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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT DATED AS OF MARCH 7, 1997
BY AND AMONG
▇▇▇▇▇ BABY PRODUCTS COMPANY
▇▇▇▇▇ ▇▇▇▇ PRODUCTS COMPANY,
AS SELLERS,
HUFFY CORPORATION
AND
EVENFLO COMPANY, INC.
AS PURCHASER
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ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
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TERMS OF SALE AND PAYMENT...........................................................................1
Sale of Assets.............................................................................1
Excluded Assets............................................................................3
Liabilities................................................................................3
Employer Liabilities.......................................................................4
Sellers' Liabilities.......................................................................4
Purchaser's Liabilities....................................................................4
Assumed Contracts, Purchase Orders, Leases, etc............................................4
Purchase Price.............................................................................4
Minimum Net Asset Adjustment...............................................................5
Allocation of Purchase Price...............................................................6
REPRESENTATIONS , WARRANTIES AND CERTAIN AGREEMENTS OF SELLERS AND HUFFY............................7
Organization...............................................................................8
Authority and Enforceability...............................................................8
Financial Statements.......................................................................8
Pending Claims.............................................................................8
Legal Compliance...........................................................................9
Title to Assets............................................................................9
Condition of Assets........................................................................9
Leases.....................................................................................9
Inventory.................................................................................10
Other Property............................................................................10
Customers and Suppliers...................................................................10
No Breach or Violation....................................................................10
Interest in Customers, Suppliers and Competitors..........................................11
Corporate Documents.......................................................................11
Zoning....................................................................................11
OSHA......................................................................................11
Intellectual Property.....................................................................11
Environmental Matters.....................................................................12
Leases and Contracts......................................................................13
Employees.................................................................................15
Labor Matters.............................................................................15
WARN Act..................................................................................15
Employee Benefit Plans....................................................................15
Brokers' Fee..............................................................................16
Receivables...............................................................................16
Insurance.................................................................................16
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Governmental Licenses, Permits and Related Approvals......................................17
Absence of Certain Changes or Events......................................................17
Recalls...................................................................................17
Product Liability Claims..................................................................17
Tax Matters...............................................................................17
Real Property.............................................................................18
Entire Business...........................................................................20
Full Disclosure...........................................................................20
PURCHASER'S REPRESENTATIONS AND WARRANTIES.........................................................20
Organization..............................................................................20
Authority.................................................................................20
Enforceability............................................................................20
Brokers' Fee..............................................................................20
COVENANTS AND AGREEMENTS...........................................................................20
Bulk Sales Compliance.....................................................................20
Preservation of Business and Assets.......................................................20
Conduct of Business.......................................................................21
Access to Books and Records...............................................................22
Confidentiality...........................................................................23
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing..................................................................24
Expenses..................................................................................24
Shareholder Communication.................................................................24
Additional Agreements.....................................................................24
Customer Service..........................................................................24
Closing Conditions........................................................................25
Notification..............................................................................25
No Shopping...............................................................................25
Affiliated Transactions...................................................................26
Assignment of Confidentiality Agreements..................................................26
Insurance Matters.........................................................................26
Employee Matters..........................................................................26
Grant of License..........................................................................26
THE CLOSING........................................................................................27
SELLERS' CONDITIONS TO CLOSE.......................................................................27
Representations and Warranties True at Closing; Compliance with Agreement.................27
Regulatory Approvals......................................................................27
No Action/Proceeding......................................................................27
Compliance with Article IX................................................................28
Other Prohibiting Transaction.............................................................28
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PURCHASER'S CONDITIONS TO CLOSE....................................................................28
Representations and Warranties True at Closing; Compliance with Agreement.................28
No Loss, Damage or Destruction............................................................28
No Material Adverse Change................................................................28
Regulatory Approvals......................................................................28
No Action/Proceeding......................................................................29
Compliance with Article VIII..............................................................29
Other Prohibiting Transaction.............................................................29
Environmental Diligence...................................................................29
Lien Search...............................................................................29
Sublease Agreement........................................................................29
Union Agreements..........................................................................29
OBLIGATIONS OF SELLERS AT CLOSING..................................................................30
Documents Relating to Title...............................................................30
Possession................................................................................30
Opinion of Sellers' Counsel...............................................................31
Corporate Good Standing and Corporate Resolution..........................................31
Closing Certificate.......................................................................31
Third Party Consents......................................................................31
Additionally Requested Documents; Post Closing Assistance.................................31
OBLIGATIONS OF PURCHASER AT CLOSING................................................................31
Purchase Price............................................................................31
Corporate Good Standing and Certified Board Resolutions...................................31
Assumption of Liabilities.................................................................32
Closing Certificate.......................................................................32
INDEMNIFICATION AND SURVIVAL OF PROVISIONS.........................................................32
Survival..................................................................................32
Sellers' Indemnification Obligation.......................................................32
Purchaser's Indemnification Obligation....................................................34
Procedure for Indemnification; General....................................................36
NON-COMPETITION COVENANT...........................................................................39
TERMINATION........................................................................................40
General...................................................................................40
No Liabilities in Event of Termination....................................................40
MISCELLANEOUS......................................................................................40
Headings..................................................................................40
Entire Agreement, Modification and Waiver.................................................40
Counterparts..............................................................................40
Rights of Parties.........................................................................40
Assignment................................................................................41
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Remedies..................................................................................41
Effect of Certain Actions.................................................................41
Supplements to Schedules and Exhibits.....................................................41
Notices...................................................................................41
Knowledge of Sellers......................................................................43
Severability..............................................................................43
Meanings of Certain Terms.................................................................43
Transfer Taxes and Recording Expenses.....................................................43
Governing Law.............................................................................43
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated March 7, 1997, is made and entered
into by and among ▇▇▇▇▇ BABY PRODUCTS COMPANY, a Delaware corporation, ▇▇▇▇▇
▇▇▇▇ PRODUCTS COMPANY, a Wisconsin corporation, (hereafter collectively referred
to herein as "Sellers"), HUFFY CORPORATION, an Ohio corporation and sole
shareholder of Sellers ("Huffy") and EVENFLO COMPANY, INC., a Delaware
corporation, (hereinafter referred to as "Purchaser").
W I T N E S S E T H:
WHEREAS, Sellers are collectively engaged in the business of designing,
manufacturing and marketing juvenile products;
WHEREAS, Sellers desire to sell to Purchaser, and Purchaser desires to
purchase from Sellers, substantially all of Sellers' assets as such exist on the
date hereof, upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, and in consideration of the mutual promises and
covenants set forth herein, the parties hereto agree as follows:
ARTICLE I
TERMS OF SALE AND PAYMENT
SECTION 1.1(a) SALE OF ASSETS. Sellers, on the basis of the
representations and warranties of Sellers and Huffy contained herein and upon
the terms and conditions hereinafter set forth, shall sell, assign, convey,
transfer and deliver to Purchaser, and Purchaser shall purchase and pay for, on
the Closing Date (as defined in Article V hereof), free and clear of all liens
and encumbrances, all of the assets, rights, properties, claims, contracts and
business of Sellers at the Closing Date of every kind, nature, character and
description, tangible and intangible, real, personal or mixed, wherever located
(the "Assets"), including but not limited to, the following:
(i) INVENTORY. Sellers' entire inventory consisting of
finished products, operating supplies, raw materials,
purchased parts, work-in-progress, and unshipped
finished goods of Sellers, including products or
supplies on hand or in transit ("Inventory");
(ii) EQUIPMENT. All vehicles, equipment, tooling,
machinery, furniture, supplies, tools, dies, jigs,
molds, patterns, drawings and all other tangible
personal property (including all spare parts
therefor) used in or intended for use in the
operation of the Sellers' business and owned by
Sellers (collectively, the "Equipment"), and all
warranties and guarantees, if any, express or
implied, existing for the benefit of Sellers with
respect to the Equipment, including but not limited
to,
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the Equipment set forth on Schedule 1.1(a)(ii) of the
disclosure schedules attached hereto and made a part
hereof (the "Disclosure Schedules");
(iii) RECORDS. All pertinent records, financial and
non-financial, relating to the present and past
operating history of Sellers' business;
(iv) CONTRACTS. All outstanding customer orders, lists,
contracts for goods, supplies, materials, equipment,
tooling, machinery, prepayments or other items used
in the operation of Sellers' business other than
employee-related contracts, including but not limited
to, the contracts which are listed on Schedule
1.1(a)(iv);
(v) REAL PROPERTY AND LEASES. The fee simple interest in
the real property, including all buildings,
structures, fixtures and improvements located therein
(the "Owned Real Property") described on Schedule
1.1(a)(v) and a sublease interest in the real
property, including all buildings, structures,
fixtures and improvements located therein, described
on Schedule 1.1(a)(v) pursuant to the terms of the
Sublease Agreement, substantially in the form
attached hereto as Exhibit A;
(vi) INTANGIBLE ASSETS. All intangible assets of Sellers
relating to their past, current and presently
contemplated future products for their business,
including, without limitation "Snugli" and "▇▇▇▇▇"
trademarks, all of Sellers' right, title and interest
in and to the patents, patent registrations, patent
applications, trademarks, trademark registrations,
trademark applications, trade names, copyrights,
copyright registrations, copyright applications,
franchises, permits, licenses, processes, formulas,
inventions, trade secrets and royalties (including
any rights to ▇▇▇ for breach or past infringement)
relating to such business, including but not limited
to, the intangible assets set forth on Schedule
1.1(a)(vi);
(vii) GOVERNMENTAL PERMITS AND LICENSES. All permits,
licenses, consents and any other forms of government
approval, to the extent assignable, as have been or
are required for the operation of Sellers' business
as it is and during the year prior to the date hereof
has been operated, including but not limited to, the
governmental permits and licenses set forth on
Schedule 1.1(a)(vii);
(viii) GOODWILL. All goodwill and, to the extent assignable
by Sellers, all warranties (express or implied) and
rights and claims related to the operation of their
business including, but not limited to, the right to
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the names "▇▇▇▇▇ Baby Products Company" and "▇▇▇▇▇
▇▇▇▇ Products Company";
(ix) ACCOUNTS RECEIVABLE. All accounts receivable of
Sellers in existence on the Closing Date, including
all notes, bonds and other evidences of such
receivables, including but not limited to, the
receivables set forth on Schedule 1.1(a)(ix); and
(x) CASH/PREPAID EXPENSES. All cash on hand, cash
equivalents, deposits in transit and prepaid expenses
as of the Closing Date;
(xi) MIS AND MATERIALS. All management information systems
and software, and customer, subscriber and vendor
lists, catalogs, research material, technical
information, technology, specifications, designs,
drawings, processes and quality control data; and
(xii) BANK ACCOUNTS. All bank accounts of Sellers listed on
Schedule 1.1(a)(xii), including the bank accounts
receiving payments of all receivables.
SECTION 1.1(b) EXCLUDED ASSETS. Sellers are not selling and
Purchaser is not purchasing or assuming obligations with respect to the
following (collectively the "Excluded Assets"):
(a) any equity interest in Sellers or any of their
subsidiaries or any of Sellers' joint venture or partnership interests;
(b) the assets listed on Schedule 1.1(b);
(c) leasehold interest under that certain Lease Agreement
between Selco Service Corporation and ▇▇▇▇▇ Baby Products Company dated
October 29, 1992 (the "Lease"); and
(d) all intercompany receivables.
SECTION 1.1(c) LIABILITIES. Purchaser shall assume on the
Closing Date on behalf of Sellers the following specific liabilities:
(i) All accounts payable of Sellers in existence on the
Closing Date, in each case only to the extent such
liabilities and obligations (1) have been incurred in
the ordinary course of either Seller's business, (2)
have been incurred in a manner and amount consistent
with past practice, and (3) are unpaid and due and
owing as of the opening of business on the Closing
Date.
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(ii) All other trade liabilities relating to the operation
of Sellers' business as may be agreed upon between
the parties hereto and which are described on
Schedule 1.1(c) hereto.
SECTION 1.1(d) EMPLOYER LIABILITIES. Purchaser shall assume on
the Closing Date on behalf of Sellers the liabilities with respect to Sellers'
employees who become employees of Purchaser described on Schedule 1.1(d) hereto.
Sellers shall remain liable up to the Closing Date for all other employee wages,
salaries and benefits not listed on Schedule 1.1(d).
SECTION 1.2(a) SELLERS' LIABILITIES. Except as set forth
specifically in this Agreement and in the last sentence of this Section 1.2(a),
Purchaser is not by reason of its purchase of the Assets assuming any
liabilities or obligations of Sellers whatsoever and shall not become liable in
any manner for any liabilities or obligations of Sellers. Without limiting the
generality of the foregoing, and without regard to whether any law, governmental
authority, or other third party may impose any liability of Sellers, in whole or
in part, on Purchaser, Purchaser does not assume, and Sellers shall continue to
be liable for, all liabilities and obligations, fixed or contingent, known or
unknown, not otherwise assumed by Purchaser under this Agreement. No payment in
respect of any liability or obligation of Sellers not expressly assumed in
writing by Purchaser under this Agreement shall be made by Sellers or Purchaser
out of the Assets to be acquired hereunder. Notwithstanding the foregoing, all
executory contracts with third parties set forth in Schedule 1.2(c) shall be
assigned by Sellers and assumed by Purchaser, but only with respect to the
executory portions thereof such that Purchaser shall be obligated to render any
performance required by such contracts after the Closing Date, but any
obligations or liabilities accruing under such contracts prior to the Closing
Date shall remain solely the responsibility of Sellers.
SECTION 1.2(b) PURCHASER'S LIABILITIES. Other than the
indemnity obligations of Huffy and Sellers contained in Article X, Sellers are
not by reason of their sale of the Assets assuming any liabilities of Purchaser
whatsoever and shall not become liable in any manner for any liabilities of
Purchaser. Without limiting the generality of the foregoing, Sellers do not
assume, and Purchaser shall be liable for, all liabilities assumed by Purchaser
pursuant to the terms of this Agreement.
SECTION 1.2(c) ASSUMED CONTRACTS, PURCHASE ORDERS, LEASES,
ETC. On the Closing Date, Purchaser shall assume and agree to pay or perform, as
the case may be, all obligations accruing after the Closing Date with respect to
those contracts, purchase orders, leases of personal property and other
obligations which are set forth on Schedule 1.2(c) hereto only to the extent
that such contracts, purchase orders, leases and other obligations are properly
assigned to Purchaser and Purchaser receives the benefits under such contracts,
purchase orders, leases and obligations (collectively with the other liabilities
assumed by Purchaser pursuant to Sections 1.1(c) and 1.1(d), the "Assumed
Liabilities"). Purchaser is not assuming, nor shall it be deemed to have assumed
any liability or obligation of Sellers or Huffy of any kind or nature, except
for the Assumed Liabilities.
SECTION 1.3 PURCHASE PRICE. Purchaser shall pay a purchase
price of Seventy-Three Million Dollars ($73,000,000) for the net assets, as
defined in and shown on Schedule 1.4 hereto (the "Net Assets"), subject to
adjustment as provided herein (as adjusted, the "Purchase Price"). The
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Purchase Price shall be payable to Sellers in immediately available funds to an
account designated in writing by Sellers to Purchaser at least two (2) business
days prior to the Closing Date.
SECTION 1.4 MINIMUM NET ASSET ADJUSTMENT. (a) Within ninety
(90) days following the Closing Date, Purchaser shall prepare and deliver to
Sellers a consolidated balance sheet and Schedule of Net Assets Purchased of the
business as of the close of business on the day before the Closing Date (the
"Closing Date Schedule of Net Assets Purchased") which shall be prepared in
accordance with generally accepted accounting principles and the instructions
set forth on Schedule 1.4 (the "Instructions") applied on a basis consistent
with those used in the preparation of the Schedule of Net Assets Purchased as
set forth on Schedule 1.4.
(b) Within thirty (30) days after Sellers' receipt of the
Closing Date Schedule of Net Assets Purchased, Sellers shall deliver to
Purchaser a written report ("Sellers' Report") setting forth, in reasonable
detail and with reasonable specificity as to each disputed item, any disputed
amounts comprising the Net Assets as reflected on the Closing Date Schedule of
Net Assets Purchased and Sellers' proposed alternative thereto.
(c) Purchaser and Sellers shall permit the other and the
other's accounting representatives, during normal business hours, at the other's
expense, to have full and complete access to, and to examine, all work papers of
or relating to the business for the periods prior to the Closing which are in
its possession, and which work papers and schedules were necessary to prepare
and/or review the Closing Date Schedule of Net Assets Purchased.
(d) If Sellers disagree with the Net Assets shown on the
Closing Date Schedule of Net Assets Purchased and have timely delivered Sellers'
Report, and such disagreement cannot be resolved by Purchaser and Sellers within
sixty (60) days of Purchaser's receipt of Sellers' Report, either party, by
written notice to the other, may elect to have any such disagreement tendered to
and resolved by a firm of independent certified public accountants of recognized
national standing ("Accountant") to make such determination which determination,
shall be final and binding on the parties hereto for the purpose of this
Agreement, and Purchaser and Sellers shall each pay one-half the entire cost of
such Accountant. If Purchaser and Sellers are unable to agree on the Accountant
within the sixty (60) day period, then the Accountant shall be Price Waterhouse,
Atlanta office, (an accounting firm which both Purchaser and Seller represent to
be independent). The Accountant shall be instructed to use every reasonable
effort to perform its function within thirty (30) days of submission of the
matter to it and, in any case, as soon as practicable after such submission to
it. The Accountant shall be limited to deciding each such disagreement in an
amount which shall be equal to or in between the amount proposed by Sellers and
Purchaser, and no more and no less.
(e) Once the parties agree upon or otherwise arrive at the
amount of the business' Net Assets as shown on the Closing Date Schedule of Net
Assets Purchased ("Closing Net Assets"), the line item referred to as "Net
Assets Per Book" as computed on Schedule 1.4 shall be compared to $52 million.
To the extent the amount set forth as "Net Assets Per Book" is less than $52
million, such amount shall be repaid to Purchaser by Sellers within ten (10)
days of such determination as a reduction of the Purchase Price.
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SECTION 1.5 ALLOCATION OF PURCHASE PRICE. (a) Purchaser and
Sellers agree that Purchaser and Sellers shall allocate the sum of the Purchase
Price and the Assumed Liabilities, including for purposes of this Section 1.5
any adjustments to the Purchase Price or Assumed Liabilities, among the Assets
and the covenant not to compete (set forth in Section 11.1 of this Agreement) as
of the Closing Date on Internal Revenue Service ("IRS") Form 8594, in accordance
with Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations promulgated thereunder. Except as otherwise provided in
Section 1.5(d) below, the allocation described in the preceding sentence (the
"Purchase Price Allocation") shall be based upon an appraisal (the "Appraisal")
of the fair market value of the Assets and such covenant not to compete as of
the Closing Date. Purchaser shall select and engage, at its own expense, the
appraiser or appraisal firm (the "Appraiser") to perform the Appraisal.
(b) Purchaser shall use its reasonable best efforts to provide
Sellers with a copy of the Appraisal at least five (5) business days prior to
the Closing Date; provided, however, that Purchaser's provision of the Appraisal
to the Sellers shall not be a condition to the Closing and Purchaser's failure
to so provide the Appraisal to the Sellers as provided herein shall not delay or
otherwise affect the Closing.
(c) Upon receipt of the Appraisal, Sellers shall have thirty
(30) days to review the Appraisal and submit, in writing, any comments, changes,
revisions or other amendments on or to the Appraisal to the Purchaser for its
consideration; provided, however, that Purchaser (and/or the Appraiser) shall in
its sole discretion determine whether to accept such comments or to make any
proposed changes, revisions or amendments to the Appraisal. If Purchaser
determines in its sole discretion not to make any of the changes, revisions or
amendments to the Appraisal proposed by the Sellers, Purchaser must notify
Sellers of such determination in writing within thirty (30) days from the date
it received such written comments, changes, revisions or amendments from the
Sellers. Upon receipt of such notice from Purchaser, the Sellers must notify
Purchaser in writing whether they shall accept or reject the Appraisal.
(d) If the Sellers accept the Appraisal, the Appraisal shall
be binding on Purchaser and the Sellers to the extent described herein. If,
however, the Sellers reject the Appraisal (in accordance with the procedures
outlined in Section 1.5(c) above), Sellers must select and engage, at their own
expense, a different appraiser or appraisal firm ("Sellers' Appraiser") to
perform an appraisal of the fair market value of the Assets and the covenant not
to compete as of the Closing Date (the "Sellers' Appraisal") and the parties
shall submit the Appraisal and the Sellers' Appraisal to an independent,
nationally recognized appraisal firm (the "Arbitrator") for binding arbitration.
