit or furnish any information to any prospective
buyer, commence, or conduct presently ongoing, negotiations with
any other party or enter into any agreement with any other party
concerning the sale of Company, Company's assets or business or any
part thereof or any equity securities of Company (an "acquisition
proposal"), and Company and Shareholder shall immediately advise
Buyer of the receipt of any acquisition proposal.
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of
each of the following conditions:
9.1. Representations and Warranties True on the Closing Date. Each
of the representations and warranties made by Company and Shareholder in
this Agreement, and the statements contained in the Disclosure Schedule
shall be (i) true and correct in all material respects when made, and (ii)
shall be true and correct in all material respects at and as of the
Closing Date as though such representations and warranties were made or
given on and as of the Closing Date, except for any changes permitted by
the terms of this Agreement or consented to in writing by Buyer.
9.2. Compliance With Agreement. Company and Shareholder shall have
in all material respects performed and complied with all of their
agreements and obligations under this Agreement which are to be performed
or complied with by them prior to or on the Closing Date, including the
delivery of the closing documents specified in Section 12.1.
9.3. Absence of Litigation. No Litigation shall have been
commenced or threatened, and no investigation by any Government Entity
shall have been commenced, against Buyer, Company or any of the
affiliates, officers or directors of any of them, with respect to the
transactions contemplated hereby.
9.4. Consents and Approvals. All approvals, consents and waivers
that are required to effect the transactions contemplated hereby,
including those set forth on Schedule 9.4, shall have been received, and
executed counterparts thereof shall be delivered to Buyer at the Closing,
except where failure to have any such approval, consent or waiver would
not have a Material Adverse Effect.
9.5. Sublease. Company shall have entered into, and Company and
Shareholder shall have caused Leipold Enterprises, Inc. to have entered
into, a Sublease substantially in the form of Exhibit C hereto with Buyer
relating to the Facility (the "Sublease") before or concurrently with the
Closing.
9.6. Environmental Audit. The results of a Phase I environmental
audit conducted by Buyer at the Facility shall not have disclosed any past
or present condition, process or practice with respect to Company or the
Facility which is not in full compliance with all applicable Environmental
Laws or which otherwise requires remediation at the Facility under any
Environmental Law, if a reasonable estimate by Buyer of the cost of
remediation, or the potential liability to third persons (including
statutory liability) arising from such condition, process or practice, or
the cost of bringing Company or the Facility into full compliance with all
applicable Environmental Laws, would exceed $100,000 in the aggregate with
respect to all matters described in this Section.
9.7. Financial Performance. Company's audited financial statements
for the fiscal year ending April 30, 1996 shall reflect net sales of at
least $17,000,000, earnings before interest, LIFO adjustment and taxes
(determined in accordance with generally accepted accounting principles,
consistently applied) of at least $900,000 and net book value of Purchased
Assets of at least $11,000,000.
9.8. Consent and Waiver. At or prior to the Closing, Shareholder's
spouse shall deliver a consent and waiver to Buyer, in form and substance
satisfactory to Buyer and its counsel ("Consent and Waiver"),
acknowledging that Shareholder is entering into this Agreement, consenting
to the transactions contemplated hereby and waiving such spouse's rights
to any equity interest Shareholder has or may thereafter acquire in Buyer.
9.9. Consent of Union. At or prior to the Closing, Local #187,
International Ladies' Garment Workers' Union shall have delivered to Buyer
a consent to Buyer's assumption of the Collective Bargaining Agreement
referenced in Section 2.1.(e) hereof.
10. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS
Each and every obligation of Company and Shareholder to be
performed on the Closing Date shall be subject to the satisfaction prior
to or at the Closing of the following conditions:
10.1. Representations and Warranties True on the Closing Date.
Each of the representations and warranties made by Buyer in this Agreement
shall be true and correct in all material respects when made and shall be
true and correct in all material respects at and as of the Closing Date as
though such representations and warranties were made or given on and as of
the Closing Date.
10.2. Compliance With Agreement. Buyer and LaCrosse shall
have in all material respects performed and complied with all of their
agreements and obligations under this Agreement which are to be performed
or complied with by them prior to or on the Closing Date, including the
delivery of the closing documents specified in Section 12.2.
10.3. Absence of Litigation. No Litigation shall have been
commenced or threatened, and no investigation by any Government Entity
shall have been commenced, against Buyer, Company or any of the
affiliates, officers or directors of any of them, with respect to the
transactions contemplated hereby.
10.4. Sublease. Buyer shall have entered into a Sublease
substantially in the form of Exhibit C hereto with Company and Leipold
Enterprises, Inc. relating to the Facility (the "Sublease") before or
concurrently with the Closing.
10.5. Consent of Union. At or prior to the Closing, Local
#187, International Ladies' Garment Workers' Union shall have delivered a
consent to Buyer's assumption of the Collective Bargaining Agreement
referenced in Section 2.1.(e) hereof.
11. INDEMNIFICATION
11.1. By Company and Shareholder. Subject to the terms and
conditions of this Article 11, Company and Shareholder, jointly and
severally, hereby agree to indemnify, defend and hold harmless Buyer, and
its directors, officers, employees and controlled and controlling persons
(hereinafter "Buyer's Affiliates"), from and against all Claims asserted
against, resulting to, imposed upon, or incurred by Buyer, Buyer's
Affiliates or the business and assets transferred to Buyer pursuant to
this Agreement, directly or indirectly, by reason of, arising out of or
resulting from
(a) the inaccuracy or breach of any representation or
warranty of Company or Shareholder contained in or made pursuant to
this Agreement (regardless of whether such breach is deemed
"material");
(b) the breach of any covenant of Company or Shareholder
contained in this Agreement (regardless of whether such breach is
deemed "material");
(c) any Claim brought by or on behalf of any broker or
finder retained, employed or used by Company or any of its
directors, officers, employees, Shareholder or agents in connection
with the transactions provided for herein or the negotiation
thereof, whether or not disclosed herein; or
(d) any Claim of or against Company, the Purchased Assets or
the business of Company not specifically assumed by Buyer pursuant
hereto.
