ASSET PURCHASE AGREEMENT
BY AND BETWEEN
BROOKFIELD INTERNATIONAL, INC.
AND
BROOKFIELD ATHLETIC CO., INC.
JUNE 27, 1997
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated June 27, 1997 by and
between BROOKFIELD INTERNATIONAL, INC., a Delaware corporation (the "Buyer"),
and BROOKFIELD ATHLETIC CO., INC., a Massachusetts corporation (the "Seller").
WHEREAS, the Seller is engaged in the business of manufacturing and selling
the recreational sports products identified on Exhibit A hereto (the "Products",
such business being herein the "Brookfield Business"); and
WHEREAS, the Buyer desires to purchase from the Seller and the Seller
desires to sell to the Buyer substantially all of the assets constituting the
Brookfield Business as a going concern; and
WHEREAS, simultaneously herewith, the parties are entering into a
Transitional Services Agreement in the form attached hereto as Exhibit B
pursuant to which the Seller is agreeing to provide certain services, all as
more fully set forth therein (the "Transitional Services Agreement").
NOW, THEREFORE, in consideration of the foregoing and the respective repre-
sentations, warranties, covenants, agreements and conditions hereinafter set
forth, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I.
PURCHASE AND SALE OF ASSETS
1.1. Purchase and Sale of Assets. At the Closing (as hereinafter
defined), the Seller shall sell, transfer, assign and deliver to the Buyer, and
the Buyer shall purchase, accept, assume and receive, all of the Seller's right,
title and interest in, to or arising from the assets comprising the Brookfield
Business, including, without limitation, the following assets, but excluding the
Excluded Assets as defined below (all such assets, other than the Excluded
Assets, being the "Purchased Assets"):
(a) All finished goods, including goods in transit, all work-in-
process, packaging materials and raw materials used exclusively in the
Brookfield Business (the "Inventory");
(b) The trademarks "Brookfield", "Easy Rollers", "Canadian Flyer" and
all other trademarks, trade dress, trade names, brand names, service marks,
logos, logotypes, packaging style and symbols which are or have been used
primarily in respect of the Products, other than the Excluded Marks (as
defined below), together with the goodwill associated therewith, any
registrations associated therewith, including any applications, renewals,
modifications or extensions (collectively, "Registrations"), all copyrights
and slogans, and any registrations associated therewith that are or have
been used primarily by the Seller or any predecessor owner, or are under
development, in the manufacture, promotion, sale or commercial exploitation
of the Products;
(c) All computers and related hardware, equipment, machinery, tools,
molds, and replacement parts and all other items of tangible personal
property used exclusively in the Brookfield Business, including those
identified on the fixed asset register attached hereto as Schedule 1.1(c)
(collectively, the "Fixed Assets"); provided, however, that the only laptop
computers and personal computers used in the Brookfield Business and being
conveyed as part of the Purchased Assets are those specifically identified
on Schedule 1.1(c);
(d) Except to the extent identified as being excluded on Schedule
1.1(d), all formulae and processes and all trade secrets, patents and
registrations therefor, which are or have been used by the Seller or any
predecessor owner, or are under research and development, to the extent
relating to the manufacture, promotion, sale or commercial exploitation of
the Products or the Brookfield Business (the "Manufacturing Know-How");
(e) All existing files pertaining to the manufacturing, production,
promotion, advertising, distribution and sale of the Products or relating
primarily to the Brookfield Business, in whatever format (written or
machine readable, or in computer data bases or other media), including,
without limitation, research and development files and studies, market
studies (including studies in respect of competitors' brands), copies of
consumer complaint files, sale histories, quality control histories, files
relating primarily to Manufacturing Know-How, and any and all other
business records relating to the Products, including the accounts
receivable and the accounts payable (the "Business Records"), provided,
however, that Seller shall retain the originals of any Business Records
that it is required by law to maintain or that are not exclusively related
to the Brookfield Business, and shall furnish copies thereof to Buyer;
(f) All marketing materials and rights to the extent relating to the
promotion, marketing and advertisement of the Products, including slogans,
jingles, marketing campaigns, promotional materials (including trade show
booths and displays), art mechanical and artwork for the production of
packaging components, television and radio masters, film or video clips,
sound recordings, photographs, and similar materials, any Registrations
associated therewith that have been used by the Seller, any predecessor
owner, or are under development for use primarily, in the manufacture,