The Arbitrator shall determine which of the competing appraisals submitted to it
by the parties more accurately reflects the fair market value of the Assets and
the covenant not to compete as of the Closing Date (such selected appraisal
shall be referred to hereinafter as the "Final Appraisal"). The Arbitrator's
decision shall be final and binding on the parties and the Purchase Price
Allocation shall be based upon the Final Appraisal.
(e) Purchaser and Sellers shall timely file with the
appropriate Tax authorities copies of the IRS Form 8594 and shall use the
Purchase Price Allocation set forth in the Appraisal or the Final Appraisal, as
the case may be, to prepare such IRS Form 8594, and in the preparation
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of all Tax Returns (including any attachments thereto) and for all other Tax
purposes. In the event any party hereto receives notice of an audit in respect
of the Purchase Price Allocation specified herein, such party shall notify the
other party in writing as to the date and subject of such audit as promptly as
reasonably practicable.
(f) If any Tax Return filed by Purchaser or Sellers relating
to the transactions contemplated hereby is challenged by the Tax authority with
which such Tax Return was filed on the basis of the Purchase Price Allocation,
as finally adjusted, the filing party shall assert in good faith the validity
and correctness of the Purchase Price Allocation and such party shall not agree
to any adjustment to the Purchase Price Allocation without obtaining the prior
written consent of the other party (which consent shall not be unreasonably
withheld). If any such Tax Return is challenged as herein described, the party
filing such Tax Return shall keep the other party informed of its decisions and
the current status and progress of all administrative and judicial proceedings,
if any, that are undertaken at the election of such party with respect thereto.
(g) Any adjustment to the Purchase Price or the Assumed
Liabilities pursuant to this Agreement shall result in an appropriate adjustment
to the Purchase Price Allocation and the allocation set forth in the IRS Form
8594.
(h) If either party (including permitted successors and
assigns thereof) to this Agreement defaults under this Section 1.5, it shall pay
as damages to the other party, so long as such other party is not in default
under this Section 1.5, an amount which, after reduction for all Taxes which
would be incurred (calculated at the highest marginal rate applicable in the
relevant jurisdiction) as a result of receiving said amount, is equal to the
result (but not less than zero) of subtracting the amount in (ii) below from the
amount in (i) below:
(i) the total amount of income, franchise,
transfer, sales or gains taxes (calculated at the highest
marginal rate applicable in the relevant jurisdictions and
including interest and penalties) payable to all jurisdictions
imposing such taxes upon the nondefaulting party with respect
to the transactions contemplated hereby; and
(ii) the total amount of such taxes which would
have been incurred (calculated at the highest marginal rate
applicable in the relevant jurisdictions and including
interest and penalties) and payable to all jurisdictions
imposing such taxes upon the nondefaulting party with respect
to the transactions contemplated hereby, if such taxing
jurisdictions had accepted the Purchase Price Allocation.
ARTICLE II
REPRESENTATIONS , WARRANTIES AND CERTAIN AGREEMENTS OF SELLERS AND HUFFY
Sellers and Huffy, jointly and severally, hereby make the
following representations, warranties and agreements to Purchaser, its
successors and assigns:
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SECTION 2.1 ORGANIZATION. Each Seller and Huffy is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its respective incorporation, duly authorized to carry on the
business presently conducted by it. Each Seller is qualified to do business in
the jurisdictions listed on Schedule 2.1 and is not required to be qualified to
do business in any other jurisdiction where the failure to be so qualified would
have a material adverse effect on the condition (financial or otherwise),
results of operations, assets, properties, business or prospects of Sellers
considered together or have a material adverse effect on either Seller's ability
to perform its obligations hereunder or under any other agreement between the
parties contemplated hereby (each of such effects is herein called a "Material
Adverse Effect").
SECTION 2.2 AUTHORITY AND ENFORCEABILITY. Sellers and Huffy
have the full right, power, legal capacity and authority to sell and transfer
the Assets, free and clear of any statutory, contractual or other limitation,
and to enter into and perform their obligations under this Agreement. The
execution, delivery and performance by Sellers and Huffy of this Agreement and
any other agreements contemplated hereby and the consummation by them of the
transactions contemplated hereby and thereby have been duly authorized by Huffy
as the sole stockholder of Sellers and by the Board of Directors of each Seller.
No other corporate or stockholder action is necessary for the authorization,
execution, delivery and performance by Sellers or Huffy of this Agreement and
any other agreements between the parties contemplated hereby and the
consummation by Sellers and Huffy of the transactions contemplated hereby or
thereby. This Agreement has been duly executed and delivered by each Seller and
Huffy and constitutes a valid and legally binding obligation of each Seller and
Huffy, enforceable against each of them in accordance with the terms hereof.
SECTION 2.3 FINANCIAL STATEMENTS. The unaudited consolidated
balance sheets of Sellers as of December 31, 1995 and December 31, 1996,
unaudited consolidated statements of income for the years ended December 31,
1995 and December 31, 1996, the unaudited balance sheet of Sellers as of
February 1, 1997 and the unaudited statement of income for the one-month period
ended February 1, 1997, copies of which have been previously delivered or are
attached hereto as Schedule 2.3 (the "Financial Statements"), are true and
correct and have been prepared in accordance with generally accepted accounting
principles consistently applied (except as set forth in the Instructions), the
balance sheets contained in the Financial Statements fairly present, in all
material respects, the financial position of the business as of their respective
dates and set forth in full and reflect all liabilities of such business as of
such dates and the income statements fairly present, in all material respects,
the results of the operations of such business for the periods indicated and
covered thereby. The inventory valuations are based upon pricing the inventories
at the lower of cost or market in accordance with the established practice of
Sellers for a number of years, with all obsolete or unusable or not readily
saleable inventories having been either eliminated, properly written down or
reserved against; Sellers do not know or have any reason to know of any
liability or any basis for the assertion against any Seller of any liability
required to be reflected or reserved against in the balance sheets according to
generally accepted accounting principles, consistently applied, and not so
reflected or reserved. Since February 1, 1997, no liabilities or obligations
have been incurred by either Seller except for liabilities and obligations
(absolute, accrued, contingent or otherwise) incurred in the ordinary course of
business and consistent with past practice.
SECTION 2.4 PENDING CLAIMS. Except as set forth in Schedule
2.4:
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(i) there is no litigation, proceeding or governmental
investigation pending or, to Sellers' knowledge,
threatened against either Seller or relating to the
Assets or the business of Sellers and there are no
unasserted claims possible of assertion involving
Sellers' business or the Assets of which Sellers have
notice or knowledge;
(ii) there are no audits by a governmental authority,
claims for unpaid taxes of any kind, or other similar
actions, proceedings or disputes pending or, to
Sellers' knowledge, threatened against or affecting
Sellers' business;
(iii) there are no unpaid judgments of any kind against
either Seller or Huffy relating to its business or
the Assets;
(iv) neither Sellers nor Huffy is charged with or, to its
knowledge threatened, with a charge or violation nor,
to its knowledge, is it under investigation with
respect to any alleged violation of any provision of
any federal, state or local law or administrative
ruling or regulation relating to any aspect of its
business or the Assets.
SECTION 2.5 LEGAL COMPLIANCE. Except as set forth in Schedule
2.5, Sellers have conducted since January 1, 1994 and are presently conducting
their business in material compliance with all applicable U.S. and foreign laws,
statutes, ordinances, rules and regulations. Neither Sellers nor Huffy is in
violation of any term of any judgment, writ, decree, injunction or order entered
by any court or governmental authority (domestic or foreign) and outstanding
against either Seller or Huffy with respect to any of the Assets or the business
of Sellers.
SECTION 2.6 TITLE TO ASSETS. Except as set forth in Schedule
2.6: (i) Sellers are the sole and exclusive owners of, and have good and
marketable title to, all of the Assets, wherever located, free and clear of all
liens, mortgages, pledges, claims, encumbrances or other charges or any other
restriction of any kind or nature (collectively, "Liens"); and (ii) no other
person, firm or corporation has or will have on the Closing Date any interest
whatsoever in any of the Assets.
SECTION 2.7 CONDITION OF ASSETS. Except as set forth on
Schedule 2.7, the Assets, including all machinery and equipment, are in good
state of repair, in sound operating condition, ordinary wear and tear excepted,
and have been given regular maintenance in the ordinary course of business.
SECTION 2.8 LEASES. Except as may be set forth in Schedule
2.8, no Seller is a lessee of any personal property under any lease agreement
covering property not owned by each Seller, and in connection with all leases
set forth in such Schedules, no Shareholder nor any officer, director or key
employee of any Seller, nor any spouse, child or relative of any of these
persons owns or has any interest, directly or indirectly, in any of the personal
property leased to any Seller. All leases listed in Schedule 2.8 are valid and
in full force, and there does not exist any default or event
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that with notice or lapse of time, or both, would constitute a default or event
of acceleration under any of these leases.
SECTION 2.9 INVENTORY. The Inventory being transferred on the
Closing Date consists of items of a quality and quantity useable or salable in
the ordinary course of business of Sellers except as reserved for in the
Financial Statements. The Inventory is not subject to any material write-down or
write-off for which appropriate reserves have not been included in the Financial
Statements. Sellers shall conduct a physical count of the Inventory as of the
Closing Date, at Sellers' expense. Purchaser shall be entitled to have its
representatives observe such physical count.
SECTION 2.10 OTHER PROPERTY. Schedule 2.10 to this Agreement
is a complete and accurate schedule describing all trucks, automobiles,
machinery, equipment, furniture, supplies, tools, dies, jigs, molds, patterns,
drawings, and all other tangible personal property owned by, in the possession
of, or used by Sellers in connection with their business, except items with net
book value of less than Five Thousand Dollars ($5,000.00). Except as set forth
on Schedule 2.10, all property described on Schedule 2.10 is situated at one of
the two locations set forth on Schedule 1.1(a)(v). Except as stated in Schedules
2.8 or 2.10, no personal property used by Sellers in connection with their
business is held under any lease, security agreement, conditional sales
contract, or other title retention or security arrangement, or is located other
than in possession of Sellers.
SECTION 2.11 CUSTOMERS AND SUPPLIERS. Schedule 2.11 to this
Agreement is a correct and current list, in all material respects, of all
material customers and suppliers of the Sellers' business as of a recent date.
Neither Sellers nor Huffy have received any communication from any material
customer or supplier of any intention to terminate or materially reduce
purchases from, or supplies to, either Seller or the business.
SECTION 2.12 NO BREACH OR VIOLATION. Except as set forth on
Schedule 2.12, the execution, delivery and performance of this Agreement and any
other agreements contemplated hereby between the parties hereto by Sellers or
Huffy and the consummation of the transactions contemplated by this Agreement or
any other agreements contemplated hereby will not (i) result in or constitute a
breach or an event that, with notice or lapse of time or both, would be a
default, breach or other violation of the articles of incorporation or by-laws
of Huffy or any Seller; (ii) violate (with or without the giving of notice or
the lapse of time or both), or require any consent, approval, filing or notice
under, any provision of any law, rule or regulation, court or administrative
order, writ, judgment or decree applicable to Sellers or any of the Assets,
except for such violations the occurrence of which, and such consents,
approvals, filings or notices the failure of which to obtain or make, would not,
either individually or in the aggregate, have a Material Adverse Effect, and
(iii) with or without the giving of notice or the lapse of time or both (x)
violate or conflict with, or result in the breach, suspension or termination of
any provision of, or constitute a default under, or result in the acceleration
of the performance of the obligations of Sellers under, or (y) result in the
creation of any Liens upon all or any portion of the properties, assets
(including the Assets) or business of Sellers pursuant to, the charter or
by-laws of Sellers, or any indenture, mortgage, deed of trust, lease, agreement,
contract or instrument to which either Seller is a party or by which either
Seller or any of its properties, assets (including the Assets) or business is
bound.
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SECTION 2.13 INTEREST IN CUSTOMERS, SUPPLIERS AND COMPETITORS.
Except as set forth on Schedule 2.13, neither Sellers nor any officer, director
or key employee of any Seller, nor any spouse, child or any Affiliate of any of
them, has any direct or indirect ownership interest in any competitor, supplier
or customer of their business or in any person from whom or to whom any Seller
leases any real or personal property, or in any other person with whom any
Seller is doing business, except for interests of less than two percent held in
publicly traded companies.
SECTION 2.14 CORPORATE DOCUMENTS. Sellers and Huffy have
furnished to Purchaser for its examination true and correct copies of the
following:
(i) the articles of incorporation and by-laws of Sellers;
(ii) the minute books of ▇▇▇▇▇ Baby Products Company and
▇▇▇▇▇ ▇▇▇▇ Products Company for the period commencing
January 1, 1992, containing all records required to
be set forth of all proceedings, consents, actions
and meetings of shareholders and the board of
directors (including committee meetings) of Sellers;
and
(iii) all permits, orders and consents issued with respect
to Sellers' business, and all applications for such
permits, order and consents.
SECTION 2.15 [RESERVED]
SECTION 2.16 ZONING. Sellers' business as conducted on the
Closing Date and all current uses of the Owned Real Property and Leased Real
Property do not conflict with applicable federal, state or local laws,
ordinances, regulations, orders or zoning laws so as to interfere with or
prevent, in any material adverse manner, its continued use for the purposes for
which it is being used.
SECTION 2.17 OSHA. Other than as described on Schedule 2.17,
each Seller and its operations and properties as such relate to their business
are presently in compliance with all applicable Occupational Safety and Health
Administration ("OSHA") rules, regulations and laws and Sellers have not
received any notice of any potential occupational safety and health problem in
connection with the operations or properties of Sellers where such problem would
have a Material Adverse Effect.
SECTION 2.18 INTELLECTUAL PROPERTY. All U.S. and foreign
intellectual property owned by or licensed to Sellers, including without
limitation, all license agreements relating to patents and/or inventions, and
all patents and patent applications, all copyrights, trademarks (whether
registered or unregistered) and trade names owned by or licensed to Sellers
which are of any value or importance to their business or which they are
authorized to use in the production or marketing of any products now produced or
proposed to be produced by Sellers (collectively, the "Intellectual Property")
are listed in Schedule 2.18, and to the extent indicated therein have been duly
registered in, filed in or issued by the United States and foreign Patent
Offices or other appropriate governmental office. Except as set forth in
Schedule 2.18, except for any residual rights retained by
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the owners of any third party-owned Intellectual Property licensed to Sellers
(all of which are described on Schedule 2.18), Sellers are the sole persons
entitled to use the Intellectual Property, free and clear of any claims or
demands of any other person. Except as noted above, Sellers do not use any of
the Intellectual Property by consent of any other rightful owner thereof and
there are no attachments, liens or encumbrances thereon. Except as set forth on
Schedule 2.18, (i) Sellers do not pay any licensing fee, royalty or other
payment to any other person or entity with respect to any of the Intellectual
Property or the use thereof, and (ii) Sellers' right to use and transfer any and
all of the Intellectual Property is perpetual and unrestricted. Except as set
forth on Schedule 2.18, there are no claims or demands of any other person, firm
or corporation pertaining to any of the Intellectual Property and no actions or
proceedings which have been instituted or are pending or, to the best of
Sellers' knowledge, threatened, which challenge the validity of, or the rights
of Sellers with respect thereto, and, to the best of Sellers' knowledge, no
Intellectual Property infringes or is being infringed by others or is subject to
any outstanding order, decree, judgment or stipulation.
SECTION 2.19 ENVIRONMENTAL MATTERS. (a) Except as disclosed on
Schedule 2.19:
(i) the property and assets of Sellers' business and any
of Sellers' operations conducted thereon or elsewhere
do not violate, and during the period of any
applicable statute of limitations have not violated,
in a material manner any applicable Environmental Law
(as hereinafter defined), and Sellers reasonably
believe that compliance with any Environmental Law
that is or is expected to become applicable to the
property or the Assets, or to any of Sellers'
operations conducted thereon or elsewhere on or prior
to the Closing, will be timely attained and
maintained, without material expense, and Sellers are
not subject to any existing, pending or, to Sellers'
knowledge, threatened investigation, inquiry or
proceeding by any person or to any order, decree,
judgment, agreement or similar obligation under any
Environmental Law;
(ii) all notices, permits, licenses or similar
authorizations, if any, currently required to be
obtained or filed under any Environmental Law in
connection with the use of the real properties and
assets including, without limitation, underground
storage tanks, and the operations of Sellers'
business including, without limitation, past or
present treatment, storage, disposal or release of
any or all petroleum products, and any or all
Hazardous Substances (as such term is hereinafter
defined) into the environment (hereinafter the
"Environmental Permits"), have been obtained or filed
and to Sellers' knowledge, the Environmental Permits
will be timely renewed and complied with, without
material expense, and that any additional
Environmental Permits that may be required will be
timely obtained and complied with, without material
expense;
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(iii) all Hazardous Substances generated at or in
connection with the real properties and operations of
Sellers' business have been transported and otherwise
handled, treated, and disposed of in compliance with
all applicable Environmental Laws;
(iv) no Hazardous Substances have been disposed of or
otherwise released, handled or stored by Sellers on
or to (aa) the real properties on which the
operations of Sellers' business are conducted or (bb)
elsewhere in violation of applicable Environmental
Laws.
(b) "Environmental Laws" shall mean any and all applicable
laws, rules, orders, regulations, statutes, ordinances, guidelines, codes,
decrees, or other legally enforceable requirement (including, without
limitation, common law) of any foreign government, the United States, or any
state, local, municipal or other governmental authority, regulating, relating to
or imposing liability or standards of conduct concerning protection of the
environment or of human health, or employee health and safety.
(c) "Hazardous Substances" shall mean any petroleum products,
asbestos, radioactive material, or hazardous, acutely hazardous, or toxic
substance or waste defined and regulated as such under Environmental Laws,
including without limitation the Federal Comprehensive Environmental Response,
Compensation and Liability Act and the Federal Resource Conservation and
Recovery Act.
(d) Except as disclosed on Schedule 2.19, no notice of any
violation of any Environmental Laws has been received by any Seller concerning
the real properties of or used by Sellers and to Sellers' knowledge there are no
existing or pending requirements of any governmental authority relating to
environmental matters requiring any remedial action or other work, repairs,
construction or capital expenditures with respect to real properties. No Seller
has been named as a "potentially responsible party" in connection with any
litigation, investigation or similar matter, and no Seller knows of any matter
in which any Seller may be so named.
(e) Except as set forth in Schedule 2.19, there is not located
in, on or under the real properties owned or used by Sellers' business (1)
electrical transformers or other equipment containing PCBs, (2) underground
storage tanks, whether or not regulated under the Resources Conservation
Recovery Act, (3) to Sellers' knowledge, urea-formaldehyde foam insulation, or
(4) asbestos in friable form.
SECTION 2.20 LEASES AND CONTRACTS.
(a) Schedule 2.20 hereto sets forth a complete and accurate
list of all contracts, agreements, purchase orders, leases, subleases, options
and commitments, oral or written, and all assignments, amendments, schedules,
exhibits and appendices thereof, involving net book value amounts in the
aggregate in excess of Five Thousand Dollars ($5,000.00) or which are otherwise
material to the business, affecting or relating to any asset, the business, or
any interest therein, to which any Seller is a party or by which any Seller or
the Assets is bound or affected, including
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without limitation, service contracts, management agreements, equipment leases,
leases of space and ground leases pertaining to any real estate (collectively
the "Leases and Contracts" and individually a "Lease and Contract"). Except for
Assumed Liabilities set forth on Schedule 1.2(c), all Leases and Contracts and
all other obligations relating to the Assets and the business of Sellers shall
be retained and paid or performed by Seller.
(b) Other than as described on Schedule 2.20, none of the
Leases and Contracts has been modified, amended, assigned or transferred and
each of the Leases and Contracts which are included in Assumed Liabilities is in
full force and effect and is valid, binding and enforceable in accordance with
its respective terms on each party thereto.
(c) Other than as described on Schedule 2.20, no event or
condition has happened or presently exists which constitutes a default or breach
or, after notice or lapse of time or both, would constitute a default or breach
by any party under any of the Leases and Contracts which are part of the Assumed
Liabilities, and Sellers shall do no act nor omit to do any act which would
cause such a default or breach. There are no counterclaims or offsets under any
of the Leases and Contracts which are part of the Assumed Liabilities.
(d) There does not exist, and between the date hereof and the
Closing Date Sellers will not grant or suffer, any security interest, lien,
encumbrance, mortgage or claim of others created or suffered to exist on any
interest created under any of the Leases or Contracts which are part of the
Assumed Liabilities.