As used in this Article 11, the term "Claim" shall include (i) all
Liabilities; (ii) all losses, damages (including, without limitation,
consequential damages), judgments, awards, penalties and settlements;
(iii) all demands, claims, suits, actions, causes of action, proceedings
and assessments, whether or not ultimately determined to be valid; and
(iv) all costs and expenses (including, without limitation, interest
(including prejudgment interest in any litigated or arbitrated matter),
court costs and fees and expenses of attorneys and expert witnesses) of
investigating, defending or asserting any of the foregoing or of enforcing
this Agreement.
11.2. By Buyer. Subject to the terms and conditions of this
Article 11, Buyer hereby agrees to indemnify, defend and hold harmless
Company, its directors, officers, employees and controlling persons, and
Shareholder from and against all Claims asserted against, resulting to,
imposed upon or incurred by any such person, directly or indirectly, by
reason of or resulting from (a) the inaccuracy or breach of any
representation or warranty of Buyer contained in or made pursuant to this
Agreement (regardless of whether such breach is deemed "material"); (b)
the breach of any covenant of Buyer contained in this Agreement
(regardless of whether such breach is deemed "material"); or (c) all
Claims of or against Company, the Purchased Assets or the Business
specifically assumed by Buyer pursuant hereto (including the Assumed
Liabilities).
11.3. Indemnification of Third-Party Claims. The following
provisions shall apply to any Claim subject to indemnification which is
(i) a suit, action or arbitration proceeding filed or instituted by any
third party, or (ii) any other form of proceeding or assessment instituted
by any Government Entity:
11.3.(a) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will
give the party from whom indemnification is sought (the
"Indemnifying Party") prompt written notice of any such Claim, and
the Indemnifying Party will have ten (10) days to decide if it
shall undertake the defense thereof by representatives chosen by
it. The assumption of defense shall constitute an admission by the
Indemnifying Party of its indemnification obligation hereunder with
respect to such Claim, and its undertaking to pay directly all
costs, expenses, damages, judgments, awards, penalties and
assessments incurred in connection therewith. Failure to give such
notice shall not affect the Indemnifying Party's duty or
obligations under this Article 11, except to the extent the
Indemnifying Party is prejudiced thereby. So long as the
Indemnifying Party is defending any such Claim actively and in good
faith, the Indemnified Party shall not settle such Claim (it being
understood that the Indemnified Party shall not be entitled to
separate counsel except at its own expense, and shall not otherwise
incur any cost or expense, unless the Indemnifying Party does not
assume responsibility for defense and settlement as provided above
or does not actually and in good faith defend such Claim or unless
the named parties to such Claim include both Company and
Shareholder, on the one hand, and Buyer, on the other hand, and
counsel retained by the Indemnifying Party shall determine that
representation of the Indemnified Party and the Indemnifying Party
by the same counsel would be inappropriate under applicable
standards of professional conduct). The Indemnified Party shall
make available to the Indemnifying Party or its representatives all
records and other materials required by them and in the possession
or under the control of the Indemnified Party, for the use of the
Indemnifying Party and its representatives in defending any such
Claim, and shall in other respects give reasonable cooperation in
such defense.
11.3.(b) Failure to Defend. If the Indemnifying Party
does not undertake to defend any such Claim within ten (10) days of
receiving notice of such Claim, or fails to defend such Claim
actively and in good faith, the Indemnified Party will (upon
further notice) have the right to undertake the defense, compromise
or settlement of such Claim or consent to the entry of a judgment
with respect to such Claim, on behalf of and for the account and
risk of the Indemnifying Party (but only if the Claim is one for
which the Indemnified Party is entitled to indemnification under
Section 11.1 or 11.2 above), and the Indemnifying Party shall
thereafter have no right to challenge the Indemnified Party's
defense, compromise, settlement or consent to judgment.
11.3.(c) Indemnified Party's Rights. Anything in this
Article 11 to the contrary notwithstanding, (i) if there is a
reasonable probability that a Claim may materially and adversely
affect the Indemnified Party other than as a result of money
damages or other money payments, the Indemnified Party shall have
the right to defend, compromise or settle such Claim, and (ii) the
Indemnifying Party shall not, without the written consent of the
Indemnified Party, settle or compromise any Claim or consent to the
entry of any judgment which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to the
Indemnified Party of a release from all Liability in respect of
such Claim.
11.4. Payment. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 11. No Indemnified
Party may set off any amount owed to an Indemnifying Party for any amount
that may be the subject of an indemnification claim hereunder. Upon
judgment, determination, settlement or compromise of any third party Claim
for which the Indemnified Party is entitled to receive indemnification
from the Indemnifying Party under this Article 11, the Indemnifying Party
shall pay promptly on behalf of the Indemnified Party, and/or to the
Indemnified Party in reimbursement of any amount theretofore required to
be paid by it, the amount so determined by judgment, determination,
settlement or compromise and all other Claims of the Indemnified Party
with respect thereto, unless in the case of a judgment an appeal is made
from the judgment. If the Indemnifying Party desires to appeal from an
adverse judgment, then the Indemnifying Party shall post and pay the cost
of the security or bond to stay execution of the judgment pending appeal.
Upon the payment in full by the Indemnifying Party of such amounts, the
Indemnifying Party shall succeed to the rights of such Indemnified Party,
to the extent not waived in settlement, against the third party who made
such third party Claim.
11.5. Indemnification for Environmental Matters. Without
limiting the generality of the foregoing, Company and Shareholder, jointly
and severally (hereinafter collectively referred to in this Section 11.5
jointly and severally as "Sellers"), agree to indemnify, reimburse, hold
harmless and defend Buyer for, from, and against all Claims asserted
against, imposed on, or incurred by Buyer, directly or indirectly, in
connection with any pollution, threat to the environment, or exposure to,
or manufacture, processing, distribution, use, treatment, generation,
transport or handling, disposal, emission, discharge, storage or release
of Waste on any property formerly owned by Company that (A) is related in
any way to Company's or any previous owner's or operator's ownership,
operation or occupancy of such property, and (B) in whole or in part
occurred, existed, arose out of conditions or circumstances that existed,
or was caused on or before the Closing Date.
11.6. Limitations on Indemnification.
11.6.(a) Time Limitation. No claim or action shall be
brought under this Article 11 for breach of a representation or
warranty after the lapse of twenty (20) months following the
Closing. Regardless of the foregoing, however, or any other
provision of this Agreement:
(i) Claims on actions brought for breach of a
representation or warranty made pursuant to Section 4.11.(c)
may be brought through December 31, 1999.