promotion, sale or commercial exploitation of the Products or relating
primarily to the Brookfield Business (the "Marketing Materials");
(g) All existing lists of suppliers, customers and distributors of
the Brookfield Business;
(h) all claims, causes of action and other rights against others
relating to the Purchased Assets;
(i) All software and documentation thereof used exclusively in the
Brookfield Business in which the Seller has proprietary rights (including
all electronic data processing systems, program specifications, source
codes, input data, flow charts and other related material, including all
documentation with respect thereto) and all information contained in all
data bases dedicated to the Brookfield Business; provided, however, that it
is understood and agreed that no rights to the software licensed by Applied
Consulting, Inc. ("APCON") or Sotas International Inc. ("SOTAS") or the
applications software which is not transferable under the terms of the
licenses for such applications software (the "Excluded Software") used on
the laptop computers and personal computers used in the Brookfield Business
are being conveyed as part of the Purchased Assets, and Buyer acknowledges
that all such Excluded Software will be deleted before delivery of laptop
computers and personal computers to Buyer;
(j) all rights under the Material Contracts (as hereafter defined) to
the extent identified with an asterisk on Section 4.11(a) of the Disclosure
Schedule (the "Assigned Agreements");
(k) To the extent assignable, all permits, governmental licenses,
filings, authorizations, approvals and indicia of authority (and pending
applications for any thereof) to conduct the Brookfield Business;
(l) All prepaid expenses, as identified in Section 1.1(l) of the
Disclosure Schedule;
(m) All accounts receivable (the "Accounts Receivable");
(n) The Seller's rights to exhibitor space and exhibitor hotel rooms
in respect of the annual National Sporting Goods Association trade show and
the annual Sporting Goods Manufacturer's Association trade show (the "Trade
Show Rights"); and
(o) The Seller's rights to the Uniform Code Council UPC numbers being
used on packaging for the Products.
1.2. Excluded Assets. The following assets of the Brookfield Business
are expressly excluded from the Purchased Assets being acquired by the Buyer
hereunder (the "Excluded Assets"):
(a) The corporate minute books and stock records of the Seller;
(b) Any rights which the Seller may have to enforce the obligations
of the Buyer pursuant to this Agreement and the other documents and
agreements contemplated hereby;
(c) The books of account and other records which are required by law
to be kept in the Seller's possession, including but not limited to tax
returns (except that Buyer shall be given access to such books and records
as reasonably necessary or desirable for the conduct by the Buyer of the
Brookfield Business);
(d) The trademarks "Spot-Bilt" and "Hyde" and derivations thereof and
all associated logos, logotypes, symbols and goodwill (the "Excluded
Marks");
(e) Real property leases relating to real property used in the
Brookfield Business (the "Excluded Leased Real Property"), and the
furniture, fixed assets and other tangible personal property located at
such premises;
(f) the real estate and structures owned by the Seller and located in
East Brookfield, Massachusetts;
(g) cash or cash equivalents;
(h) all intercompany receivables, notes or loans between (i) the
Brookfield Business and (ii) Hyde Athletic Industries, Inc., a
Massachusetts corporation ("Hyde"), the Seller or other subsidiaries of
Hyde;
(i) all of the rights, properties and assets used in the Brookfield
Business which are transferred or disposed of prior to the Closing in the
ordinary course of business, consistent with past practice;
(j) the two motor vehicles identified on Schedule 1.2(j); and
(k) the items specifically excluded from the definition of Purchased
Assets in Section 1.1 above.
1.3. Assumed Liabilities. At the Closing, the Buyer shall assume, and
shall be solely and exclusively liable with respect to, the following
liabilities and obligations of the Seller (the "Assumed Liabilities"):
(a) Those accounts payable of the Brookfield Business that are
reflected on the Closing Balance Sheet (as hereafter defined);
(b) Those accrued expenses of the Brookfield Business that are
reflected on the Closing Balance Sheet;
(c) All open orders for trade purchases of finished goods of the
Brookfield Business;
(d) The obligations for the period after the Closing as set forth in
the Assigned Agreements; and
(e) All other debts, liabilities and obligations to the extent
accrued or reserved against in the Closing Balance Sheet, provided they
shall also be of the same category and nature as shall have been reserved
against in the April 4, 1997 balance sheet attached hereto as Exhibit C.
(f) After the Closing, the Buyer shall discharge and satisfy in full
when due all Assumed Liabilities; provided, however, that nothing herein
shall be deemed to prevent or limit the Buyer's right to contest with third
parties any claim that the Buyer is liable for any such liability, or the
amount thereof.