(e) None of the Leases or Contracts shall be amended in any
material respect between the date hereof and the Closing Date without the prior
written consent of Purchaser.
(f) Except as identified on Schedule 2.20 hereto, none of the
Leases and Contracts is: (1) a capitalized lease within the meaning of generally
accepted accounting principles; or (2) a lease with a remaining term of one (1)
year or more from Closing and which cannot be canceled within thirty (30) days
at the option of Seller without penalty.
(g) Other than as described on Schedule 2.20, the assignment
to Purchaser of the Leases and Contracts constituting the Assumed Liabilities
will not cause a default under, alter or terminate any of the Leases and
Contracts, and such assignment will confer all Sellers' rights thereunder to
Purchaser except for those consents described on Schedule 2.20 not received by
the Closing Date which were waived by Purchaser in writing. Other than as set
forth on Schedule 2.20 hereto, the assignment to Purchaser of the Leases and
Contracts constituting the Assumed Liabilities does not require any consents.
(h) Any leases of space or real property to third parties are
set forth or described (if they are oral) on Schedule 2.20. Each of such third
party leases is in full force and effect and in each case free and clear of all
Liens and free from defaults and events which with the passage of time or notice
or both would constitute a default (by landlord or tenant thereunder). Neither
Seller has transferred, assigned, hypothecated, pledged or encumbered any of its
rights under any of such leases. Except as set forth on Schedule 2.20, (i) none
of the third party leases grant any options or
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other rights to the tenant thereunder to purchase any real property interest of
Sellers, and (ii) no person has any option, right of possession or interest of
any kind in or to any real property interest of Sellers. Sellers have no
outstanding obligations under any of such leases including without limitation
any obligations to make any repairs or improvements or renovations (whether such
repairs or improvements or renovations are to be made prior to or after the
Closing Date). There are no outstanding negotiations with any such lessees
regarding any matter relating to the leased space.
SECTION 2.21 EMPLOYEES. Except as provided on Schedule 2.21
Sellers have no employment agreements with their employees and all such
employees are employed on an "at will" basis. Sellers intend to terminate all of
their employees at closing. Except for the liabilities assumed by Purchaser
hereunder pursuant to Section 1.1(d) above and the covenant contained in Section
4.17 herein, Sellers and Huffy shall be jointly and severally responsible for,
and shall jointly and severally indemnify and hold harmless Purchaser from and
against any and all claims of Sellers' employees, and Sellers and Huffy shall
retain sole responsibility for and fully and timely pay all salaries, wages and
benefits (including long-term disability and payroll taxes) that have accrued to
their employees through the Closing Date (whether or not such amounts are
payable prior to the Closing Date).
SECTION 2.22 LABOR MATTERS. Other than as described on
Schedule 2.22 hereto, Sellers are not parties to any labor contract, collective
bargaining agreement, contract, letter of understanding (or to Sellers'
knowledge any other agreement, formal or informal) with any labor union or
organization which obligates Sellers to compensate their employees at prevailing
rates or union scale, nor are any of their employees represented by any labor
union or organization. Other than as set forth on Schedule 2.22, there is no
pending, or to Sellers' knowledge, threatened labor dispute, work stoppage,
unfair labor practice complaint, strike, administrative, arbitration or court
proceeding or order between Sellers and any present or former employees of
Sellers or affecting the Sellers or the business. There have been no labor union
organizing activities at Sellers' facilities within the last three (3) years
except as described on Schedule 2.22. Sellers have provided to the Purchasers
true, correct and complete copies of the executed collective bargaining
agreements, including true, correct and complete copies of any and all written
modifications and interpretations thereof and descriptions of any and all oral
modifications and interpretations thereof. No representations have been made to
Huffy, Sellers or their employees or agents to employees of Sellers with respect
to the Purchaser's intentions to employ, or not to employ, Sellers' employees.
SECTION 2.23 WARN ACT. As of the date hereof Sellers have not
taken any action so as to require any compliance under the Worker Adjustment and
Retraining Notification Act ("WARN"). Sellers shall comply with their
obligations under the Act and, if applicable, make the appropriate notifications
thereunder sixty (60) or more days prior to the Closing Date. Huffy and Sellers
shall be solely liable and responsible for any debt, obligation, contribution or
other liability arising from any failure by Sellers to comply fully with their
WARN obligations.
SECTION 2.24 EMPLOYEE BENEFIT PLANS. (a) Schedule 2.24 hereto
contains a correct and complete list of each "employee benefit plan" (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") (including multiemployer plans within the meaning of
Section 3(37) of ERISA)), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus, incentive,
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deferred compensation and all other employee benefit plans, agreements,
programs, policies or other arrangements relating to the employees of Sellers,
whether or not subject to ERISA (including any funding mechanism therefor now in
effect or required in the future as a result of the transactions contemplated in
this Agreement or otherwise), whether formal or informal, oral or written, under
which any employee or former employee of the Sellers has any present or future
right to benefits or under which the Sellers have any present or future
liability. All such plans, agreements, programs, policies and arrangements are
referred to collectively as "Sellers' Plans".
(b) The Sellers have delivered, or made available, to
Purchaser a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) of each Sellers' Plan and, to the extent
applicable and in existence, with respect to each Sellers' Plan, (i) any related
trust agreement, annuity contract or other funding instrument; (ii) the most
recent determination letter; (iii) any summary plan description and other
written communications (or a description of any oral communications) by a Seller
to its employees concerning the extent of the benefits provided under a Sellers'
Plan; and (iv) for the three most recent years (A) the Form 5500 and attached
schedules; (B) audited financial statements; and (C) attorney's response to an
auditor's request for information.
(c) Each Sellers' Plan has been administered and is
substantially in compliance with the terms of such Plan and all applicable laws
and no event or condition exists is likely to arise by virtue of the transaction
contemplated by this Agreement, with respect to any Sellers' employee or any
Sellers' Plans which could reasonably be likely to result in any liability to
Purchaser.
(d) Except for the liabilities assumed by Purchaser hereunder
pursuant to Section 1.1(d) above, Purchaser shall not be liable and not be
responsible for any debt, obligation, contribution, responsibility, withdrawal
liability or other liability of Sellers or Huffy or both under any Employee
Benefit Plans.
SECTION 2.25 BROKERS' FEE. Other than ▇▇▇▇▇ ▇▇▇▇▇▇
Incorporated, whose fee will be paid in full by Sellers, Sellers have not
employed and are not liable for the payment of any fee to any finder, broker,
consultant or similar person in connection with the transactions contemplated by
this Agreement.
SECTION 2.26 RECEIVABLES. The accounts receivable and other
receivables being sold pursuant to this Agreement (collectively, "Receivables")
of Sellers arose from bona fide transactions in the ordinary course of business.
Other than ordinary course adjustments not material in the aggregate, no
counterclaims or offsetting claims with respect to presently outstanding
Receivables are pending or, to the knowledge of Sellers, threatened.
SECTION 2.27 INSURANCE. Schedule 2.27 hereto sets forth a
complete and accurate list of Sellers' insurance maintained on their respective
properties and assets (including the Assets) and with respect to their
respective employees and representatives and business and which, in the
reasonable judgment of Sellers, covers risks customarily insured by businesses
similar to the business of Sellers.
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SECTION 2.28 GOVERNMENTAL LICENSES, PERMITS AND RELATED
APPROVALS. Except as set forth on Schedule 2.28 hereto, Sellers have all
licenses, permits, consent, approvals, authorizations, qualifications and orders
of governmental authorities required for the conduct of its business as
presently conducted.
SECTION 2.29 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since
February 1, 1997 and except as otherwise disclosed herein or set forth in
Schedule 2.29 hereto, there has not been (i) any material adverse change in the
condition (financial or otherwise), results of operations, Assets, properties,
business or prospects of Sellers taken as a whole, (ii) any material damage,
destruction or loss relating to the business or assets of Sellers, whether or
not insured, (iii) any liability created or incurred which Purchaser will assume
hereunder pursuant to this Agreement other than liabilities created or incurred
in the ordinary course of business and in amounts not unusual in respect of the
business of Sellers as customarily conducted, (iv) any material Lien created on
any Asset, (v) any material capital expenditures or commitment to make any such
expenditures with respect to the Assets or as to which Purchaser will become
obligated after the Closing pursuant to Section 1.2 of this Agreement, (vi) any
condemnation proceedings commenced with respect to any Asset or notice received
by Seller as to the proposed commencement of any such proceedings, (vii) any
rights of substantial value knowingly waived with respect to the Assets or the
business of Sellers or (viii) any sale or transfer of any Assets other than
dispositions in the ordinary course of business. Since February 1, 1997, other
than acts relating to the transactions contemplated by this Agreement, the
business of Sellers has been conducted in all significant respects only in the
ordinary course, consistent with past practice.
SECTION 2.30 RECALLS. Schedule 2.30 hereto sets forth a
complete and accurate summary of each consumer corrective action, recall or
safety advisory on products designed or manufactured by Sellers since January 1,
1992, describing in each case the nature of the problem giving rise to such
action, the number of products affected, and the aggregate costs incurred for
each such action. Except as set forth on Schedule 2.30, to Sellers' knowledge,
Sellers' products comply with all mandatory juvenile products standards and
there is no notice regarding such products required to be given to any
governmental or regulatory agencies regulating such products.
SECTION 2.31 PRODUCT LIABILITY CLAIMS. Schedule 2.31 hereto
sets forth a complete and accurate summary of each Product Liability Claim (as
defined below) in excess of $25,000 (including all legal fees) paid by Sellers
or its insurance carriers during the past five years, and each outstanding
Product Liability Claim in excess of $25,000 (including all legal fees). For
purposes of this Section 2.31, the term "Product Liability Claim" shall mean any
claim arising out of any injury to individuals or property as a result of the
ownership, possession, or use of any product sold or leased by Sellers.
SECTION 2.32 TAX MATTERS. (a) All Tax Returns required to be
filed by Huffy or Sellers (or any of their predecessors) on or before the
Closing Date have been or shall be timely filed and all Taxes which are due or
which may be claimed to be due have been or shall be paid when due. There are no
Liens upon any of the Assets in respect of Taxes except for Liens for current
Taxes that are not yet due and payable. All Taxes required to be withheld by any
Seller have been withheld and paid over to the appropriate Tax authority. Huffy
and each Seller (or any predecessor of any of
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them) is not a party to and has not received any written notice with respect to
any proposed or pending action by any governmental authority for assessment or
collection of Taxes, nor is party to any dispute or, to their knowledge,
threatened dispute in which an adverse determination of such action or dispute
reasonably could be expected to result in a foreclosure of the Assets and no
such claim for assessment or collection of Taxes has been made upon Huffy or
any Seller.
(b) For purposes of this Agreement, (i) the term "Tax" or
"Taxes" shall mean all income, gross receipts, gains, sales, use, employment,
franchise, profits, excise, property, value added and other taxes, fees, stamp
taxes and duties, assessments or charges of any kind, together with any interest
and penalties, additions to tax or additional amounts imposed by any Tax
authority with respect thereto, (ii) the term "Tax Returns" shall mean any and
all returns, reports and information statements with respect to Taxes required
to be filed with the Internal Revenue Service or other Tax authority, whether
domestic or foreign, including, without limitation any and all consolidated,
combined and unitary tax returns and (iii) the term "Tax authority" shall mean
any authority having jurisdiction over Taxes.
SECTION 2.33 REAL PROPERTY. (a) Schedule 2.33 hereto sets
forth a legal description of all Owned Real Property. Except for the Owned Real
Property listed on said Schedule 2.33, Sellers do not own any real property or
interest therein that is used in, held for use in or otherwise pertains to the
business. Sellers have good and sufficient, valid, marketable and indefeasible
title to the Owned Real Property, free and clear of any Liens. No Owned Real
Property is in violation of any restrictive covenant, condition, restriction or
limitation nor is any Owned Real Property in violation of any statute, code,
ordinance, order, regulation, or requirement applicable to such Owned Real
Property which would have a material adverse effect on the use of the Owned Real
Property as currently utilized.
(b) Schedule 2.33 hereto is a correct and current list, by
address, owner and usage, a true and complete list of all real property
agreements (including any amendments thereto) pursuant to which Sellers lease,
sublease or otherwise occupy any real property (the "Real Property Leases")
which list is true and complete (including all amendments and supplements
thereto) and copies of which have been furnished to Purchaser. Pursuant to the
Real Property Leases, Sellers have validly existing and enforceable leasehold,
subleasehold or occupancy interests in the property leased thereunder, in each
case free and clear of all Liens and free from defaults and events which with
the passage of time or notice or both would constitute a default. The Real
Property Lease is in full force and effect and is a valid and binding obligation
of each of the parties in accordance with its terms. Except as set forth in
Schedule 2.33, the consummation of the transaction contemplated by this
Agreement will not require any consent or approval of any landlord or
sublandlord under any such Real Property Lease, result in any increase in rent
or penalty to the party which is a tenant or subtenant thereunder or result in
the early termination of any Real Property Lease. Sellers have not transferred,
assigned, hypothecated, pledged or encumbered any of their rights or interest
under any Real Property Lease. Sellers have not received any notice from any
landlord or sublandlord or any other party of the termination of any Real
Property Lease.
(c) There are (i) no outstanding contracts for any
improvements to the Owned Real Property which have not been fully paid and (ii)
no expenses of any kind (including brokerage
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and leasing commissions) pertaining to the Owned Real Property which have not
been fully paid. Sellers have furnished Purchaser with copies of all recorded
deeds, legal descriptions, surveys and owner's title policies for the Owned Real
Property. Sellers have furnished Purchaser with all reports, and environmental
and engineering or other studies prepared for Sellers since January 1, 1992
which primarily deal with the ownership, operation, maintenance or management of
the Owned Real Property.
(d) Schedule 2.33 sets forth a true and complete list of all
current agreements, including any amendments thereto (as amended, the
"Development Agreements"), pursuant to which (i) any third party has been given
the right (exclusive or otherwise) to develop any real property for Sellers or
(ii) Sellers have agreed to develop, construct or occupy in the future (whether
by lease or other occupancy agreement) any real property. Except as set forth on
Schedule 2.33, each of the Development Agreements is in full force and effect
and in each case free from defaults and events which with the passage of time or
notice or both would constitute a default thereunder.
(e) Sellers have all permits and certificates of occupancy
necessary to own or operate its Owned Real Property and Leased Real Property as
such is currently being operated and used, and no such permits will be required,
as a result of the consummation of the transaction contemplated by this
Agreement, to be issued, modified or supplemented after the Closing in order to
permit Sellers following the consummation of the transaction contemplated by
this Agreement to continue to own or operate its Owned Real Property and Leased
Real Property as such is currently being operated and used, other than any such
permits which are ministerial in nature.
(f) There is no pending or, to Seller's knowledge, threatened
condemnation, expropriation, eminent domain or other governmental taking of all
or any part of any of the Owned Real Property or Leased Real Property and
Sellers have not received any oral or written notice of any of the same.
(g) None of the Owned Real Property or Leased Real Property is
subject to any contract or other restriction of any nature whatsoever (recorded
or unrecorded) preventing or limiting Sellers' right to convey or use it as
currently operated, as the case may be.
(h) All components of buildings, structures and other
improvements included within the Owned Real Property and the Leased Real
Property, including, but not limited to, the roofs and structural elements
thereof and the heating, ventilation, air conditioning, plumbing, electrical,
mechanical, sewer, waste water, storm water, paving and parking, and systems and
facilities included therein, are in good working order and repair and free of
structural defects.
(i) All Owned Real Property and Leased Real Property and the
improvements thereon are supplied with the utilities necessary for the operation
of such facilities as currently operated.
(j) Sellers have not received written notice of any special
assessment relating to any Owned or Leased Real Property or any portion thereof,
and Sellers have no knowledge of any pending or threatened special assessments.
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SECTION 2.34 ENTIRE BUSINESS. On the Closing Date, Sellers
will transfer to Purchaser all of the Assets used by Sellers in and necessary
for the conduct by Purchaser of Sellers' business, except for the Assets
excluded from purchase hereunder pursuant to Section 1.1(b).
SECTION 2.35 FULL DISCLOSURE. No representation or warranty
made in this Agreement or any exhibit or schedule hereto and no statement or
certificate or memorandum furnished or to be furnished to Purchaser pursuant
hereto or in connection with the transactions covered hereby contains or will
contain any untrue statement of a material fact, or omit any material fact, the
omission of which would be misleading.
ARTICLE III
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants to Sellers and Huffy, their
respective successors and assigns, that:
SECTION 3.1 ORGANIZATION. It is a corporation duly organized,
existing and in good standing under the laws of Delaware.
SECTION 3.2 AUTHORITY. It has taken all necessary corporate
action on its part as may be required under the laws of Delaware and under its
Certificate of Incorporation and By-laws to authorize the execution, delivery
and carrying out of this Agreement on its behalf.
SECTION 3.3 ENFORCEABILITY. This Agreement constitutes a valid
and legally binding obligation of Purchaser enforceable in accordance with the
terms hereof.
SECTION 3.4 BROKERS' FEE. Purchaser has not employed and is
not liable for the payment of any fee to any finder, broker, government
official, consultant or similar person in connection with the transactions
contemplated by this Agreement.
ARTICLE IV
COVENANTS AND AGREEMENTS
SECTION 4.1 BULK SALES COMPLIANCE. The parties agree to waive
compliance with any applicable bulk sales statutes with respect to the sale of
the assets hereunder; provided, however, that notwithstanding anything to the
contrary contained in this Agreement, Sellers will indemnify and hold Purchaser
harmless from and against any and all liabilities, including liabilities for any
Taxes, imposed upon, or asserted against Purchaser as a result of Sellers'
noncompliance with any such bulk sales or bulk transfer laws.
SECTION 4.2 PRESERVATION OF BUSINESS AND ASSETS. From the date
hereof until the Closing, Huffy and Sellers jointly and severally agree to use
their best efforts and shall do or cause to be done all such acts and things as
may be necessary to preserve, protect and maintain intact the Assets, and the
business and operation of the Sellers' business as a going concern consistent
with prior practice and in the ordinary course of business, to preserve, protect
and maintain for Purchaser
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the goodwill of the business' customers, suppliers, employees, tenants and
others having business relations with Sellers. Sellers shall continue to collect
accounts receivable consistent with their past practices . Sellers shall provide
Purchaser promptly with interim financial statements of Seller and any other
management reports, as and when they are available. In the event there is any
damage to or loss of any of the Assets (whether by fire, theft, vandalism or
other cause or casualty) between the date hereof and the Closing Date, the
Purchase Price shall be reduced by the amount necessary to repair the damage,
which reduction shall be offset by any amounts paid by Sellers' insurance
company assigned to Purchaser.
SECTION 4.3 CONDUCT OF BUSINESS. Without limiting the
generality of Section 4.2, each of Sellers, jointly and severally, agree that,
except as required or contemplated by this Agreement or otherwise consented to
in writing by Purchaser, during the period commencing on the date hereof and
ending on the Closing Date, it will:
(a) (i) maintain its books, accounts and records relating
to Sellers' business in the usual, regular and
ordinary manner, on a basis consistent with past
practice, (ii) comply with all laws and contractual
obligations applicable to Sellers and the conduct of
the business and (iii) perform all of its material
obligations relating to the business;
(b) not (i) make any capital expenditures, (ii) dispose
of any of the fixed Assets owned by it, (iii) modify
or change in any material respect or enter into or
terminate any material contract relating to the
business of Sellers; except in each case for such
actions taken in the ordinary course of business and
consistent with past practice; provided that the
aggregate of such capital expenditures shall not
exceed $1 million per month, (iv) acquire or agree to
acquire, by merging or consolidating with, or by
purchasing a substantial portion of the stock or
assets of, or by any other manner, any business or
any corporation, partnership, joint venture,
association or other business organization or
division thereof, or (v) upgrade its computer system
without Purchaser's written consent;
(c) not make any change in its accounting policies from
those applied in the preparation of the December 31,
1996 audited financial statements;
(d) not (i) permit or allow any of the Assets owned by it
to become subject to any Liens or other security
interest, (ii) waive any claims or rights relating to
the business of Sellers, (iii) grant any increase in
the compensation of any of Sellers' employees
(including any such increase pursuant to any bonus,
pension, profit-sharing or other plan or commitment),
except for reasonable increases in the ordinary
course of business and consistent with past practice,
or as a result of contractual arrangements or sales
compensation plans existing on the
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date hereof or (iv) enter into any agreements giving
rise to obligations on the part of Sellers with
respect to the business in excess of $25,000
individually or $1,000,000 in the aggregate or
otherwise not terminable by the parties upon 30 days'
notice, except commitments to purchase raw materials
and other trade obligations in the ordinary course of
business and consistent with past practice;
(e) maintain such insurance as is currently in effect;
(f) give Purchaser a copy of any notice received during
the period from the date hereof to the Closing Date
from any governmental or regulatory authority or any
other person alleging any violation of any rule,
regulation, law, order or ruling;
(g) not enter into any arrangement or transaction
between, or with Huffy or any affiliate, officer,
director or employee of Huffy or either Seller;
(h) not amend its charter or bylaws;
(i) not declare, set aside or pay any dividends on, or
make any other distributions in respect of its
capital stock; and
(j) not enter into any contract or agreement that
violates any of the foregoing.