(ii) Claims on actions brought for any willful and
knowing breach or misrepresentation by Shareholder may be
brought within five (5) years of Closing.
(iii) There shall be no time limitation on claims on
actions brought for breach of any representation or warranty
made in or pursuant to Sections 4.1, 4.2, 4.12.(a), 4.24, 5.1,
5.2 and 5.4, and Company, Shareholder and Buyer hereby waive
all applicable statutory limitation periods with respect
thereto.
(iv) Any claim or action brought for breach of any
representation or warranty made in or pursuant to Section 4.5
may be brought at any time until the underlying tax obligation
is barred by the applicable period of limitation under federal
and state laws relating thereto (as such period may be
extended by waiver).
(v) Any claim made by a party hereunder by a demand
for arbitration in accordance with Article 14 hereof for
breach of a representation or warranty prior to the
termination of the survival period for such claim shall be
preserved despite the subsequent termination of such survival
period.
(vi) If any act, omission, disclosure or failure to
disclosure shall form the basis for a claim for breach of more
than one representation or warranty, and such claims have
different periods of survival hereunder, the termination of
the survival period of one claim shall not affect a party's
right to make a claim based on the breach of representation or
warranty still surviving.
11.6.(b) Amount Limitation. Except with respect to claims
for breaches of representations or warranties contained in Sections
4.24 or 5.4, an Indemnified Party shall not be entitled to
indemnification under this Article 11 for breach of a
representation or warranty unless and only to the extent that the
aggregate of the Indemnifying Party's indemnification obligations
to the Indemnified Party pursuant to this Article 11 (but for this
Section 11.6.(b)) exceeds $100,000. In no event shall
Shareholder's aggregate liability for breach of representations and
warranties contained in this Agreement (whether such liability is
asserted under this Article 11 or otherwise) exceed $1,250,000.
11.6.(c) Insurance Offset. The obligation of an
Indemnifying Party to indemnify any Claim under this Article 11
shall be reduced by any amounts actually and irrevocably recovered
by the indemnified Party with respect to such Claim or the
underlying facts under insurance policies, (i) net of any increase
that will occur, or is reasonably likely to occur, in insurance
premiums payable by the Indemnified Party, whether by retrospective
premium adjustments or any other premium increase under the policy
or policies under which the claim is made or any other policy,
where the increase results directly from filing the insurance claim
and (ii) less, dollar for dollar, the amount by which the insurance
claim when filed or at any time during the applicable policy
period, either singly or in the aggregate with all other claims
made under the applicable policy or policies, exceeds the policy
coverage limit; provided, however, that this subsection shall apply
only if this provision does not constitute an improper waiver of
the insurer's rights to subrogation against the Indemnifying Party.
Nothing contained in this subsection 11.6.(c) shall be deemed to
create an obligation of any party hereto to maintain any form or
level of insurance after the Closing, to name any other party as an
additional insured or to obtain approval for any waiver of rights
of subrogation. An Indemnifying Party shall make a claim for
insurance with respect to any Claim for which the Indemnifying
Party has insurance coverage.
11.6.(d) Tax Offset. The amount of any payment or
reimbursement of Claims by an Indemnifying Party shall be net of
any tax benefit realized or to be realized (and capable of being
estimated on a reasonable basis) by the Indemnified Party by reason
of the facts and circumstances giving rise to the Indemnifying
Party's liability.
11.7. No Waiver. The closing of the transactions contemplated
by this Agreement shall not constitute a waiver by any party of its rights
to indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of
condition constituting the basis of the Claim at or before the Closing,
and regardless of whether such breach, violation or failure is deemed to
be "material".
12. CLOSING
The closing of this transaction ("the Closing") shall take place at
the offices of Foley & Lardner, 777 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202-5367, at 10:00 A.M. on Friday, May 31, 1996, or at such
other time and place as the parties hereto shall agree upon. Such date is
referred to in this Agreement as the "Closing Date".
12.1. Documents to be Delivered by Company and Shareholder.
At the Closing, Company and Shareholder shall deliver to Buyer the
following documents, in each case duly executed or otherwise in proper
form:
12.1.(a) Bills of Sale. Bills of sale and such other
instruments of assignment, transfer, conveyance and endorsement as
will be sufficient in the opinion of Buyer and its counsel to
transfer, assign, convey and deliver to Buyer the Purchased Assets
as contemplated hereby.
12.1.(b) Compliance Certificate. A certificate signed by
the chief executive officer of Company that each of the
representations and warranties made by Company and Shareholder in
this Agreement is true and correct in all material respects on and
as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of
the Closing Date (except as allowed by Section 9.1), and that
Company and Shareholder have performed and complied with all of
Company's and Shareholder's obligations under this Agreement which
are to be performed or complied with on or prior to the Closing
Date.
12.1.(c) Shareholders Agreement. The Shareholders
Agreement referred to in Section 7.9, duly executed by the persons
referred to in such Section.
12.1.(d) Employment Agreement. The Employment Agreement
referred to in Section 7.1, duly executed by the Shareholder.
12.1.(e) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors and the Shareholder of
Company authorizing and approving this Agreement and the
consummation of the transactions contemplated by this Agreement.
12.1.(f) Articles; By-laws. A copy of the By-laws of
Company certified by the secretary of Company, and a copy of the
Articles of Incorporation of Company certified by the Secretary of
State of the state of incorporation of Company.
12.1.(g) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and
delivered to Buyer pursuant to the terms hereof.
12.1.(h) Sublease. The Sublease referred to in Section
9.5, duly executed by the persons referred to in such Section.
12.1.(i) General Releases. The General Releases referred
to in Section 7.4, duly executed by the persons referred to in such
Section.
12.1.(j) Consent and Waiver. the Consent and Waiver
referred to in Section 9.8, duly executed by the person referred to
in such Section.
12.1.(k) Other Documents. All other documents,
instruments or writings required to be delivered to Buyer at or
prior to the Closing pursuant to this Agreement and such other
certificates of authority and documents as Buyer may reasonably
request.
12.1.(l) Consent of Union. The consent referred to in
Section 9.9, duly executed by the persons referred to in such
Section.