1.4. Excluded Liabilities and Obligations. Except as expressly set
forth in Section 1.3 above, the Buyer shall not assume and shall not be liable
or responsible for any debt, obligation or liability of the Seller or any
affiliate of the Seller, or any claim against any of the foregoing, of any kind,
whether known or unknown, contingent, absolute or otherwise, whether or not
relating to the Brookfield Business (the "Excluded Liabilities and
Obligations"). Without limiting the foregoing, and except as provided in
Section 1.3(e), the Buyer shall not assume, undertake or accept, and shall have
no responsibility with respect to, the following liabilities or obligations
(which also constitute Excluded Liabilities and Obligations):
(a) Related to or arising from transactions with any affiliate of the
Seller, including interdivisional, intracompany or intercompany payables,
obligations or agreements;
(b) For taxes of any kind, howsoever denominated including federal,
state and local taxes on income, sales and use, ad valorem duties and
assessments, worker's compensation, unemployment taxes, excise taxes, FICA
contributions, payroll taxes and profit sharing deductions and all taxes
and charges related to or arising from the transfers contemplated hereby,
subject to Section 13.4 hereof;
(c) Any liabilities for the Seller's breach or default prior to
Closing under any of the Assigned Agreements;
(d) Liabilities and obligations of the Seller with respect to
litigations, actions, proceedings, investigations, or legal,
administrative, arbitration, or other method of settling disputes or
disagreements, or any governmental investigations, if any, pending at the
Closing or threatened on or prior to the Closing, or arising after Closing
based on events occurring prior to Closing (including, without limiting the
generality of the foregoing, the Existing Litigation);
(e) Any liability of the Seller as a result of any act, omission or
event occurring prior to the Closing Date, whether or not the related cause
of action or damage occurred after the Closing Date;
(f) Any liability of the Seller relating to use, storage, release,
discharge, disposal or shipment of Hazardous Substances, or the violation
of Environmental Laws (as such terms are defined in Schedule 1.4(f)
hereto), or any environmental liability of any nature or kind whatsoever;
and
(g) Any undisclosed liabilities, or any pension plan withdrawal
liability, funding deficiency or other liability, including without
limitation any liability under ERISA, the Internal Revenue Code of 1986, as
amended, or otherwise with respect to any Employee Plan (as defined in
Section 4.12 hereof), if any, any liabilities for accrued compensation,
benefits, sick pay, vacation pay, medical costs or severance in any such
case in respect of employees of the Seller, which arise on or prior to the
Closing Date or by virtue of the transactions contemplated hereby; and
(h) Any Liabilities for Trade Promotions or Consumer Promotions (as
herein defined) relating to the period prior to the Closing, except to the
extent accrued or reserved against in the Closing Balance Sheet.
After the Closing, the Seller shall discharge and satisfy in full when
due all Excluded Liabilities and Obligations; provided, however, that nothing
herein shall be deemed to prevent or limit the Seller's right to contest with
third parties any claim that the Seller is liable for any such liability, or the
amount thereof.
1.5. Legal Effect of Certain Consents. Pursuant to Section 3.2(c)
hereof, Seller is obtaining consents from the other parties to the Assigned
Agreements to the assignment thereof to the Buyer as contemplated hereby (the
"Assignment Consents"). As part of such Assignment Consents, the Seller and the
Buyer have been requested by certain of the other parties to the Assigned
Agreements to enter into various agreements as to the liabilities of the Seller
and the Buyer to such other parties in respect of obligations under the Assigned
Agreements. It is specifically agreed that any obligations undertaken by the
Seller and/or the Buyer (and/or by Hyde or Brynwood) to third parties in
connection with obtaining the Assignment Consents shall have no legal impact on
the parties' liabilities to each other as specified herein, or on the
definitions of Purchased Assets, Excluded Assets, Assumed Liabilities, and
Excluded Liabilities and Obligations. By way of example, unless otherwise
specifically provided herein: (i) any assumption by Buyer in an Assignment
Consent of liabilities under an Assigned Agreement relating to the period prior
to the Closing Date shall not relieve the Seller of such liabilities, nor create
an inference that such liabilities constitute Assumed Liabilities under this
Agreement, and (ii) any agreement by Seller in an Assignment Consent to remain
liable for obligations under an Assigned Agreement relating to the period
following the Closing Date shall not relieve the Buyer of such liabilities, nor
create an inference that such liabilities constitute Excluded Liabilities and
Obligations. Each party agrees (i) to fully indemnify the other party in
accordance with the provisions of Article XI in respect of any Losses subject to
indemnification thereunder regardless of any liability that may have been
imposed on the party seeking indemnification pursuant to the terms of any
Assignment Consent, and (ii) that such indemnification obligations shall be from
the first dollar (i.e., without regard to the $50,000 basket specified in
Section 11.7.)