SECTION 4.4 ACCESS TO BOOKS AND RECORDS. (a) From the date
hereof until the Closing, Sellers shall give to Purchaser and to Purchaser's
counsel, accountants, and other representatives, full access during normal
business hours to all of Sellers' offices, properties, books, contracts,
commitments, records and affairs relating to the Assets and to their business so
that Purchaser may inspect and audit them (including, without limitation, a
Phase I, Phase II, or such other environmental assessment as may be reasonably
requested) and shall furnish to Purchaser a copy of all documents and
information concerning the properties and affairs of the Assets as Purchaser may
reasonably request. If any such books, records and materials are in the custody
of third parties, Sellers shall direct such third parties to promptly provide
them to Purchaser. Copies of documents furnished to Purchaser by Sellers will be
returned to Sellers upon request if the transaction is not consummated.
(b) Following the Closing Date, Purchaser shall permit Huffy's
and Sellers' representatives (including, without limitation, their counsel and
auditors), during normal business hours, to have reasonable access to, and
examine and make copies of all books and records of the Sellers' prior business
which are transferred to Purchaser hereunder and which relate to transactions or
events occurring prior to the Closing Date. For a period of seven (7) years
after the Closing, Purchaser agrees that, prior to the destruction or
disposition of any such books or records, Purchaser shall provide not less than
forty-five (45) days nor more than ninety (90) days prior written notice to
Sellers of such proposed destruction or disposal. If Sellers desire to obtain
any of such
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documents, they may do so by notifying Purchaser in writing at any time prior to
the date scheduled for such destruction or disposal. In such event, Purchaser
shall not destroy such documents and the parties shall then promptly arrange for
the delivery of such documents to Sellers, their successors or assigns. All
out-of-pocket costs associated with the delivery of the requested documents
shall be paid by Sellers.
(c) Following the Closing Date, Sellers and Huffy shall permit
Purchaser and its representatives (including, without limitation, its counsel
and auditors), during normal business hours, to have reasonable access to, and
examine and make copies of all books and records of Sellers and their affiliates
relating to Sellers' business or the Assets, including tax records, which are
retained by Sellers and Huffy and which relate to transactions or events
contemplated by this Agreement occurring prior to the Closing Date. For a period
of seven (7) years after the Closing, Sellers and Huffy agree that, prior to the
destruction or disposition of any such books or records, Sellers and Huffy shall
provide not less than forty-five (45) days nor more than ninety (90) days prior
written notice to Purchaser of such proposed destruction or disposal. If
Purchaser desires to obtain any such documents, it may do so by notifying
Sellers and Huffy in writing at any time prior to the date scheduled for such
destruction or disposal. In such event, Sellers and Huffy shall not destroy such
documents and the parties shall then promptly arrange for the delivery of such
documents to Purchaser, its successors or assigns. All out-of-pocket costs
associated with the delivery of the requested documents shall be paid by
Purchaser.
(d) Following the Closing Date, Purchaser shall make available
to Sellers and Huffy, to the extent reasonably practicable, such personnel and
other technical assistance from Purchaser as Huffy and Sellers shall reasonably
require to properly fulfill their indemnification obligations owed to Purchaser
under Article X and the obligations set forth under Section 10.4(g) herein. All
such personnel and other technical assistance furnished by Purchaser hereunder
shall be at Huffy and Sellers' sole cost and expense, including all salary,
benefits, cost and other expenses of the personnel and technical assistance
provided.
(e) Following the Closing Date, Sellers and Huffy shall make
available to Purchaser, to the extent reasonably practicable, such personnel and
other technical assistance from Sellers and Huffy as Purchaser shall reasonably
require to properly fulfill its indemnification obligations owed to Sellers and
Huffy under Article X and the obligations set forth under Section 10.4(g)
herein. All such personnel and other technical assistance furnished by Sellers
and Huffy hereunder shall be at Purchaser's sole cost and expense, including all
salary, benefits, cost and other expenses of the personnel and technical
assistance provided.
SECTION 4.5 CONFIDENTIALITY. Huffy, each Seller and the
Purchaser covenant and agree that they will not, and they will cause their
principals, affiliates, officers and other personnel and authorized
representatives not to, use information concerning another party's business,
properties and personnel received in the course of negotiating this Agreement
and investigation in connection with this transaction and will hold such
information (and will cause the aforesaid persons to hold such information) in
confidence until such information otherwise becomes publicly available or as may
be required by applicable law. In the event of the termination of this
Agreement, each party will deliver to the other any copies of nonpublic
documents furnished it by the other.
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SECTION 4.6 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ FILING. The parties hereto shall
timely and promptly make all filings which may be required by them in connection
with the consummation of the transactions contemplated hereby under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "Antitrust
Improvements Act"). The parties shall furnish to each other all necessary
information and assistance as may be reasonably requested in connection with the
preparation of any necessary filings or submissions to any governmental agency,
including, without limitation, any filings necessary under the provisions of the
Antitrust Improvements Act. The parties shall provide each other with the
opportunity to make copies of all correspondence, filings or communications (or
memoranda setting forth the substance thereof) between them or their
representatives, on the one hand, and the Federal Trade Commission ("FTC"), the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division") or members of their respective staffs, on the other hand, with
respect to this Agreement or the transactions contemplated hereby. Purchaser
shall pay the Antitrust Improvements Act filing fee.
SECTION 4.7 EXPENSES. Except as otherwise set forth herein,
without regard to whether the sale contemplated herein is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses. The
foregoing shall not affect the legal right of any party to recover expenses
pursuant to any breach of this Agreement.
SECTION 4.8 SHAREHOLDER COMMUNICATION. From and after the date
hereof, except as required by law, any government agency or the New York Stock
Exchange, or similar entity, neither Huffy, Sellers nor Purchaser will, with
respect to the transactions contemplated hereby, issue any press release or make
any public statements or mail any communications or letters to their respective
stockholders generally (except, in the case of Huffy, its annual and quarterly
reports and annual meeting materials to stockholders, and in the case of
Purchaser, its annual and quarterly reports and annual meeting materials to
stockholders) without the prior approval of the other party and its counsel.
SECTION 4.9 ADDITIONAL AGREEMENTS. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including but not limited to, using its
reasonable best efforts to obtain all necessary waivers, consents,
authorizations and approvals of or exemptions by any governmental authority,
self-regulatory authority or third party, and effecting all necessary
registrations and filings; provided, however, that in no event shall Purchaser
be required to provide any undertakings or comply with any condition imposed by
the FTC or the Antitrust Division that, in its good faith judgment, would
diminish Purchaser's rights under this Agreement or adversely affect its, or any
of its affiliate's business, results of operations or prospects. In case at any
time after the Closing Date any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors of
the parties, as the case may be, shall promptly take all such necessary action.
Where the consent of any third party is required under the terms of any of the
leases or contracts to be assumed by Purchaser hereunder, the Seller which is a
party to such lease or contract will take all reasonable and necessary steps to
obtain such consent on terms and conditions not materially less
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favorable than as in effect on the date hereof or to otherwise provide Purchaser
with the benefits of such leases or contracts. The costs incurred in connection
with the obtaining of such consents shall be the responsibility of Sellers.
Sellers and Purchaser shall cooperate fully with each other to the extent
reasonably required to obtain such consents. Notwithstanding anything to the
contrary set forth in this Agreement, to the extent that any consent or approval
is not obtained with respect to any lease, contract or any other agreement as
contemplated above, this Agreement shall not constitute an assignment or an
attempted assignment thereof. In each such case, Sellers agree to cooperate with
Purchaser in any reasonable arrangement designed to (i) provide for Purchaser
the benefits under any such lease, contract or agreement, including enforcement
at the cost and for the account of Purchaser or any and all rights of Purchaser
against the other party or otherwise and (ii) insure performance by Purchaser of
Sellers' obligations thereunder to the extent Purchaser receives such benefits.
Notwithstanding any other provision of this Agreement (including Section
1.2(a)), to the extent that such arrangement cannot be made, Purchaser shall not
have any obligation with respect to any such lease, contract or agreement.
SECTION 4.10 CUSTOMER SERVICE. Commencing on the Closing Date,
Purchaser shall administer on behalf of Sellers all warranty claims associated
with products sold by Sellers prior to the Closing Date (including finished
goods in inventory on the Closing Date), in accordance with the terms of the
express warranties accompanying such products or made by Sellers or otherwise
consistent with Sellers' past practice in connection with sales of such
products. Sellers shall have full responsibility for, and shall reimburse the
Purchaser for, all reasonable out-of-pocket costs and expenses (including
material and labor costs) attributable to or incurred in connection with the
administration of such warranty claims.
SECTION 4.11 CLOSING CONDITIONS. Except as otherwise set forth
herein, each of the parties hereto will use its reasonable efforts to cause the
conditions set forth in Articles VI and VII to occur; provided, however, this
provision shall not require any party to waive any condition.
SECTION 4.12 NOTIFICATION. Sellers shall promptly notify
Purchaser of, and furnish Purchaser any information Purchaser may reasonably
request, and keep Purchaser advised of, the occurrence of any event or condition
or the existence of any fact that would cause any of the conditions to
Purchaser's obligations to consummate the transactions contemplated by this
Agreement not to be fulfilled, including, but not limited to the occurrence of
(i) any litigation or administrative proceeding pending or, to the knowledge of
Sellers, threatened against Sellers or Huffy which could, if adversely
determined, have a Material Adverse Effect; (ii) any material damage or
destruction of any of the Assets; and (iii) any material adverse change in the
condition (financial or other), results of operations, assets, business or
prospects of Sellers taken as a whole.
SECTION 4.13 NO SHOPPING. Huffy and Sellers shall not and
shall not permit any of their agents, representatives (including, without
limitation, investment bankers, attorneys and accountants), officers, employees,
or any other affiliates to, directly or indirectly, (i) solicit, initiate or
encourage the submission of any inquiries, indications of interest, proposals of
offers from any corporation, partnership, person, entity or group, other than
Purchaser (collectively, "Third Parties"), concerning the sale of any of the
assets of Sellers or any of their subsidiaries (other than Inventory in the
ordinary course of business), or any equity security of, or any other interest
in, Sellers or any
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subsidiary of Sellers, or any merger, recapitalization or other business
combination transaction involving Sellers or any of their subsidiaries (an
"Acquisition Proposal"), (ii) participate in any discussions or negotiations
regarding, or enter into any agreements of understandings relating to, any of
the foregoing with, or provide any information concerning Sellers, its
subsidiaries or any of the foregoing to, any Third Parties including any Third
Parties that Huffy or Sellers had conducted negotiations with prior to the date
of this Agreement, or (iii) otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any Third
Party to do or seek any of the foregoing. Prior to the Closing, at Purchaser's
request, Huffy shall use its best efforts to cause the destruction or return of
all non-public, confidential or proprietary information concerning the
operations of Sellers provided to potential purchasers of the Company or the
assets thereof. Huffy or Sellers will immediately notify Purchaser after the
receipt by either of them or any of their agents of any inquiry, indication of
interest, proposal or offer with respect to an Acquisition Proposal by any Third
Party and will immediately deliver to Purchaser any written documentation
relating thereto.
SECTION 4.14 AFFILIATED TRANSACTIONS. Except as set forth in
Schedule 4.14 hereto, Huffy and Sellers shall terminate any transactions or
agreements between Sellers, on the one hand, and any officers, directors,
employees or affiliates of either Seller, on the other hand.
SECTION 4.15 ASSIGNMENT OF CONFIDENTIALITY AGREEMENTS. At the
Closing, Sellers shall assign to Purchaser its rights with respect to the
confidentiality of information related to the business of Sellers executed by
each of the prospective purchasers who received such information.
SECTION 4.16 INSURANCE MATTERS. Sellers shall add Purchaser as
an additional insured on Seller's insurance policies which are currently in
effect ("Seller's Insurance Policies"). To the extent that any of Seller's
Insurance Policies, cover any loss, liability, damage or claim relating to the
Business arising out of occurrences prior to the Closing Date, Sellers shall
cooperate with Purchaser in submitting such claims (or pursuing claims
previously made).
SECTION 4.17 EMPLOYEE MATTERS. Purchaser shall offer
employment, commencing on the Closing Date, at such salary, compensation levels
and terms and conditions as Purchaser may determine, to all salaried and hourly
employees employed by Sellers. For purposes of this Section 4.17, any person on
short-term disability, vacation or leave of absence with a definite date of
return (a "Return Date") shall be considered offered employment as set forth in
this Section; but any person on long-term disability, layoff or on a leave of
absence with no prior agreement or understanding to return to employment with
Sellers at the end of such disability, layoff or leave shall not be considered
offered employment; provided however that Sellers and Huffy shall retain sole
responsibility for and fully and timely pay all benefits and other amounts
payable with respect to any person on long-term disability, layoff or on a leave
of absence prior to their Return Date. Seller shall be responsible for providing
the continuation of health, dental and prescription drugs as required by COBRA
to any individual on COBRA on the Closing Date or eligible for COBRA coverage on
the Closing Date.
SECTION 4.18 GRANT OF LICENSE. Huffy hereby grants to
Purchaser a limited license to use the names "Huffy" or "a Huffy Company", on
all of Sellers' packaging, catalogs, labeling and
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other written materials containing such names which are sold to Purchaser on the
Closing Date. Purchaser shall have the right to use all such materials
containing such names until all such materials are fully depleted or until the
twelve month anniversary of the Closing Date, whichever date occurs first.
Purchaser shall not have the right or license to reorder any new materials
containing such names or otherwise use the trademark, "Huffy."
Huffy shall have the right to inspect Purchaser's packaging
materials utilizing its name to determine and ensure that its name is being used
in the same manner, and in accordance with the same standards that Sellers are
using it prior to the Closing Date. Purchaser shall indemnify Huffy, in
accordance with Sections 1.2(b) and 10.3 hereof, for any liability, cost or
other expense arising out of Purchaser's use of its name hereunder.
ARTICLE V
THE CLOSING
SECTION 5.1 If all of the conditions to Closing set forth in
Articles VI and VII hereof are satisfied, the Closing shall take place on the
third business day after the satisfaction of all such conditions or at such time
and place as the parties may mutually agree (the "Closing Date").
ARTICLE VI
SELLERS' CONDITIONS TO CLOSE
The obligations of Sellers under Article VIII of this Agreement shall,
at the option of Sellers (which may be waived specifically in writing by Sellers
in whole or in part) be subject to the satisfaction on or prior to Closing, of
the following conditions:
SECTION 6.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING;
COMPLIANCE WITH AGREEMENT. The representations and warranties of Purchaser
contained in this Agreement (including the Schedules and Attachments hereto) or
in any certificate or document delivered to Sellers pursuant hereto), shall be
deemed to have been made again at the Closing Date and shall then be true in all
respects; and Purchaser shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or complied
with by it prior to or at the Closing Date.
SECTION 6.2 REGULATORY APPROVALS. Any applicable waiting
period required by ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act shall have
expired and no other review, approval or any other action of the Federal Trade
Commission or the Antitrust Division of the United States Department of Justice
shall be required in order to consummate the transactions contemplated hereby.
SECTION 6.3 NO ACTION/PROCEEDING. No action or proceeding
before a court or any other governmental agency or body shall have been
instituted or threatened to restrain or prohibit the transaction herein
contemplated, and no governmental agency or body shall have taken any other
action or made any request of Huffy or Sellers or Purchaser as a result of which
Huffy and Sellers
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reasonably and in good ▇▇▇▇▇ ▇▇▇▇ that to proceed with the transactions
hereunder may constitute a violation of law.
SECTION 6.4 COMPLIANCE WITH ARTICLE IX. The Purchaser shall
have made to the Sellers the deliveries required by Article IX.
SECTION 6.5 OTHER PROHIBITING TRANSACTION. No order shall have
been entered in any action or proceeding before any court or governmental
agency, and no preliminary or permanent injunction by any court shall have been
issued, which would have the effect of (a) making the transactions contemplated
by this Agreement illegal, (b) otherwise preventing consummation of such
transactions, or (c) imposing material limitations on the ability of Purchaser
effectively to acquire and hold Assets, or, in either case, to exercise rights
of ownership pursuant thereto. There shall have been no United States federal or
state statute, rule or regulations enacted or promulgated after the date of this
Agreement that would reasonably, directly or indirectly, result in any of the
consequences referred to in this Section.
ARTICLE VII
PURCHASER'S CONDITIONS TO CLOSE
The obligations of Purchaser under Article IX of this Agreement are, at
the option of Purchaser (which may be waived specifically in writing by
Purchaser in whole or in part) subject to the satisfaction on or prior to
Closing of the following conditions:
SECTION 7.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING;
COMPLIANCE WITH AGREEMENT. The representations and warranties of Sellers and/or
Huffy contained in this Agreement (including the Schedules and Attachments
hereto) or in any certificate or document delivered to Purchaser pursuant
hereto, shall be deemed to have been made again at the Closing Date and shall
then be true in all respects; and Sellers shall have performed and complied with
all covenants, agreements and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing Date.
SECTION 7.2 NO LOSS, DAMAGE OR DESTRUCTION. In the event there
is any damage to or loss of any of the Assets (whether by fire, theft, vandalism
or other cause or casualty), the terms of Section 4.2 shall have been complied
with to the satisfaction of Purchaser.
SECTION 7.3 NO MATERIAL ADVERSE CHANGE. Since February 1, 1997
there shall not have been any material adverse change in the condition
(financial or otherwise), results of operations, assets, properties, business or
prospects of the business of Sellers.
SECTION 7.4 REGULATORY APPROVALS. Any applicable waiting
period required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act shall have
expired, and no other review, approval or other action of the Federal Trade
Commission or the Antitrust Division of the United States Department of Justice
shall be required in order to consummate the transactions contemplated hereby,
and any other permit, license, authorization, consent, approval or order
required by any other governmental authority shall have been obtained.
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SECTION 7.5 NO ACTION/PROCEEDING. No action or proceeding
before a court or any other governmental agency or body shall have been
instituted or threatened to restrain or prohibit the transaction herein
contemplated, and no governmental agency or body shall have taken any other
action or made any request of Huffy or Sellers or Purchaser as a result of which
Purchaser reasonably and in good ▇▇▇▇▇ ▇▇▇▇▇ that to proceed with the
transactions hereunder may constitute a violation of law.
SECTION 7.6 COMPLIANCE WITH ARTICLE VIII. The Sellers shall
have made to the Purchaser the deliveries required by Article VIII.
SECTION 7.7 OTHER PROHIBITING TRANSACTION. No order shall have
been entered in any action or proceeding before any court or governmental
agency, and no preliminary or permanent injunction by any court shall have been
issued, which would have the effect of (a) making the transactions contemplated
by this Agreement illegal, (b) otherwise preventing consummation of such
transactions, or (c) imposing material limitations on the ability of Purchaser
effectively to acquire and hold Assets, or, in either case, to exercise rights
of ownership pursuant thereto. There shall have been no United States federal or
state statute, rule or regulations enacted or promulgated after the date of this
Agreement that would reasonably, directly or indirectly, result in any of the
consequences referred to in this Section.
SECTION 7.8 ENVIRONMENTAL DILIGENCE. Purchaser shall have
received an environmental assessment report in form and substance reasonably
satisfactory to Purchaser with respect to the environmental hazards, conditions,
liabilities or potential liabilities to which Sellers, and the properties
currently or formerly owned, leased or operated by Sellers or their subsidiaries
may be subject, provided that in the event the environmental assessment report
is not in form and substance reasonably satisfactory to Purchaser, Purchaser
will agree to waive this condition, if, in its discretion, it is satisfied with
Sellers' agreement to remediate the conditions raised in such report.
SECTION 7.9 LIEN SEARCH. Purchaser shall have received
satisfactory results of Lien searches with respect to the Assets.