12.2. Documents to be Delivered by Buyer. At the Closing,
Buyer shall deliver to Company the following documents, in each case duly
executed or otherwise in proper form:
12.2.(a) Cash Purchase Price. To Company a certified or
bank cashier's check (or wire transfer) as required by Section
3.2.(b) hereof.
12.2.(b) Assumption of Liabilities. Such undertakings and
instruments of assumption as will be reasonably sufficient in the
opinion of Company and its counsel to evidence the assumption of
Company Liabilities as provided for in Article 2.
12.2.(c) Compliance Certificate. A certificate signed by
the chief executive officer of Buyer that the representations and
warranties made by Buyer in this Agreement are true and correct on
and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of
the Closing Date (except for any changes permitted by the terms of
this Agreement or consented to in writing by Company), and that
Buyer has performed and complied with all of Buyer's obligations
under this Agreement which are to be performed or complied with on
or prior to the Closing Date.
12.2.(d) Shareholders Agreement. The Shareholders
Agreement referred to in Section 7.9, duly executed by the persons
referred to in such Section.
12.2.(e) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
12.2.(f) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and
delivered to Company by Buyer pursuant to the terms hereof.
12.2.(g) Sublease. The Sublease referred to in Section
9.5, duly executed by the persons referred to in such Section.
12.2.(h) Other Documents. All other documents,
instruments or writings required to be delivered to Company at or
prior to the Closing pursuant to this Agreement and such other
certificates of authority and documents as Company may reasonably
request.
13. TERMINATION
13.1. Right of Termination Without Breach. This Agreement may
be terminated without further liability of any party at any time prior to
the Closing:
13.1.(a) by mutual written agreement of Buyer and Company,
or
13.1.(b) by either Buyer or Company if the Closing shall
not have occurred on or before June 15, 1996, provided the
terminating party has not, through breach of a representation,
warranty or covenant, prevented the Closing from occurring on or
before such date.
13.2. Termination for Breach.
13.2.(a) Termination by Buyer. If (i) there has been a
material violation or breach by Company of any of the agreements,
representations or warranties contained in this Agreement which has
not been waived in writing by Buyer, or (ii) there has been a
failure of satisfaction of a condition to the obligations of Buyer
which has not been so waived, or (iii) Company shall have attempted
to terminate this Agreement under this Article 13 or otherwise
without grounds to do so, then Buyer may, by written notice to
Company at any time prior to the Closing that such violation,
breach, failure or wrongful termination attempt is continuing,
terminate this Agreement with the effect set forth in Section
13.2.(c) hereof.
13.2.(b) Termination by Company. If (i) there has been a
material violation or breach by Buyer of any of the agreements,
representations or warranties contained in this Agreement which has
not been waived in writing by Company, or (ii) there has been a
failure of satisfaction of a condition to the obligations of
Company which has not been so waived, or (iii) Buyer shall have
attempted to terminate this Agreement under this Article 13 or
otherwise without grounds to do so, then Company may, by written
notice to Buyer at any time prior to the Closing that such
violation, breach, failure or wrongful termination attempt is
continuing, terminate this Agreement with the effect set forth in
Section 13.2.(c) hereof.
13.2.(c) Effect of Termination. Termination of this
Agreement pursuant to this Section 13.2 shall not in any way
terminate, limit or restrict the rights and remedies of any party
hereto against any other party which has violated, breached or
failed to satisfy any of the representations, warranties,
covenants, agreements, conditions or other provisions of this
Agreement prior to termination hereof. Subject to the foregoing,
the parties' obligations under Section 15.9 of this Agreement shall
survive termination.
14. RESOLUTION OF DISPUTES
14.1. Arbitration. After the Closing, any dispute,
controversy or claim arising out of or relating to this Agreement or the
negotiation hereof or entry hereunto or any contract or agreement entered
into pursuant hereto or the performance by the parties of its or their
terms shall be settled by binding arbitration held in Milwaukee, Wisconsin
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect, except as specifically otherwise
provided in this Article 14. This Article 14 shall be construed and
enforced in accordance with the Federal Arbitration Act, notwithstanding
any other choice of law provision in this Agreement. Notwithstanding the
foregoing:
14.1.(a) Any party may, in its discretion, apply to a
court of competent jurisdiction for equitable relief as provided in
Section 15.5. Such an application shall not be deemed a waiver of
the right to compel arbitration pursuant to this Article.
14.1.(b) No party shall be required to submit to
arbitration hereunder unless all persons who are not parties to
this Agreement, but who are necessary parties to a complete
resolution of the controversy, submit to the arbitration process on
the same terms as the parties hereto. Without limiting the
generality of the foregoing, no claim under Article 11 for the
indemnification of a third-party claim shall be subject to
arbitration under this Article 14 unless the third party bringing
such claim against the indemnitee shall agree in writing to the
application of this Article 14 of the resolution of such claim.
14.2. Arbitrators. A single neutral arbitrator shall conduct
any arbitration hereunder.
14.3. Procedures; No Appeal. The arbitrator(s) shall allow
such discovery as the arbitrator(s) determine appropriate under the
circumstances and shall resolve the dispute as expeditiously as
practicable, and if reasonably practicable, within 120 days after the
selection of the arbitrator(s). The arbitrator(s) shall give the parties
written notice of the decision, with the reasons therefor set out, and
shall have 30 days thereafter to reconsider and modify such decision if
any party so requests within 10 days after the decision. Thereafter, the
decision of the arbitrator(s) shall be final, binding, and nonappealable
with respect to all persons, including (without limitation) persons who
have failed or refused to participate in the arbitration process.
14.4. Authority. The arbitrator(s) shall have authority to
award relief under legal or equitable principles, including interim or
preliminary relief, and to allocate responsibility for the costs of the
arbitration and to award recovery of attorneys fees and expenses in such
manner as is determined to be appropriate by the arbitrator(s).
14.5. Entry of Judgment. Judgment upon the award rendered by
the arbitrator(s) may be entered in any court having in personam and
subject matter jurisdiction. Company, Buyer and Shareholder hereby submit
to the in personam jurisdiction of the Federal and State courts in
Milwaukee, Wisconsin for the purpose of confirming any such award and
entering judgment thereon.
14.6. Confidentiality. All proceedings under this Article 14,
and all evidence given or discovered pursuant hereto, shall be maintained
in confidence by all parties and by the arbitrators.
