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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
U.S. COTTON, LLC,
AMERICAN SAFETY RAZOR COMPANY
AND CERTAIN SUBSIDIARIES OF
AMERICAN SAFETY RAZOR COMPANY
DATED AS OF NOVEMBER 7, 2001
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TABLE OF CONTENTS
Page
I. TRANSFER OF ASSETS AND LIABILITIES.....................................1
1.01 Assets to be Sold................................................1
1.02 Consideration....................................................2
1.03 Closing..........................................................2
1.04 Deliveries by Seller.............................................2
1.05 Deliveries by the Buyer..........................................3
1.06 Adjustment to Initial Purchase Price.............................4
1.07 Allocation of Purchase Price.....................................6
1.08 Assumed Liabilities..............................................6
1.09 [INTENTIONALLY OMITTED]..........................................7
1.10 Acquisition of Certain Acquired Assets...........................7
II. RELATED MATTERS........................................................8
2.01 Mail Received After Closing......................................8
III. REPRESENTATIONS AND WARRANTIES OF THE SELLER...........................8
3.01 Organization And Authority.......................................8
3.02 No Violation; Consents and Approvals.............................9
3.03 Financial Statements............................................10
3.04 Absence of Undisclosed Liabilities..............................10
3.05 Absence of Certain Changes or Events............................10
3.06 Title to Acquired Assets........................................10
3.07 Intellectual Property...........................................11
3.08 Litigation......................................................12
3.09 Employee Benefit Plans..........................................13
3.10 Employees; Employee Relations...................................15
3.11 Certain Contracts and Arrangements..............................17
3.12 Compliance with Laws, Licenses, Etc.............................17
3.13 Insurance.......................................................17
3.14 Brokers.........................................................18
3.15 Inventories; Accounts Receivable................................18
3.16 Environmental Matters...........................................19
3.17 Sufficiency of the Acquired Assets..............................23
3.18 Affiliate Transactions..........................................23
3.19 Taxes...........................................................23
3.20 Warranties......................................................24
3.21 Motor Vehicles..................................................24
3.22 Customers and Suppliers.........................................24
3.23 Condition of the Property.......................................25
3.24 Customer Deposits...............................................25
3.25 Promotional Obligations.........................................25
IV. REPRESENTATIONS AND WARRANTIES OF THE BUYER...........................25
4.01 Organization And Authority......................................25
4.02 No Violation; Consents and Approvals............................26
4.03 Brokers.........................................................26
4.04 Litigation......................................................26
4.05 Available Funds.................................................27
V. COVENANTS OF THE PARTIES..............................................27
5.01 Conduct of the Business.........................................27
5.02 Access to Information; Confidentiality..........................28
5.03 Commercially Reasonable Efforts.................................29
5.04 Consents........................................................29
5.05 Public Announcements............................................29
5.06 Notification of Certain Matters.................................29
5.07 Supplemental Disclosure.........................................30
5.08 Records Pertaining to the Business..............................30
5.09 No Solicitation.................................................30
5.10 Motor Vehicles..................................................31
5.11 Other Actions...................................................31
5.12 Bulk Sales Compliance...........................................31
5.13 Discharge of Claims.............................................31
5.14 Bank Accounts...................................................31
5.15 Financial Information...........................................31
VI. ADDITIONAL AGREEMENTS.................................................32
6.01 Tax Matters.....................................................32
6.02 Tax Certificates................................................32
6.03 Proration of Taxes and Utilities................................32
6.04 Covenant Not to Compete.........................................33
6.05 Environmental Covenants.........................................34
6.06 Employee Matters................................................35
6.07 The Buyer's Financing...........................................36
6.08 The Promotional Obligations.....................................36
6.09 The Transition Services Agreement...............................37
6.10 Insurance.......................................................37
6.11 Certain Releases................................................38
6.12 Investigations by Government Authorities........................38
6.13 Review Period...................................................39
6.14 The Trademark Licenses..........................................39
6.15 [INTENTIONALLY OMITTED].........................................39
6.16 Termination of Confidentiality Obligations......................39
6.17 The Puerto Rico Lease...........................................39
6.18 Treatment of Bulk Products......................................40
6.19 Tax Credit Agreement............................................40
6.20 Enterprise Zone Contract........................................40
6.21 Nogales Sublease Additional Rent................................41
6.22 [INTENTIONALLY OMITTED].........................................41
6.23 Certain Landlord Lien Waivers...................................41
6.24 The Puerto Rico Grant...........................................41
VII. CONDITIONS TO OBLIGATIONS OF THE SELLER...............................41
7.01 Conditions......................................................41
VIII. CONDITIONS TO OBLIGATIONS OF THE BUYER................................42
8.01 Conditions......................................................42
IX. TERMINATION, AMENDMENT AND WAIVER.....................................44
9.01 Termination.....................................................44
9.02 Effect of Termination...........................................45
9.03 Amendment, Modification and Waiver..............................45
X. FEES AND EXPENSES; SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
AND INDEMNIFICATION..............................................45
10.01 Fees and Expenses...............................................45
10.02 Survival of Representations and Warranties and Covenants........45
10.03 Indemnification Obligations of the Seller.......................46
10.04 Limitation on the Liability of the Seller.......................48
10.05 Indemnification Obligations of the Buyer........................49
10.06 Limitation on the Liability of the Buyer........................49
10.07 Response Action.................................................50
10.08 Conditions of Indemnification...................................50
10.09 Waiver of Special Damages.......................................51
XI. MISCELLANEOUS.........................................................51
11.01 Further Assurances..............................................51
11.02 Notices.........................................................51
11.03 Entire Agreement................................................52
11.04 Severability....................................................52
11.05 Binding Effect; Assignment......................................53
11.06 Third-Party Beneficiaries.......................................53
11.07 Counterparts....................................................53
11.08 Interpretation..................................................53
11.09 Specific Performance............................................53
11.10 Governing Law...................................................53
11.11 Knowledge.......................................................54
11.12 Waiver of Jury Trial............................................54
11.13 Consent to Personal Jurisdiction; Agent and Method for
Service; and Choice of Forum....................................54
XII. DEFINITIONS AND TERMS.................................................55
12.01 Certain Definitions.............................................55
INDEX TO EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A-1- ▇▇▇▇ of Sale
Exhibit A-2- Deed
Exhibit B- Assignment and Assumption Agreement
Exhibit C- Trademark Assignments
Exhibit D- Lease Assignment and Assumption Agreement
Exhibit E- Undertaking
Exhibit F- [INTENTIONALLY OMITTED]
Exhibit G-1- Subordination Non-Disturbance and Attornment Agreements
Exhibit G-2- Landlord Lien Waivers
Exhibit H- Ernst & Young, LLP Letter
Exhibit I-- [INTENTIONALLY OMITTED]
Exhibit J- Transition Services Agreement
Exhibit K- The Trademark Licenses
Exhibit L- Opinion of the Buyer's Counsel
Exhibit M- Opinion of the Seller's Counsel
Exhibit N- Form of the Environmental Insurance Policy
Exhibit O- The Puerto Rico Bill of Sale
Exhibit P- The Mexico ▇▇▇▇ of Sale
Exhibit Q- The Pomfret Lease
Exhibit R- The Canadian ▇▇▇▇ of Sale
Exhibit S- The New Collectron Agreement
Exhibit T- The Cleveland Lease Amendment
Exhibit U- The Cleveland Agreement
Exhibit V- The Final Commitment Letter
APPENDICES
Appendix I -.....PR Acquired Assets
Appendix II -.....Mexican Acquired Assets
SCHEDULES
Schedule 1.01(a)- The Acquired Assets
Schedule 1.01(b)- The Excluded Assets
Schedule 1.02- Percentage of Purchase Price to be paid to the Seller
Entities
Schedule 1.07- The Allocation
Schedule 1.08- The Assumed Liabilities
Schedule 3.02- The Seller's Consents and Approvals
Schedule 3.03(a)- The Seller's Financial Statements
Schedule 3.03(b)- Exceptions Relating to the Seller's Financial Statements
Schedule 3.04- Certain Liabilities and Obligations
Schedule 3.06(a)- Ownership of the Acquired Assets by the Seller
Schedule 3.06(b)(i)- The Owned Real Property and the Leased Property
Schedule 3.06(b)(ii)- The Legal Description of the Owned Real Property
Schedule 3.07(a)(i)- The Intellectual Property
Schedule 3.07(a)(ii)- The Retained Intellectual Property
Schedule 3.07(a)(iii)- Inactive Intellectual Property
Schedule 3.08(a)- Litigation
Schedule 3.09(a)- Employee Benefit Plans
Schedule 3.10(a)- Employees
Schedule 3.10(b)- Employment Contracts
Schedule 3.10(d)(i)- Employee Relations
Schedule 3.10(d)(ii)- Collective Bargaining Agreement
Schedule 3.10(e)- Disabled Employees
Schedule 3.10(f)- Employee Perquisites
Schedule 3.11(a)- Material Contracts
Schedule 3.11(b)- Capitalized Leases
Schedule 3.13- Insurance
Schedule 3.15(a)- Inventory Unsold for Six Months
Schedule 3.15(b)- Receivables
Schedule 3.16- Environmental Matters, including Environmental Permits
Schedule 3.17- Condition of the Acquired Assets
Schedule 3.18- Affiliate Transactions
Schedule 3.19- Taxes
Schedule 3.20- Warranties
Schedule 3.22- Customers and Suppliers
Schedule 3.23- Condition of the Property
Schedule 3.24- Customer Deposits
Schedule 3.25- The Promotional Obligations
Schedule 4.02- The Buyer's Consents and Approvals
Schedule 6.14- The Licensed Trademarks
Schedule 7.01(f)(i)- The Seller's Consents and Approvals
Schedule 7.01(f)(ii)- The Buyer's Consents and Approvals
Schedule 8.01(n)- Waivers, Consents and Estoppel Certificates
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of November 7, 2001 (this
"Agreement"), by and between U.S. Cotton, LLC, a Delaware limited liability
company ("Buyer"), American Safety Razor Company, a Delaware corporation
("ASR"), Megas Beauty Care, Inc., a Delaware corporation ("Megas"), Valley Park
Realty, Inc., a Missouri corporation ("Valley Park"), Megas de Puerto Rico, Inc.
d/b/a Acme ▇▇▇▇▇▇▇ Puerto Rico, Inc., a Puerto Rican corporation ("Megas PR"),
American Safety Razor of Canada Limited, a Canadian corporation ("ASR Canada")
and Personna International de Puerto Rico, Inc., a Delaware corporation
("Personna") (each of ASR, Megas, Valley Park, Megas PR, ASR Canada and
Personna, a "Seller Entity" and, collectively, the "Seller") (the Buyer and the
Seller each hereinafter at times a "Party" and, collectively hereinafter at
times, the "Parties").
W I T N E S S E T H
WHEREAS, the Buyer desires to purchase from the Seller and the Seller
desires to sell to the Buyer, free and clear of all liabilities, obligations,
claims, use and occupancy rights, options, pledges, mortgages, hypothecations,
security interests, liens, charges, prior claims, burdens and encumbrances
(collectively, the "Encumbrances") (other than the liabilities and obligations
expressly assumed pursuant to this Agreement and the Encumbrances expressly
permitted by this Agreement), substantially all of the property and assets of
the consumer, medical, pharmaceutical and other cotton products, tissues and
foot care (collectively, the "Cotton Products") manufacturing, sales and
distribution businesses currently conducted by the Seller (collectively
hereinafter at times, the "Business") and the Owned Real Property, as
hereinafter defined, upon the terms and subject to the conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants, agreements and conditions contained
herein, and intending to be legally bound hereby, the Parties hereby agree as
follows:
I. TRANSFER OF ASSETS AND LIABILITIES
1.01 Assets to be Sold.
-----------------
(a) Upon the terms and subject to the conditions of this Agreement, at the
closing provided for in Section 1.03 hereof (the "Closing"), the Seller shall
sell, convey, assign, transfer and deliver to the Buyer all of the Seller's
right, title and interest in and to the property and assets of the Business
listed and described in Schedule 1.01(a) hereto and the Seller shall sell,
convey, assign, transfer and deliver to the Buyer the entire fee interest in the
Owned Real Property, including all rights, benefits and hereditaments
appurtenant thereto (collectively, the "Acquired Assets"), expressly excluding
the Excluded Assets, as hereinafter defined, free and clear of all Encumbrances,
except for the Assumed Liabilities and the Permitted Encumbrances.
(b) The Acquired Assets do not include any assets which are not listed on
Schedule 1.01(a) hereto, including, without limitation, those assets of the
Seller listed and described in Schedule 1.01(b) hereto (collectively, the
"Excluded Assets").
(c) Such sale, conveyance, assignment, transfer and delivery shall be effected
by delivery by the Seller to the Buyer or its designees of (i) a duly executed
▇▇▇▇ of sale, in substantially the form of Exhibit A-1 hereto (the "▇▇▇▇ of
Sale"), (ii) a special warranty deed, in recordable form and in the form of
Exhibit A-2 hereto (the "Deed"), with respect to the Owned Real Property, (iii)
an assignment of the Contracts (as hereinafter defined), permits and certain
other assets included in the Acquired Assets in substantially the form of
Exhibit B hereto (the "Assignment and Assumption Agreement"), (iv) assignments
of all of the trademarks of the Seller included in the Acquired Assets in
substantially the form of Exhibit C hereto (the "Trademark Assignments"), and
(v) such other good and sufficient instruments of conveyance and transfer,
including, without limitation, assignments of any leases for Leased Property
included in the Acquired Assets in substantially the form of Exhibit D hereto
(the "Lease Assignment and Assumption Agreements") (collectively, the "Other
Instruments"), as shall be necessary to vest in the Buyer or one of its
subsidiaries good, valid and marketable title to the Acquired Assets, free and
clear of all Encumbrances, excepting the Assumed Liabilities (as hereinafter
defined) and Permitted Encumbrances (as hereinafter defined).
1.02 Consideration. Upon the terms and subject to the conditions of this
Agreement, in consideration of the aforesaid sale, conveyance, assignment,
transfer and delivery of the Acquired Assets, at the Closing, the Buyer shall
deliver or cause to be delivered to the Seller Entities in accordance with the
respective percentages set forth on Schedule 1.02 in full payment for the
aforesaid sale, conveyance, assignment, transfer and delivery of the Acquired
Assets: (i) Eighteen Million U.S. Dollars ("Dollars") (US $18,000,000) (the
"Initial Purchase Price"), subject to adjustment in accordance with Section 1.06
hereof (as so adjusted, the "Purchase Price"); (ii) an undertaking,
substantially in the form of Exhibit E hereto (the "Undertaking"), whereby the
Buyer shall assume and agree to perform, pay or discharge certain of the
liabilities and obligations of the Seller relating to the Business specified
therein, (iii) the Assignment and Assumption Agreement; and (iv) the Lease
Assignment and Assumption Agreements.
1.03 Closing. The Closing of the transactions contemplated by this Agreement
shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. Central time on November 9, 2001
or, if the conditions to Closing set forth in Articles VII and VIII hereof shall
not have been satisfied or waived by such date, as soon as practicable after
such conditions shall have been satisfied, or such other date and time as shall
be agreed upon in writing by the parties hereto. The date on which the Closing
actually occurs is referred to herein as the "Closing Date."
1.04 Deliveries by Seller. At the Closing, the Seller shall deliver or cause to
be delivered to the Buyer (unless delivered previously) the following:
(a) the ▇▇▇▇ of Sale, the Puerto Rico Bill of Sale, the Mexico ▇▇▇▇ of Sale and
the Canadian ▇▇▇▇ of Sale;
(b) the Deed;
(c) the Acquired Assets;
(d) the Trademark Assignments, the Assignment and Assumption Agreement, the
Lease Assignment and Assumption Agreements, the Transition Services Agreement
and the Other Instruments;
(e) the compliance certificate referred to in Subsection 8.01(d) hereof;
(f) the opinion of counsel to the Seller referred to Subsection 8.01(k) hereof;
(g) the originals or copies (in the Seller's discretion) of all books and
records, in any form or media (including all computerized or electronic records
and other computerized storage media), of the Seller relating in a meaningful
way to the Business (collectively, the "Books and Records"), including, without
limitation, all Books and Records relating to the purchase of materials for,
supplies and services for, and dealings with customers and distributors of, the
Business, but specifically excluding the corporate charter, qualifications to
conduct business as a foreign corporation, payroll and other employee records,
the Environmental Information, seals, minute books, stock transfer books, blank
stock certificates, and other documents relating to the organization and
corporate governance of the Seller or any of its subsidiaries as a corporation
or other entity;
(h) to the extent to which the Seller can obtain them through the use of
commercially reasonable efforts: (i) subordination, non-disturbance and
attornment agreements for any encumbered Leased Property from the lender thereon
substantially in the form of Exhibit G-1 hereto (the "Subordination
Non-Disturbance and Attornment Agreements"); and (ii) landlord lien waivers for
any Leased Property from the landlord thereof substantially in the form of
Exhibit G-2 hereto (the "Landlord Lien Waivers").
(i) the Trademark Licenses;
(j) to the extent transferable under applicable Laws and set forth on Schedule
7.01(f)(i), any documents, instruments or agreements to effectuate the transfer
and assignment of any and all permits (including, without limitation,
Environmental Permits) authorizations, building permits, certificates of
occupancy, approvals and variances (collectively, "Permits") held by the Seller
which are necessary to own and operate the Acquired Assets in accordance with
applicable laws;
(k) [INTENTIONALLY OMITTED]
(l) all other documents, certificates, instruments or writings reasonably
required to be delivered by the Seller at or prior to the Closing pursuant to
this Agreement or otherwise reasonably requested by counsel to the Buyer in
connection herewith, including any declaration of value or other affidavits or
filings required in connection with the recordation of the Deeds or the issuance
of title insurance to Buyer with respect to the Owned Real Property.
1.05 Deliveries by the Buyer. At the Closing, the Buyer shall deliver or cause
to be delivered to the Seller (unless delivered previously) the following:
(a) an amount equal to the Initial Purchase Price, in accordance with Section
1.02 hereof, by wire transfer of immediately available funds in Dollars, to bank
accounts designated by the Seller, which accounts shall be designated not less
than two (2) business days prior to the Closing Date;
(b) the Undertaking;
(c) the Assignment and Assumption Agreement and the Lease Assignment and
Assumption Agreements;
(d) the Transition Services Agreement;
(e) the compliance certificate referred to in Subsection 7.01(c) hereof;
(f) the opinion of counsel to the Buyer referred to in Section 7.01(g) hereof;
(g) the Trademark Licenses; and
(h) all other documents, certificates, instruments or writings reasonably
required to be delivered by the Buyer at or prior to the Closing pursuant to
this Agreement or otherwise reasonably requested by counsel to the Seller in
connection herewith.
1.06 Adjustment to Initial Purchase Price. The Initial Purchase Price shall
be adjusted following the Closing as follows:
(a) As soon as practicable, but in any event no later than sixty (60) days
after the Closing Date, Ernst & Young, LLP, the Seller's auditor, shall conduct
an audit of the working capital of the Business (excluding, the Excluded Assets
and liabilities which are not Assumed Liabilities) as of the Closing Date (the
"Audit") to determine, among other things, the Business' working capital
(excluding, the Excluded Assets and liabilities which are not Assumed
Liabilities) as of the Closing Date (the "Closing Working Capital") and to
prepare and deliver to the Buyer a statement (the "Statement") setting forth the
Closing Working Capital and setting forth in reasonable detail the calculation
thereof. Subject to the terms of the letter agreement customarily employed by
Ernst & Young, LLP, a copy of which is attached hereto as Exhibit H, the Buyer
and its agents and representatives shall have complete and unrestricted access
to the work papers of Ernst & Young, LLP used in the preparation of the
Statement. Subject expressly to the right of the Buyer to reasonable observation
of such procedures, the Buyer shall give the Seller and its auditors reasonable
access to, and the right to examine and make copies of all books and records,
and reasonable access to appropriate employees of the Buyer relating to the
Business during normal business hours in order to conduct the Audit. The cost of
the Audit shall be borne by the Seller. The Audit shall be conducted in
accordance with generally accepted auditing standards. The Statement shall be
prepared in accordance with GAAP, provided that materiality shall be determined
by reference solely to the Business. The results of the Audit shall be subject
to verification by the Buyer's accountants and other representatives. In the
event of a dispute regarding any item contained in the Statement, the Buyer
shall notify the Seller in writing of such dispute within thirty (30) days of
the Buyer's receipt of the Statement, and the Buyer and the Seller shall
negotiate in good faith to resolve such dispute. In the event that the Buyer and
the Seller are unable to resolve the dispute within thirty (30) days after the
Seller receives written notice of such dispute, the dispute shall be promptly
referred to PricewaterhouseCoopers (the "Independent Accounting Firm") whose
decision shall be final and binding on the Parties. The costs of the Independent
Accounting Firm shall be borne by the Party whose determination of the Closing
Working Capital differs from the Closing Working Capital, as determined by the
Independent Accounting Firm, by the greatest amount. In the event that the Buyer
does not notify the Seller of any dispute with respect to any item contained in
the Statement within thirty (30) days following the Buyer's receipt of the
Statement, the Statement shall be the "Final Statement". In the event of a
dispute, the Statement, as modified by resolution by the Buyer and the Seller,
or the Independent Accounting Firm, shall be the "Final Statement."