SECTION 7.10 SUBLEASE AGREEMENT. The Sublease Agreement in the
form attached hereto as Exhibit A, or in a form otherwise satisfactory to
Purchaser, shall have been executed by Sellers and the Selco Service
Corporation, or other Lessor with respect to the Thornton, Colorado facility.
SECTION 7.11 UNION AGREEMENTS. The amendment to that certain
agreement captioned "Agreement between ▇▇▇▇▇ Baby Products Company and
U.N.I.T.E. Union of Needletrades, Industrial and Textile Employees, AFL-CIO-CLC,
Chicago and Central States Joint Board, Rocky Mountain District Joint Board,
Local #1156C, AFL-CIO-CLC dated January 31, 1996" (the "Collective Bargaining
Agreement") providing for the wage reductions set forth in Schedule 7.11 shall
have been executed by the parties thereto and shall be a valid and binding
obligation of the parties thereto. The Union Assumption Agreement in the form
attached hereto as Exhibit B, or in a form otherwise satisfactory to Purchaser,
shall have been executed by the labor
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organizations that are parties to the Collective Bargaining Agreement, and such
Union Assumption Agreement shall be a valid and binding obligation on the union
and its membership.
ARTICLE VIII
OBLIGATIONS OF SELLERS AT CLOSING
At Closing, Sellers shall deliver or cause to be delivered to Purchaser
the following in a form and substance reasonably satisfactory to Purchaser:
SECTION 8.1 DOCUMENTS RELATING TO TITLE. Sellers shall
execute, acknowledge, deliver and cause to be executed, acknowledged and
delivered to Purchaser:
(a) Deeds, bills of sales and assignments, in form and
substance satisfactory to Purchaser and sufficient to
convey to Purchaser good, valid and marketable fee
simple title to all Assets free and clear of all
liens, mortgages, pledges, encumbrances, security
interests, covenants, easements, rights of way,
equities, options, rights of first refusal
restrictions, special tax or governmental
assessments, defects in title, encroachments and
other burdens, except for exceptions permitted by
Purchaser.
(b) An assignment to Purchaser of all of Sellers' rights
and interests in, to and under each Lease of personal
property and Contract constituting an Assumed
Liability.
(c) General Warranty Deeds (or equivalent) in recordable
form and substance satisfactory to Purchaser and
sufficient to convey to Purchaser all of Seller's
interest in the Owned Real Property free and clear of
all liens, mortgages, pledges, encumbrances, security
interests, covenants, easements, rights of way,
equities, options, rights of first refusal,
restrictions, special tax or governmental
assessments, defects in title, encroachments and
other burdens, except for exceptions permitted by
Purchaser.
(d) An Affidavit of Non-Foreign Status as required by the
Foreign Investment and Real Property Tax Act
ss.1445(b)(2), as amended.
(e) Such other documents as Purchaser may reasonably
request to facilitate the transfer of the Owned Real
Property and Purchaser's obtaining title insurance
insuring Purchaser's title in and to the Owned Real
Property.
SECTION 8.2 POSSESSION. Sellers shall deliver to Purchaser
full possession and control of the Assets.
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SECTION 8.3 OPINION OF SELLERS' COUNSEL. Sellers shall deliver
to Purchaser the favorable opinion of counsel for Sellers, dated as of the
Closing Date, in a form reasonably satisfactory to Purchaser.
SECTION 8.4 CORPORATE GOOD STANDING AND CORPORATE RESOLUTION.
Sellers shall deliver to Purchaser Certificates of Good Standing from the
secretaries of states of organization for Sellers, together with a certified
copy of the resolutions of the Board of Directors of Huffy Corporation and
Sellers, and of the sole stockholder of Sellers, authorizing the execution,
delivery and consummation of this Agreement and the execution, delivery and
consummation of all other agreements and documents executed in connection
herewith by them, including all deeds, bills of sale and other instruments
required hereunder and certified by officers of the respective entities to be
validly adopted and in full force and effect and unamended as of Closing.
SECTION 8.5 CLOSING CERTIFICATE. Huffy and Sellers shall
deliver to Purchaser certificates of executive officers of Huffy and Sellers,
dated as of Closing, certifying that (a) each covenant and obligation of Sellers
has been complied with by Sellers in all material respects, and (b) each
representation and warranty of Sellers is true and correct on the Closing as if
made on and as of the Closing.
SECTION 8.6 THIRD PARTY CONSENTS. Sellers shall deliver to
Purchaser any consents, approvals and authorizations of third parties which are
necessary in the reasonable opinion of Purchaser for the execution, delivery and
consummation of this Agreement and the operation of the business after the
Closing Date as currently conducted by Sellers, including without limitation,
those necessary for the assignment of the Leases and Contracts included in the
Assumed Liabilities.
SECTION 8.7 ADDITIONALLY REQUESTED DOCUMENTS; POST CLOSING
ASSISTANCE. At the reasonable request of Purchaser at the Closing Date and at
any time or from time to time thereafter, Huffy and Sellers shall cooperate with
Purchaser to put Purchaser in actual possession and operating control of the
Assets, execute and deliver such further instruments of sale, conveyance,
transfer and assignment, as Purchaser may reasonably request in order to
effectively sell, convey, transfer and assign the Assets to Purchaser, to
execute and deliver such further instruments and to take such other actions as
Purchaser may reasonably request to release Purchaser from all obligation and
liability with regard to any obligation or liability retained by Sellers.
ARTICLE IX
OBLIGATIONS OF PURCHASER AT CLOSING
At Closing, Purchaser shall deliver or cause to be delivered to Sellers
the following in a form and substance reasonably satisfactory to Sellers:
SECTION 9.1 PURCHASE PRICE. Purchaser shall deliver to Sellers
cash or other immediately available funds in the aggregate amount of the
Purchase Price specified herein.
SECTION 9.2 CORPORATE GOOD STANDING AND CERTIFIED BOARD
RESOLUTIONS. Purchaser shall deliver to Sellers a certificate of Good Standing
from the secretary of the state of
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organization for the Purchaser and a certified copy of the resolutions of the
Board of Directors of the Purchaser approving this Agreement and consummation of
the transactions intended hereby.
SECTION 9.3 ASSUMPTION OF LIABILITIES. Purchaser shall assume
and covenant to fully perform and comply with all of the Assumed Liabilities
pursuant to the form of Assumption Agreement attached hereto as Exhibit C.
SECTION 9.4 CLOSING CERTIFICATE. Purchaser shall deliver to
Sellers a certificate of officers of the Purchaser, dated as of Closing,
certifying that (a) each covenant and condition precedent of Purchaser has been
complied with by Purchaser in all material respects and (b) each representation
and warranty of Purchaser is true and correct on the Closing as if made on and
as of the Closing.
ARTICLE X
INDEMNIFICATION AND SURVIVAL OF PROVISIONS
SECTION 10.1 SURVIVAL. The covenants and agreements contained
in this Agreement and any agreements, certificates or other instruments
delivered pursuant to this Agreement, shall survive the Closing and remain in
full force and effect. The representations and warranties set forth in Articles
II and III shall survive the Closing and remain in full force and effect until
the second anniversary of the Closing Date; provided, that the representations
and warranties set forth in Sections 2.19 and 2.24 shall survive for three years
and the representations and warranties contained in Sections 2.1, 2.2, 2.6, 3.1,
3.2 and 3.3 or which otherwise relate to title of the Assets shall survive
indefinitely and the representations and warranties contained in Section 2.32
shall survive for the statute of limitations period and any extensions thereof.
SECTION 10.2 SELLERS' INDEMNIFICATION OBLIGATION. Huffy and
Sellers shall, jointly and severally, indemnify and hold Purchaser and its
Affiliates, and their successors and assigns, harmless from and against, and in
respect of:
(a) all obligations and liabilities of Sellers or any of
its Affiliates, whether accrued, absolute, fixed,
contingent or otherwise, not assumed by Purchaser
pursuant to the Assumption Agreement or under any
other agreement executed and delivered by the parties
in furtherance of the transactions described herein;
(b) any claim, cost, loss, liability, settlement,
judgment, charge, fee, expense (including any
reasonable attorneys', accountants' or other experts'
fee or expense) or damage (collectively, "Damages")
incurred or sustained by Purchaser or its Affiliates
as a result of any inaccuracy or breach of any
representation or warranty by Sellers or Huffy
contained herein or under any other agreement
executed and delivered by the parties in furtherance
of the transactions described herein; provided,
however, that (i) Sellers and Huffy shall be required
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to indemnify Purchaser or its Affiliates pursuant to
this clause (b) for any such breaches or inaccuracies
only to the extent that the aggregate Damages
resulting from such breaches or inaccuracies to
Purchaser or its Affiliates exceed $1,500,000, (ii)
Purchaser and its Affiliates shall not make any claim
against Sellers or Huffy which individually (or in
the aggregate with respect to related claims,
including but not limited to, corrective actions,
recalls and other related actions) does not exceed
$20,000 (such claims that do not meet the threshold
shall still be applied against the $1,500,000
aggregate basket and such aggregate minimum claim
threshold shall not act as a deductible) and (iii)
any claim for indemnification under this clause (b)
must be made in writing in reasonable detail to
Sellers or Huffy not later than the expiration of the
applicable survival period specified in Section 10.1;
(c) any Damages incurred or sustained by Purchaser or its
Affiliates as a result of a breach by Sellers or
Huffy of any covenant or other agreement contained
herein or under any other agreement executed and
delivered by the parties in furtherance of the
transactions described herein;
(d) any liabilities for Taxes arising at any time out of
the operation of the business of Sellers and its
Affiliates prior to the close of business on the
Closing Date or incurred in connection with the
transactions contemplated by this Agreement
(including any transfer of recording taxes);
(e) any Damages incurred or sustained by Purchaser or its
Affiliates as a result of the operation of the
business of Sellers, Huffy and its Affiliates prior
to the close of business on the Closing Date,
including but not limited to, any liabilities and
obligations relating to (i) products shipped prior to
the close of business on the Closing Date, (ii) all
employee wages, salaries, bonuses, benefits or other
compensation or employee claims relating to Sellers'
employees for the period ending at the close of
business on the Closing Date, (iii) all workers'
compensation claims relating to injuries occurring
prior to the close of business on the Closing Date,
or (iv) any litigation, proceeding or governmental
investigation or action relating to actions taken by
Sellers or Huffy prior to the close of business on
the Closing Date, except to the extent assumed by
Purchaser pursuant to the Assumption Agreement and
except for Damages relating to design or
manufacturing defects for products shipped after the
close of business on the Closing Date to the extent
the representations and warranties in Sections 2.30
and 2.31 are not violated or to the extent Sellers
have not otherwise agreed to indemnify Purchaser for
Damages pursuant to Section 10.2(h);
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(f) any Damages (including, without limitation, injuries
to persons, property or natural resources, injunctive
relief, the fees and disbursements of legal counsel,
environmental consultants or engineers, and any
investigation and laboratory fees and response
costs), whether or not the subject of a claim by any
government entity or any other third party, which
Purchaser or its affiliates, successors, assigns,
partners, contractors or lenders may incur by reason
of any violation of or liability under any
Environmental Law or the presence of any Hazardous
Substances, to the extent arising from any event or
condition that (i) on or prior to the Closing Date
exists on, or results from the migration or transport
from, the Owned Real Property or the leased real
property, whether or not caused or contributed to by
Sellers, and (ii) exists at any time at any location
to the extent caused or contributed to by Sellers or
any of its Affiliates;
(g) any Damages incurred or sustained by Purchaser or its
Affiliates as a result of any recall (voluntary or
involuntary), safety advisory or other corrective
action taken with respect to any products shipped
prior to the close of business on the Closing Date;
(h) any Damages incurred or sustained by Purchaser or its
Affiliates with respect to any Double Guard booster
seats, model number 675, shipped within 16 months of
the Closing Date; provided, that Purchaser shall not
recall, issue any safety advisory or take any other
corrective action with respect to such products
without the written consent of Sellers or Huffy;
provided further, that Purchaser may take the same
corrective action taken by Sellers or Huffy with
respect to such products without such consent; and
(i) all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements)
incurred by Purchaser or its Affiliates in connection
with any action, suit, proceeding, demand, assessment
or judgment incident to any of the matters
indemnified against in this Section 10.2.
SECTION 10.3 PURCHASER'S INDEMNIFICATION OBLIGATION. Purchaser
shall indemnify and hold Huffy, Sellers, and their Affiliates, and their
respective successors and assigns, harmless from and against, and in respect of:
(a) all obligations and liabilities of Purchaser or any
of its affiliates, whether accrued, absolute, fixed,
contingent or otherwise, assumed by Purchaser
pursuant to the Assumption Agreement or assumed under
any other agreement executed and delivered by the
parties in furtherance of the transactions described
herein;
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(b) any Damages incurred or sustained by Sellers or their
Affiliates as a result of any inaccuracy or breach of
any representation or warranty by Purchaser contained
herein or under any other agreement executed and
delivered by the parties in furtherance of the
transactions described herein; provided, however,
that (i) Purchaser shall be required to indemnify
Sellers or their Affiliates pursuant to this clause
(a) for any such breaches or inaccuracies only to the
extent that the aggregate Damages resulting from such
breaches or inaccuracies to Sellers or their
Affiliates exceed $1,500,000, (ii) Sellers and their
Affiliates shall not make any claim against Purchaser
which individually (or in the aggregate with respect
to related claims) does not exceed $20,000 (such
claims that do not meet the threshold shall still be
applied against the $1,500,000 aggregate basket and
such aggregate minimum claim threshold shall not act
as a deductible) and (iii) any claim for
indemnification under this clause (a) must be made in
writing in reasonable detail to Purchaser not later
than the expiration of the applicable survival period
specified in Section 10.1;
(c) any Damages incurred or sustained by Sellers or their
Affiliates as a result of a breach by Purchaser of
any covenant or other agreement contained herein or
under any other agreement executed and delivered by
the parties in furtherance of the transactions
described herein;
(d) any liabilities for Taxes arising at any time out of
the operation of the business of Purchaser after the
close of business on the Closing Date or incurred in
connection with the transactions contemplated by this
Agreement, other than Taxes assumed by Sellers
pursuant to the terms of this Agreement;
(e) any Damages incurred or sustained by Sellers or its
Affiliates as a result of the operation of the
business of Purchaser, and its affiliates after the
close of business on the Closing Date, including but
not limited to, any liabilities and obligations
relating to (i) products shipped after the close of
business on the Closing Date (except as set forth in
Section 10.2(h)), (ii) all employee wages, salaries,
bonuses, benefits or other compensation or employee
claims relating to Purchaser's employees for the
period commencing on the close of business on the
Closing Date, (iii) all workers' compensation claims
relating to injuries occurring after the close of
business on the Closing Date, (iv) any litigation,
proceeding or governmental investigation or action
relating to actions taken by Purchaser after the
close of business on the Closing Date; except in each
case to the extent such Damages relate to Sellers'
and Huffy's indemnification obligations under this
Agreement.
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(f) all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements)
incurred by Sellers or their Affiliates in connection
with any action, suit, proceeding, demand, assessment
or judgment incident to any of the matters
indemnified against in this Section 10.3.
SECTION 10.4 PROCEDURE FOR INDEMNIFICATION; GENERAL. The
procedure to be followed in connection with any claim for indemnification by
Purchaser under Section 10.3 or by Sellers or Huffy under Section 10.2 or any
claims by one party against the other, is set forth below:
(a) Notice. Whenever any indemnified party shall have
received notice that a claim has been asserted or
threatened against such indemnified party, which, if
valid, would subject the indemnifying party to an
indemnity obligation under this Agreement, the
indemnified party shall promptly notify the
indemnifying party of such claim, together with
supporting facts and data to support the claim for
indemnification, provided, however, that the failure
of the indemnified party to give timely notice
hereunder shall relieve the indemnifying party of its
indemnification obligations under this Agreement to
the extent, but only to the extent that, such failure
materially prejudices the indemnifying party's
ability to defend such claim.
(b) Defense of a Claim. The indemnifying party or its
designee will have the right, but not the obligation,
to assume the defense of any claim which is the
subject of indemnification under this Agreement so
long as the indemnifying party acknowledges in
writing its obligation to indemnify the indemnified
party hereunder; provided, however, if there is a
reasonable probability that a claim may adversely
affect the business of the indemnified party despite
the indemnity of the indemnifying party, the
indemnified party shall have the right at its option
to defend, at its own cost and expense, and to
compromise or settle such claim, which compromise or
settlement shall be made only with the written
consent of the indemnifying party, such consent not
to be unreasonably withheld, provided that the
indemnified party shall promptly notify the
indemnifying party of any compromise or settlement
proposal with respect to the claim and shall not
unreasonably refuse to accept any such proposal if
the same is acceptable to the indemnifying party. If
the indemnifying party fails to assume the defense of
such claim with thirty (30) days after receipt of
notice of a claim for indemnification, the
indemnified party against which such claim has been
asserted will (upon delivering notice to such effect
to the indemnifying party) have the right to
undertake, at
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the indemnifying party's cost and expense, the
defense, compromise or settlement of such claim on
behalf of and for the account and risk of the
indemnifying party, 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 if, in the good faith
judgment of the indemnifying party's counsel, such
claim is not being adequately defended and so long as
the indemnifying party acknowledges in writing its
obligation to indemnify the indemnified party
hereunder and provided, however, that the indemnified
party shall not enter into any such compromise or
settlement without the written consent of the
indemnifying party which consent shall not be
unreasonably withheld. In the event the indemnifying
party assumes defense of the claim, the indemnifying
party will keep the indemnified party reasonably
informed of the progress of any such defense,
compromise or settlement. The indemnifying party
shall have the sole right to defend, settle or
otherwise dispose of such claim, on such terms as the
indemnifying party, in its sole discretion, shall
deem appropriate; provided, however, that the
indemnifying party shall obtain the written consent
of the indemnified party, which shall not be
unreasonably withheld, prior to ceasing to defend,
settling or otherwise disposing of any such claim if
as a result of such settlement the indemnified party
would become subject to injunctive or other equitable
relief or the business of the indemnified party would
be adversely affected in any manner; and provided,
further, that if the indemnified party has elected to
be represented by separate counsel pursuant to the
proviso to the following sentence, such settlement or
compromise shall be effected only with the consent of
the indemnified party, which consent shall not be
unreasonably withheld. After notice from the
indemnifying party to the indemnified party of its
election to assume the defense of such claim or
action, the indemnifying party shall not be liable to
the indemnified party under this Section 10.4(b) for
any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense
thereof; provided, however, that the indemnified
party shall have the right to employ counsel to
represent it if, in the written opinion of counsel to
the indemnified party (such opinion also addressed to
the indemnifying party), it is advisable for the
indemnified party to be represented by separate
counsel due to actual or potential conflicts of
interest, and in that event the fees and expenses of
such separate counsel shall be paid by the
indemnifying party; provided, that in no event shall
the indemnifying party be responsible for the fees of
more than one counsel. The parties each agree to
render to the other parties such assistance as may
reasonably be requested in order to insure the proper
and adequate defense of any such claim or proceeding.
The indemnifying party shall not be liable
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for any settlement of any action effected without its
consent, but if settled with the consent of the
indemnifying party or if there be a final judgment
beyond review or appeal, for the plaintiff in any
such action, the indemnifying party agrees to
indemnify and hold harmless an indemnified party from
and against any loss or liability by reason of such
settlement or judgment. Any party who does not
undertake the defense of a claim may otherwise, at
its own expense, retain such additional attorneys and
other advisors as it shall deem necessary, which
attorneys and advisors will be permitted by the party
undertaking such defense, and its attorneys, to
observe the defense of such claim.
(c) No Additional Obligations. Nothing herein shall be
deemed to expand the obligation of the indemnifying
party to defend, or be responsible for indemnifying
the indemnified party, with respect to any claim
beyond the specific indemnification obligations set
forth in this Agreement.
(d) Survival. The indemnities provided in this Article X
shall survive the Closing.
(e) Treatment of Indemnity Payments. The parties agree
that any indemnification payments made pursuant to
this Agreement shall be treated for tax purposes as
an adjustment to the Purchase Price, unless otherwise
required by applicable law. To the extent that any
indemnity claim is required by any taxing authority
or by applicable law to be treated as taxable income
to the party making the claim and is not under
applicable law permitted to be treated as an
adjustment to the Purchase Price, the amount of any
indemnity payment shall be determined on a net
after-tax basis (after taking into consideration any
related deductions and assuming a tax rate equal to
the maximum marginal federal corporate income tax
rate for the taxable year in which the indemnity is
determined to be taxable).