14.7. Continued Performance. The fact that the dispute
resolution procedures specified in this Article 14 shall have been or may
be invoked shall not excuse any party from performing its obligations
under this Agreement and during the pendency of any such procedure all
parties shall continue to perform their respective obligations in good
faith, subject to any rights to terminate this Agreement that may be
available to any party and to the right of setoff provided in Section 11.4
hereof.
14.8. Tolling. All applicable statutes of limitation shall be
tolled while the procedures specified in this Article 14 are pending. The
parties will take such action, if any, required to effectuate such
tolling.
15. MISCELLANEOUS
15.1. Disclosure Schedule. Information set forth in any
disclosure schedule attached hereto (individually, a "Disclosure Schedule"
and collectively, the "Disclosure Schedules") shall be deemed to have been
disclosed for purposes of all Disclosure Schedules, and it shall not be
necessary to repeat disclosures on multiple schedules provided that
specific information is provided on the Disclosure Schedule on which
information is disclosed for more than one purpose to make the disclosures
for other purposes meaningful to Buyer and to make such disclosures not
misleading. The Disclosure Schedules shall not vary, change or alter the
language of the representations and warranties contained in this Agreement
and, to the extent the language in the Disclosure Schedules does not
conform in every respect to the language of such representations and
warranties, such language shall be disregarded and be of no force or
effect.
15.2. Further Assurance. From time to time, at any party's
request and without further consideration, the other parties will execute
and deliver to such party such documents, instruments and consents and
take such other action as such party may reasonably request in order to
consummate more effectively the transactions contemplated hereby, to
discharge the covenants of the parties hereto and to vest in Buyer good,
valid and marketable title to the business and assets being transferred
hereunder.
15.3. Disclosures and Announcements. Both the timing and the
content of all disclosure to third parties and public announcements
concerning the transactions provided for in this Agreement by any party
shall be subject to the approval of the other parties in all essential
respects, except that Company's approval shall not be required as to any
statements and other information which Buyer shall be required to make
pursuant to any rule or regulation of the Securities and Exchange
Commission or The Nasdaq Stock Market, or that are otherwise required by
law.
15.4. Assignment; Parties in Interest.
15.4.(a) Assignment. Except as expressly provided herein,
the rights and obligations of a party hereunder may not be
assigned, transferred or encumbered without the prior written
consent of the other parties.
15.4.(b) Parties in Interest. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the
respective successors and permitted assigns of the parties hereto.
Nothing contained herein shall be deemed to confer upon any other
person any right or remedy under or by reason of this Agreement.
15.5. Equitable Relief. Company and Shareholder agree that
any breach of the Company's obligation to consummate the sale of the
Purchased Assets on the Closing Date, any breach of any noncompetition
obligation imposed by Section 7.2 hereof or by any agreement delivered to
Buyer pursuant to Section 7.1 hereof, or any breach by Company or
Shareholder of its or their obligations imposed by Section 7.3 hereof,
will result in irreparable injury to Buyer for which a remedy at law would
be inadequate; and that, in addition to any relief at law which may be
available to Buyer for such breach and regardless of any other provision
contained in this Agreement, Buyer shall be entitled to injunctive and
other equitable relief as a court may grant. This Section 15.5 shall not
be construed to limit Buyer's right to obtain equitable relief for other
breaches of this Agreement under general equitable standards.
15.6. Law Governing Agreement. This Agreement shall be
construed and interpreted according to the internal laws of the State of
Wisconsin, excluding any choice of law rules that may direct the
application of the laws of another jurisdiction. Subject to the
provisions of Article 14, the parties hereby stipulate that any action or
other legal proceeding arising under or in connection with this Agreement
may be commenced and prosecuted in its entirety in the federal or state
courts having jurisdiction over Milwaukee County, Wisconsin, each party
hereby submitting to the personal jurisdiction thereof, and the parties
agree not to raise the objection that such courts are not a convenient
forum. Process and pleadings mailed to a party at the address provided in
Section 15.8 shall be deemed properly served and accepted for all
purposes.
15.7. Amendment and Modification. Buyer, Company and
Shareholder may amend, modify and supplement this Agreement in such manner
as may be agreed upon by them in writing.
15.8. Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a)
personally delivered; (b) sent by telecopier, facsimile transmission or
other electronic means of transmitting written documents; or (c) sent to
the parties at their respective addresses indicated herein by registered
or certified U.S. mail, return receipt requested and postage prepaid, or
by private overnight mail courier service. The respective addresses to be
used for all such notices, demands or requests are as follows:
(a) If to Buyer or LaCrosse, to:
LaCrosse Footwear, Inc.
1319 St. Andrew Street
La Crosse, Wisconsin 54603
Attention: Patrick K. Gantert
Facsimile: (608) 782-8190
(with a copy to)
Luke E. Sims
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-5367
Facsimile: (414) 297-4900
or to such other person or address as Buyer shall furnish to Company in
writing.
(b) If to Company or Shareholder, to:
Rainfair, Inc.
3600 S. Memorial Drive
Racine, Wisconsin 53403
Attention: Craig L. Leipold
Facsimile: (414) 554-6655
(with a copy to)
Christian G. Steinmetz
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-5367
Facsimile: (414) 297-4900
or to such other person or address as Company shall furnish to Buyer in
writing.
If personally delivered, such communication shall be deemed
delivered upon actual receipt; if electronically transmitted pursuant to
this paragraph, such communication shall be deemed delivered the next
business day after transmission (and sender shall bear the burden of proof
of delivery); if sent by overnight courier pursuant to this paragraph,
such communication shall be deemed delivered upon receipt; and if sent by
U.S. mail pursuant to this paragraph, such communication shall be deemed
delivered as of the date of delivery indicated on the receipt issued by
the relevant postal service, or, if the addressee fails or refuses to
accept delivery, as of the date of such failure or refusal. Any party to
this Agreement may change its address for the purposes of this Agreement
by giving notice thereof in accordance with this Section.
15.9. Expenses. Regardless of whether or not the transactions
contemplated hereby are consummated:
15.9.(a) Expenses to be Paid by Buyer. Buyer shall pay,
and shall indemnify, defend and hold Company and Shareholder
harmless from and against, each of the following:
(i) Environmental Audit. The fees and expenses for
the Phase I environmental audit of the Facility.