(b) The Purchase Price shall be equal to the Initial Purchase Price,
increased or decreased, as the case may be, pursuant to this Section 1.06(b). In
the event the Closing Working Capital exceeds $10,530,000 (the "Required Working
Capital"), the Purchase Price shall be increased by such excess, and the Buyer
shall pay to the Seller Entities in accordance with the respective percentages
set forth on Schedule 1.02 an amount equal to such excess. Subject to the last
sentence of Section 1.06(e), in the event the Closing Working Capital is less
than the Required Working Capital, the Purchase Price shall be equal to the
Initial Purchase Price decreased by such deficit, and the Seller shall pay to
the Buyer an amount equal to such deficit. The Closing Working Capital shall be
comprised of: (i) Receivables (net of reserves, as determined in accordance with
GAAP) of at least $6,500,000; (ii) all of the Seller's raw materials and
supplies, packaging, manufactured and purchased parts, work-in-process and
finished goods inventories and spare parts inventories which relate to the
Business (the "Inventory") having value of at least $10,000,000; provided,
however, that if the value of such Inventory shall be in excess of $11,000,000,
then the amount by which such Inventory value exceeds $11,000,000 shall be known
as the "Inventory Surplus Amount", and in that event the value of the finished
goods which comprise the Inventory shall be equal to the sum of: (x) $4,000,000;
and (y) fifty percent (50%) of the Inventory Surplus Amount; and provided,
further, that the value of the finished goods Inventory shall under no
circumstances be less than an amount equal to $4,000,000; and (iii) prepaid
expenses and other assets that are transferable to the Buyer having a value less
than or equal to $600,000. For purposes of this Section 1.06, the Closing
Working Capital shall be calculated in conformity with GAAP, and shall mean, as
of the Closing Date, (i) the sum of (A) the value of Inventory on a
first-in-first-out basis (net of reserves, as determined in accordance with
GAAP), (B) Receivables (net of reserves, as determined in accordance with GAAP
and net of fully accrued amounts for future deductions relating to sales booked
on or before the Closing Date) and (C) prepaid expenses and other working
capital assets that are transferable to the Buyer less (ii) the accounts payable
and accrued expenses of the Business with due dates of twelve (12) months or
less from the Closing Date, exclusive of capitalized leases; provided, however,
that any items for which the Seller retains liability as a result of proration
pursuant to Section 6.03 shall not be included as accrued expenses for purposes
of calculating the Closing Working Capital. In the event that the Receivables
exceed $8,500,000, the Seller shall retain the amount of such excess.
(c) Any payments to be made by the Buyer or the Seller, as the case may be,
pursuant to Section 1.06(b) shall be made by wire transfer in immediately
available funds within five (5) business days after the date upon which the
Statement becomes the Final Statement, in an amount determined pursuant to
Section 1.06(b), together with interest thereon from the Closing Date through
the date such payment is made, at the prime lending rate as announced as of the
date of such payment by Bank of America.
(d) On that date which is two (2) business days prior to the date scheduled
to be the Closing Date (the "Assessment Date") the Buyer and the Seller shall
jointly calculate the value of the Inventory according to the Seller's books, as
adjusted pursuant to the physical Inventory inspection conducted as of September
29, 2001 (such calculation, the "Inventory Audit") of the Inventory of the
Seller which is used in the Business (net of reserves, determined in accordance
with GAAP). The Parties expressly acknowledge and agree that, with respect to
any Obsolete Inventory, as hereinafter defined: (i) such Obsolete Inventory
which does not constitute packaging material shall be valued at the lower of
cost or market; and (ii) such Obsolete Inventory which constitutes packaging
material shall be valued at zero ($0.00). Each of the Seller and the Buyer shall
use its commercially reasonable efforts to cooperate fully with the other in the
conduct of the Inventory Audit, and each Party shall bear its own costs of
performing the Inventory Audit. The results of the Inventory Audit, adjusted for
changes in the Inventory between the Assessment Date and the Closing Date, shall
be considered by the Parties for purposes of determining the Closing Working
Capital, in accordance with Section 1.06(b) of this Agreement, and the Inventory
identified as a result of the Inventory Audit shall be set forth on Schedule
1.01(a) hereto as part of the Acquired Assets.
(e) On the Assessment Date, the Buyer and the Seller shall, in good faith,
make a determination of the working capital of the Business as of the Assessment
Date including consideration of the Inventory Audit. As it pertains to the other
components of the working capital of the Business as of the Assessment Date, the
Buyer and the Seller shall use the provisions of Section 1.06(b) hereof. The
Parties hereto expressly acknowledge and agree that, if the working capital of
the Business, as determined by the Parties on the Assessment Date, (i) fails to
satisfy any of the composition requirements set forth in the fourth sentence of
Section 1.06(b); (ii) is less than $8,530,000; or (iii) more than $12,530,000,
then the Buyer, in its sole and absolute discretion, may terminate this
Agreement.
1.07 Allocation of Purchase Price. The Parties agree to allocate the
Purchase Price and the Assumed Liabilities (as hereinafter defined) among the
Acquired Assets in the manner set forth in Schedule 1.07 hereto (the
"Allocation"), which Allocation shall be adjusted to take into account any
difference between the Purchase Price and the Initial Purchase Price. The
Parties hereby agree that the Allocation shall be conclusive and binding on each
of them for purposes of federal and, where applicable, state and local Tax
Returns and that they will file all Tax Returns consistent therewith. The
Parties hereby agree to prepare and timely file all applicable forms with the
Internal Revenue Service ("IRS") and any other Government Authority (as
hereinafter defined) in a manner that reflects the Allocation, to cooperate with
each other in the preparation of such forms and to furnish each other with a
copy of such forms prepared in draft, within a reasonable period prior to the
filing due date thereof.
1.08 Assumed Liabilities. The liabilities and obligations expressly assumed
by the Buyer in this Agreement and in each of the Undertaking and the Assignment
and Assumption Agreement are set forth on Schedule 1.08 hereto and shall be
hereinafter referred to as the "Assumed Liabilities". Except for the Assumed
Liabilities, the Buyer has not agreed to assume, shall not be required to assume
and shall have no liability or obligation with respect to, any liability or
obligation, direct or indirect, absolute or contingent, of any of the Seller,
the Business, the Owned Real Property or the Leased Property, including, without
limitation, any of the Seller's indebtedness for borrowed money, advances,
loans, notes or other monetary obligations (including interest incurred on such
indebtedness, advances, loans, notes and other monetary obligations). Further,
the Buyer shall not assume and shall have no liability (including without
limitation strict liability) or obligation with respect to any liability or
obligation arising under Environmental Laws, the facts or circumstances giving
rise to which occurred on or before the Closing Date, and the Seller expressly
agrees that if any Governmental Authority or third party asserts that the Buyer
is liable for such matters, the Seller shall expressly indemnify the Buyer in
accordance with Article X hereof and the Buyer's remedies against the Seller
shall be solely as set forth in Article X hereof.
1.09 [INTENTIONALLY OMITTED]
1.10 Acquisition of Certain Acquired Assets.
(a) Acquisition of Acquired Assets in Puerto Rico. Prior to the Closing,
the Buyer shall cause to be formed U.S. Cotton de Puerto Rico, Inc., a Puerto
Rican corporation, as a wholly owned subsidiary of the Buyer ("USCPR"). At the
Closing, the Seller shall cause: (i) all of the Acquired Assets used in the
conduct of the Business in Puerto Rico and identified on Appendix I hereto (the
"PR Acquired Assets") to be sold, conveyed, assigned, transferred and delivered
by Personna and Megas PR to USCPR by means of a ▇▇▇▇ of sale, assignment and
assumption agreement relating solely to the PR Acquired Assets which shall be
substantially in the form attached hereto as Exhibit O (the "Puerto Rico Bill of
Sale"); and (ii) the lease for the Leased Property in Puerto Rico to be assigned
by Megas PR to USCPR pursuant to a Lease Assignment and Assumption Agreement in
substantially the form of Exhibit D hereto. At the Closing, USCPR shall assume
certain liabilities associated with the PR Acquired Assets pursuant to the
Puerto Rico Bill of Sale.
(b) Acquisition of Acquired Assets in Mexico. Prior to the Closing, the
Buyer shall cause to be formed USC Mexico Holding, LLC, a Delaware limited
liability company, as a wholly owned subsidiary of the Buyer ("USCMEX"). At the
Closing, the Seller shall cause: (i) all of the Acquired Assets used in the
conduct of the Business in Mexico and identified on Appendix II hereto (the
"Mexican Acquired Assets") to be sold, conveyed, assigned, transferred and
delivered by Megas to USCMEX by means of a ▇▇▇▇ of sale, assignment and
assumption agreement relating solely to the Mexican Acquired Assets which shall
be substantially in the form attached hereto as Exhibit P (the "Mexico ▇▇▇▇ of
Sale"); and (ii) assign the lease for the Leased Property in Nogales, Mexico to
be assigned by Megas to USCMEX pursuant to a Lease Assignment and Assumption
Agreement in substantially the form of Exhibit D hereto. At the Closing, USCMEX
shall assume certain liabilities associated with the Mexican Acquired Assets
pursuant to the Mexico ▇▇▇▇ of Sale.
(c) Acquisition of the Owned Real Property. Prior to the Closing, the Buyer
shall cause to be formed VP, LLC, a Delaware limited liability company, as a
wholly owned subsidiary of the Buyer ("VPLLC"). At the Closing, the Seller shall
cause the Owned Real Property to be sold, conveyed, assigned, transferred and
delivered by Valley Park to VPLLC by means of the Deed.
(d) Acquisition of the Canadian Inventory. At the Closing, the Seller shall
cause all of the Inventory located in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (the "Canadian
Inventory") to be sold, conveyed, assigned, transferred and delivered by
American Safety Razor of Canada Limited, a Canadian corporation, to U.S. Cotton
(Canada) Co., a Nova Scotia unlimited liability company and a subsidiary of the
Buyer ("USC Canada"), by means of a ▇▇▇▇ of sale, assignment and assumption
agreement relating solely to the Canadian Inventory which shall be substantially
in the form attached hereto as Exhibit R (the "Canadian ▇▇▇▇ of Sale"). At the
Closing, USC Canada shall assume certain liabilities associated with the
Canadian Inventory pursuant to the Canadian ▇▇▇▇ of Sale.
(e) The Buyer shall cause USCPR, USCMEX, VPLLC and USC Canada
(collectively, the "USC Subsidiaries") to comply with all of the Buyer's
covenants and agreements under this Agreement and shall be liable in accordance
with the terms of Article X hereof for any Damages incurred by the Seller as a
result of the failure of any of the USC Subsidiaries to comply with the Buyer's
covenants and agreements hereunder. ASR shall cause Megas, Valley Park, Megas
PR, ASR Canada and Personna (collectively, the "ASR Subsidiaries") to comply
with all of ASR's covenants and agreements under this Agreement and shall be
liable in accordance with the terms of Article X hereof for any Damages incurred
by the Buyer as a result of the failure of any of the ASR Subsidiaries to comply
with ASR's covenants and agreements hereunder.
II. RELATED MATTERS
2.01 Mail Received After Closing. On and after the Closing: (a) the Buyer
may open all mail received by it and addressed to the Seller and the Buyer may
deal with the contents thereof in its discretion to the extent that such mail
and the contents thereof relate in a material way to the Business, the Acquired
Assets or any of the Assumed Liabilities; and (b) Seller may open all mail
received by it and addressed to the Seller and the Seller may deal with the
contents thereof in its discretion to the extent that such mail and the contents
thereof relate to the businesses of the Seller other than the Business (the
"Retained Businesses") or to the Excluded Assets or to liabilities which are not
Assumed Liabilities, but not the Business, the Acquired Assets or any of the
Assumed Liabilities. The Buyer agrees to deliver, or to cause to be delivered,
promptly to the Seller all other mail received which is addressed to Seller to
the extent such mail and the contents thereof do not relate to the Business, the
Acquired Assets or the Assumed Liabilities. The Seller agrees to deliver, or to
cause to be delivered, promptly to the Buyer all other mail received which is
addressed to the Seller to the extent such mail and the contents thereof relate
to the Business, the Acquired Assets or the Assumed Liabilities. Each of the
Buyer and the Seller hereby agrees, on and after the Closing, to provide the
other with copies of all mail and other material information which relate both
to: (i) the Acquired Assets or the Assumed Liabilities; and (ii) the Retained
Businesses, the Excluded Assets or liabilities which are not Assumed
Liabilities, reasonably redacted for confidential information as determined by
the delivering party.
III. REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as follows:
3.01 Organization And Authority.
(a) Each Seller Entity is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to conduct the Business as it is currently being conducted. The
Seller is duly qualified or licensed to do business as a foreign corporation and
is in good standing in each jurisdiction in which the property owned, leased or
operated by it relating to the Business or the nature of the Business conducted
by it makes such qualification necessary, except in those jurisdictions where
the failure to have such power and authority or to be so duly qualified or
licensed and in good standing would not have a material adverse effect on the
business, assets, results of operations or financial condition of the Business.
(b) Each of the Seller Entities has all requisite corporate power and
authority to enter into this Agreement and any instruments and agreements
contemplated herein required to be executed and delivered by it pursuant to this
Agreement (including, as applicable, the ▇▇▇▇ of Sale, the Puerto Rico Bill of
Sale, the Mexican ▇▇▇▇ of Sale, the Canadian ▇▇▇▇ of Sale, the Deed, the
Trademark Assignments, the Assignment and Assumption Agreement, the Lease
Assignment and Assumption Agreements, the Transition Services Agreement, the
Trademark Licenses, the Subordination Non-Disturbance and Attornment Agreements,
the Landlord Lien Waivers and any Other Instruments, which are referred to
collectively herein, as the "Seller Related Instruments") and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Seller Related Instruments and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the Seller. This
Agreement has been, and each of the Seller Related Instruments, shall be, duly
executed and delivered by the relevant Seller Entity(ies) and shall constitute a
legal, valid and binding obligation of such Seller Entity(ies), enforceable
against such Seller Entity(ies) in accordance with their respective terms,
except that (a) such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, now or hereafter
in effect, relating to or limiting creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
3.02 No Violation; Consents and Approvals.
(a) The execution and delivery of this Agreement and the Seller Related
Instruments do not, and the consummation of the transactions contemplated hereby
or thereby and compliance with the terms hereof or thereof will not (i) conflict
with, or result in any violation of or default under, other than immaterial
violations of or defaults under: (A) any provision of the charter or bylaws of
any of the Seller Entities or (B) any judgment, order or decree, statute, law,
ordinance, rule or regulation, other than immaterial judgments, orders, decrees,
statutes, laws, ordinances, rules or regulations, applicable to the Seller, the
Business or the Acquired Assets; or (ii) conflict with, or result in any
violation of, or constitute a default (or an event or condition which, with
notice or lapse of time or both, would constitute a default) under, other than
immaterial conflicts, violations or defaults, or result in the termination of,
or accelerate the performance required by, or cause the acceleration of the
maturity of, any liability or obligation, other than immaterial liabilities or
obligations, pursuant to, or result in the creation or imposition of any
Encumbrance under, any contract, note, bond, mortgage, hypothecation, agreement,
indenture, license, lease (capitalized or operating), commitment or other
instrument or obligation, other than immaterial contracts, notes, bonds,
mortgages, hypothecations, agreements, indentures, licenses, leases,
commitments, instruments or obligations, by which the Business or the Acquired
Assets may be bound or affected (collectively, "Contracts").
(b) Except as set forth on Schedule 3.02, no consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state, county, municipal or local court, administrative agency or commission or
other governmental or regulatory entity, body, authority or instrumentality,
domestic or foreign including, without limitation, Mexican and Puerto Rican
(collectively, "Government Authorities"), or any third party is required to be
obtained or made by or with respect to the Seller in connection with the
execution, delivery and performance of this Agreement or the Seller Related
Instruments or the consummation by the Seller of the transactions contemplated
hereby or thereby or the conduct of the Business by the Buyer after the Closing,
except where the failure to obtain such consent, approval, order or
authorization, or to register, declare or file would not have a material adverse
effect on the business, assets, operations, financial condition or prospects of
the Business (hereinafter, a "Material Adverse Effect") or a material adverse
effect on the Seller's ability to consummate the transactions contemplated by
this Agreement.
3.03 Financial Statements. Schedule 3.03(a) sets forth: (i) the unaudited
balance sheet of the Business as of December 29, 2000, and the unaudited income
statement and statement of cash flows of the Business for the fiscal year then
ended (collectively, the "Business Financial Statements") and (ii) the unaudited
balance sheet of the Business as of September 30, 2001 and the unaudited income
statement and statement of cash flows of the Business for the nine (9) month
period then ended (the "Interim Business Financial Statements"). Except as set
forth on Schedule 3.03(b), each of the Business Financial Statements and the
Interim Business Financial Statements have been prepared in conformity with
generally accepted accounting principles, consistently applied ("GAAP") and
fairly present the financial condition and the results of operations and cash
flows of the Business as of the date and for the period indicated and are
consistent with the Books and Records, except for the absence of footnotes and
subject, in the case of the Interim Business Financial Statements, to normal
recurring year-end adjustments which cannot be determined except at year end.
3.04 Absence of Undisclosed Liabilities. Except for liabilities and
obligations (a) set forth in Schedule 3.04, (b) reflected on the Interim
Business Financial Statements, (c) incurred in the ordinary course of business
during the period from the date of the Interim Business Financial Statements to
the date hereof, or (d) which are immaterial to the Business, the Seller has not
incurred, and is not subject to, any liabilities or obligations of whatsoever
nature, direct or indirect, whether accrued, fixed or contingent, relating to
the Business or the Acquired Assets.
3.05 Absence of Certain Changes or Events. Except as may be permitted under
Section 5.01 of this Agreement, during the period from the date of the Interim
Business Financial Statements to the date hereof: (a) the Business has been
operated in the ordinary course, consistent with past practice, (b) there has
been no event, change or development which, individually or in the aggregate,
has had a Material Adverse Effect; and (c) the Seller has not taken any action
which, if taken after the execution and delivery of this Agreement, would
constitute a breach or violation of Section 5.01 hereof.
3.06 Title to Acquired Assets.
(a) The Seller has, or will immediately prior to the Closing, have good,
valid and marketable title to all of the Acquired Assets. The Acquired Assets
are owned by the Seller as set forth on Schedule 3.06(a) free and clear of all
Encumbrances of any nature whatsoever, other than the Permitted Encumbrances and
subject to the Assumed Liabilities, and, at Closing, title to the Acquired
Assets will vest in the Buyer, free of all Encumbrances other than Permitted
Encumbrances and subject to the Assumed Liabilities, and no third party has been
granted any option to purchase, use, lease or encumber any of the Acquired
Assets. This Subsection does not relate to real property (immovable property) or
interests in real property (immovable property).
(b) Schedule 3.06(b)(i) sets forth a true, correct and complete list of all
real property (immovable property) and interests in real property (immovable
property) owned by the Seller and used in the Business (the "Owned Real
Property") and sets forth a complete list of all real property (immovable
property) and interests in real property (immovable property) leased by the
Seller and used in the Business (the "Leased Property"). A legal description of
the Owned Real Property is set forth at Schedule 3.06(b)(ii). Except as set
forth on Schedule 3.06(b)(i), the Seller has (i) good, valid and marketable
title to the Owned Real Property and (ii) good, valid and enforceable interests
in the Leased Property, with the exclusive right to use land, where applicable,
occupy such Leased Property, in each case free and clear of all Encumbrances,
easements, covenants, rights-of-way and other restrictions of any nature
whatsoever, excepting (A) liens for Taxes, assessments and other governmental
charges which are not due and payable or which may hereafter be paid without
penalty or which are being contested in good faith by appropriate proceedings,
for which adequate reserve has been made; (B) easements, covenants,
rights-of-way and other restrictions of record; (C) zoning laws and other land
use restrictions that would not have a Material Adverse Effect; (D) Encumbrances
specifically reflected as such in the Business Financial Statements or the
Interim Business Financial Statements; (E) Encumbrances arising solely by action
of the Buyer; (F) other Encumbrances that would not have a Material Adverse
Effect; (G) any deemed Permitted Encumbrances pursuant to Section 6.13 hereof;
and (H) inchoate interests of mechanics, materialmen and landlords that have not
yet ripened into mechanics', materialmen's or landlords' liens (the exceptions
referred to in clauses (A) through (H) above being herein collectively referred
to as the "Permitted Encumbrances").
(c) The Seller Related Instruments, when duly executed and delivered by the
relevant Seller Entities to the Buyer, and the delivery of the Acquired Assets
at the Closing will effectively convey to the Buyer good, valid and marketable
title to all of the Acquired Assets, subject only to the Permitted Encumbrances
and Assumed Liabilities.
(d) Except as set forth on Schedule 3.06(b)(i), the Seller is not in
default in any material respect under any lease covering all or a portion of the
Leased Property, nor is there any matter which with the giving of notice or the
passage of time, or both, would constitute such a default by the Seller under
any such lease. To the Seller's knowledge, there is no default in any material
respect by any landlord under any lease of Leased Property, nor any matter which
with the giving of notice or the passage of time, or both, would constitute such
a default by any such landlord under such leases. The Seller has made all
payments required to be paid to the landlords under the leases for the Leased
Property.
3.07 Intellectual Property.
(a) Schedule 3.07(a)(i) sets forth a true, correct and complete list of all
patents, trademarks (registered or unregistered), trade names, service marks,
assumed names, copyrights and all applications therefor owned, filed or licensed
by the Seller and used solely in or necessary solely for the conduct of the
Business (collectively, the "Intellectual Property") and, with respect to
registered trademarks, all jurisdictions in which such trademarks are
registered. Schedule 3.07(a)(ii) sets forth a true, correct and complete list of
all patents, trademarks (registered or unregistered), trade names, service
marks, assumed names, copyrights and all applications therefor (collectively,
the "Retained Intellectual Property") owned, filed or licensed by the Seller and
used in or necessary for both (i) the conduct of the Business and (ii) the
Retained Businesses. Schedule 3.07(a)(iii) sets forth a list of patents,
trademarks (registered or unregistered), trade names, service marks, assumed
names and copyrights which (i) relate solely to the Business and (ii) are
neither used in nor necessary for the conduct of the Business (the "Inactive
Intellectual Property").
(b) The Seller is the sole and exclusive owner of the Intellectual Property
and the Retained Intellectual Property for which it is identified as the owner
thereof on either Schedule 3.07(a)(i) or Schedule 3.07(a)(ii). The Seller has
the full right to use (without payment, except for payment in conjunction with
filing, maintenance, continuation or extension of rights) the Intellectual
Property and the Retained Intellectual Property in the conduct of the Business,
as currently conducted. The Seller has received no written notice of any such
claim that (i) the operations of the Seller or the Business infringe upon or
conflict with the rights of any other person in respect of any Intellectual
Property or Retained Intellectual Property with respect to the Business or (ii)
any Intellectual Property, any Retained Intellectual Property or the use by the
Seller or the Business of such Intellectual Property or Retained Intellectual
Property is invalid or unenforceable. None of the Intellectual Property or the
Retained Intellectual Property (i) is, to the Seller's knowledge, being
infringed upon by any other person or (ii) is subject to any judgment, order,
decree or agreement restricting the use thereof. Except as set forth in the last
sentence of Section 3.07(a), the Seller makes no representations or warranties
of any kind whatsoever with respect to the Inactive Intellectual Property,
including without limitation, with respect to ownership of or rights to the
Inactive Intellectual Property.