(f) Third Party Suppliers. The parties hereto agree that
if the liability is deemed to be that of a third
party supplier used by Purchaser, Purchaser shall
cooperate with Sellers to assist in causing such
supplier to assume its defense and/or liability
obligations.
(g) Recall Cooperation. The parties agree to communicate,
cooperate and share all relevant information as soon
as possible with respect to any potential recall,
consumer corrective action or other consumer
notification action. In the event that either party
receives notification from any regulatory agency
requesting or suggesting a recall, consumer
corrective action or other consumer notification
action, the
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receiving party will promptly inform the other of all
relevant information relating to the notice and the
party's response plan; or, conversely, if either
party believes it must notify any regulatory agency
regarding a recall, consumer corrective action or
notification action, it shall notify the other party
in advance of such notice to discuss the substance of
such notice and the effect on the parties. The
parties will cooperate in good faith with each other
regarding all communication and negotiation with any
applicable governmental authority or other third
party, and shall notify and allow both parties to
meet jointly with the regulatory agencies. In the
event that the parties disagree as to whether a
consumer notification action is necessary, the
parties agree to communicate with each other, to act
in good faith with respect to each other and such
issue and to give due regard to the business
interests of the other.
ARTICLE XI
NON-COMPETITION COVENANT
SECTION 11.1 Huffy and Sellers hereby agree and acknowledge
that Purchaser would not enter into this Agreement and purchase the Assets
without the covenant and agreement of Huffy and Sellers to the non-competition
covenant contained in this Article XI. Huffy and Sellers agree, jointly and
severally, that for a period of ten (10) years from and after the Closing Date
they will not, directly or indirectly, engage as a principal, agent, partner,
stockholder (other than as passive investor owning less than five percent (5%)),
member, consultant, lender or in any other capacity, in a business, directly or
indirectly, that would be competitive with the products of the business of
Sellers sold to Purchaser hereunder as described on Schedule 11.1 hereto. The
parties agree that if Huffy or any Seller violates this covenant that
irreparable harm will be caused to Purchaser thereby for which there is no
adequate remedy at law and that Purchaser shall be entitled, in addition to any
other remedies and damages available, to seek an injunction to restrain the
violation of this covenant. Huffy's activities under the license agreement with
TRI Industries, Inc. dated February 14, 1990, (as amended July 23, 1991, July 1,
1992, July 5, 1993 and June 23, 1994) and the manufacture and sale of the
products described therein and the manufacture and sale of products under the
Midway Sales, Inc. license agreements dated June 1, 1995, (as amended April 1,
1995, January 1, 1996 and October 1, 1996), and dated April 1, 1995 are
excepted, in each case to the extent such activities or products do not compete
with the products set forth on Schedule 11.1. From the date hereof, until the
third anniversary of the Closing Date, neither Huffy nor Sellers or any other
affiliate will solicit (or assist or encourage the solicitation of) any of the
current employees of Purchaser or Sellers or its affiliates, without the prior
written consent of Purchaser; provided, that the foregoing restriction shall not
prohibit general solicitations of employment not specifically targeted at
Purchaser's employees and shall not apply to terminated Employees of Purchaser.
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ARTICLE XII
TERMINATION
SECTION 12.1 GENERAL. This Agreement may be terminated and the
transactions contemplated herein may be abandoned, (a) by mutual written consent
of Purchaser and Sellers, (b) by either Purchaser or Sellers, if any permanent
injunction or action by any governmental authority preventing the consummation
of the Closing shall have become final and nonappealable, (c) by any party by
notice to the other party in the event that the Closing Date shall not have
occurred on or before May 15, 1997; provided, if the only condition to Closing
not satisfied is the Antitrust Improvements Act compliance set forth in Section
4.6 hereto, then that date shall be June 15, 1997; provided further, that if the
Closing Date shall not have occurred on or before such dates due to the act or
omission of one of the parties in violation of any provision of this Agreement,
that party may not terminate the Agreement pursuant to this clause (c) of
Section 12.1.
SECTION 12.2 NO LIABILITIES IN EVENT OF TERMINATION. In the
event of any termination of the Agreement as provided in Section 12.1 above,
this Agreement shall forthwith become wholly void and of no further force and
effect and there shall be no liability on the part of Purchaser, Sellers or
Huffy, except that the obligations of Purchaser, Sellers and Huffy under
Sections 4.5, 4.7 and Article X of this Agreement shall remain in full force and
effect, and except that termination shall not preclude any party from suing the
other party for breach of this Agreement.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 HEADINGS. The subject headings of the sections,
paragraphs and subparagraphs of this Agreement are included for purposes of
convenience only, and shall not affect the construction or interpretation of any
of its provisions.
SECTION 13.2 ENTIRE AGREEMENT, MODIFICATION AND WAIVER. This
Agreement constitutes the entire agreement between the parties pertaining to its
subject matter and supersedes all prior and contemporaneous agreements,
representations and understandings of the parties. No supplement, modification
or amendment of this Agreement shall be binding unless executed in writing by
all the parties. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
SECTION 13.3 COUNTERPARTS. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
SECTION 13.4 RIGHTS OF PARTIES. Nothing in this Agreement,
whether expressed or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the parties to it and
their respective successors and assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
persons to any party to this Agreement, nor shall any provision give any third
persons any right of subrogation or action over or against any party to this
Agreement.
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SECTION 13.5 ASSIGNMENT. Purchaser shall not assign this
Agreement except to an affiliate or successor. This Agreement shall be binding
on, and shall inure to the benefit of, the parties to it and their respective
heirs, legal representatives and successors. Sellers shall be free to assign
their right to receive payments under Section 1.3 to any party.
SECTION 13.6 REMEDIES. Each party's obligation under this
Agreement is unique. If any party should default in its obligations under this
Agreement, the parties each acknowledge that it would be extremely impracticable
to measure the resulting damages; accordingly, the nondefaulting party, in
addition to any other available rights or remedies, may ▇▇▇ in equity for
specific performance, and the parties each expressly waive the defense that a
remedy in damages will be adequate.
SECTION 13.7 EFFECT OF CERTAIN ACTIONS. No action taken
pursuant to or related to this Agreement, including without limitation any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, condition or agreement contained herein.
SECTION 13.8 SUPPLEMENTS TO SCHEDULES AND EXHIBITS. Sellers,
may at any time between execution of this Agreement and the Closing Date provide
Purchaser in writing as a supplement to any Schedule hereto any information
considered necessary by Sellers to cause such Schedule to be complete and
accurate. The provision of such information shall not affect the right of
Purchaser to elect not to close the transactions contemplated by this Agreement
if the representations and warranties of Sellers contained in this Agreement at
the time of execution hereof and the Disclosure Schedules attached hereto at the
time of execution shall not be true and correct in all material respects at the
time of the Closing Date, but if, despite such right, Purchaser nevertheless
elects to close, Purchaser shall thereby be deemed to have waived any such
disclosed misrepresentation or breach of warranty, and shall thereafter have no
claim against Sellers for a breach of such representation or warranty; provided,
however, such supplement shall not otherwise affect any other indemnification
available under this Agreement.
SECTION 13.9 NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party
(including without limitation service by overnight courier service) to whom
notice is to be given, or on the third day after mailing if mailed to the party
to whom notice is to be given, by first class mail, registered or certified,
postage prepaid, at the address set forth below, or on the date of service if
delivered by facsimile to the facsimile number set forth below which facsimile
is confirmed within three days by deposit of a copy of such notice in first
class mail, registered or certified, postage prepaid at the address set forth
below. Any party may change its address for purposes of this paragraph by giving
the other parties written notice of the new address in the manner set forth
above.
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If to Sellers or Huffy Corporation
to Huffy: P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President-General Counsel and
Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇, ▇▇., Esq.
▇▇▇▇▇▇▇▇ & Shohl
1900 Chemed Center
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Evenflo Company, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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SECTION 13.10 KNOWLEDGE OF SELLERS. To the knowledge of
Sellers, to Sellers' knowledge or any counterparts thereof shall mean the actual
knowledge of the officers of Sellers and those natural persons listed on
Schedule 13.10 hereto.
SECTION 13.11 SEVERABILITY. If any provision of this
Agreement shall be declared by any court of competent jurisdiction to be
illegal, void or unenforceable, all other provisions of this Agreement shall not
be affected and shall remain in full force and effect.
SECTION 13.12 MEANINGS OF CERTAIN TERMS. As used in this
Agreement the term "business" shall mean the juvenile products business of
Sellers and the term "Affiliate" as to any person, means any other person, that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such person.
SECTION 13.13 TRANSFER TAXES AND RECORDING EXPENSES. Sellers
shall assume and pay and shall indemnify Purchaser and its Affiliates against
all sales, motor vehicle or transfer taxes and recording expenses, if any,
required to be paid in connection with the transfer of the Assets (including any
interest charge or penalty with respect thereto). Purchaser shall assume and pay
and shall indemnify Sellers and Huffy against all sales taxes, if any, required
to be paid in connection with the transfer of the Assets (including any interest
charge or penalty with respect thereto).
SECTION 13.14 GOVERNING LAW. This Agreement shall be construed
in accordance with, and governed by the laws of, the State of Ohio.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
as of the date set forth above.
HUFFY CORPORATION ▇▇▇▇▇ BABY PRODUCTS COMPANY
BY BY
---------------------------------- --------------------------------------
▇▇▇▇▇ ▇▇▇▇ PRODUCTS COMPANY
BY
--------------------------------------
EVENFLO COMPANY, INC.
BY
--------------------------------------
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EXHIBIT INDEX
Exhibit A Sublease Agreement
Exhibit B Form of Union Assumption Agreement
Exhibit C Form of Assumption Agreement
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EXHIBIT A
SUBLEASE AGREEMENT
This Sublease Agreement (the "Agreement") made this _______ day of
April, 1997, by and between ▇▇▇▇▇ BABY PRODUCTS COMPANY, a Delaware corporation
("Lessor"), and EVENFLO COMPANY, INC., a Delaware corporation ("Lessee"), under
the following circumstances:
A. By Master Lease ("Master Lease") dated effective as of October 29,
1992 (a copy of which is attached hereto as EXHIBIT B), Lessor, as lessee, has
previously leased from SELCO SERVICE CORPORATION ("SSC"), as lessor, an
approximately 400,000 square foot office, manufacturing and distribution
facility located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the "Facility"),
together with that certain real property described in EXHIBIT A attached hereto
(the "Land"), consisting of 45 acres, more or less, together with the Facility,
and all improvements constructed thereon (collectively called the "Leased
Premises").
▇. ▇▇▇▇▇▇ desires to sublease the Leased Premises to Lessee, and Lessee
desires to sublease same from Lessor.
NOW THEREFORE, in consideration of the premises and the mutual promises
and covenants contained in this document, Lessor and Lessee hereby agree as
follows:
1. (a) Effective on the Lease Commencement Date (as defined in
Schedule 1 attached hereto), and ending on the Original Termination Date (as
defined in Schedule 1 attached hereto), Lessor shall, and hereby does, lease and
demise to Lessee for a term of eighteen (18) months ("Original Lease Term"),
subject to all terms and conditions of this Agreement, the Leased Premises.
(b) Provided Lessee is not then in default under this
Agreement, Lessor hereby grants to Lessee an exclusive option and right to
extend the term of this Agreement for an additional period of six (6) months
(the "Extended Lease Term") upon the same terms and conditions hereof, except
Base Rent, which shall be in an amount and paid as provided in paragraph 4(b)
hereof. The Extended Lease Term shall
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commence upon the day of the Original Termination Date and shall end on the
Extended Term Termination Date (as defined in Schedule 1 attached hereto).
Written notice of Lessee's exercise of its election to extend the lease term for
six (6) months shall be delivered by Lessee to Lessor so that it is received by
Lessor no later than forty-five (45) days prior to the Original Termination
Date.
2. On the Lease Commencement Date, Lessee shall take sole possession of
the Leased Premises, which shall be in the same general condition as it was on
March 6, 1997, as-is-where-is. Upon delivery of possession of the Leased
Premises to Lessee in the same general condition as the Leased Premises existed
on March 6, 1997, it shall be conclusively deemed that Lessee has accepted the
Leased Premises for occupancy, and that the condition of the Leased Premises is
and was satisfactory and in conformity with the provisions of this Agreement in
all respects.
3. At any time during this Agreement, Lessor or SSC shall have the
right, with the prior written consent of Lessee, which shall not be unreasonably
withheld or delayed, to make reservations from the interest in the Land leased
hereunder for such covenants, easements, licenses, and rights of entry as Lessor
or SSC may, in Lessor's or SSC's discretion, reasonably exercised, deem
necessary; provided, however, that such reservations shall not impair materially
the use of the Facility by Lessee for its intended purposes.
4. (a) The Original Base Rent for the Leased Premises during the
Original Lease Term is shown on the attached Schedule 1 ("Original Base Rent").
The Original Base Rent for the Original Lease Term shall be paid as shown on
Schedule 1.
(b) The rent for the Leased Premises during the Extended Lease
Term is shown on the attached Schedule 1 ("Extended Base Rent"). The Extended
Base Rent for the Extended Lease Term shall be paid as shown on Schedule 1.
Hereafter, the Original Lease Term and Extended Lease Term shall
collectively be called the "Lease Term"; the Original Base Rent and Extended
Base Rent shall collectively be called the "Base Rent"; and the Original
Termination Date and Extended Term Termination Date shall collectively be called
the "Termination Date."
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5. As further set forth herein, and as limited by paragraph 9(b)
hereof, this is a net, net, net lease, with all and every cost and expense
associated with the Leased Premises being borne solely by Lessee. In furtherance
of the foregoing, throughout the entire Lease Term, Lessee shall be responsible
for and shall pay prior to their due date, as additional rent ("Additional
Rent") (i) all real estate and other property taxes assessed or levied covering
the Lease Term (including any tax or lease payments, other than Colorado and
Federal income taxes and income taxes imposed by Lessor's jurisdiction of
incorporation), (ii) all governmental assessments levied against the Leased
Premises assessed or levied covering the Lease Term (including, without
limitation, the Land) for improvements benefiting the Leased Premises, and (iii)
all other costs or charges, of any nature whatsoever, that arise during the
Lease Term that Lessee is expressly required by this Agreement to pay,
including, without limitation, any insurance premiums to be paid by Lessee under
Section 14, but as further limited by the terms of paragraph 9(b) hereof. Lessee
shall pay Additional Rent by making payments of such costs and charges to Lessor
or directly to the third party entitled to receive payment therefor, as the case
may be. It is agreed that for purposes of real estate taxes, Lessee shall
reimburse SSC for such tax payment within ten (10) days after SSC or Lessor
delivers evidence to Lessee that such real estate taxes have been paid by SSC or
Lessor (the first and last such real estate tax payment shall be pro-rated
between Lessee and Lessor based upon their respective time of possession of the
Leased Premises as compared to the tax payment period involved). For example, if
the first tax payment is due July 8, 1997, and covers the period January 1, 1997
to June 30, 1997, and this Agreement commences April 1, 1997, then 50% of such
tax payment would be paid to SSC by Lessor and the remaining 50% of such tax
payment would be paid to SSC by Lessee. At the expiration of the Lease Term, (i)
Lessee shall pay to Lessor its pro-rata share of such taxes to the extent such
taxes are paid in arrears, and (ii) Lessor shall pay to Lessee the pro-rata
share of such taxes to the extent such taxes were paid in advance by Lessee.
Pursuant to the terms of the Incentive Agreement (the "Incentive Agreement")
dated February 1, 1995, between Lessor and ▇▇▇▇▇ County, Colorado (the
"County"), Lessor shall make timely application to the County for each incentive
payment (as defined and described in the Incentive Agreement), and if and when
such payment is received from the County by Lessor, then within ten (10)
business days thereafter, Lessor shall pay to Lessee such proportionate share of
the incentive payment received based upon the calendar period encompassed by the
incentive payment as compared against Lessee's lease term. For example, if the
incentive payment is received in May, 1997, and is in payment for calendar year
1996, then the entire amount of this payment shall be retained by Lessor. If the
incentive payment is received in May, 1998, and is in payment for calendar year
1997, and the Lease Commencement Date is April 1, 1997, Lessee shall be entitled
to receive 75% of such payment, and Lessor shall retain 25% of such payment. If
the current method of property taxation or assessment is changed so that a
capital tax or other tax imposed on the rent or any other payments received by
Lessor from Lessee hereunder would be
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substituted for the whole or any part of the real property taxes or assessments
now imposed on the Leased Premises, or any part thereof, such other tax, to the
extent that it is so substituted, shall be included in determining Lessor's real
property tax ▇▇▇▇ for the relevant years, and shall be paid by Lessee to Lessor
as Additional Rent. Lessee shall have the right to contest (in good faith and to
be prosecuted diligently) with the appropriate taxing or assessing authority the
assessed tax valuation of the Leased Premises, the cost thereof to be borne
solely by Lessee. Any such contesting shall not delay Lessee's requirement to
reimburse Lessor or SSC for any real estate tax payments actually made.
6. Lessee agrees that the Leased Premises shall be used and occupied in
a legal, careful, safe and proper manner, in accordance with all applicable
laws, including, but not limited to, the Americans with Disabilities Act, that
no activity which is known in the insurance industry as extra or especially
hazardous shall be permitted therein, and that no waste shall be committed or
suffered by Lessee to the Leased Premises. Lessee shall at all times maintain in
force and effect all permits and licenses required for the operation of the
Leased Premises for the purposes used by Lessee. Notwithstanding the foregoing,
without the prior written consent of Lessor, in no event shall Lessee use or
permit the use of the Leased Premises for any purpose which materially increases
the risk of environmental liability for Lessor over and above the level of risk
of environmental liability in operating similar manufacturing and distribution
facilities, even if any such use is in compliance with all applicable laws,
including, without limitation, Environmental Laws (as hereinafter defined).
7. (a) During the Lease Term, at Lessee's expense and without
expense to Lessor, Lessee will comply with and abide by all applicable laws.
(b) In order to induce Lessor to enter into this Agreement,
Lessee covenants and agrees that during the Lease Term it shall:
(i) subject to the last paragraph of clause
7(b)(ii) hereof, comply in all respects, and cause its subsidiaries,
assignees, tenants or other persons occupying or conducting operations
on or about the Leased Premises to comply in all respects, with all
Environmental Laws now or thereafter applicable to the Leased Premises
or any operation thereon;
(ii) subject to the last paragraph of this clause
7(b)(ii), have sole responsibility for any and all costs and expenses
associated with such compliance, including compliance with any such
Environmental Law directed to Lessor, or to which Lessor may become
subject;
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Notwithstanding clause (i) and (ii) above, Lessee shall not be
responsible for any violation of or liability under any Environmental
Law to the extent arising from any event or condition that (a) on or
prior to the Commencement Date exists on or results from the migration
or transport from the Leased Premises, or (b) exists at any time at any
location to the extent caused or contributed to by Lessor, SSC or any
prior owner of the Leased Premises.
(iii) not generate, use, treat, store, release or
dispose of, or permit the generation, use, treatment, storage, release
or disposal of Materials of Environmental Concern on the Leased
Premises, or transport or permit the transportation of Materials of
Environmental Concern to or from the Leased Premises, other than in
each case in connection with the operation and maintenance of the
Leased Premises, and in compliance at all times with Section 6 hereof;
and
(iv) provide Lessor written notice of (x)(A) any
condition, occurrence or release at, on, or arising from the Leased
Premises, or any operation thereon that results in material
noncompliance with any Environmental Laws, or (B) any release of
Materials of Environmental Concern in violation of or in a manner
giving rise to liability under any Environmental Laws on or from the
Leased Premises that has resulted, or in the reasonable judgment of
Lessee, may result in personal injury, material property damage or the
requirement that Lessee or any of its subsidiaries, sublessees,
assignees, tenants or other persons occupying or conducting operations
on the Leased Premises remediate such release, Lessee agrees to use all
reasonable efforts to give such notice within five business days after
the condition, occurrence or release is brought to the attention of the
corporate officer of Lessee responsible for environmental compliance,
and (y) any pending, or to the best knowledge of Lessee, threatened
claim under any Environmental Law against Lessee, any of its
subsidiaries, sublessees, assignees, tenants or other persons occupying
or conducting operations on the Leased Premises which, if determined
adversely to Lessee or any such persons, could reasonably be expected
to have a material adverse effect on the operations or financial
condition of Lessee (a "Material Environmental Claim"), Lessee agrees
to use all reasonable efforts to give such notice within five business
days after the date such Material Environmental Claim or threat thereof
is brought to the attention of the corporate officer of Lessee
responsible for environmental compliance. All such notices shall
describe in reasonable detail the nature of the claim, investigation,
condition, incident or occurrence, and Lessee's response thereto. In
addition, Lessee will provide Lessor with copies of all written
communications with any persons asserting a Material Environmental
Claim.