(ii) Professional Fees. All legal fees and expenses
directly related to the organization of Buyer as a legal
entity.
15.9.(b) Expenses to be Paid by Company. Company shall
pay, and shall indemnify, defend and hold Buyer harmless from and
against, each of the following:
(i) Transfer Taxes. Any sales, use, excise, transfer
or other similar tax imposed with respect to the transactions
provided for in this Agreement, and any interest or penalties
related thereto.
15.9.(c) Other. Except as otherwise provided herein, each
of the parties shall bear its own expenses and the expenses of its
counsel and other agents in connection with the transactions
contemplated hereby.
15.10. Entire Agreement. This instrument embodies the entire
agreement between the parties hereto with respect to the transactions
contemplated herein, and there have been and are no agreements,
representations or warranties between the parties other than those set
forth or provided for herein.
15.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
15.12. Headings. The headings in this Agreement are inserted
for convenience only and shall not constitute a part hereof.
15.13. Facsimile Copies. Facsimile copies of signed documents
shall be deemed to be original signed documents for all purposes
hereunder.
15.14. Limited Obligation of LaCrosse. Company, Shareholder
and Buyer acknowledge and agree that LaCrosse is a party to this Agreement
solely for the limited purpose provided in Section 8.5, and is not bound
by any other provision of this Agreement except as expressly provided
herein.
* * * * *
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
RAINCO, INC.
("Buyer")
By /s/ Craig L. Leipold
Craig L. Leipold, President
LACROSSE FOOTWEAR, INC.
("LaCrosse")
By /s/ Patrick K. Gantert
Patrick K. Gantert, President
RAINFAIR, INC.
("Company")
By /s/ Craig L. Leipold
Craig L. Leipold, President
/s/ Craig L. Leipold (SEAL)
Craig L. Leipold, personally
("Shareholder")
SHAREHOLDERS' AGREEMENT
THIS AGREEMENT made and entered into as of this 31st day of May,
1996, by and between CRAIG L. LEIPOLD, an individual resident of Wisconsin
("Leipold"), LaCROSSE FOOTWEAR, INC., a Wisconsin corporation ("LaCrosse")
and RAINCO, INC., a Wisconsin corporation (the "Company").
W I T N E S S E T H :
WHEREAS, LaCrosse has purchased 1,250 shares of the Company's
Class A Common Stock, $.01 par value ("Class A Common Stock"), for an
aggregate of $1,250,000, and 500 shares of the Company's 8% Preferred
Stock, $.01 par value ("Preferred Stock"), for an aggregate of $500,000;
WHEREAS, Leipold has purchased 1,250 shares of the Company's
Class B Common Stock, $.01 par value ("Class B Common Stock"), for an
aggregate of $1,250,000; and
WHEREAS, LaCrosse and Leipold (together, the "Shareholders" and
each, individually a "Shareholder") consider it in their mutual best
interests to restrict the transfer of the Class A Common Stock, Class B
Common Stock (collectively, the "Common Stock") and the Preferred Stock,
to provide for certain matters with respect to the operation of the
Company and to provide for the purchase by LaCrosse of the Class B Common
Stock owned by Leipold under certain circumstances, as provided herein.
NOW, THEREFORE, in consideration of the mutual promises set
forth herein and the mutual benefits to be derived from this Agreement,
the parties, intending to be legally bound, hereby agree as follows:
1. Definitions. Each capitalized term below will have the
meaning given it:
"Option" means the Put or the Call (as such terms are defined
herein).
"Securities" means the Common Stock and the Preferred Stock.
2. Restrictions on Transfer. Except as otherwise provided in
this Agreement, the Shareholders covenant and agree that neither they nor
their successors or assigns will transfer or dispose of any Securities now
owned or hereafter acquired, whether by sale, assignment, exchange, gift,
bequest, pledge, hypothecation, transfer by operation of law or any other
means (hereinafter collectively referred to as "transfer"); provided,
however, that each Shareholder may freely transfer all of the Common Stock
or all of the Preferred Stock owned by such Shareholder to a corporation
wholly owned by such Shareholder as long as such Securities continue to
remain subject to the terms, conditions and restrictions of this Agreement
and such corporation assumes in writing the obligations of the
transferring Shareholder under this Agreement; provided, however, that no
such transfer and assumption shall relieve the transferring Shareholder of
any of its obligations under this Agreement.
3. Grant of Put. Subject to the terms and conditions hereof,
LaCrosse hereby grants to Leipold the continuing right to sell ("Put") to
LaCrosse, all, but not less than all, the shares of Class B Common Stock
now owned or hereafter acquired by Leipold. The Put granted hereby
continues in the hands of any transferee that receives Class B Common
Stock in accordance with the terms of this Agreement:
(a) The Put cannot be exercised until the earlier of
(i) January 1, 2000 or (ii) Leipold's death;
(b) During Leipold's lifetime (subject to (a) above),
the Put can only be exercised during the period from January 1
through March 31 of any calendar year; and
(c) In the event of Leipold's death, the Put can be
exercised at anytime within nine (9) months of such death;
provided, however, that if such Put is not exercised within such
9-month period, the Put shall thereafter be governed by
Section 3(b) hereof as if Leipold were living.
4. Grant of Call. Subject to the terms and conditions hereof,
Leipold grants to LaCrosse a continuing right to purchase ("Call") all,
but not less than all, the shares of Class B Common Stock now held or
hereafter acquired by Leipold at any time that Leipold may exercise the
Put provided for in Section 3 hereof. The Call granted hereby shall be
binding on each transferee that receives Class B Common Stock in
accordance with the terms of this Agreement and may be exercised by any
transferee that receives Class A Common Stock in accordance with the terms
of this Agreement.
5. Exercise of Option(s).
(a) The Put may be exercised by written notice delivered
personally or sent by registered or certified mail, postage prepaid,
addressed to the President of LaCrosse at LaCrosse's principal office in
LaCrosse, Wisconsin. The Call may be exercised by written notice
delivered personally or sent by registered or certified mail, postage
prepaid, addressed to Leipold at Leipold's address as it appears on the
books and records of the Company. For purposes of this Agreement, the
date of exercise shall be the date on which such notice of exercise is
delivered or mailed, as the case may be.