3.08 Litigation.
(a) Schedule 3.08(a) sets forth (i) a true, correct and complete list of
any and all claims, actions, suits, proceedings, notices of violation,
investigations and inquiries relating to the Business or the Acquired Assets
("Litigation") other than routine collection matters pending, asserted or, to
the knowledge of the Seller, threatened by or before any Government Authority,
or by or on behalf of any third party, and (b) a description of all Litigation
dismissed, settled or compromised since April 23, 1999, other than routine
collection matters.
(b) There is no Litigation pending or, to the knowledge of the Seller,
threatened against the Seller, the Business or the Acquired Assets by or before
any Government Authority, or by or on behalf of any third party, which
challenges the validity of this Agreement or any Seller Related Instrument or
which, if adversely determined, would (i) adversely affect the ability of the
Seller to consummate the transactions contemplated by this Agreement or any
Seller Related Instrument or (ii) have a Material Adverse Effect.
(c) The Seller is not subject to any continuing judgment, order, ruling,
closing agreement or decree of any Government Authority applicable specifically
to the Business or the Acquired Assets or in default with respect thereto.
3.09 Employee Benefit Plans.
(a) Except as set forth in Schedule 3.09(a), neither the Seller nor any
person (as defined in Section 3(9) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) that is or has been a member of any group of
persons described in Section 414(b), (c), (m) or (o) of the Internal Revenue
Code of 1986, as amended (the "Code"), including the Seller ("ERISA Affiliate"),
maintains or contributes to, nor have they maintained or contributed to, any
"employee pension benefit plans" as defined in Section 3(2) of ERISA or
applicable Mexican provisions, "welfare benefit plans" as defined in Section
3(1) of ERISA or applicable Mexican provisions (including, without limitation,
all medical, health, dental, vision and other welfare benefit plans), or stock
bonus, stock option, restricted stock, stock appreciation right, stock purchase,
bonus, incentive, deferred compensation, severance, or vacation plans, or any
other employee benefit plan, program, policy or arrangement maintained or
contributed to by the Seller or any of its ERISA Affiliates or to which the
Seller or any of its ERISA Affiliates, contributes or is obligated to make
payments thereunder or otherwise may have any liability (collectively, the
"Employee Benefit Plans").
(b) Except as set forth in Schedule 3.09(a), neither the Seller nor any of
its ERISA Affiliates has any liability (including any contingent liability under
Section 4204 of ERISA) with respect to any multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions are or have been made by the
Seller or any of its ERISA Affiliates or as to which the Seller or any of its
ERISA Affiliates may have liability and that is covered by Title IV of ERISA
("Multiemployer Plan") covering employees (or former employees) employed in the
United States, Mexico and Puerto Rico. Neither the Seller nor any ERISA
Affiliate has incurred any liability or taken any action that could reasonably
be expected to cause it to incur any liability (i) on account of a partial or
complete withdrawal (within the meaning of Section 4205 and 4203 of ERISA,
respectively) with respect to any Multiemployer Plan or (ii) on account of
unpaid contributions to any such Multiemployer Plan.
(c) Except as set forth in Schedule 3.09(a), for each employee pension
benefit plan listed in Schedule 3.09(a) that is intended to satisfy the
provisions of Section 401(a) of the Code and/or Section 1165(a) of the Puerto
Rico Internal Revenue Code of 1994, as amended (the "PR Code"), to the extent
applicable, (i) the Seller has obtained a favorable determination letter from
the IRS and/or the Puerto Rico Department of the Treasury (the "PR Treasury"),
to the extent applicable, to such effect, (ii) none of the determination letters
has been revoked by the IRS and/or the PR Treasury, nor has the IRS and/or the
PR Treasury given any indication to the Seller that it intends to revoke any
such determination letter, (iii) no such employee pension benefit plan which is
a funded pension plan and no trust established thereunder has any accumulated
funding deficiency within the meaning of Section 302(a) of ERISA and Section 412
of the Code, whether or not waived, and no tax has been imposed pursuant to
Section 4971 of the Code in respect thereof, (iv) the current value of the
assets of each such employee pension benefit plan that is subject to Title IV of
ERISA exceeds the actuarially determined present value of the accrued benefits
(whether or not vested) under each such plan, determined on an ongoing basis,
(v) no reportable event within the meaning of Section 4043 of ERISA or
prohibited transaction within the meaning of Section 406 of ERISA has occurred
with respect to any employee pension benefit plan and no tax has been imposed
pursuant to Section 4975 or 4976 of the Code and/or Section 1409 of the PR Code
(to the extent applicable) in respect thereof, (vi) the Seller has incurred no
liability to the Pension Benefit Guaranty Corporation (the "PBGC") with respect
to any such employee pension benefit plan which is a pension plan subject to
Title IV of ERISA (except for premiums due), and (vii) the Seller has made all
filings required by ERISA, the Code and/or the PR Code (to the extent
applicable) as to each of such Employee Benefit Plans and all notices and
disclosures required by ERISA, the Code and/or the PR Code (to the extent
applicable) have been provided to the participants. No condition exists which
could subject the Seller or any ERISA Affiliate to a penalty under Section 4071
of ERISA. Neither the PBGC nor the Seller or any ERISA Affiliate has instituted
proceedings to terminate any employee pension benefit plan that is subject to
Title IV of ERISA, and the PBGC has not informed the Seller or any ERISA
Affiliate of its intent to institute proceedings to terminate any such plan.
With respect to each Employee Benefit Plan in which employees of the Business
participate that is subject to Title IV of ERISA, the actuarial assumptions used
by each such plan are reasonable, and true and correct copies of the most recent
actuarial reports have been furnished to the Buyer.
(d) For each welfare benefit plan listed in Schedule 3.09(a) which is a
"group health plan" within the meaning of Section 5000(b)(1) of the Code, the
Seller has complied with the notice and continuation coverage requirements of
Section 4980B of the Code, the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA"), and Part 6 of Subtitle B of Title I of ERISA and the
regulations thereunder, to the extent such requirements are applicable. The
Seller shall remain obligated, in accordance with COBRA, to provide continuation
coverage to those of its covered employees, former employees and their qualified
beneficiaries entitled to receive COBRA continuation coverage under a group
health plan sponsored by the Seller or an ERISA Affiliate on account of a
qualifying event occurring either prior to the Closing Date or as a result of
the consummation of the transactions contemplated by this Agreement.
(e) All contributions to, and payments from, the Employee Benefit Plans
listed in Schedule 3.09(a) which are required to have been made by the Seller or
any of its ERISA Affiliates with respect to any period ending on or before the
Closing Date (including any required installment payments under Section 412(m)
of the Code), in accordance with such Employee Benefit Plans, have been timely
made. All premiums due to the PBGC with respect to all Employee Benefit Plans
for any period ending on or before the Closing Date have been timely paid.
(f) There are no claims pending by or on behalf of any of the Employee
Benefit
Plans listed in Schedule 3.09(a), by any employee or beneficiary covered under
any such Plan, or otherwise involving any such Plan (other than routine claims
for benefits).
(g) Each of the Employee Benefit Plans listed in Schedule 3.09(a) has been,
and is being, operated and administered in all respects in accordance with its
terms and in compliance with applicable laws, including, but not limited to,
ERISA, the Code and/or the PR Code (to the extent applicable). No investigation,
audit or dispute relating to each of such Employee Benefit Plans is pending or
threatened before any Government Authority in Puerto Rico or Mexico. All
Employee Benefit Plans outside of the United States, if any (the "Foreign
Plans"), are in compliance with all applicable laws and regulations and have
been operated in accordance with such plans' respective terms. There are no
unfunded liabilities under or in respect of the Foreign Plans, and all
contributions or other payments required to be made to or in respect of the
Foreign Plans prior to the Closing Date have been made or will be made prior to
the Closing Date.
(h) Neither the Seller nor any ERISA Affiliate has any formal plan or
commitment, whether legally binding or not, to create any additional Employee
Benefit Plan or modify or change any existing Employee Benefit Plan that would
affect any employee or terminated employee of the Business or any ERISA
Affiliate.
(i) No amounts payable under the Employee Benefit Plans listed in Schedule
3.09(a) will fail to be deductible for federal income tax purposes by virtue of
Section 280G of the Code and/or for Puerto Rico income Tax purposes (to the
extent applicable).
(j) Neither the Seller nor any ERISA Affiliate maintains or contributes to,
or has maintained or contributed to, or is committed, whether legally binding or
not, to create, any Employee Benefit Plan for any retired or former employee of
the Business or any ERISA Affiliate.
(k) With respect to any Employee Benefit Plans which the Buyer is assuming
(the "Assumed Plans"), the Seller has delivered to the Buyer a current, accurate
and complete copy of and, to the extent applicable, (i) each plan (including all
amendments thereto, (ii) any related trust agreement, annuity contract or other
funding instrument, (iii) any summary plan description and summary of material
modifications, (iv) the most recently filed Form 5500 relating to each such
plan, (v) the most recently received determination letter from the Internal
Revenue Service, and (vi) the most recently prepared financial statements.
(l) (i) Each Assumed Plan has been established and administered in
accordance with its terms and in compliance with the applicable provisions of
any legal requirements and other applicable laws, rules and regulations; (ii)
with respect to any Assumed Plan, no actions, suits or claims are pending or
threatened, no facts or circumstances exist which could give rise to any such
actions, suits or claims; (iii) all insurance premiums required to be paid with
respect to each Assumed Plan as of the Closing have been or will be paid prior
thereto; (iv) all contributions required to be made prior to the Closing under
the terms of any Assumed Plan, for benefits attributable to service on or prior
to the Closing; (v) no Assumed Plan provides for an increase in benefits on or
after the Closing; and (vi) each Assumed Plan may be amended or terminated
without material obligation or liability.
3.10 Employees; Employee Relations.
(a) Schedule 3.10(a) sets forth (i) the name, seniority (years of service)
and current annual salary (or rate of pay) and other compensation (including,
without limitation, normal bonus, profit-sharing and other compensation)
currently payable by the Seller to each Business Employee, (ii) any increase to
become effective after the date of this Agreement in the total compensation or
rate of total compensation payable by the Seller to each such Business Employee,
(iii) any increase to become payable after the date of this Agreement by the
Seller to employees related to the Business (other than those specified in
clause (i)), (iv) all presently outstanding loans and advances (other than
routine travel advances to be repaid or formally accounted for within 60 days)
made by the Seller to, or made to the Seller by, any Business Employee, (v) all
other transactions between the Business and any Business Employee or director or
officer of the Business since April 23, 1999 resulting in aggregate payments to
such person in excess of $5,000 during such period and (vi) all accrued but
unpaid vacation pay owing to each Business Employee. "Business Employees" are
all of the employees of the Seller solely employed in the Business, all of whom
are identified on Schedule 3.10(a). All of the employees employed at any of the
five (5) facilities which constitute a part of the Business are Business
Employees.
(b) Except as disclosed in Schedule 3.10(b), the Seller is not a party to
any employment contract with any individual or employee employed in the
Business, either express or implied, oral or written. Except as disclosed in
Schedule 3.10(b), the Seller has received no written notices of any legal
proceedings, charges, complaints or similar actions that exist under any
federal, state, local or foreign laws affecting the employment relationship
between the Seller and any Business Employee, including, but not limited to: (i)
anti-discrimination statutes such as Title VII of the Civil Rights Act of 1964,
as amended (or similar state, local or foreign laws prohibiting discrimination
because of race, sex, religion, national origin, age, disability and the like);
(ii) the Fair Labor Standards Act or other federal, state, municipal, local or
foreign laws regulating hours of work, wages, overtime and other working
conditions; (iii) requirements imposed by federal, state, municipal, local or
foreign governmental contracts; (iv) laws with respect to tortious conduct,
including, without limitation, slander, false light, invasion of privacy,
negligent hiring or retention, intentional infliction of emotional distress,
assault and battery or loss of consortium; (v) laws requiring severance payments
or other payments to terminated employees; or (vi) the Occupational Safety and
Health Act, as amended, as well as any similar federal, state or foreign laws,
or other regulations respecting safety in the workplace; and the Seller has
received no written notices of any proceedings, charges, or complaints that are
threatened under any such laws or regulations. As it relates to the Business, to
the knowledge of the Seller, no facts or circumstances have been discussed by
the Seller with any Business Employee which would give rise to any such
proceedings, charges, complaints or claims. The Seller is not subject to any
settlement or consent decree with any present or former employee, employee
representative or any Government Authority which relates to the Business
relating to claims of discrimination or other claims in respect to employment
practices and policies; except as disclosed on Schedule 3.10(b), no Government
Authority has issued a judgment, order, decree or finding with respect to the
labor and employment practices (including practices relating to discrimination)
of the Seller relating to the Business.
(c) [INTENTIONALLY OMITTED]
(d) Except as disclosed in Schedule 3.10(d)(i), (i) the Seller is not a
party to, nor bound by, the terms of any collective bargaining agreement with
respect to the Business, (ii) the Seller is in compliance in all material
respects with all applicable Laws respecting employment and employment practices
with respect to the Business, (iii) the Seller has no knowledge of any unfair
labor practice charge or complaint against the Seller which has been discussed
with the Seller by any union since April 23, 1999, with regard to any charge or
complaint which, based on such discussions, the Seller reasonably believes is
likely to be filed with the National Labor Relations Board or similar body in
any foreign country with respect to the Business or of any grievance or any
arbitration proceeding arising out of or under collective bargaining agreements
pending with respect to the Business, (iv) to the knowledge of the Seller, there
is no labor strike, slowdown or work stoppage pending against the Seller with
respect to the Business and (v) there are no collective bargaining agreement
provisions which require assumption of a collective bargaining agreement or
hiring of bargaining unit employees in the event of any sale of the Business.
The Seller has not received written notice of the intent of any Government
Authority responsible for the enforcement of labor or employment laws to conduct
an investigation of or relating to the Seller, with respect to the Business, and
to the knowledge of the Seller, no such investigation is in progress. Attached
as Schedule 3.10(d)(ii) hereto is a copy of the Collective Bargaining Agreement.
(e) Each employee of the Business on long-term or short-term disability or
presently receiving payments under any applicable health and safety legislation
has been identified in Schedule 3.10(e).
(f) Set forth on Schedule 3.10(f), with respect to each Business Employee,
is an identification of all bonuses (including, without limitation, any
transition bonus or retention bonus), vacation pay, fringe benefits, and sick
days.
3.11 Certain Contracts and Arrangements. Schedule 3.11(a) lists all
Contracts related to the Business and/or the Acquired Assets by which the
Seller, the Business and/or the Acquired Assets are bound or affected, other
than (a) such Contracts as may be terminated by the Buyer at any time after the
Closing without liability, penalty or premium upon notice of 120 days or less
and (b) such Contracts which will not result in future annual expenditures or
receipts by the Business or by the Buyer at any time of $25,000 or more (such
Contracts to be listed are hereinafter collectively referred to as the "Material
Contracts"). Except as set forth on Schedule 3.11(a), true, correct and complete
copies of all such Material Contracts have been delivered or made available to
the Buyer. Except as described on Schedule 3.11(a), there are no oral Material
Contracts relating to the Business and/or the Acquired Assets. Except as set
forth on Schedule 3.11(a), neither the Seller, nor, to the Seller's knowledge,
any other party to such Material Contract is in breach of or in default under,
other than immaterial breaches or defaults, any such Material Contract. The
Seller has received no written notices that any such Material Contract is not
the legal, valid and binding obligation of the respective parties thereto
enforceable in accordance with their terms; and, except as made available to the
Buyer prior to the date hereof, no Material Contracts have been amended. The
Seller has received no written notices of any defenses, offsets or counterclaims
which have been asserted or which may be made nor has the Seller waived any
rights under any Material Contract.
Set forth on Schedule 3.11(b) hereto is a list of all capitalized leases
which constitute Material Contracts.
3.12 Compliance with Laws, Licenses, Etc. The Business and the ownership by
the Seller of the Acquired Assets complies in all respects with all laws
(including, without limitation, Environmental Laws), statutes, ordinances,
rules, regulations and orders of all Government Authorities (collectively, the
"Laws"), except where the failure to so comply would not have a Material Adverse
Effect. The Seller possesses all material permits, certificates, licenses,
approvals and other authorizations required in connection with the operation of
the Business and the Acquired Assets under applicable Laws.
3.13 Insurance. The Seller maintains policies of fire and casualty,
liability (including, without limitation, products liability), workers'
compensation and other forms of insurance with respect to the Business and the
Acquired Assets in such amounts, with such deductibles and against such risks
and losses, as when taken together with self insurance maintained by the Seller,
are reasonable for the Business and the Retained Businesses taken as a whole.
Schedule 3.13 sets forth a true, correct and complete list of all such insurance
policies (including insurer, named insured, type of coverage, limits of
insurance, required deductibles and co-payments, annual premiums, retentions and
loss runs). All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the Closing Date have
been paid, or will be paid on or prior to the Closing Date, and no pending
written notice of default, cancellation or termination with respect to any such
policy has been received by the Seller. Such policies: (a) are sufficient for
compliance in all material respects with all requirements of applicable Laws and
all Material Contracts; (b) are valid, outstanding and enforceable policies; or
(c) will remain in full force and effect through the Closing Date without the
payment of additional premiums. Except as set forth in Schedule 3.13, the Seller
has received no written notice of any pending or threatened disputes relating to
coverage or other disputed claims under any of the foregoing insurance policies.
Schedule 3.13 also lists all workers' compensation claims relating to the
Business that are current, pending or settled since April 23, 1999. There are no
notices of assessment, provisional assessment, reassessment, supplementary
assessment, penalty assessment, increased assessment or retrospective premiums
received by the Seller relating to the Business (collectively, the
"Assessments") or any other communications related thereto which the Seller has
received from any worker's compensation board or similar authorities in any
jurisdiction where the Business is carried on and there are no assessments which
will be unpaid at the Closing Date.
3.14 Brokers. No broker, finder or financial advisor or other person is
entitled to any brokerage fees, commissions, finders' fees or financial advisory
fees in connection with the transactions contemplated hereby by reason of any
action taken by the Seller or any of its Affiliates, directors, officers,
employees, representatives or agents.
3.15 Inventories; Accounts Receivable.
(a) The Inventory is of a quality usable in the ordinary course of
business, and items of finished goods in the Inventory are salable in the
ordinary course of business. The Inventory is reflected in the Books and Records
of the Seller on a first-in-first-out basis in accordance with GAAP consistently
applied, valued at the lower of cost or market. The quantities of all finished
goods Inventory are reasonable and are at adequate levels for the Business in
its normal course consistent with past practice and taking into account
customary seasonality. Set forth on Schedule 3.15(a) is a listing of: (i) all
finished goods Inventory items, like items of which have not been sold by the
Seller since March 31, 2001; and (ii) all raw materials and packaging Inventory
items, of which like items have not been used in production by the Seller since
March 31, 2001 (collectively, the "Obsolete Inventory"). Schedule 3.15(a) shall
be updated by the Seller as of the last fiscal month end of the Seller prior to
the Closing Date.
(b) Set forth on Schedule 3.15(b) is an aggregate summary of all accounts
receivable, promissory notes, contract rights, commercial paper, debt securities
and other rights of the Seller to receive money, excluding any accounts
receivable which may exist from Affiliates of the Seller (other than accounts
receivable from Business Employees hired by the Buyer) ("the Receivables")
reflected as assets of the Business in the Interim Business Financial Statements
showing the name of the account debtor, maker or obligor, the aggregate unpaid
balance, the age of the Receivables and, if applicable, the maturity dates, the
interest rates and any collateral securing such obligations. Except as set forth
on Schedule 3.15(b), all Receivables reflected in the Interim Business Financial
Statements or acquired since that date are legal, valid and binding obligations
of the obligors and the Seller has no knowledge of any fact impairing the
collectability of such Receivables in accordance with their terms net of the
reserves shown on the Interim Business Financial Statements. The reserves for
doubtful Receivables and uncollectible accounts reflected in the Interim
Business Financial Statements, are net of fully accrued amounts for future
deductions by customers of the Business relating to sales booked on or before
the date of the Interim Business Financial Statements, were established in
accordance with GAAP consistently applied and are adequate and calculated in
accordance with the Seller's past practices. Except as set forth on Schedule
3.15(b), since June 30, 2001, the Seller has not (a) written-off, cancelled,
committed or become obligated to cancel or write-off any Receivables aggregating
more than $10,000 of Receivables reflected in the Interim Business Financial
Statements, (b) disposed of or transferred any Receivables except through the
collection thereof in accordance with their terms or (c) acquired or permitted
to be created any Receivables except in the ordinary course of its business
consistent with the past practice.
3.16 Environmental Matters. Except as set forth in Schedule 3.16 and as the
sole representation and warranty involving the Environmental Laws:
(a) Representations and Warranties.