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(c) For purposes of this Agreement:
(i) "Environmental Law or Laws" means any
federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to or imposing
liability upon any person or entity in connection with the use, release
or disposal of any hazardous, toxic or dangerous substance, waste or
material.
(ii) "Materials of Environmental Concern" means
chemicals, pollutants, contaminants, wastes, degradation by-products,
toxic substances, petroleum and petroleum products, including, without
limitation, "hazardous substances", "hazardous wastes", "toxic
substances" and "toxic pollutants" as defined in or identified in any
Environmental Laws.
8. Lessee shall at all times keep the Leased Premises in a clean, neat
and orderly condition typical of a well-managed manufacturing and distribution
facility, shall cause trash and refuse to be stored out of view of the general
public and the adjoining properties, and shall cause such trash, refuse and
other waste products to be removed on a regular basis. Lessee shall keep all
parking and walkway areas on the Leased Premises clean, orderly, and reasonably
free from snow, ice and debris. All of the foregoing shall be accomplished at
Lessee's sole cost and expense.
9. (a) Lessee shall from time to time make, at Lessee's expense,
all necessary interior and exterior repairs and replacements to the Leased
Premises and all parts thereof, in a condition and in a manner that complies
with all government regulation and requirements and in accordance with generally
accepted procedures and specifications, and shall perform all necessary interior
and exterior maintenance to the Leased Premises, including, without limitation,
the landscaped areas, drives, parking areas, aprons and sidewalks constituting a
part thereof. Lessee shall maintain the Leased Premises in satisfactory working
order and to a standard at least comparable to the standard of maintenance of
the Leased Premises on the date hereof.
(b) Notwithstanding the foregoing or any other term or
provision of this Agreement, Lessor agrees that it shall be solely responsible
for the repair and replacement during the Lease Term of the Facility roof,
outside structural walls and concrete floors (collectively called the "Roof,
Walls and Floor"), provided, that any such repair or replacement shall not be
required by Lessor if caused by the action or inaction of Lessee, its employees,
representatives, agents or invitees (if so caused by Lessee, its employees,
representatives, agents or invitees, then Lessee shall be responsible for the
required repair or replacement). Lessee shall give Lessor written notice of any
repair or
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replacement required for the Roof, Walls and Floor, and within a commercially
reasonable period of time thereafter, Lessor shall take the appropriate and
necessary action to determine the work to be done and to commence and complete
such work. The parties hereto shall cooperate with each other to permit such
required work during normal business hours at a commercially minimum
inconvenience and disruption of Lessee's business operations at the Leased
Premises. Notwithstanding the foregoing, in the event of an emergency, Lessee
may take commercially reasonable steps to repair and/or replace the Roof, Walls
or Floor, and give notice of such action to Lessor, with the actual reasonable
costs thereof to third parties to be paid by Lessor, as required above. In the
event Lessor fails or refuses to repair and replace the Roof, Walls and Floor,
then Lessee may either (1) terminate this Agreement upon ten (10) days prior
written notice to Lessor, and thereafter, Lessor shall refund to Lessee any
prepaid Base Rent and Lessee may also seek such damages as provided by law, or
(2) make the required repair and/or replacement at Lessee's cost and seek
repayment of same in a court of law.
Lessee shall be solely responsible for and shall pay for maintenance,
upkeep, servicing, inspection and repair of the Facility's sprinkler system (the
"SS") and the Facility's heating, air conditioning and ventilating equipment and
system (the "HVAC"), including but not limited to service specifications of the
manufacturers and installers of the SS and HVAC. In the event the SS or material
components of the HVAC must be replaced during the Lease Term, and any such
replacement is not caused by the failure of Lessee to meet the above
maintenance, upkeep, servicing, inspection or repair standards or is not caused
by the action or inaction of Lessee, its employees, representatives, agents or
invitees, then Lessor shall be responsible for the required replacement. Lessee
shall give Lessor written notice of any replacement required for the SS or
material components of the HVAC, and within a commercially reasonable period of
time thereafter, Lessor shall take the appropriate and necessary action to
determine the work to be done and to commence and complete such work. The
parties hereto shall cooperate with each other to permit such required work
during normal business hours at a commercially minimum inconvenience and
disruption to Lessee's business operations at the Leased Premises.
Notwithstanding the foregoing, in the event of an emergency, Lessee may take
commercially reasonable steps to replace the SS or material components of the
HVAC and give notice of such action to Lessor, with the actual reasonable costs
thereof to third parties to be paid by Lessor, as required above. In the event
Lessor fails or refuses to replace the SS or material components of the HVAC
then Lessee may either (1) terminate this Agreement upon ten (10) days prior
written notice to Lessor, and thereafter, Lessor shall refund to Lessee any
prepaid Base Rent and Lessee may also seek such damages as provided by law, or
(2) make the required repair and/or replacement at Lessee's cost and seek
repayment of same in a court of law.
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Nothing set forth in this paragraph 9(b) shall require Lessor to
undertake any repair, maintenance or replacement for an item covered by Lessee's
casualty insurance.
10. After providing not less than forty (40) days' prior notice to
Lessor, Lessee may make such modifications, substitutions, alterations and
additions to the Leased Premises as Lessee may from time to time require or deem
appropriate, in Lessee's discretion, to adapt the same to Lessee's reasonable
business requirements. All modifications, substitutions, alterations and
additions made by Lessee shall be effected in a good and workmanlike manner and
in compliance with all applicable laws and insurance requirements, and shall not
diminish the value, condition or the appearance of, or impair the utility or
useful life of the Facility, shall not violate any covenant, condition,
restriction, reservation, easement, exception or encumbrance which affects the
Leased Premises. All non-severable parts incorporated or installed in the Leased
Premises shall become the absolute property of Lessor upon expiration or
termination of Lessee's leasehold or the abandonment of the Leased Premises by
Lessee unless the Leased Premises are purchased by Lessee pursuant to Section 30
hereof. Nothing herein shall be construed to constitute Lessee as the agent of
Lessor for purposes of making any such modifications, substitutions, alterations
or additions, or to give Lessor any control over the manner of execution of the
work, it being agreed that Lessee and Lessee alone is fully responsible for
completion of and payment for all such modifications, substitutions, alterations
or additions.
11. Lessee shall defend, indemnify and hold Lessor and SSC and Lessor's
and SSC's interest in the Leased Premises harmless from all liens and claims of
liens which may be filed or claimed in connection with any repairs, maintenance,
alterations, additions, improvements, or other work made or done by Lessee
(collectively called "Lessee's Work"). Any liens filed against the Leased
Premises for Lessee's Work shall be removed by Lessee, at Lessee's sole expense,
within thirty (30) days of the attachment of such lien. Lessee shall have the
right to dispute or contest any such lien; provided, however, that Lessee first
takes all steps necessary to ensure that the lienor cannot recover against the
Leased Premises.
12. Lessee has inspected the Leased Premises and concluded that it is
served by water, gas, electricity, light, heat, telephone, power and other
utilities and communication services (collectively, the "Utilities") sufficient
for Lessee's use of the Leased Premises. Lessor has not made any representations
to Lessee about the Utilities. Lessee shall not have any right to terminate this
Agreement or to a refund of its Base Rent or ▇▇▇▇▇ its Additional Rent due under
this Agreement, or to assert any claim against Lessor on account of the
interruption, cessation or unavailability of any of the Utilities.
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58
Lessee, at its expense, shall obtain and pay for all necessary or required
Utilities and other services for the Leased Premises. Lessor shall not be liable
for any damages Lessee may suffer because of any unavailability of or
interruption or other deficiency in such Utility services. Lessor, upon request
of Lessee, and at the sole expense and liability of Lessee, shall join with
Lessee in any application required for obtaining or continuing any of the
Utilities, but in no event shall Lessor be obligated to pay any cost in
connection with such application or for any service supplied by the Utility to
which such application is made. Lessor represents to Lessee that at no time
during the Lease Term shall SSC or Lessor be responsible for providing any
Utilities.
13. Lessee shall permit Lessor and/or SSC to enter and inspect the
Leased Premises at any reasonable time upon reasonable notice for any proper
purpose, including, without limitation, review of compliance by Lessee with its
obligations hereunder and inspection by a prospective purchaser, mortgagee, or
tenant of Lessor's or SSC's interest in the Leased Premises. However, Lessor or
SSC shall have no duty to inspect and no failure by Lessor or SSC to inspect
shall relieve Lessee of any duty which Lessee may have under this Agreement.
14. (a) Lessee shall continuously maintain in full force during
the entire Lease Term the following insurance coverage:
(i) all risk insurance coverage against losses
for the full insurable replacement value of the Leased Premises,
including losses by fire, lightning, hail, windstorm, vandalism, and
malicious mischief endorsement;
(ii) public liability and property damage with
limits of $1,000,000 per occurrence (subject to $500,000 self-insured
retention per occurrence) and with umbrella coverage of $20,000,000;
(iii) boiler and explosion coverage; and
(iv) workers' compensation;
(v) rent interruption insurance for a twelve
(12) month period; and
(vi) automobile liability with limits of
$1,000,000 per occurrence, subject to a $75,000 self-insured retention
per occurrence, and with umbrella coverage of $20,000,000.
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(b) All such policies of insurance shall be written in the
State of Colorado (or as otherwise satisfactory to SSC), shall be written in
standard form, shall provide that the policies shall not be cancelable except
upon thirty (30) days' prior written notice by the insurer to Lessor and SSC,
and shall name Lessor and SSC as additional insureds and loss payees in such
policies, as their interests may appear, in form and substance acceptable to
Lessor and SSC. In addition, such policies shall cover such loss contingencies
and hazards as are commonly covered in policies issued on similar properties in
the area of the Leased Premises. Lessee shall deliver to Lessor and SSC a
certificate of insurance and, if requested by Lessor or SSC, a copy of such
policies (or in lieu of policies of insurance, binders if then acceptable to
Lessor) and if requested by Lessor, a copy of any renewal policy shall be
delivered to Lessor and SSC as promptly as possible prior to the termination
date of any expiring policy (if such policy is unavailable, substitute evidence
of insurance coverage will be delivered to Lessor and SSC, with a copy of the
renewal policy to be delivered within a reasonable time thereafter).
(c) Lessor and Lessee each hereby waives, on behalf of itself
and on behalf of all carriers of the insurance required to be maintained
pursuant to Section 14(b) above, all claims, by subrogation or otherwise, which
such waiving party might otherwise have against the other or SSC for loss or
damage to the Leased Premises and the respective interests of such parties
therein, arising out of perils insured against in accordance with such
requirements of this Agreement, but only to the extent of proceeds of insurance
actually received, and only if this waiver does not or will not invalidate,
limit, or otherwise restrict coverage.
(d) All personal property of every kind and description that
may at any time be in, at, or on the Leased Premises shall be kept in, at or on
the Leased Premises at Lessee's sole risk, or at the risk of those claiming
under Lessee. Without limitation of the foregoing waivers of claims of
subrogation, Lessor shall not be liable for any damage to said personal property
or any loss of business by Lessee, however arising, including, without
limitation, from the bursting, overflowing or leaking of water or pipes, or from
other heating, electrical, or plumbing fixtures, from electric wires, from gas
or odors, from acts of other persons on or in the vicinity of the Leased
Premises, or from any other cause in any other manner whatsoever, except to the
extent that such damage to personal property may result from and actually be
caused by the gross negligence, willful misconduct or intentionally tortious
acts or omissions of Lessor.
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15. Subject to such waivers and limitations of liability as are
specifically provided hereunder, Lessee shall at all times during the Lease Term
and thereafter with respect to any condition occurring during the Lease Term,
defend, indemnity and save Lessor harmless from any and all Damages relating to
the Leased Premises, and from any Damages that may occur or be claimed by or
with respect to any party, person or persons, entity, property or chattels in,
on, or about the Leased Premises, resulting in whole or in part from any
negligent or willfully tortious act done or omission by or through Lessee, any
Affiliate of Lessee, or any third party in or on the Leased Premises, or
resulting from Lessee's, any such Affiliate's, or any such third party's use,
non-use or occupancy of the Leased Premises in any manner contrary to the
requirements of this Agreement, except for such Damages resulting from the gross
negligence or willful misconduct of Lessor or SSC. Without limiting the
generality of the foregoing, Lessee shall defend, indemnify and save Lessor
harmless from any and all Damages that may occur or be claimed with respect to
Lessee's, any Affiliate of Lessee's, or any such third party's violation or
failure to comply with all Environmental Laws which occurred during the Lease
Term, except for such Damages resulting from the gross negligence or willful
misconduct of Lessor. Notwithstanding anything set forth in this paragraph 15,
Lessor shall not be responsible for any violation of or liability under any
Environmental Law to the extent arising from any event or condition that (a) on
or prior to the Commencement Date exists on or results from the migration or
transport from the Leased Premises, or (b) exists at any time at any location to
the extent caused or contributed to by Lessor, SSC or any prior owner of the
Leased Premises. This covenant of indemnity shall survive expiration or
termination of this Agreement, and shall be construed as supplementary to and
not be construed to conflict with or limit any other covenant of indemnity
contained in this Agreement.
For purposes of this Agreement, "Damages" include any and all expenses,
losses, costs, claims, liability or damages incurred by the damaged party as a
proximate result of an event or occurrence causing loss to the damaged party,
including, without limitation, reasonable attorneys' fees and other defense
costs; and "Affiliate" means a person, company or other entity directly or
indirectly controlled by, controlling, or under common control with the
affiliated entity.
16. In the event of damage or destruction of the Leased Premises from
any casualty, the terms and provisions of Section 15.1 and 15.2 of the Master
Lease shall be applicable, and they are incorporated herein by reference as if
fully set forth; provided, however, if more than 25% of the Facility is
destroyed by an insured casualty occurrence, or if the repairs required to be
made at the Facility as a result of the casualty cannot
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reasonably be expected to be completed prior to the expiration of the Lease
Term, then Lessee may elect within thirty (30) days of such casualty occurrence
to terminate this Agreement, in which event the full amount of the casualty and
rent interruption insurance proceeds, any deductible amount and any self-insured
amount shall be paid to Lessor and SSC, and this Agreement shall terminate (the
real estate tax payments shall be prorated to the date of termination, as
provided in paragraph 5 hereof, all other Additional Rent, if any, shall be paid
by Lessee through the date of termination and no part of the Base Rent shall be
refunded).
17. (a) If, during the Lease Term, the Leased Premises or any part
thereof is condemned or appropriated by any public authority such that Lessee
reasonably determines that the Leased Premises cannot economically be used by
Lessee for the purposes for which it was used immediately before such taking (a
"Total Taking"), this Agreement shall terminate on the later to occur of the
date (i) on which title to the portion of the Leased Premises subject to the
Total Taking vests in the condemning authority responsible for such taking, and
(ii) of payment to Lessor of the entire amount paid by the condemning authority.
In such event, the prepaid Base Rent shall be equitably refunded to Lessee by
Lessor, pro-rata, based upon the date of Lease termination.
(b) If a portion of the Leased Premises is condemned or
appropriated by any public authority during the Lease Term in a manner which
Lessee reasonably determines would not materially and adversely affect the use
thereof by Lessee after practical repair and reconstruction, this Agreement
shall remain in effect and Lessee shall repair and reconstruct the Facility to
as nearly as practicable the same condition, or better, as it existed
immediately prior to such taking, in which event Lessor shall deliver the
proceeds relating to such condemnation or appropriation loss to Lessee, and any
amount in excess of the amount required to repair or reconstruct the Facility
shall be retained by Lessor to compensate Lessor for any portion of the Land and
any appurtenant rights and easements taken. Lessee's obligation to repair and
reconstruct shall not be limited to the proceeds of condemnation available for
such purposes. Lessor may disburse the payment of such proceeds in a manner that
assures Lessor of satisfactory, lien-free completion of such repair or
construction in accordance with standard construction lending disbursement
practices. Notwithstanding the foregoing, if more than 25% of the Facility is
condemned or appropriated as stated above, or if the repairs required to be made
at the Facility as a result of the condemnation or appropriation cannot
reasonably be expected to be completed prior to the expiration of the Lease
Term, then Lessee may elect on the effective date of such taking to terminate
this Agreement, in which event the full amount of the condemnation appropriation
proceeds shall be paid to Lessor and SSC, and this Agreement shall terminate
(the real estate tax
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payments shall be pro-rated to the date of termination, as provided in paragraph
5 hereof, all other Additional Rent, if any, shall be paid by Lessee through the
date of termination, and no part of the Base Rent shall be refunded).
18. Lessee shall take no action or fail to take any action which would
cause a default under the terms of the Master Lease. Lessor shall take no action
or fail to take any action which would cause a default under the terms of the
Master Lease. Lessor shall indemnify, defend and hold Lessee harmless from and
against all claims, obligations and costs of any kind whatsoever, including
without limitation reasonable attorneys' fees, that Lessee may incur by reason
of or resulting from any default or breach due to the acts or omissions of
Lessor as tenant under the Master Lease.
19. The following shall be deemed an event of default hereunder:
(a) should Lessee fail to pay any installment of Base Rent or
Additional Rent, or any other sum herein required to be paid to Lessor, within
ten (10) days after such payment is due and payable; or
(b) should Lessee abandon or vacate the Leased Premises for
any period of more than one hundred eighty (180) consecutive days; or
(c) should Lessee fail to maintain any insurance required
pursuant to Section 14(a) hereunder; or
(d) should Lessee fail to perform any other covenant or to
comply with any other condition herein provided to be performed or complied with
by Lessee (other than the payment of money and maintenance of insurance), within
thirty (30) days after receipt by Lessee of written notice thereof from Lessor
(or in the event such failure can be removed or corrected, but cannot be removed
or corrected within such thirty (30) day period, in the event Lessee does not
commence to remove or correct such failure within said thirty (30) day period
and thereafter diligently pursue such removal or correction to completion as
quickly as may be reasonably practicable, but in any event within one hundred
eighty (180) days after the onset of such failure); or
(e) should there occur any material breach of any
representation or warranty by Lessee hereunder.
20. In the event of a default by Lessee as described in Section 19
above, then Lessor shall have the same rights as provided in Section 17.2(a),
(b) and (c) of the Master
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Lease, the terms of which are incorporated herein by reference. It is agreed
that Lessor shall be entitled to such Damages for such default as provided by
law. To the maximum extent permitted by law, should Lessee commit a default
under this Agreement, it hereby covenants and agrees to pay and discharge all
reasonable costs and expenses which shall be incurred by Lessor arising out of
such default, in enforcing the covenants and agreements of this Agreement,
including, without limitation, reasonable attorneys' fees.
21. The failure of Lessor insist in any one or more cases on strict or
specific performance of any provision of this Agreement or to exercise any right
herein contained shall not constitute a waiver in the future of such right.
Acceptance by Lessor of rent or other payment, or acceptance of any other
performance required hereunder with knowledge of a breach by Lessee of any
provision hereof, shall not constitute a waiver of such breach, nor shall any
acceptance of rent or other payment in a lesser amount than herein provided for
operate or be construed in any other manner other than as a payment on account
of the earliest rent or other charge then unpaid by Lessee. No remedy referred
to in Section 20 is intended to be exclusive, but each shall be cumulative and
in addition to any other remedy referred to above or otherwise available to
Lessor at law or in equity, and the exercise in whole or in part by Lessor of
any one or more of such remedies shall not preclude the simultaneous or later
exercise by Lessor of any or all other such remedies. No waiver by Lessor of any
default hereunder shall in any way be, or be construed to be, a waiver of any
future or subsequent default.
22. Lessee may not assign its rights, or any of them hereunder, except
to an Affiliate of Lessee (incorporated under the laws of a State of the United
States), which shall assume in writing and agree to be bound by all of the
terms, conditions, duties and obligations hereunder, and then only if Lessor and
SSC shall have given their prior consent to such assignment. Lessor shall not
withhold or delay such consent unreasonably, and SSC will agree in the Consent
set forth at the end of this Agreement not to withhold or delay such consent
unreasonably. Lessee shall not make or agree to make any partial assignment of
the rights granted or conferred hereunder. No sublease of the Leased Premises or
any portion thereof shall be granted hereunder, except that Lessee may sublease
up to 50% of the square footage of the Facility to an Affiliate. Any such
assignment or subletting shall not relieve Lessee of any obligations hereunder.