(b) The purchase price per share of Class B Common Stock
shall be determined by multiplying (i) the average of EBIT (as defined
below) for the Company's three most recently completed 12-month fiscal
years, by (ii) a factor of 3.75, and dividing such product by the total
number of shares of Common Stock then outstanding; provided, however, that
in no circumstances will such price per share of Class B Common Stock be
less than the book value per share of Class B Common Stock determined in
accordance with GAAP (as defined below) ("Book Value") as of the end of
the Company's then most recently completed fiscal year. In the event that
either Option is exercised by reason of Leipold's death, (x) prior to June
1, 1997, the purchase price for Leipold's Class B Common Stock in such
sale shall be the Book Value per share of such stock as of the end of the
month preceding the month of Leipold's death or (y) on or after June 1,
1997 and prior to January 1, 2000, the amount described in clause (i)
above shall be determined on the basis of the average EBIT for the Company
for the months following the date hereof through the month preceding the
month of Leipold's death, which average monthly EBIT shall be annualized
through December 31, 1999 in order to determine the amount that should be
multiplied by the factor in clause (ii) above to determine the purchase
price per share of Class B Common Stock based upon EBIT of the Company.
For purposes of this calculation only, "EBIT" means the Company's earnings
before interest and taxes (determined in accordance with generally
accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board, consistently
applied (collectively, "GAAP")). EBIT and Book Value of the Class B
Common Stock shall be determined by the Company's regular auditors in
accordance with GAAP, but subject to the following adjustments or
modifications:
(1) No amount resulting from the amortization of any goodwill
shall be treated as an expense for the purpose of calculating EBIT
and Book Value, except that the purchase price premium in the amount
of $500,000 paid by the Company to Rainfair, Inc. in connection with
the acquisition of Rainfair's assets shall be amortized on a straight
line basis over the fifteen (15) years following the date hereof and
charged on that basis against EBIT and Book Value.
(2) No fees or expenses of LaCrosse attributable to the
acquisition shall be treated as an expense for the purpose of
calculating EBIT and Book Value.
(3) Any gains or losses arising from the sale, disposition,
destruction or condemnation of any assets of the Company not held for
sale to customers in the ordinary course of business shall be
disregarded in computing EBIT and Book Value.
(4) All transactions between the Company, on the one hand, and
LaCrosse or its Affiliates, on the other hand, shall be reflected in
EBIT and Book Value on the basis of terms that would prevail in an
arms-length transaction between the Company and unrelated parties.
Without limiting the generality or application of the preceding
sentence, any service or loan provided by LaCrosse or any of its
Affiliates to the Company (including without limitation any general
administrative, MIS or financing services or any loan) that would
result in an allocation of material expense to the Company shall be
subject to the prior written approval of the Shareholder and subject
to the limitation of the foregoing sentence; provided, however, that
the selection of Company's auditors or insurance carriers shall not
be subject to such written approval.
(5) The acceleration of expenses or deferral of income from one
fiscal year to another having an aggregate net effect of reducing
EBIT or Book Value by more than $100,000 during the time that Leipold
owns Common Stock shall not be considered in the computation of EBIT
or Book Value to the extent of such excess.
(6) No expenses or charges of the Company considered to be
excluded from the Company's operating income pursuant to GAAP shall
be considered in the computation of EBIT or Book Value.
(7) EBIT and Book Value shall be calculated using the first-in,
first-out (FIFO) method of inventory valuation.
(8) EBIT and Book Value shall not include any amount of expense
for contributions to the Company's defined benefit pension plan that
was formerly administered by Rainfair in excess of the annual minimum
funding requirements of ERISA after taking advantage of any available
exemptions or exceptions from payment.
(9) In calculating EBIT and Book Value, all depreciation on
assets owned by Rainfair as of the date hereof shall be based upon
historical net cost basis as on the books of Rainfair as of the date
hereof and EBIT and Book Value shall be determined by using the
depreciation methods and periods prescribed by GAAP.
(10) In the event the Company's lease of the Rainfair facilities
must be capitalized for financial accounting or tax purposes, the
effects of such capitalization shall be excluded from calculating
EBIT and Book Value and only the periodic rental actually paid by
Rainfair pursuant to the lease shall be included in calculating EBIT
and Book Value.
(c) Leipold and his accountants may dispute the
calculation of EBIT or Book Value of the Class B Common Stock and Company
and LaCrosse agree to permit Leipold, Leipold's accountants, and their
respective representatives, during normal business hours, to have
reasonable access to, and to examine and make copies of, all books and
records of Company, including but not limited to the books, records,
schedules and work papers of LaCrosse, Company and their accountants and
access to representatives of their accountants, but only such documents
and access as are necessary to review the calculation of EBIT and Book
Value of the Class B Common Stock in accordance with this Section 5. Any
dispute regarding such determination that cannot be settled by
negotiations between the parties may be submitted to arbitration before a
single arbitrator who is a partner, shareholder or other equity holder of
a firm of certified public accountants of national standing (other than
the accountants for any of the parties hereto) under the rules set forth
in Section 14 of the Asset Purchase Agreement dated May 16, 1996 by and
between LaCrosse, Rainco, Inc. and Leipold.
(d) LaCrosse may, in its sole discretion, fulfill its
obligations under the Options by providing funds at least equal to the
aggregate purchase price to the Company and causing the Company to
purchase the Class B Common Stock from Leipold, provided that Company may
purchase such stock without violating any applicable law.
(e) In the event of a stock dividend, stock split,
exchange for a different number or kind of shares of capital stock or
other securities of the Company or of another corporation (whether as a
result of a reorganization, recapitalization, combination of shares,
merger, consolidation or comparable transaction), or any other change in
the number or kind of outstanding shares of Common Stock or of any stock
or other securities into which such Common Stock shall have been changed
or for which it or they shall have been exchanged, the number and/or kind
of shares covered by an Option, and the purchase price if appropriate,
shall be equitably adjusted.