(1) None of the Acquired Assets or Leased Property or the Seller with
respect to the Business is in violation of or noncompliance with,
any Environmental Laws in connection with the ownership, use,
maintenance or operation of, or conduct of the Business, which
would give rise to Material Environmental Liability;
(2) Without in any manner limiting the generality of (1) above:
(i) Except as would not create Material Environmental Liability
under Environmental Laws (including, without limitation, by
obtaining necessary Environmental Permits as hereinafter
defined), to the Seller's knowledge no Materials of
Environmental Concern have been used, generated, extracted,
mined, beneficiated, manufactured, stored, treated, or
disposed of, or in any other way released (and no release is
threatened), on, under or about the Acquired Assets or
Leased Property;
(ii) There are no Environmental Claims known, pending or
threatened against the Seller which relate to the Business
or any Acquired Asset or Leased Property which would likely
give rise to Material Environmental Liability;
(iii)The Seller has, and has timely filed applications for
renewal of, all Environmental Permits required for operation
of the Business. As to the Business, the Seller has all
environmental and pollution control equipment necessary to
comply with all Environmental Laws (including, without
limitation, compliance with all such required Environmental
Permits) and operation of the Business as presently
conducted is in material compliance with all terms and
conditions of such Environmental Permits, and a list of all
such Environmental Permits is identified on Schedule 3.16;
(iv) To the Seller's knowledge, there are no storage tanks or
solid waste management units located on or under any
Acquired Asset and there are no Materials of Environmental
Concern on any Acquired Asset in quantities which would
require reporting to any governmental authority or
Remediation to comply with Requirements of Environmental
Laws;
(v) The Seller has not been named as a potentially responsible
party in connection with the Business, Acquired Assets, or
Leased Property under CERCLA or comparable Environmental
Laws, and no Acquired Asset is subject to any lien arising
under Environmental Laws;
(vi) The Seller has not received any written notice of (A) its
status as a potentially responsible party for response costs
as to any facility based upon waste generation activities of
the Business, or the Acquired Assets or Leased Property; (B)
the migration of Materials of Environmental Concerns from a
neighboring facility onto an Acquired Asset or Leased
Property; or (C) any release or threatened release of
Materials of Environmental Concern, or of any violation of
or remedial obligation under, Environmental Laws or Permits,
relating to the ownership, use, maintenance, operation of
any Acquired Asset; which as to items 3.16(a)(vi)(A)-(C)
above would likely give rise to Material Environmental
Liability under any Environmental Law, nor has the Seller
voluntarily undertaken Remediation or other decontamination
or cleanup costing $25,000 or more of any Acquired Asset;
(vii)The Seller is not aware of any requirement of any
Environmental Laws that will individually require future
compliance costs in connection with the ownership and
operation of the Acquired Assets or the Business on the part
of the Buyer in excess of Twenty-Five Thousand Dollars
($25,000) above costs currently expended in the ordinary
course of business;
(viii) There are no present or past events, conditions,
circumstances, activities, practices, incidents, actions or
plans known to the Seller which will prevent continued
compliance at or by any Acquired Asset with Requirements of
Environmental Laws or which may give rise to any common law
or statutory liability under Environmental Laws at an
Acquired Asset, in either event which would give rise to a
Material Environmental Liability;
(ix) The Seller has not received any written report or notice
that the Acquired Assets or Leased Property contain any
asbestos containing materials, or polychlorinated biphenyls
in any form nor any wetland areas, habitat for endangered
species or other land subject to restricted development
under Environmental Laws.
(b) Definitions. For purposes of this Agreement, the following initially
capitalized words and phrases will have the meanings set forth below
when used in this Agreement:
(1) "Environmental Claim" means any claim; complaint; proceeding;
litigation; demand; action; cause of action; suit; loss; cost,
including, but not limited to, attorneys' fees, diminution in
value, and expert's fees; damage; punitive damage; fine, penalty,
expense, liability, criminal liability, strict liability,
judgment, governmental or private investigation and testing
liability or potential liability for investigatory costs,
governmental response costs, natural resource damages, property
damage, personal injury, fines, penalties; notification of status
of being potentially responsible for clean-up of any facility or
for being in violation or in potential violation of any
requirement of Environmental Law; proceeding; consent or
administrative orders, agreements or decrees; lien; personal
injury or death of any person; or property damage, whether
threatened, sought, brought or imposed, that is related to or
that seeks to recover Damages related to, or seeks to impose
liability for: (i) improper use of treatment of wetlands,
pinelands or other protected land or wildlife; (ii) noise; (iii)
radioactive materials (including naturally occurring radioactive
materials ("NORM"); (iv) explosives; (v) pollution,
contamination, preservation, protection, decontamination,
remediation or clean-up of the air, surface water, groundwater,
or soil; (vi) solid, gaseous or liquid waste generation,
handling, discharge, release, threatened release, treatment,
storage, disposal or transportation; (vii) exposure of persons or
property to Materials of Environmental Concern and the effects
thereof; (viii) the release or threatened release (into the
indoor or outdoor environment), generation, extraction, mining,
beneficiating, manufacture, processing, distribution in commerce,
use, transfer, transportation, treatment, storage, disposal or
Remediation of Materials of Environmental Concern; (ix) injury
to, death of or threat to the health or safety of any person or
persons caused by Materials of Environmental Concern.
(2) "Environmental Laws" means any and all laws, rules, regulations,
ordinances, orders, consent agreements, orders on consent now or
hereafter in effect of any applicable foreign, federal, state or
local executive, legislative, judicial, regulatory or
administrative agency, board or authority or any binding judicial
or administrative decision relating to health, worker protection,
the environment, or a community's right to know.
(3) "Environmental Permits" means all permits, licenses,
certificates, registrations, identification numbers,
applications, consents, approvals, variances, notices of intent,
and exemptions necessary for the ownership, use and/or operation
of the Acquired Assets or Leased Property to comply with
Requirements of Environmental Laws.
(4) "Material Environmental Liability" means liability or potential
liability, in an amount of $25,000 or more based on an individual
event or $25,000 for more than one event over a one (1) year
period.
(5) "Materials of Environmental Concern" means: (i) those substances
included within the statutory and/or regulatory definitions or
listings of "hazardous substance," "medical waste," "special
waste," "hazardous waste," "extremely hazardous substance,"
"regulated substance," "hazardous materials," or "toxic
substances," or analogous terms under any Environmental Law; (ii)
any material, waste or substance which is or contains: (A)
petroleum, oil or a fraction thereof, (B) explosives, (C)
radioactive materials (including naturally occurring radioactive
materials), or (D) solid wastes that pose imminent and
substantial endangerment to health or the environment or (iii)
any and all substances in, on or under the Leased Property in
Nogales, Mexico or the Business property in Ciudad ▇▇▇▇▇, Mexico
regulated pursuant to, or that could result in the imposition of
liability under, SH&E Law, including, without limitation,
petroleum and petroleum products, polychlorinated biphenyls and
polychlorinated biphenyl-containing equipment, asbestos and
asbestos-containing materials, and "Hazardous Substances", as
defined pursuant to SH&E Law. To the extent that the laws or
regulations of any applicable state, local, or foreign
jurisdiction establish a meaning for any term defined herein
through reference to federal Environmental Laws which is broader
than the meaning under such federal Environmental Laws, such
broader meaning shall apply.
(6) "Remediation" means any remedial action necessary to comply with
the requirements of Environmental Laws and (ii) responding to,
removing, remediating or monitoring the release of threatened
release of Materials of Environmental Concern at, on, in, about
or under, the air, soil, surface water, groundwater or soil
vapor.
(7) "SH&E Law" means any and all rules and regulations stemming out
of the General Law of Ecological Balance and Environmental
Protection in Mexico and related State and Municipal laws,
regulations and ordinances, including, but not limited to, air
emissions, water sources and discharges, solid waste disposal and
treatment, noise and energy levels, and others relating to
pollution, water, the protection of the environment or natural
resources, release, emission, discharge, or disposal of any
material or substance, environmental restoration, safety, health
or environmental aspects of property transfer, natural resource
damage, pipeline closure, production registration, hazard
communication, or human health or safety.
3.17 Sufficiency of the Acquired Assets. The Acquired Assets, the Excluded
Assets and the Retained Intellectual Property constitute all of the material
assets, properties, licenses, rights, permits and contracts which are being used
on the date hereof in the Business as conducted on the date hereof. Except as
set forth on Schedule 3.17, each item of machinery and equipment in the Acquired
Assets is in good operating condition and repair, ordinary wear and tear
excepted.
3.18 Affiliate Transactions. Schedule 3.18 sets forth a true, correct and
complete list of all Contracts to or by which the Seller, the Business or the
Acquired Assets, on the one hand, and any of Seller's Affiliates, on the other
hand, are a party or are otherwise bound or affected, and by which the Business
or any Acquired Asset is bound or affected or pursuant to which the Business has
made or is obligated to make payments or incur expenses to or for the benefit of
the Seller or any of its Affiliates (collectively, the "Affiliate
Transactions"). Other than the transactions contemplated by this Agreement, each
Affiliate Transaction will terminate at or prior to the Closing without any
payment by or liability to the Business and without any adverse effect on any
Acquired Asset.
3.19 Taxes. Except as specifically identified and described in Schedule
3.19:
(a) The Seller has or, prior to the Closing, will have timely paid all
Taxes due and payable or claimed to be due and payable by any taxing authority
with respect to the Business or the Acquired Assets. There are no pending or, to
the Seller's knowledge, threatened actions or proceedings for the assessment or
collection of Taxes against the Seller with respect to the Business or the
Acquired Assets. The reserves for unpaid current Taxes of the Seller set forth
in the Business Financial Statements and the Interim Business Financial
Statements are adequate for the payment of all material Taxes of the Seller
through the dates thereof. There are no Tax liens or special assessments on the
Acquired Assets and, to the Seller's knowledge, no taxing authority has
threatened any such lien or special assessment with respect to the Acquired
Assets. There are no requests for information currently outstanding that could
affect the Taxes owed by the Seller relating to the Business or the Acquired
Assets.
(b) The amounts of Taxes withheld by or on behalf of the Seller with
respect to all compensation paid to: (i) employees of the Seller ; (ii)
non-employees of the Seller for services rendered by such persons in Puerto
Rico; and (iii) nonresident individuals or foreign corporations not engaged in a
trade or business in Puerto Rico, for all periods ending on or before the
Closing Date have been (or will be, as the case may be) proper and accurate and
all deposits required with respect to compensation paid to such employees have
been (or will be) made in compliance with the provisions of all applicable Laws,
except in each case, for any failure to withhold such Taxes or to make such
deposits that shall have no adverse affect upon all or any part of the Business
or result in any liability to the Buyer or its Affiliates.
(c) No federal, state, local or foreign audits or other administrative or
court proceedings are presently pending or threatened with regard to any Taxes
or Tax Returns of the Seller that may have any adverse affect upon all or any
part of the Business and the Seller has not been contacted by any taxing
authority or representative thereof regarding pending tax audits related to any
Taxes or Tax Returns of the Seller that may have any adverse affect upon all or
any part of the Business.
(d) The Seller is not a party to any agreement providing for the payment,
indemnity allocation or sharing of Taxes that would have any adverse effect upon
all or any part of the Business.
(e) None of the Acquired Assets is property which is required to be treated
as being owned by any other person pursuant to the so-called "safe harbor lease"
provisions of Section 168(f)(8) of the Code (as in effect prior to amendment by
the Tax Reform Act of 1986) or is "tax-exempt use property" within the meaning
of Section 168 of the Code.
(f) None of the Acquired Assets directly or indirectly secures any debt the
interest on which is tax exempt under Section 103(a) of the Code.
(g) To the Seller's knowledge, no Tax debt with respect to the Acquired
Assets has been sold or transferred in any way by the Commonwealth of Puerto
Rico.
(h) For purposes of this Agreement: (i) the term "Taxes" means all federal,
state, local, foreign (including, without limitation, Mexican and Puerto Rican)
and other net income, gross income, gross receipts, sales, use, ad valorem,
property, assets, transfer, franchise, profits, license, lease, service, service
use, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatever, together with any interest and any
penalties, additions to tax or additional amounts with respect thereto, and the
term "Tax" means any one of the foregoing Taxes; and (ii) the term "Tax Returns"
means all returns, declarations, reports, statements, value-added tax returns,
asset tax returns and other documents required to be filed in respect of Taxes
and any amendments to the foregoing documents, and the term "Tax Return" means
any one of the foregoing Tax Returns.
3.20 Warranties. Schedule 3.20 sets forth a complete list of all material
warranties made by the Seller with respect to products of the Business sold by
the Seller since April 23, 1999, if any, copies of which have been or will, on
or prior to September 10, 2001, be provided to the Buyer.
3.21 Motor Vehicles. Each motor vehicle, if any, included in the Acquired
Assets has current registrations and licenses required by applicable Laws to
operate such motor vehicle as presently operated in connection with the
Business.
3.22 Customers and Suppliers. Schedule 3.22 sets forth a true, correct and
complete list of the thirty (30) largest customers and the twenty-five (25)
largest suppliers of the Business for the fiscal year ending December 29, 2000
and for the six (6) month period ended June 30, 2001, which list contains the
name of such customer or supplier, its address, telephone number, contact person
and telephone number and the amount of business done with each such customer or
supplier during each such period. Such customers of the Business as are
identified on Schedule 3.22 hereto accounted for no less than seventy-five
percent (75%) of the gross revenues of the Business for the fiscal year ending
December 29, 2000. Except as set forth on Schedule 3.22, the Seller has no
knowledge that any such customer or supplier of the Business will cease to do
business with the Business after the Closing. Except as set forth in Schedule
3.22, the Seller is not required to provide any bonding or other financial
security arrangements in connection with any transactions with any of its
customers or suppliers.
3.23 Condition of the Property. Except as set forth on Schedule 3.23, each
piece of Owned Real Property and Leased Property (each a "Property") has access
to and from dedicated public rights of way adjoining the Property; (b) each
Property is in material compliance with all applicable Laws, building codes,
fire and life safety codes, building or use restrictions, subdivision laws,
zoning ordinances and other similar Laws affecting the Property and/or the use
thereof; (c) each Property is in material compliance with all easements,
covenants, restrictions and other encumbrances affecting the Property and/or the
use thereof; (d) the Seller has all material certificates of occupancy, licenses
and permits necessary for the use and operation of the Property as presently
being used and operated; (e) all utilities necessary for the use and operation
of the Property as presently used and operated are available; (f) the
improvements on the Property, including, without limitation, (i) the roof, roof
deck, roof membrane, roof covering, floor, subflooring, foundation, slab, load
bearing walls and other structural elements of the improvements and (ii) all
heating, ventilating, air conditioning, mechanical, electrical and plumbing
systems and all wiring, cable and conduit for the improvements, have been and
are being regularly and properly maintained and are in good operating order and
condition, normal wear and tear excepted; (g) there is no pending or, to the
Seller's knowledge, threatened action in eminent domain or condemnation with
respect to the Property or the improvements thereon or any portion thereof; (h)
there are no pending or, to the Seller's knowledge, threatened general or
special assessments affecting the Property, nor is or has the Property been
subject to any special tax exemption or category; and (i) no person or entity
other than the Seller (or any Affiliate of the Seller) has any right to use,
occupy or, with respect to the Owned Real Property, purchase the Property (or
any part thereof).
3.24 Customer Deposits. The Seller has received no customer deposits or
customer prepayments other than those listed on Schedule 3.24, and such deposits
or prepayment amounts relate to unfilled purchase orders and have been received
in the ordinary course of business, consistent with past practice.
3.25 Promotional Obligations. Schedule 3.25 lists all material trade-fixed
and annual-based volume-related promotions of the Business, which includes,
without limitation, all volume rebates, cooperative advertising fees or
arrangements, volume-related promotions or allowances, business development fund
amounts or allowances, slotting fees and early payment discounts payable or to
become payable in respect of the Business as of the date of this Agreement.
Schedule 3.25 shall be updated by the Seller as of the Closing Date
(collectively hereinafter, the "Promotional Obligations").
IV. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
4.01 Organization And Authority. The Buyer is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite power and authority to enter into this
Agreement and any instruments and agreements contemplated herein required to be
executed and delivered pursuant to this Agreement (including, as applicable, the
Undertaking, the Assignment and Assumption Agreement, the Lease Assignment and
Assumption Agreements, the Transition Services Agreement and the Trademark
Licenses, which are referred to collectively herein as the "Buyer Related
Instruments") and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and the Buyer
Related Instruments and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of the
Buyer. This Agreement has been, and each of the Buyer Related Instruments, as
applicable, shall be, duly executed and delivered by the Buyer and shall
constitute the legal, valid and binding obligation of the Buyer, enforceable
against the Buyer in accordance with its terms, except that (a) such enforcement
may be subject to any bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other laws, now or hereafter in effect, relating to or
limiting creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
4.02 No Violation; Consents and Approvals.
(a) The execution and delivery of this Agreement and the Buyer Related
Instruments do not, and the consummation of the transactions contemplated hereby
or thereby and compliance with the terms hereof or thereof will not (i) conflict
with, or result in any violation of or default under, other than immaterial
violations of or defaults under: (A) any provision of the certificate of
formation or limited liability company agreement of the Buyer or (B) any
judgment, order or decree, statute, law, ordinance, rule or regulation, other
than immaterial judgments, orders, decrees, statutes, laws, ordinances, rules or
regulations applicable to the Buyer; or (ii) conflict with, or result in any
violation of, or constitute a default (or an event or condition which, with
notice or lapse of time or both, would constitute a default) under, other than
immaterial conflicts, violations or defaults, or result in the termination of,
or accelerate the performance required by, or cause the acceleration of the
maturity of, any liability or obligation, other than immaterial liabilities or
obligations, pursuant to, or result in the creation or imposition of any
Encumbrance under, any contract, note, bond, mortgage, hypothecation, agreement,
indenture, license, lease (capitalized or operating), commitment or other
instrument or obligation, other than immaterial contracts, notes, bonds,
mortgages, hypothecations, agreements, indentures, licenses, leases,
commitments, instruments or obligations to which the Buyer is a party or by
which the Buyer may be bound or affected.
(b) Except as set forth on Schedule 4.02, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Government
Authority, or any third party is required to be obtained or made by or with
respect to the Buyer in connection with the execution, delivery and performance
of this Agreement or the Buyer Related Instruments or the consummation by the
Buyer of the transactions contemplated hereby or thereby, except where the
failure to obtain such consent, approval, order or authorization of, or to
register, declare or file would not have a material adverse effect on the
Buyer's ability to consummate the transactions contemplated by this Agreement.
4.03 Brokers. No broker, finder or financial advisor or other person is
entitled to any brokerage fees, commissions, finders' fees or financial advisory
fees in connection with the transactions contemplated hereby by reason of any
action taken by the Buyer or any of its directors, officers, employees,
representatives or agents.
4.04 Litigation. There is no Litigation pending or, to the knowledge after
due inquiry by the Buyer, threatened against the Buyer by or before any
Government Authority, or by or on behalf of any third party, which challenges
the validity of this Agreement or any Buyer Related Instrument or which, if
adversely determined, would adversely affect the ability of the Buyer to
consummate the transactions contemplated by this Agreement or any Buyer Related
Instrument.
4.05 Available Funds. Subject to the contingency that no source of the
Buyer's financing shall have defaulted under its obligations to provide such
financing to the Buyer, the Buyer will have, on the Closing Date, sufficient
funds available to it to perform all of its obligations under this Agreement and
the Buyer Related Instruments, including, without limitation, to pay the
Purchase Price in accordance with the terms of this Agreement and to assume the
Assumed Liabilities.
V. COVENANTS OF THE PARTIES
5.01 Conduct of the Business. Except as contemplated by this Agreement,
during the period from the date of this Agreement to the Closing Date, the
Seller will conduct the Business in the ordinary course of business, consistent
with past practice and, to the extent consistent therewith, use all commercially
reasonable efforts to preserve its current relationships with customers,
suppliers and others having business dealings with it. Without limiting the
generality of the foregoing, and, except as contemplated by this Agreement,
during the period from the date of this Agreement to the Closing Date, without
the prior written consent of the Buyer, the Seller will not:
(a) increase by more than ten percent (10%) the rate of compensation of, or
increase by more than ten percent (10%) any benefit to, any employee of the
Business, except as may be required by any Employee Benefit Plan, or as required
by law;
(b) with regard to the Business, enter into, adopt or amend any Employee
Benefit Plan or employment or severance agreement, except as may be required by
law;
(c) (i) sell, lease, transfer or otherwise dispose of any of the Acquired
Assets, other than in the ordinary course of business, or (ii) mortgage,
hypothecate or encumber any of the Acquired Assets, other than Inventory sold in
the ordinary course of business, except for Permitted Encumbrances;
(d) except in the ordinary course of business, materially modify, amend or
terminate any Contract to be assumed by the Buyer pursuant to this Agreement or
materially alter the terms (including, without limitation, such terms relating
to the pricing of any products or services) upon which the Seller transacts
business with any of the customers of the Business;
(e) enter into any contract (other than in the ordinary course of business)
(i) obligating the Seller to expend more than $25,000 in connection with the
Business, or (ii) relating to the Acquired Assets and extending beyond the
Closing Date, other than in the ordinary course of business;
(f) commit any action which would result in any material adverse change to
any of the Acquired Assets (other than normal wear and tear and depreciation);
(g) commit any action which would result in any insurance policy relating
exclusively to the Business naming the Seller or the Business as a beneficiary
or a loss payee being cancelled or terminated; or
(h) agree, whether in writing or otherwise, to do any of the foregoing.
5.02 Access to Information; Confidentiality.
(a) During the period from the date of this Agreement through the Closing
Date, the Seller will give the Buyer and its authorized Affiliates, employees,
agents, advisors, accountants, attorneys, engineers, environmental consultants,
financing sources and representatives reasonable access during customary working
hours to all plants, offices, warehouses, facilities, employees and Books and
Records of the Seller relating to the Business as they may reasonably request.
(b) Each Party will hold and will cause its Affiliates, employees, agents,
advisors, accountants, attorneys, engineers, environmental consultants,
representatives and financing sources to hold any information which such Party
receives in connection with the transactions contemplated by this Agreement in
strict confidence and in accordance with and subject to the terms of the
Confidentiality Agreement dated as of July 20, 2001 between the Buyer and ASR,
as may be amended or modified by the Parties (the "Confidentiality Agreement").
(c) Solely with respect to the Acquired Assets and documents reasonably
available to Seller, the Seller, at its sole cost and expense, shall provide to
the Buyer reasonable access (at all corporate offices of the Business) to all
records and information concerning all Environmental Permits and Materials of
Environmental Concern, used, stored, generated, treated or disposed of by the
Seller, all environmental or safety studies conducted by or on behalf of the
Seller and all reports, correspondence or filings to Governmental Authorities
concerning the compliance of the Acquired Assets or the operation of the
Business with Requirements of Environmental Laws, all policies and procedures
manuals or guidelines utilized by the Seller to comply with Requirements of
Environmental Laws, and any other information reasonably requested by the Buyer
pertaining to environmental, health, and safety issues (the "Environmental
Information"). The Seller agrees that the Buyer shall have the right to inspect
the Environmental Information and the Acquired Assets, and, with the Seller's
written approval (which may be granted or withheld in the Seller's sole
discretion), perform subsurface or other invasive investigations, including
without limitation, air monitoring and soil, groundwater, and surface water
analysis, at the Acquired Assets; provided, regarding all such inspections and
investigations: (i) the Buyer will present to the Seller its scope or scopes of
work to be performed for the Seller's review and approval; (ii) the costs, risks
and expenses associated therewith will be borne by the Buyer; (iii) the
Confidentiality Agreement shall govern; (iv) the Buyer will not interfere with
the operations of the Business; (v) the Buyer shall restore the Acquired Assets
to substantially the same condition in which they existed prior to the Buyer's
or its agent's or representative's performance of such invasive investigations,
including, without limitation, plugging and abandoning any borings or ▇▇▇▇▇;
(vi) the Seller shall be entitled to have a representative present for all
inspections and investigations; (vii) the Buyer shall provide the Seller with
reasonable prior advance written notice of inspection or investigation and all
such inspections or investigations will be during normal business hours; and
(viii) upon the Seller's written request the Buyer shall provide the Seller with
a copy of all information and material generated, obtained or procured as a
result of the inspection or investigation. Prior to any invasive investigation,
the Buyer shall provide to the Seller evidence that the Buyer (or the Buyer's
professional representatives) maintain adequate insurance to cover any damage
which may reasonably result from such investigation, which insurance shall
identify the Seller as a named insured party. The costs associated with the
disposal of any investigation derived waste will be borne by the Buyer; provided
that the Buyer shall execute manifests and related documents.