Any assignment, sublease, or subcontract (or attempted assignment, sublease or
subcontract) in violation of these restrictions shall be void.
23. Except to the extent that Lessee shall have purchased the Leased
Premises pursuant to Section 30, Lessee shall surrender the Leased Premises to
Lessor upon expiration or termination of the Lease Term in as good condition and
repair as the same shall be at the commencement of the Lease Term, ordinary wear
and tear and construction of permitted improvements thereon, excepted. The
Facility must be capable
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64
of fulfilling the purpose for which it was originally intended and must conform
to all regulatory requirements imposed by any applicable governmental body
during the Lease Term. No tenancy of any duration (other than a tenancy-at-will)
shall be created by Lessee's holding over beyond the end of the Lease Term.
24. All equipment and trade fixtures furnished by Lessee and used in
the operation of the Facility, shall at all times be and remain the personal
property of Lessee. Unless Lessee shall have purchased the Leased Premises
pursuant to Section 30, Lessee shall, on or prior to the Termination Date,
remove all of such equipment and trade fixtures from the Leased Premises. At
Lessor's request, Lessee shall repair all damage to the Leased Premises caused
by such trade fixtures and equipment or by their removal.
25. Lessor covenants that, for so long as Lessee shall enjoy any
leasehold estate under this Agreement, Lessee, having performed all covenants
and obligations herein set forth, shall have quiet and peaceable possession of
the Leased Premises, subject to and on the terms and conditions herein provided,
free and clear of any claim by, from, through or under any person lawfully
claiming an interest in the Leased Premises from or through Lessor.
26. The relationship of the parties hereunder is that of independent
contractors and of lessor and lessee.
27. Any notices under or pursuant to this Agreement shall be deemed
duly sent when delivered in hand or when mailed by registered or certified mail,
return receipt requested, addressed as follows:
To Lessor: Huffy Corporation
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: Treasurer
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
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65
With Copy To: Huffy Corporation
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
To Lessee: Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Evenflo Company Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
With Copy to: Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Either party may change such address by sending notice of the change to the
other party.
28. The provisions of Section 22, 24, 25 and the last two sentences of
Section 27 from the Master Lease are incorporated herein by reference as if
fully set forth.
29. Except as provided in paragraph 9(b) hereof, Lessee acknowledges
that this Agreement is intended to be absolutely "net" in nature, with all
expenses associated with operating, maintaining, repairing or replacing the
Leased Premises during the Lease Term, or any part thereof, to be paid by
Lessee. Lessee will pay all such expenses directly to the providers of the goods
and/or services.
30. (a) In the event Lessor or an Affiliate of Lessor obtains from
SSC fee title to the Leased Premises during the Lease Term, this Agreement shall
continue in full force and effect pursuant to its terms. In addition, in the
event Lessor or an Affiliate of Lessor obtains from SSC fee title to the Leased
Premises during the Lease Term, and thereafter during the Lease Term Lessor is
prepared to execute a sale agreement ("Proposed Purchase Agreement") for the
Leased Premises with a third party purchaser which is not an Affiliate of Lessor
("Third Party Purchaser"), then Lessor shall deliver to Lessee a copy of the
Proposed Purchase Agreement with the Third Party Purchaser and Lessee shall have
a period of 10 business days thereafter to deliver to Lessor a notice that it
desires to purchase the Leased Premises upon the exact same terms, conditions
and price as set forth in the Proposed Purchase Agreement. If Lessee fails to
deliver the required notice within such 10 business day period, then it shall be
conclusively presumed that Lessee
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has waived its right to purchase, and Lessor may then enter into the Proposed
Purchase Agreement with the Third Party Purchaser or its assigns. Thereafter,
Lessee shall have no right to purchase the Leased Premises, but such sale shall
be made to the Third Party Purchaser subject to all other terms of this
Agreement.
If Lessee gives notice within such permitted notice period that it
elects to purchase, then the Proposed Purchase Agreement will be redrafted for
Lessee's and Lessor's signatures, and within 3 business days thereafter, Lessor
and Lessee will enter into a purchase agreement for the Leased Premises on the
exact same terms, provisions, conditions and price as set forth in the Proposed
Purchase Agreement, provided, however, Lessee shall receive a credit on the
purchase price equal to the pro-rata amount of prepaid rent paid by Lessee to
Lessor.
(b) In the event Lessor or an Affiliate of Lessor obtains from SSC fee
title to the Leased Premises during the Lease Term (and Lessor has not delivered
to Lessee a copy of the Proposed Purchase Agreement with a Third Party
Purchaser), then Lessee shall have the option, to be exercised by written notice
to Lessor from Lessee to be received by Lessor at any time prior to the
expiration of the Lease Term and prior to delivery of a copy of a Proposed
Purchase Agreement with a Third Party Purchaser, to purchase the Leased Premises
from Lessee. The purchase price shall be the exact same purchase price paid for
the Leased Premises by Lessor from SSC. Closing shall occur prior to the
expiration of the Lease Term by delivery of a limited warranty deed from Lessor
to Lessee (or its assigns), with no pro-ration of real estate taxes or
assessments and Lessee paying all transfer, recording, title and escrow fees
(each party shall pay their own attorneys' fees). A credit on the purchase price
shall be given to Lessee by Lessor for prepaid Base Rent, as provided in
paragraph 30(a) above.
In addition, Lessee may also give written notice to Lessor no later
than thirty (30) days prior to the expiration of the Lease Term that Lessee
desires Lessor to (i) attempt to negotiate with SSC a purchase price for the fee
title to the Leased Premises, and (ii) if negotiations are successful, to
purchase from SSC the fee title to the Leased Premises. Lessor, while consulting
with Lessee, will thereafter attempt to negotiate with SSC an acceptable
purchase price for the Leased Premises, and if Lessee, in its sole discretion,
deems such negotiated purchase price acceptable, then Lessee shall direct Lessor
to acquire and Lessor shall make a good faith attempt to acquire fee title to
the Leased Premises from SSC on or before the Lease Termination Date.
Simultaneous with the acquisition from SSC of the fee title, Lessor shall
transfer the fee title to the Leased Premises by limited warranty deed to Lessee
at the exact same purchase price paid by Lessor, less a credit for prepaid Base
Rent, as provided in paragraph 30(a) above, with all other costs, fees or
expenses to be incurred by Lessor limited to Lessor's own attorney fees.
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67
31. Simultaneous with the execution of this Agreement, Lessor shall
obtain the written consent of SSC (the "Consent of SSC") to this Agreement, the
specific terms of the Consent of SSC is as set forth after the signature page
hereof.
32. Lessee acknowledges and understands that this Agreement is made,
and is in all respects expressly subject and subordinate to all of the terms and
conditions of the Master Lease. Except as otherwise intended by Section 30
above, if the Master Lease is terminated by SSC for any reason, this Agreement
shall automatically terminate (Lessee or Lessor, as the case may be, may
thereafter have such rights and claims as against the other party hereto as
provided in this Agreement); provided, however, that if the Master Lease
terminates as a result of a default under the Master Lease, Lessee shall, at the
option of SSC, attorn to and recognize SSC as landlord hereunder and Lessee
shall promptly, upon SSC's request, execute and deliver all instruments
necessary or appropriate to confirm such attornment and recognition.
33. Lessor represents and warrants to Lessee that the Master Lease is
unmodified and in full force and effect, all rent (Base Rent and Additional
Rent) has been paid as of the date of this Agreement; to the best of Lessor's
knowledge, there is no event of default under the Master Lease; Lessor has not
received any notice of default from SSC under the Master Lease; and to the best
of Lessor's knowledge, except for the Consent of SSC, no other consent is
required in order for Lessor to enter into this Agreement with Lessee.
34. To the extent the indemnification provisions set forth in this
Agreement are inconsistent with the indemnification provisions set forth in that
certain Asset Purchase Agreement dated March 7, 1997 by and between Lessor and
Lessee (the "Asset Agreement"), the terms of the Asset Agreement shall control.
{Signature Page Follows}
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as agents, as of the date and year of
acknowledgement of their signatures, as set forth below.
LESSOR:
Signed and acknowledged in
the presence of: ▇▇▇▇▇ BABY PRODUCTS COMPANY,
a Delaware corporation
By:
------------------------------------ -------------------------------------
Its:
------------------------------------ -------------------------------------
Printed Name
------------------------------------
------------------------------------
Printed Name
LESSEE:
EVENFLO COMPANY, INC.
By:
------------------------------------ -------------------------------------
Its:
------------------------------------ -------------------------------------
Printed Name
------------------------------------
------------------------------------
Printed Name
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CONSENT OF SSC
The undersigned, lessor under the Master Lease, hereby states that
attached hereto is a true and correct copy of the Master Lease, that the Master
Lease is unmodified and in full force and effect, to the best knowledge of the
undersigned, all rent (Base and Additional) has been paid as of this date, and
the undersigned has not delivered to Lessor a notice of default under the Master
Lease, nor have they received notice of default from Lessor. Further, the
undersigned agrees that upon an event of default under the Master Lease, it
shall give written notice of same to Lessee and an opportunity to cure such
default for not less than ten (10) business days after such notice (notice shall
be delivered at the address and as otherwise provided in paragraph 27 of the
Agreement). Undersigned further agrees that it shall not unreasonably withhold
or delay consent for Evenflo Company, Inc. to assign the Agreement to its
Affiliate, pursuant to the terms of paragraph 22 of the Agreement. The
undersigned hereby consents to the foregoing Sublease Agreement, with the
express understanding and agreement on the part of the undersigned that all of
SSC's costs and expenses (including reasonable attorneys' fees and expenses)
incurred in connection with this Agreement and its Consent hereto shall be
promptly reimbursed by Lessor upon demand. The foregoing Consent shall not be
deemed a waiver of any restriction in the Master Lease concerning any further
assignment or subletting.
SELCO SERVICE CORPORATION
By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
Dated:
----------------------------------
20
70
STATE OF OHIO )
) ss
COUNTY OF _______________ )
The foregoing instrument was acknowledged before me on __________,
1997, by _________________________, the ________________ of Evenflo Company,
Inc., on behalf of the corporation.
----------------------------------------
Notary Public
My Comm. Expires:
STATE OF OHIO )
) ss
COUNTY OF ▇▇▇▇▇▇▇▇▇▇ )
The foregoing instrument was acknowledged before me on __________,
1997, by ___________________, the Secretary of ▇▇▇▇▇ Baby Products Company, a
Delaware corporation, on behalf of the corporation.
----------------------------------------
Notary Public
My Comm. Expires:
This Instrument Prepared By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & Shohl, LLP
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
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SCHEDULE 1
Lease Commencement Date: _____________, 1997
Original Termination Date: _____________, 1998
Extended Term Termination Date: _____________, 1999
Lease Term: Eighteen (18) Months with an option
to extend for an additional Six (6)
Months
(RENT IS PAYABLE IN ADVANCE ON THE DAYS AND IN THE AMOUNT SHOWN BELOW, BUT THE
EXACT AMOUNT OF THE FIRST AND LAST PAYMENTS AND THE DETERMINATION OF PAYMENTS TO
BE MADE DURING THE ORIGINAL LEASE TERM AND EXTENDED LEASE TERM WILL BE INSERTED
AT THE TIME THIS AGREEMENT IS EXECUTED AND THE EXACT DATE FOR THE COMMENCEMENT
OF THE ORIGINAL LEASE TERM IS KNOWN.)
April 1, 1997 $117,135.00
May 1, 1997 $117,135.00
June 1, 1997 $117,135.00
July 1, 1997 $116,463.33
August 1, 1997 $116,463.33
September 1, 1997 $116,463.34
October 1, 1997 $115,791.66
November 1, 1997 $115,791.66
December 1, 1997 $115,791.68
January 1, 1998 $115,120.33
February 1, 1998 $115,120.33
March 1, 1998 $115,120.34
April 1, 1998 $114,448.66
May 1, 1998 $114,448.66
June 1, 1998 $114,448.68
July 1, 1998 $113,777.00
August 1, 1998 $113,777.00
September 1, 1998 $113,777.00
October 1, 1998 $113,105.33
November 1, 1998 $113,105.33
December 1, 1998 $113,105.34
January 1, 1999 $112,433.66
February 1, 1999 $112,433.66
March 1, 1999 $112,433.69
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72
April 1, 1999 $111,762.00
May 1, 1999 $111,762.00
(The First and Last Payment shall be pro-rated based on number of days
of the month if the Commencement Date and Termination Date are on other than the
first day of the month.)
Lessee shall make its Lease payments directly to Lessor so that they are
received on or before the due dates set forth above.
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Exhibit A
Legal Description To Be
Attached At Time
of Execution of Agreement
24
74
Exhibit B
Master Lease To Be Attached
At Time of Execution of Agreement
25
75
EXHIBIT B
UNION CONTRACT ASSUMPTION AGREEMENT
This Agreement by and between Evenflo ("Purchaser") and the Union of
Needletrades, Industrial and Textile employees, AFL-CIO-CLC, Local #1156C
("Union") witnesseth:
WHEREAS, Purchaser has agreed to purchase certain assets from ▇▇▇▇▇
Baby Products Company and ▇▇▇▇▇ ▇▇▇▇ products Company ("Seller") which assets
include the equipment, inventory, real property and leasehold interest in
property located in Thornton, Colorado ("Plant"); and
WHEREAS, Purchaser plans to offer employment to certain of the workers
who are represented by Union at Plant; and
WHEREAS, Purchaser and Union desire to have in place the terms and
conditions of employment which will govern the employment of said workers when
they commence working for Purchaser;
NOW THEREFORE, in consideration of the mutual promises contained herein
the parties hereto agree as follows:
1. Effective upon completion of purchase of the Plant by Purchaser
and the employment of such of the workers currently employed there as to whom
Purchaser may decide to employ.
A. Purchaser recognizes the Union as the sole and exclusive
representative of all of its production and maintenance employees employed at
the Plant;
B. Purchaser agrees to assume each and every obligation contained in
a certain collective bargaining agreement between Union and Seller which
collective bargaining agreement expires on December 31, 1998 and all Settlement
Agreements and Letters of Understanding between Union and Seller modifying the
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above agreement, including but not limited to, the Letter of Understanding
Regarding $7.00/Hour Restructuring executed by Union and Seller on or about
February 27, 1997 (the "$7.00/Hour Restructuring Agreement");
(1) Union agrees that the terms of the $7.00/Hour
Restructuring Agreement applies to all production positions at the
Plant, with the exception of those on production lines 690/691,
626/627/628, 674/676, and 683.
(2) Union agrees that the following production will be
outsourced and that the only payments to which the effected employees
are entitled with respect to this outsourcing are those described in
paragraph 9 of the $7.00/Hour Restructuring Agreement: Sewing --
740/750 Frame Carrier, Aluminum Frame Carrier, 803 Swing, Misc. sewing,
691/683 Convertible, 671 Super Shield Booster, 675 Double Guard
Booster, 626 Securide Infant, 627 Ride N Glide Infant, 631/637 2 N 1
Booster, 696/698 Bolster.
(3) Union agrees that the following production lines have
been converted to the reduced pay structure in accordance with the
$7.00/Hour Restructuring Agreement: 636/637 2N1 Car Seat Assembly, 671
Booster Assembly, Infant Seat Assembly 037/038, Splash Seat 44, All
diaper pails, all baths, toilet trainer.
(C) Union agrees to substitute the name "Evenflo" at all places in
the aforementioned collective bargaining agreement where the words "▇▇▇▇▇ Baby
Products Company" or "Employer" currently appear;
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D. Union agrees that the benefits described in Article XVI of
the collective bargaining agreement, including the Letter of Understanding
between Union and Seller dated January 9, 1996 and all summary plan
descriptions attached thereto, shall be replaced with benefits which, in the
aggregate, are substantially comparable to, but not necessarily the same.
Benefits to be provided will at a minimum include medical, prescription drugs,
life insurance coverage, short term disability, optional long term disability,
severance and optional vision care.
E. Purchaser and Union agree to incorporate each and every
term of the collective bargaining agreement and Lettters of Understanding, as
modified by paragraphs 1C and 1D above, into this Contract Assumption Agreement
as if each term were fully herein set forth.
2. This Contract Assumption Agreement shall become
effective at 12:01 a.m. on the day immediately following the date on which the
purchase of the Plant is completed; provided, however, that in the event the
purchase of the Plant shall not have been completed on or before _____, 1997,
this Contract Assumption Agreement shall be null and void.
IN WITNESS WHEREOF, the parties to this Contract Assumption
Agreement have affixed their respective signatures this _____ day of _______,
1997.
Evenflo Union of Needletrades,
Industrial and Textile
Employees, Local 1156C
By: By:
---------------------------- ------------------------------
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EXHIBIT C
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT dated as of April 21, 1997 is made and
entered into by and among ▇▇▇▇▇ Baby Products Company, a Delaware corporation
("GWPC"), ▇▇▇▇▇ ▇▇▇▇ Products Company, a Wisconsin corporation ("GWPC") (GBPC
and GWPC are collectively referred to herein as "Assignors"), Huffy Corporation,
an Ohio corporation and sole shareholder of Assignors ("Huffy") and Evenflo
Company, Inc., a Delaware corporation ("Assignee").
WITNESSETH:
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of March 7,
1997 (the "Purchase Agreement"), by and among Huffy, the Assignors, and the
Assignee, the Assignors have sold, transferred, assigned, conveyed and delivered
to Assignee substantially all of their respective properties, assets and
business as set forth in the Agreement (the "Assets"); and
WHEREAS, the Purchase Agreement requires that Assignee undertake to
assume and to agree to perform, pay or discharge certain liabilities and
obligations of Assignors relating to Assignor's businesses;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration the receipt of which is hereby acknowledged, Huffy, the
Assignors and Assignee agree as follows:
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Purchase Agreement.
1. Assignee hereby unconditionally undertakes, assumes and agrees to
fully perform, pay, satisfy and discharge when due, subject to the limitations
contained in paragraph 2 hereof, all Assumed Liabilities as set forth in the
Purchase Agreement.
2. It is expressly understood that Assignee is not assuming or agreeing
to perform, pay or discharge any liabilities not assumed pursuant to the terms
of the Purchase Agreement.
3. Nothing contained herein shall require Assignee to pay, perform or
discharge any liabilities or obligations expressly assumed hereunder so long as
Assignee shall in good faith contest or cause to be contested the amount or
validity thereof, provided that Assignee shall indemnify Assignors, Huffy and
their affiliates and hold them harmless against any liabilities, damages, claims
and expenses, including the reasonable fees and expenses of their counsel, which
Assignors or Huffy may incur as a result of any such contest and Assignors or
Huffy shall have no obligation to participate in any way on Assignee's behalf or
otherwise in or with respect to any such contest.
4. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given on the
date of service if served personally
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on the party (including without limitation service by overnight courier service)
to whom notice is to be given, or on the third day after mailing if mailed to
the party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, at the address set forth below, or on the date of
service if delivered by facsimile to the facsimile number set forth below which
facsimile is confirmed within three days by deposit of a copy of such notice in
first class mail, registered or certified, postage prepaid at the address set
forth below. Any party may change its address for purposes of this paragraph by
giving the other parties written notice of the new address in the manner set
forth above.
If to Assignors or Huffy Corporation
to Huffy: ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President-General Counsel and
Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇, ▇▇., Esq.
▇▇▇▇▇▇▇▇ & Shohl
1900 Chemed Center
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Assignee: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Evenflo Company, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the date of hand
delivery or on the third business day after the mailing thereof.
5. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
2
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6. This Agreement may be amended, supplemented or otherwise modified
only by a written instrument executed by the parties hereto. No waiver by either
party of any of the provisions hereof shall be effective unless explicitly set
forth in writing and executed by the party so waiving. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any covenants or agreements contained herein and in any documents delivered or
to be delivered pursuant to this Agreement. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
7. If any provision of this Agreement shall be declared by any court of
competent jurisdiction to be illegal, void or unenforceable, all other
provisions of this Agreement shall not be affected and shall remain in full
force and effect.
8. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
9. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Ohio without regard to conflicts of laws or
principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
▇▇▇▇▇ BABY PRODUCTS COMPANY
By:
-----------------------------------------
Title:
▇▇▇▇▇ ▇▇▇▇ PRODUCTS COMPANY
By:
-----------------------------------------
Title:
3
81
HUFFY CORPORATION
By:
-----------------------------------------
Title:
EVENFLO COMPANY, INC.
By:
-----------------------------------------
Title:
4