ARTICLE II.
CONSIDERATION FOR TRANSFER
2.1. Consideration. The aggregate consideration for the Brookfield
Business and the Purchased Assets shall be the net asset value of the Purchased
Assets minus the Assumed Liabilities conveyed to and assumed by Buyer hereunder
as of the Closing Date (the "Purchase Price"). The net asset value shall be as
reflected on the Closing Balance Sheet (as hereafter defined), prepared in
accordance with U.S. generally accepted accounting principles ("GAAP"),
consistently applied with the January 3, 1997 balance sheet of the Brookfield
Business, a copy of which is attached hereto as Schedule 2.1(a) (subject to the
overall requirement of GAAP); provided, however, that (i) the 101 Dalmatian
Roller Skates and the Franklin in-line skates shall be valued at Seller's cost
on a first in, first out basis, (ii) there shall be $1,297,714 reflected in
respect of the barter credits described in Section 4.7 to the Disclosure
Schedule, (iii) the reserves for accounts receivable ($823,546.83) and
inventory ($289,342.12) shall be at least the dollar amounts therefor reflected
on the April 4, 1997 balance sheet of the Brookfield Business, a copy of which
is attached hereto as Schedule 2.1(b) (provided that the reserves for the
Dalmation Roller Skates and the Franklin in-line skates shall equal zero and
$88,798.35, respectively), and (iv) there shall be an accrual as required by
Section 8.2 (the net asset value as so calculated as of the Closing Date being
the "Net Asset Value").
2.2. Initial Payment. Simultaneously with the execution hereof, the
Buyer is paying to the Seller, by wire transfer or other form acceptable to
Seller, the amount of $6,000,000 (the "Initial Payment"), which payment shall be
increased or decreased dollar for dollar to reflect the Purchase Price as
finally determined as set forth below.
2.3. Determination of Purchase Price.
(a) Preparation of Closing Balance Sheet. Within sixty (60) days of
the Closing, the Seller shall deliver to the Buyer a consolidated balance
sheet reflecting the Net Asset Value (the "Closing Balance Sheet"), audited
by and containing an unqualified report of Coopers & ▇▇▇▇▇▇▇ L.L.P. (the
"Seller's Auditors"). The Closing Balance Sheet shall be prepared in good
faith in accordance with Section 2.1 and the representations and warranties
relating to the Closing Balance Sheet set forth in Sections 4.6 and 4.7
hereof. The Seller agrees that representatives of the Buyer may be present
during any physical inventory conducted as part of the audit of the Closing
Balance Sheet. The Seller agrees to provide the Buyer at the same time
with access to all work papers used in the preparation of the Closing
Balance Sheet.
Unless the Buyer shall dispute the calculation of Net Asset Value as
reflected on the Closing Balance Sheet in accordance with the provisions
set forth below, then the amount thereof shall be the final Purchase Price
and the Initial Payment shall be subject to automatic increase or decrease
as provided in Section 2.2, above. In the event of an increase, the Buyer
shall pay such amount to Seller within ten business days of the final
determination, and in the event of a decrease, the Seller shall reimburse
such amount to Buyer within ten business days of such final determination,
in either case such payment to be made by wire transfer to an account
designated by the recipient, or in other form acceptable to the recipient.
The fees and expenses of the Seller's Auditors in connection with the
preparation and audit of the Closing Balance Sheet shall be shared equally
by the Seller and the Buyer, provided that Buyer's share shall not exceed
$20,000.
(b) Disputes Regarding Closing Balance Sheet. Disputes with
respect to the Closing Balance Sheet shall be dealt with as follows:
(i) The Buyer shall have thirty (30) days after receipt of the
Closing Balance Sheet (the "Dispute Period") to dispute any of the
elements of or amounts reflected in the Closing Balance Sheet (a
"Balance Sheet Dispute"). If the Buyer has a Balance Sheet Dispute,
the Buyer shall deliver to the Seller and Seller's Auditors written
notice (a "Dispute Notice") within the Dispute Period, setting forth
in reasonable detail a description of the Balance Sheet Dispute.