5.03 Commercially Reasonable Efforts. Subject to the terms and conditions
of this Agreement, each of the Parties hereto will use commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable Laws to
consummate the transactions contemplated by this Agreement at the earliest
practicable date.
5.04 Consents. The Parties will use their commercially reasonable efforts
to obtain all licenses, permits, authorizations, consents and approvals of all
third parties and Government Authorities necessary in connection with the
consummation of the transactions contemplated by this Agreement prior to the
Closing and all costs and expenses associated with such efforts shall be shared
equally by the Buyer, on the one hand, and the Seller, on the other hand;
provided, however that this covenant shall in no way limit the representation
and warranty set forth in Section 3.16. Each of the Parties hereto will make or
cause to be made all filings and submissions under Laws applicable to it as may
be required for the consummation of the transactions contemplated by this
Agreement. The Buyer and the Seller will cooperate fully with each other in
exchanging such information and assistance as any of the Parties hereto may
reasonably request in connection with the foregoing.
5.05 Public Announcements. Neither of the Parties hereto shall, without the
approval of the other Party (which may not be unreasonably withheld), make any
press release or other public announcement or communicate with any customer,
competitor or supplier of the Seller concerning the transactions contemplated by
this Agreement, except through the terms of certain letter agreements and press
releases, the forms of which have been agreed to by the Parties and except as
and to the extent that such Party shall determine is required by: (i) Law; or
(ii) stock exchange requirements (which determination shall be made by such
Party based upon the advice of its counsel), in which case the other Party shall
be advised a reasonable amount of time in advance of such release or
announcement and the Parties shall use their best efforts to cause a mutually
agreeable release or announcement to be issued.
5.06 Notification of Certain Matters. The Seller shall give prompt notice
to the Buyer, and the Buyer shall give prompt notice to the Seller, of the
occurrence, or non-occurrence, of any event the occurrence or non-occurrence of
which would be reasonably likely to cause (a) any representation or warranty of
the Seller or the Buyer, as the case may be, contained in this Agreement to be
untrue or inaccurate in any material respect at or prior to the Closing, (b) the
Seller or the Buyer, as the case may be, to fail to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with or
satisfied by it hereunder, (c) the commencement of any Environmental Claims or
inspection by any Governmental Authority with responsibility to enforce
Environmental Laws likely to result in Material Environmental Liability, or (d)
a material adverse change to the Business; provided, however, that the delivery
of any notice pursuant to this Section 5.06 shall not limit or otherwise affect
the remedies available hereunder to the Party receiving such notice.
5.07 Supplemental Disclosure. Each Party shall have the right from time to
time prior to the Closing to supplement or amend such Party's disclosure
schedules hereto (the "Schedules") with respect to (a) any matter that existed
as of the date of this Agreement and should have been set forth or described in
the Schedules and (b) any matter hereafter arising which, if existing as of the
date of this Agreement, would have been required to be set forth or described in
the Schedules; provided, however, that with respect to clause (a) above, any
such supplemental or amended disclosure shall not be deemed to cure any breach
of any representation or warranty made in this Agreement as of the date of this
Agreement unless so consented to by the other Party.
5.08 Records Pertaining to the Business
(a) Turnover of Books and Records. See Section 1.04(g).
(b) Retention of Records. The Seller shall, for a period of seven (7) years
after the Closing Date, neither dispose of nor destroy any of Books and Records
without first offering to turn over possession of copies thereof to the Buyer,
at the Buyer's expense, by written notice to the Buyer, at least thirty (30)
days prior to the proposed date of such disposition or destruction. The Buyer
shall, for a period of seven (7) years after the Closing Date, neither dispose
of nor destroy any of the Books and Records without first offering to turn over
possession of copies thereof to the Seller, at the Seller's expense, by written
notice to the Seller, at least thirty (30) days prior to the proposed date of
such disposition or destruction.
(c) Access to Records. After the Closing Date, the Seller shall, upon
reasonable notice, allow the Buyer and its advisors, accountants, attorneys and
representatives access to all business records and files of the Seller which
pertain in part to the Business (it being understood that the Seller may redact
from such records such information that does not pertain to the Business),
during customary working hours at the principal place of business of the Seller,
or at any location where such records are stored, and the Buyer shall have the
right, at the Buyer's expense, to make copies of any such records and files.
(d) Assistance with Records. After the Closing Date, for a period of seven
(7) years following the Closing Date: (i) the Seller shall make available to the
Buyer, upon reasonable advance written request, and at reasonable times, at the
Buyer's expense: (x) employees, agents or advisors of the Seller to assist the
Buyer in locating and obtaining records and files maintained by the Seller and
(y) any of the employees, agents or advisors of the Seller whose assistance or
participation is reasonably required by the Buyer in anticipation of, or
preparation for, any existing or future third party actions, Tax or other
matters in which the Business is involved and which relates to the Business or
the Acquired Assets; and (ii) the Buyer shall make available to the Seller, upon
reasonable advance written request, and at reasonable times, at the Seller's
expense: (x) employees, agents or advisors of the Buyer to assist the Seller in
locating and obtaining records and files maintained by the Buyer and (y) any of
the employees, agents or advisors of the Buyer whose assistance or participation
is reasonably required by the Seller in anticipation of, or preparation for, any
existing or future third party actions, Tax or other matters in which the
Business is involved and which relates to the Business.
5.09 No Solicitation. Except with respect to the Buyer and its Affiliates
until November 30, 2001, the Seller shall not, and shall cause its subsidiaries,
officers, directors, employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained by any of
them) not to, (a) initiate or solicit, directly or indirectly, any inquiries or
the making of any proposal with respect to a merger, consolidation, sale of
shares of capital stock or similar transaction involving the Acquired Assets or
any purchase of all or any significant portion of the Acquired Assets (an
"Acquisition Transaction") or (b) engage in any negotiations concerning, or
provide to any other person any information or data relating to the Business for
the purposes of, or have any discussions with any person relating to, or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage any effort or attempt by any other person to seek or effect, an
Acquisition Transaction. The Seller shall promptly advise the Buyer of any such
inquiry or proposal the Seller may receive.
5.10 Motor Vehicles. The Seller shall take all actions and prepare all
documents necessary to effect the transfer to the Buyer of all motor vehicle
licenses and registrations pertaining to automobiles, trucks and other motor
vehicles that are part of the Acquired Assets in compliance with the motor
vehicle registration, licensing and other applicable laws of any jurisdictions
where such motor vehicles are registered or licensed. All such documents
evidencing the transfer of licenses and registrations required hereby shall be
delivered to the Buyer or to the appropriate Governmental Authorities for
processing within thirty (30) days following the Closing.
5.11 Other Actions. The Buyer and the Seller will each take all such other
and further actions, consistent with this Agreement and the related agreements,
as the other may reasonably request.
5.12 Bulk Sales Compliance. The Buyer and the Seller waive compliance with
the provisions of all applicable Laws relating to bulk transfers or bulk sales.
5.13 Discharge of Claims. The Seller shall cause all Encumbrances on any
Acquired Asset other than the Permitted Encumbrances to be terminated or
otherwise discharged at or prior to the Closing, and shall pay all costs and
expenses incurred in connection therewith. The Seller shall discharge or caused
to be discharged all of the liabilities of the Business that are not Assumed
Liabilities and as to which neither the Seller nor any counterparty has any
dispute upon the latter to occur of (i) the due date of such liability
(including any applicable grace period) and (ii) twelve (12) months after the
Closing; provided, however, that the Seller shall not be obligated to discharge
any such liability to the extent that the party to whom the liability is due has
any liability or obligation to the Seller.
5.14 Bank Accounts. The Seller shall cooperate with the Buyer in making all
necessary or desirable arrangements so that checks or other payments received
after the Closing Date on all Receivables arising out of the operation of the
Business which are Acquired Assets may be deposited into the Buyer's bank
accounts without endorsement by the Seller. The Seller shall execute and deliver
to the Buyer all documents and instruments and take all actions as the Buyer may
reasonably request in order to effectuate the foregoing.
5.15 Financial Information. The Seller will deliver to the Buyer within
fifteen (15) business days after the end of each calendar month which ends
between the date of the Agreement and the Closing Date an income statement of
the Business, setting forth in each case in comparative form the figures for the
then current month, and the figures for the corresponding period in the previous
fiscal year. Each such income statement shall be substantially in the form of
the Business Income Statements and Interim Business Income Statements set forth
on Schedule 3.03.
VI. ADDITIONAL AGREEMENTS
6.01 Tax Matters. The Buyer shall pay all the expenses relating to (a) all
sales, use and transfer Taxes arising out of the transactions contemplated by
this Agreement; and (b) all transfer, conveyance, filing, recording, stamp and
any similar Tax, fee or duty (including, without limitation, any notarial fee
regarding such transfer and any expense related thereto, including but not
limited to internal revenue stamps and registry vouchers) arising out of or in
connection with the Owned Real Property or other real property, the transfer of
which is effected pursuant to this Agreement and any related agreements. The
Seller shall use its commercially reasonable efforts to cooperate fully with the
Buyer in the Buyer's efforts to obtain a grant of Tax exemption or any
applicable Tax benefits with respect to the Business or the Acquired Assets.
6.02 Tax Certificates. On or before the Closing, each Seller Entity that is
transferring a United States real property interest within the meaning of
Section 897 of the Code shall provide the Buyer with a certificate in accordance
with Treasury Regulation 1.1445-2 stating that such Seller Entity that is
transferring a United States real property interest within the meaning of
Section 897 of the Code is not a foreign person. With respect to the Acquired
Assets located in the Commonwealth of Puerto Rico, on or before the Closing, the
Seller shall provide the Buyer with a Negative Debt Certificate issued by the
Center for the Collection of Municipal Revenue. The relevant Seller Entity(ies)
shall also provide the Buyer with a letter representing that it is engaged in a
trade or business in Puerto Rico, and thus, that it is not subject to
withholding taxes under Section 1150 of the Puerto Rico Internal Revenue Code of
1994, in accordance with Article 1152-2 of the Regulations thereunder.
6.03 Proration of Taxes and Utilities. Real estate (immovable) and personal
(movable) property Taxes relating to the Business and the Acquired Assets for
the year of the Closing assessed by any taxing authority shall be prorated on a
daily basis as of the Closing Date. If the Closing Date occurs before the Tax
rate is fixed for the current year, the apportionment of the Taxes shall be upon
the basis of the Tax rate for the preceding year applied to the latest assessed
valuation, but any difference between the ad valorem Taxes actually paid and the
amount used in determining the proration shall be recomputed and adjusted
between the Parties upon receipt of written evidence of the payment thereof. If
the ad valorem Taxes actually paid exceed the amount used in determining the
proration, the Seller shall remit to the Buyer the difference between the amount
of such Taxes allocated to the Seller pursuant to such proration and the amount
of such Taxes allocable to the Seller based upon the actual amount of Taxes
paid, and if the ad valorem Taxes actually paid is less than the amount used in
determining the proration, the Buyer shall remit to the Seller the difference
between the amount of such Taxes allocated to the Seller pursuant to such
proration and the amount of such Taxes allocable to the Seller based upon the
actual amount of Taxes paid. If the Buyer or the Seller should subsequently
receive any refund of such real estate or personal property Taxes, such refund
shall be similarly apportioned and the Party receiving such refund shall remit
to the other its proportionate part thereof. All municipal or utility charges,
water rates, water meter charges, sewer charges, costs of fuel and like charges
with respect to the operation of the Business and the Acquired Assets shall be
apportioned as of the Closing Date based on meter readings taken on such date
or, if meter readings are not taken on such date such other reasonable
allocation as is appropriate under the circumstances. Real estate (immovable)
and personal (movable) property Taxes relating to the Business and the Acquired
Assets for years prior to the year of Closing shall be paid by the Seller
regardless of whether the assessment is made after Closing Date.
6.04 Covenant Not to Compete.
(a) The Seller acknowledges that the Buyer would be irreparably damaged if
the trade secret, confidential and/or proprietary information of the Seller
relating to the Business were disclosed or utilized on behalf of any person
which is in competition in any respect, directly or indirectly, with the Buyer
or the Business. The Seller further acknowledges that the covenants and
agreements contained in this Section 6.04 are a material part of this Agreement,
and that, without such covenants and agreements, the Buyer would not furnish to
the Seller the consideration for which this Agreement provides. In furtherance
of this Section 6.04 and to secure the interests of the Buyer hereunder, the
Seller hereby covenants and agrees that, except as otherwise expressly provided
herein, from and after the Closing Date and until the second annual anniversary
of the Closing Date, neither the Seller nor any of its Affiliates will: (i) in
any geographic area in which Buyer or the Business conducts its business on the
date hereof, engage in a business which competes with the Business (a "Competing
Business") in any manner, directly or indirectly, including, without limitation:
(A) soliciting any customer of the Buyer or the Business to purchase any Cotton
Products of the Business from anyone other than the Buyer or the Business; and
(B) assisting any person in any way to do, or attempt to do, anything prohibited
by the foregoing, whether by the ownership, control, management, operation or
financing of such person; (ii) solicit or recruit for hire other than through
general advertising any employees or persons who have worked for the Seller or
the Business within one (1) year prior to the Closing Date, who were hired by
the Buyer on the Closing Date, and who were not terminated by the Buyer prior to
the time of such solicitation or recruitment, or (iii) interfere with or attempt
to disrupt relationships, contractual or otherwise, between the Buyer, as
successor to the Business, and any of its employees, agents, suppliers or
contractors. Notwithstanding the foregoing: (x) the Seller and its Affiliates
shall be permitted to become the registered or beneficial owner of (A) up to 5%
of any class of capital stock of a Competing Business publicly traded on any
nationally recognized stock exchange, provided that the Seller or such Affiliate
does not actively participate in the business of such corporation or (B) any
Competing Business which in the then most recent fiscal year earned no more than
one-third of its revenues from the sale of Cotton Products; provided that within
nine (9) months of the closing of any such transaction, Seller or such Affiliate
divests the portion of such Competing Business relating to the sale of Cotton
Products; and (y) the Seller and its Affiliates shall be permitted to sell the
Bulk Products. For purposes of this Agreement, the term "Bulk Products" shall
refer to bulk irregular cotton swabs identified on Schedule 1.01(b).
(b) In furtherance of this Section 6.04 and to secure the interests of the
Buyer hereunder, the Seller covenants and agrees that, except as otherwise
provided herein, from and after the Closing Date, neither the Seller nor any of
its Affiliates will use for its benefit or disclose to any person, any
proprietary information relating to the Business (but only to the extent to
which it relates to the Business) not obtained or developed by the Seller or any
of its Affiliates outside of the Business unless such proprietary information
(i) is, at the time such use first commences, part of the public domain through
no action of the Seller or its Affiliates; (ii) was already or becomes known to
the Seller or its Affiliates other than through the Business; (iii) is disclosed
to the Seller or its Affiliates by a third party who is not in breach or default
of any confidentiality obligation to the Buyer; (iv) is independently discovered
or developed by the Seller or its Affiliates; (v) is required to be disclosed by
law, rule, regulation or order applicable to the Seller or its Affiliates, in
response to any subpoena or other legal process or in connection with any
litigation to which the Seller or its Affiliates is a party; or (vi) as it
relates solely to the financial performance of the Business, is being disclosed
to existing or prospective financing sources in the ordinary course of business.
(c) The Seller acknowledges and agrees that if the Seller or any one or
more of its Affiliates breaches any provision of this Section 6.04, any remedy
at law would be inadequate and that the Buyer, in addition to seeking monetary
damages in connection with any such breach, shall be entitled to specific
performance and temporary or permanent injunctive and other equitable relief to
prevent or restrain a breach of this Section 6.04 or to enforce the provisions
hereof, without the necessity of proving actual damage and without the necessity
of posting bond or other security. The Seller agrees to pay all reasonable costs
and expenses (including reasonable attorneys' fees and all costs of court)
incurred by the Buyer in connection with the enforcement of this Section 6.04 if
the Buyer prevails, and the Buyer agrees to pay all reasonable costs and
expenses (including reasonable attorneys' fees and costs of court) incurred by
the Seller in connection therewith if the Seller or any of its Affiliates
prevails.
(d) The Seller and the Buyer intend that the provisions of this Section
6.04 be enforced to the fullest extent permissible under the Laws applied in
each jurisdiction in which enforcement is sought. The Seller and the Buyer agree
that, if any covenant or provision of this Section 6.04, or a portion thereof,
is found to be invalid, void, illegal, or incapable of being enforced, in whole
or in part, by reason of any rule of law or public policy, such covenant or
provision or portion thereof shall be deemed severable from the remainder of
this Section 6.04, which shall remain independent and enforceable. Furthermore,
the Seller and the Buyer agree that, if any provision of this Section 6.04, or
any part hereof, shall be held by a court of competent jurisdiction to be
invalid or unenforceable, this Section 6.04 shall be amended to revise the scope
of such provision, to make it enforceable to the fullest extent permitted by
applicable Law, if possible, or to delete such provision or such part, such
revision or deletion to apply only with respect to the operation of this Section
6.04 in the jurisdiction of such court.
6.05 Environmental Covenants. The Seller agrees that prior to the Closing
Date it shall take all commercially reasonably steps to transfer to the Buyer
all assignable Environmental Permits, as defined in Section 3.16, and assist the
Buyer in obtaining non-assignable Environmental Permits. The Buyer agrees that
until the fifth anniversary of the Closing Date it shall not perform, or prompt
or instigate any Governmental Authority or other person to perform, any invasive
subsurface environmental testing on any of the Owned Real Property or the Leased
Property, unless (A) necessary (as reasonably determined by the Buyer) to
investigate any known condition or conditions which could give rise to liability
under Environmental Law which such conditions have been disclosed by the Seller,
(B) required by any Environmental Law reasonably necessary to mitigate any
potential sanction under any Environmental Law, as reasonably determined by the
Buyer, (C) required by any Governmental Authority or any binding judicial or
administrative decision relating to health, worker protection, the environment,
or a community's right to know, (D) required to defend Buyer against any
Environmental Claim, as reasonably determined by the Buyer, (E) required by any
third party doing business with the Buyer (including, without limitation,
landlords, mortgagees, parties loaning (or proposing to loan) funds to the
Buyer, parties making (or proposing to make) an equity investment in the Buyer,
any purchaser or potential purchaser of all or any part of any parcel of the
Owned Real Property or any subtenants, sublessees, or assignees of all or any
part of any parcel of the Leased Property), as reasonably determined by the
Buyer or (F) all or any part of the Owned Real Property is sold or otherwise
conveyed to a party that is not an Affiliate of the Buyer, at which time the
Buyer's obligation under this sentence shall cease as to that part of the Owned
Real Property that is sold or otherwise conveyed.
6.06 Employee Matters. (a) The Seller has provided the Buyer reasonable
access to the Business Employees for the purpose of interviewing such employees
for possible employment following the Closing. The Buyer has notified the Seller
(the "Proposed Employment Offer Notice") of the names of the Business Employees
to be offered employment with the Buyer, and their respective salary or wage
rates, bonus opportunities and benefits. The Proposed Employment Offer Notice
reflects that the Buyer is to offer employment to ninety percent (90%) or more
of the salaried Business Employees and to ninety percent (90%) or more of the
hourly Business Employees. It is hereby expressly acknowledged and agreed by the
Parties that the Buyer shall have no obligations whatsoever to the Seller for
any Business Employees to whom the Buyer has not extended offers of employment,
nor for any actions taken by the Seller as to any Business Employees who may
have claims with regard to such actions by the Seller, except as provided in
Section 10.05(e) hereof. Effective as of the Closing Date, the Seller shall
terminate from the Business all Business Employees who are not offered
employment by the Buyer. The Buyer acknowledges and agrees that in no event will
the Buyer fail to offer employment at any single site to thirty-three percent
(33%) or more of the employees or fifty (50) or more employees. Also, the Buyer
acknowledges and agrees that it will offer employment, effective as of the first
day following the Closing Date, to all of the Business Employees listed on the
Proposed Employment Offer Notice at salary or wage rates, bonus opportunities
and benefits not different than those stated for the respective Business
Employee on the Proposed Employment Offer Notice. Should the Buyer fail to offer
employment, effective as of the first day following the Closing Date, to all of
the Business Employees set forth in the Proposed Employment Offer Notice at
salary or wage rates, bonus opportunities and benefits not different than those
set forth for the respective Business Employee in the Proposed Employment Offer
Notice, the Parties acknowledge and agree that the Seller shall, in addition to
any other rights under this Agreement, have the right to terminate this
Agreement at any time prior to the Closing.
(b) The Buyer expressly acknowledges and agrees that at Closing the Buyer
shall assume the Collective Bargaining Agreement. Employment by the Buyer of
those Business Employees who are covered by the Collective Bargaining Agreement
shall be on terms and conditions consistent with such Collective Bargaining
Agreement or such other terms and conditions as agreed to by Buyer and the
applicable union.
(c) The Seller shall be responsible for, and shall indemnify and hold Buyer
harmless against and in respect of any liability, loss, claim, damage, expense
or deficiency (including attorneys' fees and costs) that arises under the Worker
Adjustment and Retraining Notification Act ("WARN") or other similar statutes or
regulations of any jurisdiction ("WARN Liabilities") on account of actions taken
by the Seller on or before the Closing Date. The Buyer shall be responsible for,
and shall indemnify and hold the Seller harmless against and in respect of WARN
Liabilities on account of, actions taken by the Buyer after the Closing Date.
The Seller expressly acknowledges and agrees that the Seller shall be solely
responsible for the payment of all severance obligations, if any, incurred with
respect to any Business Employees who are not offered employment by the Buyer.