(f) The closing ("Closing") for the sale and purchase,
respectively, of any shares of Class B Common Stock with respect to which
an Option is exercised shall be a date mutually agreeable to the parties,
but in no event earlier than forty-five (45) days after the date of
exercise of an Option or later than sixty (60) days after such date of
exercise. The aggregate purchase price shall be paid in cash or by
certified check at the Closing. At the Closing, Leipold shall deliver
stock certificates representing all shares of Class B Common Stock then
owned by Leipold, together with stock powers duly executed in blank
sufficient to effect the transfer of such shares. Such certificates shall
be free and clear of all liens and encumbrances of every nature or kind
whatsoever. In the event that Leipold refuses to deliver stock
certificates representing such shares, or stock powers, or otherwise fails
to comply with its obligations hereunder, LaCrosse shall have the right to
cause the Company to cancel the outstanding stock certificates held in the
name of Leipold and to cause the Company to reissue stock certificates
representing such shares in the name of LaCrosse upon the payment of the
aggregate purchase price provided herein to Rainfair, and Leipold agrees
to indemnify and hold the Company harmless from and against all costs,
damages and expenses as a result of such breach. Any Closing shall be
held at LaCrosse's principal executive office unless the parties thereto
shall otherwise mutually agree.
6. Other Agreements Between Parties.
(a) The Shareholders acknowledge and understand that
pursuant to the Articles of Incorporation ("Articles") and By-laws ("By-
Laws") of the Company in the form attached hereto, LaCrosse, as sole
holder of the Class A Common Stock, is entitled to elect a majority of the
Company's Board of Directors and therefore will control the operation of
the Company, except as otherwise provided herein, in the Articles or By-
laws, or under applicable Wisconsin law.
(b) The Company and LaCrosse agree that during the period
that Leipold owns any Common Stock except with the express written consent
of Leipold (any such consent which shall specifically refer to this
section):
(1) The Company shall carry on its business diligently and
substantially in the same manner as conducted by Leipold prior to the
date hereof. The Company's business will be limited to the design,
manufacture, marketing and sale of rainwear, footwear or other
protective clothing.
(2) Separate books and records for the Company's operations
shall be maintained.
(3) So long as the Company is generally satisfying the goals of
its business plan, it is the intention of the parties that day-to-day
operating control of the Company will be exercised by Leipold,
subject to the strategic plan, annual operating plan and budget, and
authorization and approval limits established from time to time by
the Company's Board of Directors. The Shareholders and the Company
agree that they will, in good faith, attempt to enhance the Company's
financial performance to the extent such enhancement is consistent
with good business practices and the Company's business plan.
(4) The Company shall maintain insurance for the benefit of the
Company in such kinds and amounts as are customarily carried by
businesses similar to the business conducted by the Company.
(c) LaCrosse, in its sole discretion, may cause the
Company to borrow any of its working capital requirements from LaCrosse at
an interest rate not to exceed the prime rate charged from time to time by
Firstar Bank Milwaukee, N.A., plus 1/2%, and cause the Company to grant a
security interest in its assets in favor of LaCrosse to secure such
borrowing; provided, however, that LaCrosse has no obligation to make any
such loan or to continue, extend or loan additional amounts with respect
to any such loan, if made, past its original repayment date or beyond its
original principal amount. It is the present intention of LaCrosse to
provide the Company reasonable working capital to support the Company's
business and its reasonable growth. Notwithstanding the foregoing, in the
event that LaCrosse decides in the future not to provide all of the
capital or financing required for such purpose, LaCrosse shall give the
Company sixty (60) days advance written notice and the Company shall
pursue alternate financing with such banks or financial institutions as
the Board of Directors of the Company shall determine and, in such event,
LaCrosse agrees to subordinate any loans with the Company and security
interests, mortgages or liens that LaCrosse may have in the Company's
assets to the loans, security interests, mortgages and liens of the banks
and other financial institutions that provide such alternative financing
for the Company.
(d) The Company shall not declare or pay dividends or
distributions with respect to the Common Stock, or redeem any such Common
Stock except as contemplated herein, so long as Leipold owns any Common
Stock.
7. Investment Representations; Stock Certificate Legends.
(a) The Shareholders covenant and represent that all
shares of Securities that they will acquire will be acquired for
investment purposes only and not with a view toward the resale or
distribution thereof.
(b) All certificates for shares of Securities now owned or
hereafter acquired by the Shareholders shall bear legends in substantially
the same form set forth below:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE BEING
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TOWARD
DISTRIBUTION OR RESALE.
ANY SALE, ASSIGNMENT, EXCHANGE, GIFT, BEQUEST,
TRANSFER, PLEDGE, HYPOTHECATION OR TRANSFER BY OPERATION OF LAW
OR ANY OTHER MEANS OF THE SHARES REPRESENTED BY THIS CERTIFICATE
IS RESTRICTED BY, AND SUBJECT TO, THE TERMS AND PROVISIONS OF
THAT CERTAIN SHAREHOLDER AGREEMENT, DATED AS OF MAY 16, 1996,
BETWEEN LaCROSSE FOOTWEAR, INC., LEIPOLD AND THE CORPORATION. A
COPY OF SUCH AGREEMENT AND OF ALL AMENDMENTS OR SUPPLEMENTS
THERETO IS ON FILE AT THE CORPORATION'S PRINCIPAL EXECUTIVE
OFFICE, 3600 SOUTH MEMORIAL DRIVE, RACINE, WISCONSIN 53403-
3871. BY ACCEPTANCE OF THIS CERTIFICATE THE HOLDER HEREOF
AGREES TO BE BOUND BY THE TERMS OF SAID AGREEMENT AND ALL
AMENDMENTS OR SUPPLEMENTS THERETO."
8. Entire Agreement. This instrument embodies the entire
agreement between the parties hereto with respect to the subject matter of
this Agreement, and there have been and are no agreements, representations
or warranties between the parties hereto other than those set forth or
provided for herein.
9. Amendment; Modification. This Agreement shall not be
amended, modified or supplemented other than in writing signed by all
parties hereto.
10. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute but one and the same instrument.
11. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.
12. Severability. The parties agree that if any provision of
this Agreement shall under any circumstances be deemed invalid or
inoperative, the Agreement shall be construed with the invalid or
inoperative provision deleted, and the rights and obligations of the
parties shall be construed and enforced accordingly.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal law of the State of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
/s/ Craig L. Leipold (SEAL)
Craig L. Leipold
LaCROSSE FOOTWEAR, INC.
By: /s/ Patrick K. Gantert
Patrick K. Gantert
President
RAINCO, INC.
By: /s/ Craig L. Leipold
Craig L. Leipold, President