Within ten (10) days after the Buyer's delivery of any such Dispute
Notice, the Seller, the Seller's Auditors, and the Buyer and Buyer's
accounting representatives ("Buyer's Auditors") shall meet at a
mutually acceptable time and place and thereafter as often as Seller
and Buyer reasonably deem necessary and shall, in good faith,
cooperate in an attempt to resolve such Balance Sheet Dispute and
agree in writing upon an appropriate adjustment to the Net Asset Value
as reflected in the Closing Balance Sheet. Without limiting the
generality of the foregoing, in connection with any such Balance Sheet
Dispute, the Seller and the Seller's Auditors agree to furnish the
Buyer and Buyer's Auditors and agents with full access, upon
reasonable prior notice and during normal business hours, to all
working papers, books, records, financial data and other documentation
used in the calculation of the Net Asset Value.
(ii) If any Balance Sheet Dispute is not finally resolved within
twenty (20) days after the Buyer shall have delivered a Dispute
Notice, as aforesaid, or if the parties shall fail to meet within ten
(10) days after the Buyer's delivery of any such Dispute Notice, then
the Balance Sheet Dispute shall be referred to an independent big six
accounting firm jointly selected by the Buyer and the Seller (the
"Balance Sheet Arbitrator") for resolution in accordance with the
terms hereof (the "Balance Sheet Arbitration"), and in any event as
soon as practicable. The Balance Sheet Arbitrator shall not have
represented, nor had any other business or financial relationship
with, Seller or Buyer or any affiliate thereof within the past five
years.
(iii) In the event that the accounting firm jointly selected
by the Buyer and the Seller is then unwilling or unable to serve as
the Balance Sheet Arbitrator, the parties hereto shall select by
mutual written agreement another nationally recognized certified
public accounting firm to serve as the Balance Sheet Arbitrator, which
firm is not then rendering (and during the preceding five year period
has not rendered) services to any party hereto or any affiliate
thereof, nor shall such firm then have or have had during the past
five years any other business or financial relationship with such
party or affiliate thereof. In the event that a Balance Sheet
Arbitrator is not selected, for any reason, within thirty (30) days
after delivery of a Dispute Notice, the Balance Sheet Arbitrator shall
be selected by the CPR Institute for Dispute Resolution, New York, New
York.
(iv) The Balance Sheet Arbitrator shall hold a hearing within
thirty (30) days of the submission of the Balance Sheet Dispute for
arbitration (the "Balance Sheet Hearing") and shall render a decision
within thirty (30) days of the conclusion of such hearing. In
preparation for its presentation at such Balance Sheet Hearing, either
party may depose such directors, officers, employees or agents of the
other party or its auditors as it may deem reasonably necessary for
such preparation. Each party hereto may file with the Balance Sheet
Arbitrator such briefs, affidavits and supporting documents as they
deem appropriate. The Seller shall afford the Balance Sheet
Arbitrator with the same access as the Buyer to any documentation used
in the calculation of the Net Asset Value. Any decision made by the
Balance Sheet Arbitrator within the scope of its authority shall be
final, binding and non-appealable.
(v) The Balance Sheet Arbitrator shall only be authorized on any
one issue to decide in favor of and choose the position of either of
the parties hereto or to decide upon a compromise position between the
ranges presented by the parties to such arbitration. The Balance
Sheet Arbitrator shall base its decision solely upon the presentations
of the parties hereto at the Balance Sheet Hearing and any materials
made available under (iv) or (vi) hereof and not upon independent
review.
(vi) The Balance Sheet Arbitrator's decision regarding its final
resolution of any Balance Sheet Dispute (the "Arbitrator's Decision")
shall be in writing, shall set forth the calculations made in reaching
its decision, shall describe the manner in which such calculations
were made and shall include a representation that the manner so used
was in accordance with the specific terms of this Agreement relative
to the calculation of the Net Asset Value. The Arbitrator's Decision
shall specifically set forth the amount of any adjustment required to
be made to the Initial Payment pursuant to Section 2.2.
(vii) Any such Balance Sheet Arbitration shall take place in
Boston, Massachusetts unless the parties shall mutually agree on
another location. The Balance Sheet Arbitration shall be governed by
the United States Arbitration Act, 9 U.S.C. SectionSection 1 through
16, and judgment upon the award of the Balance Sheet Arbitrator may be
entered by any court having jurisdiction thereof.