The Buyer expressly acknowledges and agrees that it will take all necessary
steps such that there are no WARN Liabilities incurred as a result of the
transactions contemplated by this Agreement.
(d) Effective as of the Closing, the Buyer shall assume and become the
sponsoring employer of: (i) the Megas Beauty Care, Inc. Union Employee
Retirement Plan (the "Union Plan"), in which the participants consist solely of
Business Employees whose terms and conditions of employment are governed by the
Collective Bargaining Agreement; and (ii) the Megas Beauty Care, Inc. Incentive
Savings Plan and the Megas Beauty/St. Louis Employee Savings Plan (the "401(k)
Plans") and shall enter into an Assumption and Substitution Agreement with
respect thereto. In the event that the Buyer and the Seller agree prior to the
Closing Date that the Buyer should not assume either or both of the 401(k)
Plans, they agree to work together to effect a transfer of assets from either or
both of such 401(k) Plans to a 401(k) plan or plans maintained or established by
the Buyer in a manner that satisfies the requirements of Section 414(l) of the
Code. The Seller shall cooperate with the Buyer post-Closing in obtaining and
providing to the Buyer such information as is necessary for the preparation of
the annual information return, Form 5500, and any required financial statement
for the Union Plan for the plan year in which the Closing occurs.
(e) Effective as of the Closing, the Buyer shall establish a trust
qualified under Section 501(a) of the Code, and, as soon as practicable
following the Closing, (i) the Seller shall cause the trustee of the trust that
currently holds the assets of the Union Plan (the "Master Trust") to transfer or
otherwise pay to the trust so established by the Buyer in cash all of the assets
of the Union Plan (as determined by such trustee in accordance with its books
and records maintained for the purpose of providing separate accounting for the
assets of each plan participating in the Master Trust) reduced by the allocable
share of all fees and expenses incurred by the Union Plan to the date of
transfer and (ii) on the Closing Date, the Seller shall pay to the Buyer an
amount in cash equal to $158,172. The Buyer and the Seller agree to take any and
all action, including the filing of any documents required by Federal law,
necessary to facilitate such transfer of assets.
6.07 The Buyer's Financing. The Buyer has provided to the Seller a
commitment letter from the Buyer's financing sources in the form attached hereto
as Exhibit V (the "Final Commitment Letter"). The Buyer agrees that in the event
that its financing sources default under the Final Commitment Letter, the Buyer
will use commercially reasonable efforts (including, without limitation the
expenditure of reasonable attorneys fees and expenses) to seek any recoverable
damages and equitable relief from such financing sources as a result of the
financing sources' default.
6.08 The Promotional Obligations. (a) The Buyer and the Seller hereby
expressly covenant and agree that, if the Promotional Obligations shall not have
been satisfied in their entirety by the Seller by the time of the Closing, the
Seller shall be responsible only for the actual aggregate customer deductions
for such Promotional Obligations not satisfied by the time of the Closing which
are in excess of the reserves therefore on the Statement or the Final Statement,
as applicable. To the extent to which the actual aggregate customer deductions
relating to such Promotional Obligations is less than the reserves therefor on
the Statement or the Final Statement, as applicable, the Buyer shall pay to the
Seller the amount of such difference. The obligations of the Seller and the
Buyer hereunder shall be for a period of twelve (12) months following the
Closing. At such time as the reserve therefor on the Statement or the Final
Statement, as applicable has been reduced to zero, and on a monthly basis
thereafter until the expiration of the twelve (12) month period hereunder, the
Buyer shall provide the Seller with an invoice detailing in a reasonable manner
the deductions relating to such Promotional Obligations and any excess over the
reserve due to the Buyer from the Seller. The Seller shall pay such invoice
within ten (10) days of receipt. Within ten (10) days of the expiration of the
twelve (12) month period hereunder, the Buyer shall provide the Seller with an
accounting of any remaining amount of the reserves, together with payment to the
Seller of such amount.
(b) In the event of a dispute relating to any Promotional Obligation,
whether raised by the Seller or by a customer, the Seller shall have the
exclusive right to resolve such dispute with the customer. In connection with
any such dispute, the Buyer shall provide the Seller with reasonable access to
all records and information concerning such Promotional Obligation. The Seller
shall be entitled to dispute any Promotional Obligation with any customer,
provided that such dispute will not have a material adverse effect on the Buyer.
Any provision of this Section 6.08 to the contrary notwithstanding, the Seller
shall not be permitted to delay any payments owing to the Buyer pursuant to this
Section on account of any disputes between the Seller and any customer relating
to any Promotional Obligations; should the Seller be successful in resolving in
its favor any such dispute with a customer and the customer pays such disputed
Promotional Obligation to the Buyer, the Buyer shall be obligated to return to
the Seller such disputed amounts received by the Buyer, provided that no amounts
are owed by the Seller to the Buyer pursuant to this Section 6.08.
6.09 The Transition Services Agreement. The Parties expressly acknowledge
and agree that, in order to ensure an effective transition of the Business to
the Buyer, it will be necessary for the Buyer and ASR, on the Closing Date, to
enter into an agreement pursuant to the terms of which ASR shall provide to the
Buyer certain transition services from and after the Closing Date. Accordingly,
ASR and the Buyer hereby expressly covenant and agree, effective as of the
Closing Date, to enter into an agreement substantially in the form attached
hereto as Exhibit J (the "Transition Services Agreement"). ASR agrees to use its
best efforts to cooperate with the Buyer in order to effect the orderly
transition of the Business operations contemplated by the Transition Services
Agreement; provided that ASR shall not provide to the Buyer any pricing or other
competitively sensitive information regarding the Business.
6.10 Insurance. The Seller hereby expressly covenants and agrees to
maintain in effect, for a period of two (2) years following the Closing Date,
insurance policies of similar terms, conditions and limitations of liability to
those referenced on Schedule 3.13 pertaining to product and general liability
claims, to cover claims made against the Business with respect to the products
which were both manufactured and sold prior to the Closing Date. The Seller
hereby expressly covenants and agrees to purchase and deliver to the Buyer at
Closing, at the Seller's sole cost and expense, and maintain in effect for a
period of ten (10) years following the Closing Date, a single premium insurance
policy in the form attached hereto as Exhibit N with policy limits of not less
than Ten Million Dollars ($10,000,000) and a retention of not greater than Three
Million Dollars ($3,000,000) from Indian Harbor Insurance Company (the
"Environmental Insurance Policy"); such policy to name the Buyer and the lender
under the Final Commitment Letter as loss payees. The Seller hereby expressly
covenants and agrees that it has or will provide all information required by,
requested by, or necessary for the carrier to issue the Environmental Insurance
Policy. Notwithstanding any other provision of this Agreement to the contrary,
(i) the rights of the Buyer under the Environmental Insurance Policy shall not
be limited in any respect by this Agreement, (ii) the rights of the Buyer under
any provision of this Agreement shall not be limited in any respect by the
operation of the Environmental Insurance Policy, (iii) although the Buyer may
pursue recovery simultaneously under this Agreement and the Environmental
Insurance Policy, the Buyer shall not be entitled to recover more than one
hundred percent (100%) of its Damages arising out of the same set of facts or
circumstances and (iv) to the extent the Buyer's lender recovers under the
Environmental Insurance Policy for Damages of the Buyer such recovery shall be
deemed a recovery by the Buyer of its Damages.
6.11 Certain Releases. The Seller hereby covenants and agrees, upon the
request of the Buyer: (i) after the execution and delivery of this Agreement, to
release ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ from the terms of any and all contractual obligations
which he may have with the Seller or any of the Seller's Affiliates, it being
expressly understood that, if the Closing does not occur, such release shall be
only for the time period prior to the date the Agreement is terminated, and that
until the Closing Date, such release shall only be effective with respect to the
Buyer; and (ii) to release ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ from the terms of any and all
contractual obligations which he may have with the Seller or any of the Seller's
Affiliates, it being expressly understood that such release shall be contingent
upon the extension and acceptance by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of an offer of employment by
the Buyer.
6.12 Investigations by Government Authorities. The Buyer and the Seller
covenant and agree to promptly notify the other Party of such Party's receipt of
any complaint or claim filed by or with, or any investigation initiated by, any
Government Authority relating to transactions contemplated by this Agreement and
to provide the other Party with a copy thereof. The Buyer and the Seller further
covenant and agree to use their respective best efforts to assist the other
Party in the defense or investigation thereof and shall promptly send to the
other Party copies of any documents received by such Party which relate thereto.
If any such complaint, claim or investigation is commenced, the termination date
of this Agreement (set forth in Section 9.01(g) hereof) and the provisions of
Section 5.09 hereof shall be extended for a period of time equal to the number
of days comprising the period of time from the date such complaint, claim or
investigation commenced until the date it is finally resolved, but in no event
later than March 31, 2002. Upon resolution of any such complaint, claim or
investigation which constitutes a Material Adverse Effect, either the Seller or
the Buyer may terminate this Agreement. If after Closing any federal or state
governmental agency of the United States or another country determines that this
Agreement is in violation of the antitrust laws enforced by such agency, the
Buyer will use good faith efforts to negotiate a consent decree with such agency
that does not include rescission of this Agreement before the agency orders (by
consent or otherwise) rescission of this Agreement. The Seller agrees that after
Closing it shall not prompt or instigate any Governmental Authority to
investigate the Buyer or the Business, unless required of the Seller by Law, or
required of the Seller to defend itself or required of the Seller to mitigate or
avoid liability or damages that could be sought from the Seller.
6.13 Review Period. The Buyer has notified the Seller, in writing, of such
objections as Buyer may have to any exception contained in the title commitments
or matter shown on the surveys obtained by the Buyer and covering the Owned Real
Property and/or the Leased Property. Any exceptions or matters not objected to
by the Buyer in writing prior to the date hereof shall be deemed waived by the
Buyer and shall be deemed Permitted Encumbrances. The Seller shall have the
option to (a) cure, remove, provide for the satisfaction of, or provide for a
title company's insurance over any such objections; provided that if all
objections made by the Buyer can be satisfied solely by the payment of a sum of
less than $25,000, the Seller shall be responsible to effectuate such cure, or
(b) in the event that all of the Buyer's objections cannot be satisfied by the
payment of less than $25,000 or cannot be reasonably cured within the "Title
Cure Period" (defined hereinbelow), the Seller will advise the Buyer in writing
on or before the end of the Title Cure Period of such fact or facts, and the
Buyer will have the option, to be exercised within five (5) business days after
receipt of the Seller's notice, to either waive such objections and proceed to
the Closing, whereupon such waived title objections shall also be deemed
Permitted Encumbrances, or terminate this Agreement, and neither Party hereto
shall have any further obligations one to the other hereunder, except for the
indemnities or provisions expressly stated to survive the termination of this
Agreement. If the Buyer's objections (which may not include Permitted
Encumbrances or Assumed Liabilities) cannot be cured or removed by the Closing
Date, the Seller may at its option have the right to adjourn the Closing Date
for a period of up to sixty (60) days to attempt to cure or remove such
exceptions or defects (the "Title Cure Period"). In the event the Seller, using
diligent, good faith efforts, does not cure such matters prior to the Closing or
prior to the expiration of the Title Cure Period, if applicable, and such
matters materially adversely affect the related property or have a Material
Adverse Effect, the Buyer shall have the right to either (1) terminate this
Agreement and neither Party hereto shall have any further obligations one to the
other hereunder, except for the indemnities or provisions expressly stated to
survive in this Agreement, or (2) waive such title objections and proceed to the
Closing, whereupon such waived title objections shall also be deemed Permitted
Encumbrances.
6.14 The Trademark Licenses. With respect to the Retained Intellectual
Property identified on Schedule 6.14 hereto (the "Licensed Trademarks"), the
Buyer and certain of the Seller Entities shall, on the Closing Date, enter into
trademark licenses pursuant to which such Seller Entities shall license the
Licensed Trademarks to the Buyer (the "Trademark Licenses"). The Trademark
Licenses shall be substantially in the form attached hereto as Exhibit K hereto.
6.15 [INTENTIONALLY OMITTED]
6.16 Termination of Confidentiality Obligations. The Parties hereby
expressly acknowledge and agree that, upon the consummation of the transactions
contemplated by this Agreement at the Closing, any and all confidentiality
obligations of the Buyer or any of its Affiliates with respect to the Acquired
Assets and the Assumed Liabilities pursuant to Section 5.02(b) of this Agreement
or the Confidentiality Agreement shall terminate.
6.17 The Puerto Rico Lease. With regard to the lease for the Leased
Property in the Commonwealth of Puerto Rico (the "Puerto Rico Lease"), the
Parties hereby expressly acknowledge and agree that: (i) the Seller shall assign
the Puerto Rico Lease to the Buyer or its designated Affiliate on or prior to
the Closing; (ii) the Parties shall use their respective best efforts to obtain
the consent of the landlord to the assignment of the Puerto Rico Lease (the
"Puerto Rico Consent") at the lowest cost practicable; (iii) should the Parties
be unable to obtain the Puerto Rico Consent, such that the Buyer shall be
evicted the premises, the Seller shall indemnify the Buyer against any and all
Damages, as hereinafter defined, resulting from such eviction; and (iv) should
the Buyer or its Affiliate be required to enter into a new lease with the
existing landlord at an aggregate rental rate which is higher than that
currently payable under the terms of the Puerto Rico Lease, the Seller shall
reimburse the Buyer or its Affiliate for the amount of such difference during
such period of time which corresponds to the balance of the current term under
the Puerto Rico Lease, excluding any renewals or extensions thereof; provided
that, in no event shall the Seller be obligated to make payments to the Buyer
under this Section 6.17 in excess of $75,000 in the aggregate. The Buyer
acknowledges and agrees that failure to obtain the Puerto Rico Consent shall not
be a breach of this Agreement by the Seller. Notwithstanding anything to the
contrary set forth in this Agreement, including without limitation, Article X
hereof, the remedies provided in this Section 6.17 shall be the Buyer's
exclusive remedy for the subject matter set forth in this Section 6.17.
6.18 Treatment of Bulk Products. With respect to the Bulk Products, the
Parties hereby acknowledge and agree that: (i) the Bulk Products, in such form
as they exist at the time of the Closing, shall constitute Excluded Assets of
which the Seller shall retain the ownership following the Closing; (ii) the
Seller shall bear any and all of the costs associated with the warehousing of
the Bulk Products; (iii) for a period of six (6) months following the Closing
and to the extent the Buyer has the man power capability to repackage and ship
such Bulk Products, the Buyer shall repackage and/or ship the Bulk Products
pursuant to the prior written instructions of the Seller; (iv) the Seller shall
be solely responsible for the freight costs and expenses associated with such
shipment by the Buyer of the Bulk Products; and (v) any costs or expenses
associated with any additional repacking or repackaging of the Bulk Products to
be shipped by the Buyer shall be charged by the Buyer, at cost, to the Seller.
6.19 Tax Credit Agreement. With respect to that certain Tax Credit
Agreement (herein so called), Tax Credit Authority No. ECDD 97-65, dated August
11, 1998, by and between the State of Ohio, Tax Credit Authority and Megas, the
Seller hereby expressly agrees to use its best efforts: (a) within thirty (30)
days after the date of this Agreement, to deliver to the Buyer an original
Release of the Tax Credit Agreement executed on behalf of Megas in form and
substance reasonably acceptable to the State of Ohio and the Buyer; and (b)
thereafter, to cooperate in good faith with the Buyer and assist the Buyer in
its efforts to negotiate and execute a new Tax Credit Agreement between the
Buyer (or its Affiliate) and the State of Ohio.
6.20 Enterprise Zone Contract. With respect to that certain Enterprise Zone
Contract dated as of August 1, 1977, by and between the City of Cleveland and
Megas (the "Enterprise Contract"), the Seller hereby expressly agrees to use its
best efforts: (a) within forty-five (45) days after the date of this Agreement,
to deliver to the Buyer a written Consent to Assignment executed on behalf of
the City of Cleveland, Ohio, and in form and substance reasonably acceptable to
the Buyer, which consent approves in all respects the assignment of the
Enterprise Contract from Megas to the Buyer or an Affiliate of the Buyer; and
(b) within five days after the Buyer's receipt of such consent, to deliver to
the Buyer an original Assignment of Enterprise Zone Contract, in form and
substance reasonably acceptable to the Buyer, executed on behalf of Megas in
favor of the Buyer or an Affiliate of the Buyer.
6.21 Nogales Sublease Additional Rent. In the event the Buyer, or its
Affiliate, does not elect to extend the term of that certain Sublease dated
September 29, 1999 by and between Collectron International Management, Inc., as
lessor ("Collectron"), and Megas, as lessee, covering real property and
improvements located at Calle ▇▇▇▇▇ ▇▇▇▇▇▇ No. 6, Nogales, Sonora, Mexico (the
"Sublease"), as provided in that certain letter amendment (the "Letter
Amendment") to the Sublease to be dated November 2001, Seller will timely pay
the additional rent in the amount of $38,871.60 required under the Letter
Amendment in the manner provided in the Letter Amendment. The obligation of
Seller to timely pay the additional rent as provided herein shall survive the
Closing.
6.22 [INTENTIONALLY OMITTED]
6.23 Certain Landlord Lien Waivers. On or before thirty (30) days following
the Closing, the Seller shall use its commercially reasonable efforts to deliver
to the Buyer a Landlord Lien Waiver in the form attached hereto as Exhibit G-2
from the landlord under the Puerto Rico Lease and from the landlord of the
property in Ciudad ▇▇▇▇▇, Mexico where certain property, plant and equipment
constituting the Acquired Assets is located.
6.24 The Puerto Rico Grant. With respect to the grant of the Industrial Tax
Exemption issued to Megas PR, Case No. 00-135-I-116 (the "Puerto Rico Grant"),
the Seller shall take such actions and use its commercially reasonable efforts
to cooperate fully with the Buyer in the Buyer's efforts to obtain the transfer
of such Puerto Rico Grant to the Buyer, including, but not limited to, the
execution and filing of any joint applications with the Puerto Rican Office of
Industrial Tax Exemption, the issuance or provision of any other consents,
instructions or information, and the taking of any actions necessary to achieve
such transfer.
VII. CONDITIONS TO OBLIGATIONS OF THE SELLER
7.01 Conditions. The obligations of the Seller to consummate the
transactions contemplated by this Agreement are subject to the fulfillment at or
prior to the Closing of each of the following conditions (any or all of which
may be waived in whole or in part by the Seller):
(a) Representations and Warranties. The representations and warranties made
by the Buyer in this Agreement that are qualified as to materiality shall be
true, correct and complete as of the date when made and at and as of the Closing
Date, as though such representations and warranties were made at and as of the
Closing Date, and the representations and warranties of the Buyer in this
Agreement that are not so qualified shall be true, correct and complete in all
material respects as of the date when made and at and as of the Closing Date, as
though such representations and warranties were made at and as of the Closing
Date.
(b) Performance. The Buyer shall have performed and complied, in all
material respects, with all agreements, obligations, covenants and conditions
required by this Agreement to be so performed or complied with by the Buyer at
or prior to the Closing.
(c) Compliance Certificate. The Buyer shall have delivered to the Seller a
certificate, dated as of the Closing Date, executed by a duly authorized officer
of the Buyer, certifying the fulfillment of the conditions specified in
Subsections 7.01(a) and 7.01(b) hereof.
(d) No Injunction. On the Closing Date, there shall not be in effect any
judgment, order, injunction or decree issued by a court of competent
jurisdiction restraining or prohibiting the consummation of the transactions
contemplated by this Agreement.
(e) Execution of Documents. The Seller shall have received the Buyer
Related Instruments, in each case, duly executed by each Party thereto (other
than the Seller).
(f) Consents. The Seller shall have obtained all authorizations, consents
and approvals of all Government Authorities and all third parties necessary in
connection with the consummation of the transactions contemplated by this
Agreement as set forth on Schedule 7.01(f)(i). The Buyer shall have obtained all
authorizations, consents and approvals of all Government Authorities and all
third parties necessary in connection with the consummation of the transactions
contemplated by this Agreement as set forth on Schedule 7.01(f)(ii).
(g) Opinion of Counsel. The Buyer shall have delivered to the Seller an
opinion of legal counsel to the Buyer, dated the Closing Date, substantially in
the form of Exhibit L hereto.
(h) The Cleveland Agreement. The Cleveland Agreement shall have been
executed and delivered by the parties thereto and become binding in accordance
with its terms.
VIII. CONDITIONS TO OBLIGATIONS OF THE BUYER
8.01 Conditions. The obligations of the Buyer to consummate the
transactions contemplated by this Agreement are subject to the fulfillment at or
prior to the Closing of each of the following conditions (any or all of which
may be waived in whole or in part by the Buyer):
(a) Representations and Warranties. The representations and warranties made
by the Seller in this Agreement that are qualified as to materiality shall be
true, correct and complete as of the date when made and at and as of the Closing
Date, as though such representations and warranties were made at and as of the
Closing Date, and the representations and warranties of the Seller in this
Agreement that are not so qualified shall be true, correct and complete in all
material respects as of the date when made and at and as of the Closing Date, as
though such representations and warranties were made at and as of the Closing
Date. The Parties expressly acknowledge and agree that the term "material" for
purposes of the previous sentence shall be determined solely by reference to the
Business.
(b) Performance. The Seller shall have performed and complied, in all
material respects, with all agreements, obligations, covenants and conditions
required by this Agreement to be so performed or complied with by the Seller at
or prior to the Closing.
(c) No Material Adverse Effect. There shall not have been, since the date
of this Agreement, any event or occurrence which has had or would reasonably be
expected to result in a Material Adverse Effect, and the Seller shall not have
sustained any loss or damage to the Acquired Assets or the Business that
materially affects its ability to operate the Business in the ordinary course of
business or the ability of the Buyer to operate the Business after the Closing.
(d) Compliance Certificate. Each of the Seller Entities shall have
delivered to the Buyer a certificate, dated the Closing Date, executed by a duly
authorized officer of such Seller Entity, certifying the fulfillment of the
conditions specified in Subsections 8.01(a), 8.01(b) and 8.01(c) hereof.
(e) No Injunction. On the Closing Date, there shall not be in effect any
judgment, order, injunction or decree issued by a court of competent
jurisdiction restraining or prohibiting the consummation of the transactions
contemplated by this Agreement.
(f) Execution of Documents. The Buyer shall have received the Seller
Related Instruments, in each case, duly executed by each Party thereto (other
than the Buyer).
(g) [INTENTIONALLY OMITTED]
(h) Consents. The Seller shall have obtained all authorizations, consents
and approvals of all Government Authorities and all third parties necessary in
connection with the consummation of the transactions contemplated by this
Agreement, as set forth on Schedule 7.01(f)(i). The Buyer shall have obtained
all authorizations, consents and approvals of all Government Authorities and all
third parties necessary in connection with the consummation of the transactions
contemplated by this Agreement as set forth on Schedule 7.01(f)(ii).
(i) Transfer of Acquired Assets. At the Closing, the Seller shall deliver
to the Buyer all Acquired Assets, including, without limitation, all Contracts
and Intellectual Property, sold pursuant to this Agreement.
(j) [INTENTIONALLY OMITTED]
(k) Opinion of Counsel. The Seller shall have delivered to the Buyer an
opinion of legal counsel to the Seller, dated the Closing Date, substantially in
the form of Exhibit M hereto.
(l) Survey. The Buyer shall have received a copy of a current ALTA lender's
survey of each Owned Real Property addressed to the Buyer and the title
insurance company, signed and certified by a licensed professional engineer or
registered surveyor, bearing current date, registration number and seal and
sufficient for title insurance companies to delete the standard survey exception
from the title insurance policies.
(m) Title Insurance Policies. A title insurance company reasonably
satisfactory to the Buyer shall be unconditionally committed to issue to the
Buyer at the Closing, at the expense of the Buyer, an owner's policy (or
leasehold policy, as applicable) of title insurance with respect to each
Acquired Asset which is real property or an interest in real property other than
the Puerto Rico Lease, with extended coverage and other customary endorsements,
subject only to the Permitted Encumbrances and Assumed Liabilities (to the
extent applicable to each such Acquired Asset).
(n) Leases. The Seller shall have obtained the waivers, consents and
estoppel certificates of any landlord for any property leased from a third party
set forth on Schedule 8.01(n) to the assignment of any such lease to the Buyer
at the Closing in form and substance reasonably satisfactory to the Buyer.
(o) Indebtedness. The Seller shall have provided to the Buyer evidence, in
form and substance reasonably satisfactory to the Buyer, that all Encumbrances
on the Acquired Assets (other than Permitted Encumbrances or Assumed
Liabilities) have been terminated or otherwise discharged.
(p) The Trademark Licenses. The Buyer and the relevant Seller Entities
shall have entered into the Trademark Licenses.
(q) Funding. At the Closing, the Buyer's debt financing sources fund in
accordance with the Final Commitment Letter.
(r) The Pomfret Lease. The Buyer shall have entered into a written lease
agreement with the landlord of the Leased Property located in Pomfret,
Connecticut, substantially in the form attached hereto as Exhibit Q (the
"Pomfret Lease").
(s) The Collectron Agreement. The Buyer shall have entered into an
agreement with Collectron International Management, Inc., an Arizona
corporation, substantially in the form attached hereto as Exhibit S (the "New
Collectron Agreement").
(t) The Cleveland Lease Amendment. The Buyer shall have entered into an
amendment of the lease for the Leased Property in Cleveland, Ohio (the
"Cleveland Lease") with the landlord under the Cleveland Lease, substantially in
the form attached hereto as Exhibit T (the "Cleveland Lease Amendment").
(u) The Cleveland Agreement. Each of ASR, Megas, the Buyer and the landlord
under the Cleveland Lease (Weston Property Investments III, Ltd. and Weston
Design/Build, Inc.) shall have entered into an agreement relating to, among
other things, the repairs of the roof of the building that is the subject of the
Cleveland Lease, in the form attached hereto as Exhibit U (the "Cleveland
Agreement); and the Cleveland Agreement shall have become binding in accordance
with its terms.
IX. TERMINATION, AMENDMENT AND WAIVER
9.01 Termination. This Agreement may, without the need of judicial,
arbitral or other resolution or declaration, be terminated and the transactions
contemplated hereby may be abandoned:
(a) at any time, by mutual written agreement of the Buyer and the Seller;
(b) by the Buyer, in writing: if any of the conditions to the obligations
of the Buyer contained in Section 8.01 of this Agreement shall not have been
satisfied or, if unsatisfied, waived as of the Closing Date;
(c) by the Seller, in writing, if any of the conditions to the obligations of
the Seller contained in Section 7.01 of this Agreement, shall not have been
satisfied or, if unsatisfied, waived as of the Closing Date;
(d) by either Party, in writing, if the other Party breaches the
confidentiality obligations set forth in Section 5.02(b);
(e) by the Seller, in writing, pursuant to Section 6.06(a) hereof;
(f) by the Buyer, in writing, pursuant to the provisions of Section 1.06
hereof; or
(g) at any time after December 31, 2001, by the Buyer or the Seller, in
writing, if the Closing shall not have occurred for any reason, other than a
breach of this Agreement by the terminating Party.
9.02 Effect of Termination. In the event of the termination of this
Agreement and the abandonment of the transactions contemplated hereby pursuant
to Section 9.01 hereof, this Agreement shall be of no further force or effect,
except that the obligations provided for in Section 10.01 and the last sentence
of Section 6.07 hereof, the confidentiality provision contained in Section 5.02
hereof and the Confidentiality Agreement referred to in said Section shall
survive any termination of this Agreement. In the event of the termination of
this Agreement pursuant to Section 9.01 hereof as a result of a breach of this
Agreement, nothing in this Agreement shall prejudice the ability of the
non-breaching Party from seeking damages from any other Party for any breach of
this Agreement, including, without limitation, attorneys' fees and the right to
pursue any remedy at law or in equity.
9.03 Amendment, Modification and Waiver. This Agreement may be amended,
modified or supplemented at any time by written agreement of the Parties hereto.
Any failure of a Party to comply with any term or provision of this Agreement
may be waived by the other Party at any time by an instrument in writing signed
by or on behalf of such other Party, but such waiver or failure to insist upon
strict compliance with such term or provision shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure to comply.
X. FEES AND EXPENSES; SURVIVAL OF REPRESENTATIONS AND WARRANTIES; AND
INDEMNIFICATION
10.01 Fees and Expenses. Whether or not the transactions contemplated
hereby are consummated pursuant hereto, the Buyer, on the one hand, and the
Seller, on the other hand, shall pay all fees and expenses respectively incurred
by them or on their behalf in connection with or in anticipation of this
Agreement and the consummation of the transactions contemplated hereby. The
Buyer shall pay any costs to retitle or transfer the Acquired Assets.
10.02 Survival of Representations and Warranties and Covenants. (a) The
representations and warranties in this Agreement and in any other document
delivered in connection herewith shall survive the Closing and shall terminate
upon the expiration of the period as set forth below; provided, that such
representations and warranties shall survive as to any claim properly made prior
to the termination of such period until such claim is fully paid or otherwise
resolved by the Parties hereto or by a court of competent jurisdiction; and
provided further, that it is specifically understood that the expiration of any
survival period or the exhaustion of any indemnity hereunder shall not have the
effect of or be construed as an assumption by the Buyer or any of its Affiliates
of any liability of the Seller, the Buyer having agreed to assume only the
Assumed Liabilities.
(i) The representations and warranties set forth in Section 3.09
(Employee Benefit Plans) shall survive until the expiration of
thirty (30) days following the expiration of the applicable
statute of limitations with respect to the matters set forth in
such Section.
(ii) The representations and warranties set forth in Section 3.16
(Environmental Matters) shall survive until the fifth anniversary
of the Closing Date.
(iii)The representations and warranties set forth in Section 3.19
(Taxes) shall survive until thirty (30) days after the date on
which the last applicable limitation period under applicable Tax
Laws expires with respect to any taxation year which is relevant
in determining any liability under this Agreement with respect to
Tax matters.
(iv) The representations and warranties set forth in Section 3.01
(Organization and Authority), Section 3.06 (Title to Acquired
Assets) and Section 4.01 (Organization and Authority) shall
survive indefinitely the Closing hereunder.
(v) All other representations and warranties shall survive until the
second anniversary of the Closing Date.
(b) Any provision of this Agreement to the contrary notwithstanding, the
Parties expressly acknowledge and agree that: (i) any covenants entered into
pursuant to this Agreement which by their express terms may be fully performed
prior to the Closing shall survive only until the second anniversary of the
Closing Date; and (ii) any covenants entered into pursuant to this Agreement
which by their express terms cannot be fully performed prior to the Closing
shall survive for a period of time equal to thirty (30) days after such period
of time as is prescribed for any such covenants pursuant to the terms of this
Agreement, or if no time period is prescribed herein, indefinitely.
10.03 Indemnification Obligations of the Seller. Upon the terms and subject
to the conditions of this Article X, the Seller agrees to indemnify, defend and
hold harmless the Buyer and its Affiliates, managers, members, officers,
employees, agents and representatives (collectively, the "Buyer Group") at any
time after consummation of the Closing, from and against all demands, claims,
actions or causes of action, assessments, losses, damages, liabilities, costs
and expenses, including, without limitation, interest, penalties and reasonable
attorneys', consultants, engineers and environmental professionals' fees and
expenses (collectively, "Damages"), resulting to, imposed upon or incurred by
the Buyer Group, or any one of them, directly or indirectly, by reason of or
resulting from: (a) liabilities, obligations or claims (whether absolute,
accrued, contingent or otherwise, but excluding (1) the Assumed Liabilities and
(2) any Environmental Claims (including, without limitation, any liabilities
described in the last sentence of Section 1.08) written notice of which
Environmental Claims are not provided to the Seller by the Buyer on or before
the fifth anniversary of the Closing Date) of or against the Seller, the
Business or the Acquired Assets relating to the conduct of the Business or the
Acquired Assets on or before the Closing Date, existing as of the Closing Date
or arising out of facts, conditions or circumstances occurring at or prior
thereto, whether or not such liabilities, obligations or claims are disclosed in
a Schedule to this Agreement; (b) a breach of any representation or warranty of
the Seller contained in or made pursuant to this Agreement or the Seller Related
Instruments or any facts or circumstances constituting such a breach and written
notice of which is provided to the Seller by the Buyer within the time limits
set forth in Section 10.02; provided, however, that for purposes of this Article
X any such breach (but only as it relates to a breach of the representations and
warranties contained in Sections 3.02(a), 3.04, 3.06(d) and 3.11 (excluding the
defined term "Material Contracts") shall be determined without regard to any
qualification for "immaterial" or "material" contained in the text of such
representations and warranties; (c) a breach of any covenant or agreement of the
Seller contained in or made pursuant to this Agreement or the Seller Related
Instruments or any facts or circumstances constituting such a breach, written
notice of which is provided to the Seller by the Buyer on or before the
expiration of the survival period for such covenant or agreement as provided in
Section 10.02(b); (d) any intentional misrepresentation made by the Seller in
connection with the transactions contemplated by this Agreement or the Seller
Related Instruments; (e) any Environmental Claim asserted against the Buyer for
which the Buyer may become liable, the facts or circumstances giving rise to
which occurred on or before the Closing Date, (including without limitation any
Claim relating to CERCLA investigation of the plant facility located in Valley
Park, Missouri identified in ASR's Form 10-K) and written notice of which Claim
is provided to the Seller by the Buyer on or before the fifth anniversary of the
Closing Date; (f) the presence of Materials of Environmental Concern in, on,
under, at or emanating from, any Acquired Asset or Leased Property or in
connection with the Business on or prior to the Closing Date and written notice
of which Claim is provided to the Seller by the Buyer on or before the fifth
anniversary of the Closing Date; (g) any violation of Requirements of
Environmental Law by the Seller or any other party, at the Leased Property, the
Owned Property or any Business Facility the facts or circumstances giving rise
to which occurred in whole or in part prior to the Closing Date and written
notice of which Claim is provided to the Seller by the Buyer on or before the
fifth anniversary of the Closing Date; (h) any liability of the Seller for Taxes
arising prior to the Closing Date or related to periods prior to the Closing
Date; (i) claims for COBRA coverage made by or on behalf of any current or
former employees of the Seller and their qualified beneficiaries other than
claims for COBRA coverage made by or on behalf of any Business Employees hired
by the Buyer and subsequently terminated by the Buyer (collectively, "Claims");
and (j) pre-Closing liabilities, obligations, or claims of or against the Seller
or any of Seller's Affiliates, including but not limited to Megas Beauty Care,
Inc., relating to (1) that certain Tax Credit Agreement, Tax Credit Authority
No. ECDD 97-65, dated August 11, 1998, by and between the State of Ohio, Tax
Credit Authority and Megas Beauty Care, Inc., and (2) that certain Enterprise
Zone Contract, dated as of August 1, 1977, by and between the City of Cleveland
and Megas Beauty Care, Inc. If (i) the Buyer continues the Seller's pre-Closing
course of conduct for a facility process of the Business and (ii) the Seller is
not notified of a Claim arising out of or in connection with such course of
conduct on or before the first anniversary of the Closing Date, then the
indemnification by the Seller pursuant to Sections 10.03(e), (f) or (g) hereof
shall be prorated based on the time period during which the process failed to
comply with Environmental Laws, with the time period of noncompliance on or
before the Closing Date (regardless of facility ownership) being allocated to
the Seller and the time period of noncompliance after the Closing Date
(regardless of facility ownership) being allocated to the Buyer. The
indemnification set forth in Sections 10.03 (f) and (g) shall include, without
limitation, any and all costs incurred by any member of the Buyer Group owing to
any investigation of the Leased Property or Business or any remediation,
response, cleanup, removal or restoration required to comply with any
requirements of Environmental Law, including, without limitation, in order to
obtain a regulatory closure and the costs associated with correcting any matter
that constitutes a breach of Section 3.16 and written notice of which Claim is
provided to the Seller by the Buyer on or before the fifth anniversary of the
Closing Date, and the costs of repairing or restoring the Acquired Assets, the
Leased Property or the Business after the performance of any such corrective
action or closure. This indemnification provision is expressly intended to
include, and does include, any Claims or Environmental Claims arising as a
result of any strict liability (including, without limitation, strict liability
arising under Environmental Laws) imposed or threatened to be imposed on any
member of the Buyer Group in connection with any of the indemnified events
described in this Section. The right of indemnification hereunder shall not be
affected, diminished or reduced as a result of any investigations made by or on
behalf of the Buyer prior to the Closing Date and the Buyer may rely upon all
representations and warranties made by the Seller hereunder, notwithstanding any
such investigations. The Parties expressly acknowledge and agree that, although
the Buyer may pursue multiple theories of recovery under this Section, the Buyer
shall not be entitled to recover more than one hundred percent (100%) of its
Damages arising out of the same set of facts or circumstances.
10.04 Limitation on the Liability of the Seller. Any provision of this
Agreement to the contrary notwithstanding, the liability of the Seller to
indemnify the members of the Buyer Group pursuant to Section 10.03 hereof
against any Damages sustained by reason of any Claim shall be limited to Claims
as to which any such member of the Buyer Group has given the Seller written
notice thereof on or prior to the expiration of the applicable time periods set
forth in Section 10.02 hereof, whether or not any Damages have then actually
been sustained. Any provision of this Agreement to the contrary notwithstanding,
other than the last sentence of this Section 10.04, in no event shall the
aggregate amount of the Seller's indemnity obligations pursuant to Section 10.03
exceed the amount of $4,750,000 (the "Claims Limit"). Subject to the last
sentence of this Section 10.04, in no event shall the Seller be liable to the
Buyer unless and until all claims for which Damages are recoverable by the Buyer
under Section 10.03 exceed $100,000 (the "Basket"); provided, however, that once
the level of Damages exceeds the amount of the Basket, the Buyer shall be
entitled to receive only the amount of such Damages in excess of the amount of
the Basket (up to the Claims Limit) and provided, further, that any Damages
incurred by the Buyer as a consequence of the Seller's breach of Section 6.08 of
this Agreement shall not be subject to the Basket but shall be subject to the
Claims Limit. Other than with respect to (i) Damages resulting from fraud or
(ii) any rights of any member of the Buyer Group which arise under common law
(other than breach of contract) or any federal, state or local statutory Law
(including, without limitation, all rules, regulations, orders thereunder and
all judicial and administrative interpretations thereof) which relate in any way
to any environmental matters or any Materials of Environmental Concern,
including, without limitation, any Environmental Claim or any violation or
alleged violation at or related to the Acquired Assets and/or by the Seller, in
connection with the Business, of any Environmental Laws, the remedies provided
in this Article X are the Buyer's exclusive remedy against the Seller for
Damages arising from or in connection with this Agreement, the transactions
contemplated hereby, the Business, the Acquired Assets or the Assumed
Liabilities. Anything to the contrary herein notwithstanding, the following
claims shall not be subject to the Basket or the Claims Limit, claims relating
to: (i) fraud, (ii) intentional or willful breach of any covenant, (iii) the
representations contained in Sections 3.01 and 3.06, (iv) liabilities which are
not Assumed Liabilities and (v) any breach of the covenants contained in Section
6.06(d) and (e).
10.05 Indemnification Obligations of the Buyer. Upon the terms and subject
to the conditions of this Article X, the Buyer agrees to indemnify, defend and
hold harmless the Seller, its Affiliates, directors, officers, shareholders,
employees, agents and representatives (collectively, the "Seller Group") at any
time after consummation of the Closing, from and against all Damages asserted
against, resulting to, imposed upon or incurred by the Seller Group, or any one
of them, directly or indirectly, by reason of or resulting from: (a)
liabilities, obligations or claims (whether absolute, accrued, contingent or
otherwise) relating to the conduct of the Business or the Acquired Assets and
arising out of facts, conditions or circumstances occurring after the Closing
Date and not described in Section 10.03; (b) a breach of any representation or
warranty of the Buyer contained in or made pursuant to this Agreement or the
Buyer Related Instruments or any facts or circumstances constituting such a
breach provided, however, that for purposes of this Article X any such breach
(but only as it relates to a breach of the representations and warranties
contained in Section 4.02(a)) shall be determined without regard to any
qualification for "immaterial" or "material" contained in the text of such
representation and warranty; (c) a breach of any covenant or agreement of the
Buyer contained in or made pursuant to this Agreement or the Buyer Related
Instruments or any facts or circumstances constituting such a breach, written
notice of which is provided to the Buyer by the Seller on or before the
expiration of the survival period for such covenant or agreement as provided in
Section 10.02(b); (d) the Assumed Liabilities; and (e) any illegal pre-Closing
employment actions or omissions of the Buyer with respect to any Business
Employee (collectively, the "Seller Claims"). The Parties expressly acknowledge
and agree that, although the Seller may pursue multiple theories of recovery
under this Section, the Seller shall not be entitled to recover more than one
hundred percent (100%) of its Damages arising out of the same set of facts or
circumstances.
10.06 Limitation on the Liability of the Buyer. Any provision of this
Agreement to the contrary notwithstanding, the liability of the Buyer to
indemnify the members of the Seller Group pursuant to Section 10.05 hereof
against any Damages sustained by reason of any Seller Claim shall be limited to
Seller Claims as to which any such member of the Seller Group has given the
Buyer written notice thereof on or prior to the expiration of the applicable
time periods set forth in Section 10.02, whether or not any Damages have then
actually been sustained. Any provision of this Agreement to the contrary
notwithstanding, other than the last sentence of this Section 10.06, in no event
shall the aggregate amount of the Buyer's indemnity obligations pursuant to
Section 10.05 exceed the Claims Limit. Subject to the last sentence of this
Section 10.06, in no event shall the Buyer be liable to the Seller unless and
until all claims for which Damages are recoverable by the Seller under Section
10.05 exceed the Basket; provided, however, that once the level of Damages
exceeds the amount of the Basket, the Buyer shall be entitled to receive only
the amount of such Damages in excess of the amount of the Basket (up to the
Claims Limit) and provided further that any Damages incurred by the Seller as a
consequence of the Buyer's breach of Section 6.08 of this Agreement shall not be
subject to the Basket, but shall be subject to the Claims Limit. Other than with
respect to Damages resulting from fraud, the remedies provided in this Article X
are the Seller's exclusive remedy for Damages arising in connection with this
Agreement, the transaction contemplated hereby, the Business, the Acquired
Assets or the Assumed Liabilities. Anything to the contrary herein
notwithstanding, the following claims shall not be subject to the Basket or the
Claims Limit, claims relating to: (i) fraud, (ii) intentional or willful breach
of any covenant; (iii) the representations contained in Section 4.01, (iv)
Section 10.05(d) and (v) Section 10.05(e).
10.07 Response Action. If any investigation or monitoring or any clean-up,
containment, restoration, removal or other Remediation (collectively the
"Response Action") is required under any applicable Environmental Law and which
involves a claim properly made by the Buyer under Section 10.03 hereof, the
Seller shall either perform or cause to be performed the Response Action in
compliance with Requirements of Environmental Laws, or shall promptly reimburse
Buyer for the cost of such Response Action. In the event that the Seller elects
to perform the Response Action, all Response Action shall be performed by one or
more contractors and consulting engineers, selected by the Seller and reasonably
approved in advance in writing by the Buyer, and under the supervision of a
consulting engineer. The Seller shall bear responsibility for fees and expenses
of the consulting engineer. Otherwise, the Buyer shall select the contractor(s)
and the consulting engineer. All costs and expenses of such Response Action
shall be paid either directly, or in the form of reimbursement to the Buyer, by
the Seller including, without limitation, the charges of such contractor(s)
and/or the consulting engineer, and the Buyer's reasonable attorneys' fees and
costs incurred in connection with monitoring or review of such Response Action.
In the event the Seller shall fail to timely commence, or cause to be commenced,
or fail to diligently prosecute to completion, such Response Action, the Buyer
may cause such Response Action to be performed, and all costs and expenses
thereof, or incurred in connection therewith, shall be Damages.
10.08 Conditions of Indemnification. The obligations and liabilities of the
Seller, on the one hand, and of the Buyer, on the other hand, to indemnify the
Buyer Group or the Seller Group, as the case may be, with respect to claims made
by third parties shall be subject to the following terms and conditions:
(a) The indemnified party will give the indemnifying party prompt notice of
any such claim, and the indemnifying party shall have the right to undertake the
defense thereof, at the indemnifying party's expense, by representatives chosen
by the indemnifying party and reasonably acceptable to the indemnified party.
(b) If the indemnifying party, within thirty (30) days (unless applicable
Laws provide for a shorter time period for a required response) after notice of
any such claim, fails to assume the defense of the indemnified party against
which such claim has been asserted, the indemnified party shall (upon further
notice to the indemnifying party) have the right to undertake the defense,
compromise or settlement of such claim on behalf of and for the account and risk
of the indemnifying party, at the indemnifying party's expense, subject to the
right of the indemnifying party to assume the defense of such claim at any time
prior to settlement, compromise or final determination thereof.
(c) If, in the opinion of the indemnified party's legal counsel, a conflict
of interest with respect to any claim exists between the indemnified party
against which a claim has been asserted and the indemnifying party, then such
indemnified party shall have the right to retain its own counsel with respect to
such claim; provided that the reasonable fees and expenses of one such counsel
shall be at the expense of the indemnifying party.
(d) Any provision of this Article X 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, at its own cost and
expense, to defend, compromise or settle such claim; provided, however, that if
such claim is settled without the indemnifying party's consent, the indemnified
party shall be deemed to have waived all rights hereunder against the
indemnifying party for money damages arising out of 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.
10.09 Waiver of Special Damages. THE BUYER AND THE SELLER HAVE EACH AGREED
TO WAIVE ANY RIGHT TO RECEIVE PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT
DAMAGES RELATING IN ANY WAY TO THIS AGREEMENT OR THE PURCHASE/SALE OF THE
BUSINESS AND/OR THE ACQUIRED ASSETS, IRRESPECTIVE OF THE LEGAL THEORY ASSERTED,
WITH THE EXCEPTION OF FRAUD.
XI. MISCELLANEOUS
11.01 Further Assurances. From time to time after the Closing Date, at the
request of any Party hereto and at the expense of the Party so requesting, the
Buyer and the Seller shall execute and deliver to such requesting Party such
documents and take such other action as such requesting Party may reasonably
request in order to consummate more effectively the transactions contemplated
hereby.
11.02 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered by hand, by
overnight delivery service, or by facsimile transmission (receipt of which is
confirmed):
(a) If to the Buyer, to:
U. S. Cotton, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ Liddell & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Seller, to:
American Safety Razor Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇.▇. Childs Associates, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as any Party shall specify by notice in
writing to the other Party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date on which so
hand-delivered, on the next day following their distribution by overnight
delivery service and on the date on which faxed and confirmed, except for a
notice of change of address, which shall be effective only upon receipt thereof.
11.03 Entire Agreement. The preamble to this Agreement forms a part of this
Agreement. This Agreement, the Exhibits, Schedules and other documents referred
to herein which form a part hereof (including, without limitation, the
Confidentiality Agreement referred to in Section 5.02 hereof) contain the entire
understanding of the Parties hereto with respect to the subject matter hereof.
This Agreement supersedes all prior agreements and understandings, oral and
written, with respect to its subject matter.
11.04 Severability. Should any provision of this Agreement for any reason
be declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any of the other provisions of this Agreement,
which other provisions shall remain in full force and effect and the application
of such invalid or unenforceable provision to persons or circumstances other
than those as to which it is held invalid or unenforceable shall be valid and be
enforced to the fullest extent permitted by Law.
11.05 Binding Effect; Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the Parties hereto and
their respective successors and permitted assigns, but except as contemplated
herein, neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned, directly or indirectly, by either of the Parties
hereto without the prior written consent of the other Party hereto, except that
the Buyer may without such consent collaterally assign its rights, interests and
obligations hereunder, in whole or in part, to an Affiliate of the Buyer or to
an agent for the Buyer's lenders; provided, however, that no assignment by the
Buyer shall relieve the Buyer of any of its obligations hereunder.
11.06 Third-Party Beneficiaries. This Agreement is not intended and shall
not be deemed to confer upon or give any person, except the Parties hereto and
their respective successors and permitted assigns, any remedy, claim, liability,
reimbursement, cause of action or other right under or by reason of this
Agreement.
11.07 Counterparts. This Agreement may be executed simultaneously in
facsimile counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
11.08 Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the Parties and shall not in any way affect the meaning or interpretation of
this Agreement. As used in this Agreement, the term "person" shall mean and
include an individual, a partnership, a joint venture, a corporation, a limited
liability company, an unlimited liability company, a trust, an unincorporated
organization and any Government Authority. As used in this Agreement, the term
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the General Rules
and Regulations of the Securities Exchange Act of 1934, as amended, and shall
expressly include any subsidiary of the Seller. As used in this Agreement, the
term "including" shall mean by way of example and not by way of limitation, and
each accounting term not otherwise defined in this Agreement shall have the
meaning assigned to it in accordance with GAAP. Unless the context of this
Agreement otherwise requires, (a) words of any gender shall be deemed to include
each other gender; (b) words using the singular or plural number shall also
include the plural or singular number, respectively; and (c) the terms "hereof,"
"herein," "hereby," "hereto," and derivative or similar words shall refer to
this entire Agreement.
11.09 Specific Performance. Each Party hereto acknowledges that money
damages would be both incalculable and an insufficient remedy for any breach of
this Agreement by such Party and that any such breach would cause the other
Party hereto irreparable harm. Accordingly, each Party hereto also agrees that,
in the event of any breach or threatened breach of the provisions of this
Agreement by such Party, the other Party hereto shall be entitled to equitable
relief without the requirement of proving actual damage or posting a bond or
other security, including in the form of injunctions and orders for specific
performance.
11.10 Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, without regard to the principles of conflicts of law or
choice of law thereof, and of the United States of America.
11.11 Knowledge. Where any representation or warranty of the Seller
contained in this Agreement is expressly qualified by reference "to the
knowledge of the Seller," or "to the best knowledge of the Seller" or similar
phrases it refers to the knowledge of the Seller as to the existence or absence
of facts that are the subject of such representations and warranties after
consultation with and due inquiry of ▇▇▇▇▇ August, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇.
11.12 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
11.13 Consent to Personal Jurisdiction; Agent and Method for Service; and
Choice of Forum. AS PART OF THE CONSIDERATION FOR VALUE RECEIVED PURSUANT TO
THIS AGREEMENT, AND REGARDLESS OF THE LOCATION OF ANY PRESENT OR FUTURE DOMICILE
OR PRINCIPAL PLACE OF BUSINESS OF ANY PARTY, EACH PARTY HEREBY IRREVOCABLY
CONSENTS IN ADVANCE TO THE PERSONAL JURISDICTION OF THE CHANCERY COURT OF THE
STATE OF DELAWARE, TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BROUGHT AGAINST
SUCH PARTY BY ANY OTHER PARTY AND PERTAINING TO THIS AGREEMENT OR TO ANY MATTER
RELATING TO OR ARISING OUT OF THIS AGREEMENT. EACH PARTY, FOR ITSELF AND ITS
SUCCESSORS AND ASSIGNS, HEREBY DESIGNATES AND APPOINTS ITS REGISTERED AGENT IN
THE STATE OF DELAWARE, AND ITS SUCCESSORS OR ASSIGNS AS ITS LEGAL AGENT AND
ATTORNEY-IN-FACT UPON WHOM ALL PROCESS AGAINST SUCH PARTY IN ANY SUIT, ACTION OR
PROCEEDING IN RESPECT OF ANY MATTER AS TO WHICH IT WAS SUBMITTED TO JURISDICTION
UNDER THIS SECTION MAY BE SERVED WITH THE SAME EFFECT AS IF IT HAD LAWFULLY BEEN
SERVED WITH SUCH PROCESS IN ITS JURISDICTION OF INCORPORATION OR ORGANIZATION OR
IN ANY JURISDICTION IN WHICH SUCH PARTY LAWFULLY TRANSACTS BUSINESS, IT BEING
EXPRESSLY UNDERSTOOD THAT SUCH DESIGNATION AND APPOINTMENT SHALL BECOME
EFFECTIVE WITHOUT FURTHER ACTION ON THE PARTY OF SUCH PARTY.
SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING IN RESPECT OF
ANY MATTER HEREUNDER MAY BE MADE BY DELIVERY OF THE SAME PERSONALLY OR BY
MAILING THE SAME BY REGISTERED MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED
AT THE ADDRESS INDICATED IN THIS SECTION 11.13 WITH A COPY TO SUCH PARTY'S
ADDRESS SPECIFIED UNDER THE NOTICE PROVISIONS OF THIS AGREEMENT, OR BY ANY OTHER
METHOD AUTHORIZED BY THE LAWS OF THE STATE OF DELAWARE.
AS FURTHER CONSIDERATION FOR VALUE RECEIVED PURSUANT TO THIS AGREEMENT,
AND REGARDLESS OF THE LOCATION OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL
PLACE OF BUSINESS OF ANY OF THE PARTIES, EACH PARTY HEREBY IRREVOCABLY CONSENTS
AND AGREES THAT THE AFORESAID COURT SHALL BE AN APPROPRIATE FORUM FOR SUCH
ACTION.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE IN SUCH COURT, INCLUDING, WITHOUT
LIMITATION, ANY CLAIM BASED UPON IMPROPER VENUE OR FORUM NON CONVENIENS. EACH OF
THE PARTIES AGREES NOT TO SEEK, AND HEREBY WAIVES, ANY REVIEW OF THE JUDGMENT OF
THE AFORESAID COURT BY ANY COURT OF ANY OTHER STATE, NATION OR JURISDICTION
WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT.
XII. DEFINITIONS AND TERMS
12.01 Certain Definitions. As used in this Agreement, the following terms
shall have the meanings set forth or referenced below:
"Acquired Assets" shall have the meaning set forth in Section 1.01(a)
hereof.
"Acquisition Transaction" shall have the meaning set forth in Section 5.09
hereof.
"Affiliate" shall have the meaning set forth in Section 11.08 hereof.
"Affiliate Transactions" shall have the meaning set forth in Section 3.18
hereof.
"Agreement" shall have the meaning set forth in the Preamble hereof.
"Allocation" shall have the meaning set forth in Section 1.07 hereof.
"ASR" shall have the meaning set forth in the Preamble hereof.
"ASR Canada" shall have the meaning set forth in the Preamble hereof.
"ASR Subsidiaries" shall have the meaning set forth in Section 1.10(e)
hereof.
"Assessment Date" shall have the meaning set forth in Section 1.06(d)
hereof.
"Assessments" shall have the meaning set forth in Section 3.13 hereof.
"Assignment and Assumption Agreement" shall have the meaning set forth in
Section 1.01(c) hereof.
"Assumed Liabilities" shall have the meaning set forth in Section 1.08
hereof.
"Assumed Plans" shall have the meaning set forth in Section 3.09(k)
hereof.
"Audit" shall have the meaning set forth in Section 1.06(a) hereof.
"Basket" shall have the meaning set forth in Section 10.04 hereof.
"▇▇▇▇ of Sale" shall have the meaning set forth in Section 1.01(c) hereof.
"Books and Records" shall have the meaning set forth in Section 1.04(g)
hereof.
"Bulk Products" shall have the meaning set forth in Section 6.04(a)
hereof.
"Business" shall have the meaning set forth in the Preamble hereof.
"Business Employees" shall have the meaning set forth in Section 3.10(a).
"Business Facility" shall have the meaning set forth in Section 3.16(b)(1)
hereof.
"Business Financial Statements" shall have the meaning set forth in
Section 3.03 hereof.
"Buyer" shall have the meaning set forth in the Preamble hereof.
"Buyer Financial Statements" shall have the meaning set forth in Section
4.06 hereof.
"Buyer Group" shall have the meaning set forth in Section 10.03 hereof.
"Buyer Related Instruments" shall have the meaning set forth in Section
4.01 hereof.
"Buyer Unaudited Interim Financial Statements" shall have the meaning set
forth in Section 4.06 hereof.
"Canadian ▇▇▇▇ of Sale" shall have the meaning set forth in Section
1.10(d) hereof.
"Canadian Inventory" shall have the meaning set forth in Section 1.10(d)
hereof.
"Claims" shall have the meaning set forth in Section 10.03 hereof.
"Claims Limit" shall have the meaning set forth in Section 10.04 hereof.
"Cleveland Agreement" shall have the meaning set forth in Section 8.01(u)
hereof.
"Cleveland Lease" shall have the meaning set forth in Section 8.01(t)
hereof.
"Cleveland Lease Amendment" shall have the meaning set forth in Section
8.01(t) hereof.
"Closing" shall have the meaning set forth in Section 1.01(a) hereof.
"Closing Date" shall have the meaning set forth in Section 1.03 hereof.
"Closing Working Capital" shall have the meaning set forth in Section
1.06(a) hereof.
"COBRA" shall have the meaning set forth in Section 3.09(d) hereof.
"Code" shall have the meaning set forth in Section 3.09(a) hereof.
"Collectron" shall have the meaning set forth in Section 6.21 hereof.
"Competing Business" shall have the meaning set forth in Section 6.04(a)
hereof.
"Confidentiality Agreement" shall have the meaning set forth in Section
5.02(b) hereof.
"Contracts" shall have the meaning set forth in Section 3.02(a) hereof.
"Cotton Products" shall have the meaning set forth in the Preamble hereof.
"Damages" shall have the meaning set forth in Section 10.03 hereof.
"Deeds" shall have the meaning set forth in Section 1.01(c) hereof.
"Dollars" shall have the meaning set forth in Section 1.02(a) hereof.
"Employee Benefit Plans" shall have the meaning set forth in Section
3.09(a) hereof.
"Encumbrances" shall have the meaning set forth in the Preamble hereof.
"Enterprise Contract" shall have the meaning set forth in Section 6.20
hereof.
"Environmental Claim" shall have the meaning set forth in Section
3.16(b)(1) hereof.
"Environmental Information" shall have the meaning set forth in Section
5.02(c) hereof.
"Environmental Insurance Policy" shall have the meaning set forth in
Section 6.10 hereof.
"Environmental Laws" shall have the meaning set forth in Section
3.16(b)(2) hereof.
"Environmental Permits" shall have the meaning set forth in Section
3.16(b)(3) hereof.
"ERISA" shall have the meaning set forth in Section 3.09(a) hereof.
"ERISA Affiliate" shall have the meaning set forth in Section 3.09(a)
hereof.
"Excluded Assets" shall have the meaning set forth in Section 1.01(b)
hereof.
"Final Commitment Letter" shall have the meaning set forth in Section
6.07 hereof.
"Final Pension Liability Statement" shall have the meaning set forth in
Section 6.06(f) hereof.
"Final Statement" shall have the meaning set forth in Section 1.06(a)
hereof.
"Foreign Plans" shall have the meaning set forth in Section 3.09(g)
hereof.
"401(k) Plans" shall have the meaning set forth in Section 6.06(d) hereof.
"GAAP" shall have the meaning set forth in Section 3.03 hereof.
"Government Authorities" shall have the meaning set forth in Section
3.02(b) hereof.
"Inactive Intellectual Property" shall have the meaning set forth in
Section 3.07(a) hereof.
"Including" shall have the meaning set forth in Section 11.08 hereof.
"Independent Accounting Firm" shall have the meaning set forth in Section
1.06(a) hereof.
"Independent Actuarial Firm" shall have the meaning set forth in Section
6.06(f) hereof.
"Initial Purchase Price" shall have the meaning set forth in Section
1.02(a) hereof.
"Intellectual Property" shall have the meaning set forth in Section
3.07(a) hereof.
"Interim Business Financial Statements" shall have the meaning set forth
in Section 3.03 hereof.
"Inventory" shall have the meaning set forth in Section 1.06(b) hereof.
"Inventory Audit" shall have the meaning set forth in Section 1.06(d)
hereof.
"Inventory Audit Date" shall have the meaning set forth in Section 1.06(d)
hereof.
"Inventory Surplus Amount" shall have the meaning set forth in Section
1.06(b) hereof.
"IRS" shall have the meaning set forth in Section 1.07 hereof.
"Landlord Lien Waivers" shall have the meaning set forth in Section
1.04(h) hereof.
"Laws" shall have the meaning set forth in Section 3.12 hereof.
"Lease Assignment and Assumption Agreement" shall have the meaning set
forth in Section 1.01(c) hereof.
"Leased Property" shall have the meaning set forth in Section 3.06(b)
hereof.
"Letter Amendment" shall have the meaning set forth in Section 6.21
hereof.
"Licensed Trademarks" shall have the meaning set forth in Section 6.14
hereof.
"Litigation" shall have the meaning set forth in Section 3.08(a) hereof.
"Master Trust" shall have the meaning set forth in Section 6.06(e) hereof.
"Material Adverse Effect" shall have the meaning set forth in Section
3.02(b) hereof.
"Material Contracts" shall have the meaning set forth in Section 3.11
hereof.
"Material Environmental Liability" shall have the meaning set forth in
Section 3.16(b)(4) hereof.
"Materials of Environmental Concern" shall have the meaning set forth in
Section 3.16(b)(5) hereof.
"Megas" shall have the meaning set forth in the Preamble hereof.
"Megas PR" shall have the meaning set forth in the Preamble hereof.
"▇▇▇▇▇▇" shall have the meaning set forth in Section 6.06(f) hereof.
"Mexican Acquired Assets" shall have the meaning set forth in Section
1.10(b) hereof.
"Mexico ▇▇▇▇ of Sale" shall have the meaning set forth in Section 1.10(b)
hereof.
"Multiemployer Plan" shall have the meaning set forth in Section 3.09(b)
hereof.
"New Collectron Agreement" shall have the meaning set forth in Section
8.01(s) hereof.
"Obsolete Inventory" shall have the meaning set forth in Section 3.15(a)
hereof.
"Other Instruments" shall have the meaning set forth in Section 1.01(c)
hereof.
"Owned Real Property" shall have the meaning set forth in Section 3.06(b)
hereof.
"Parties" shall have the meaning set forth in the Preamble hereof.
"Party" shall have the meaning set forth in the Preamble hereof.
"PBGC" shall have the meaning set forth in Section 3.09(c) hereof.
"Pension Liability Amount" shall have the meaning set forth in Section
6.06(f) hereof.
"Pension Liability Statement" shall have the meaning set forth in Section
6.06(f) hereof.
"Permits" shall have the meaning set forth in Section 1.05(d) hereof.
"Permitted Encumbrances" shall have the meaning set forth in Section
3.06(b) hereof.
"Person" shall have the meaning set forth in Section 11.08 hereof.
"Personna" shall have the meaning set forth in the Preamble hereof.
"Pomfret Lease" shall have the meaning set forth in Section 8.01(r)
hereof.
"PR Acquired Assets" shall have the meaning set forth in Section 1.10(a)
hereof.
"PR Code" shall have the meaning set forth in Section 3.09(c) hereof.
"PR Treasury" shall have the meaning set forth in Section 3.09(c) hereof.
"Promotional Obligations" shall have the meaning set forth in Section 3.25
hereof.
"Property" shall have the meaning set forth in Section 3.23 hereof.
"Proposed Employment Offer Notice" shall have the meaning set forth in
Section 6.06(a) hereof.
"Puerto Rico Bill of Sale" shall have the meaning set forth in Section
1.10(a) hereof.
"Puerto Rico Consent" shall have the meaning set forth in Section 6.17
hereof.
"Puerto Rico Grant" shall have the meaning set forth in Section 6.24
hereof.
"Puerto Rico Lease" shall have the meaning set forth in Section 6.17
hereof.
"Purchase Price" shall have the meaning set forth in Section 1.02(a)
hereof.
"Receivables" shall have the meaning set forth in Section 3.15(b) hereof.
"Remediation" shall have the meaning set forth in Section 3.16(b)(6)
hereof.
"Required Working Capital" shall have the meaning set forth in Section
1.06(b) hereof.
"Requirement(s) of Environmental Law(s)" shall have the meaning set forth
in Section 3.16(b)(7) hereof.
"Response Action" shall have the meaning set forth in Section 10.07
hereof.
"Retained Businesses" shall have the meaning set forth in Section 2.01
hereof.
"Retained Intellectual Property" shall have the meaning set forth in
Section 3.07(a) hereof.
"Schedules" shall have the meaning set forth in Section 5.07 hereof.
"Seller" shall have the meaning set forth in the Preamble hereof.
"Seller Claims" shall have the meaning set forth in Section 10.05 hereof.
"Seller Entity" shall have the meaning set forth in the Preamble hereof.
"Seller Group" shall have the meaning set forth in Section 10.05 hereof.
"Seller Related Instruments" shall have the meaning set forth in Section
3.01(b) hereof.
"SH&E Law" shall have the meaning set forth in Section 3.16(b)(8) hereof.
"Statement" shall have the meaning set forth in Section 1.06(a) hereof.
"Sublease" shall have the meaning set forth in Section 6.21 hereof.
"Subordination Non-Disturbance and Attornment Agreements" shall have the
meaning set forth in Section 1.04(h) hereof.
"Tax" or "Taxes" shall have the meaning set forth in Section 3.19(i)
hereof.
"Tax Return(s)" shall have the meaning set forth in Section 3.19(i)
hereof.
"Trademark Assignments" shall have the meaning set forth in Section
1.01(c) hereof.
"Trademark Licenses" shall have the meaning set forth in Section 6.14
hereof.
"Transition Services Agreement" shall have the meaning set forth in
Section 6.09 hereof.
"Undertaking" shall have the meaning set forth in Section 1.02(a) hereof.
"Union Plan" shall have the meaning set forth in Section 6.06(d) hereof.
"USC Canada" shall have the meaning set forth in Section 1.10(d) hereof.
"USC Subsidiaries" shall have the meaning set forth in Section 1.10(e)
hereof.
"Valley Park" shall have the meaning set forth in the Preamble hereof.
"WARN" and "WARN liabilities" shall have the meanings set forth in Section
6.06 hereof.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement
as of the day and year first above written.
THE BUYER:
U.S. COTTON, LLC,
a Delaware limited liability company
By:/s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President
THE SELLER ENTITIES:
AMERICAN SAFETY RAZOR COMPANY,
a Delaware corporation
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Title: President
--------------------------------
MEGAS BEAUTY CARE, INC.,
a Delaware corporation
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Title: Chief Executive Officer
--------------------------------
VALLEY PARK REALTY, INC.,
a Missouri corporation
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: Chief Executive Officer
------------------------------
MEGAS DE PUERTO RICO, INC.,
a Puerto Rican corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: Chief Executive Officer
------------------------------
AMERICAN SAFETY RAZOR
OF CANADA LIMITED,
a Canadian corporation
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: Chief Executive Officer
------------------------------
PERSONNA INTERNATIONAL
DE PUERTO RICO, INC.,
a Delaware corporation
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: Chief Executive Officer
------------------------------