(viii) The fees and expenses of the Balance Sheet Arbitrator
shall be shared equally by the Buyer and the Seller. Each of the
parties hereto shall bear their own costs and expenses related to any
such Balance Sheet Arbitration. Upon the request of the Balance Sheet
Arbitrator, each party hereto agrees to enter into an arbitration
agreement providing reasonable protection to the Balance Sheet
Arbitrator, in such form as may be mutually acceptable to the Balance
Sheet Arbitrator and the parties hereto.
(ix) If the Balance Sheet Arbitrator determines that the value of
the Net Asset Value requires an adjustment to the Initial Payment in
accordance with Section 2.2 hereof, then the Initial Payment shall be
increased or decreased in accordance with such determination. In
the event of an increase, the Buyer shall pay such amount to Seller
within ten business days of the final determination, and in the event
of a decrease, the Seller shall reimburse such amount to Buyer within
ten business days of such final determination.
ARTICLE III.
DELIVERIES BY THE PARTIES;
THE CLOSING AND TRANSFER OF ASSETS
3.1. Deliveries by the Buyer. Simultaneously herewith, the Buyer is
delivering the following:
(a) The Initial Payment required by Section 2.1;
(b) An opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the Buyer;
(c) An Instrument of Assumption of Liabilities in respect of the
Assumed Liabilities;
(d) An agreement between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and Hyde in respect of
certain confidentiality and other matters (the "▇▇▇▇▇▇▇▇ Agreement");
(e) A certified copy of the resolutions of the Board of Directors of
the Buyer providing authority for the execution, delivery and performance
of this Agreement and the transactions contemplated hereby;
(f) A certified copy of the Certificate of Incorporation and By-Laws
of the Buyer, each as amended and in effect as of such date;
(g) A guaranty by Brynwood Partners III L.P. ("Brynwood") of the
obligations of the Buyer to pay the Purchase Price as provided herein; and
(h) Such other instruments or documents as may be reasonably
necessary or appropriate to carry out the transactions contemplated hereby.
3.2. Deliveries by the Seller. Simultaneously herewith, the Seller is
delivering the following:
(a) A ▇▇▇▇ of Sale in respect of the Purchased Assets;
(b) Trademark and patent assignments contemplated by this Agreement,
in a form appropriate for filing with the United States Patent and
Trademark Office (the "PTO");
(c) Consents that are required to assign the Assigned Agreements;
(d) Results of contemporaneous lien searches conducted in each U.S.
jurisdiction where the Purchased Assets are located;
(e) UCC-3 termination statements with respect to financing
statements, if any, filed against the Brookfield Business or any of the
Purchased Assets;
(f) A certified copy of resolutions of the Board of Directors and
sole stockholder of the Seller providing authority for the execution,
delivery and performance of this Agreement and the transactions
contemplated hereby;
(g) A certified copy of the Articles of Organization and By-laws of
the Seller, each as amended and in effect as of such date;
(h) An opinion of ▇▇▇▇ and ▇▇▇▇ LLP, Seller's counsel;
(i) A Non-Competition agreement in respect of certain confidentiality
and non-compete obligations of Hyde;
(j) An assignment by Hyde of the trademarks and patents identified on
Section 4.16 of the Disclosure Schedule as being owned by Hyde, in a form
appropriate for filing with the PTO;
(k) Articles of Amendment amending Seller's Articles of Organization
to delete the word "Brookfield" from Seller's corporate name, in form
suitable for filing with the Secretary of State of the Commonwealth of
Massachusetts.
(l) A Guaranty by Hyde of the obligations of the Seller hereunder;
and
(m) Such other instruments or documents as may be reasonably
necessary or appropriate to carry out the transactions contemplated hereby;
3.3. Closing. The closing contemplated by this Agreement (the
"Closing") shall occur at the offices of ▇▇▇▇ and ▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, at 10:00 a.m., Eastern Standard Time, on July 4, 1997
(the "Closing Date") or as soon thereafter as all conditions to Closing have
been satisfied or waived. The effective time of the Closing shall be 12:01 a.m.
on the Closing Date (the "Effective Time").
3.4. Closing Deliveries. At the Closing, the Seller shall deliver an
Officer's Certificate of the Seller to the effect that the Seller has fulfilled
its obligations set forth in Section 6.1 hereof in all material respects, and
the parties shall execute, acknowledge and deliver such instruments or documents
as may be reasonably necessary or appropriate to carry out the transactions
contemplated by this Agreement and to comply with the terms hereof.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents, warrants and covenants to the Buyer as follows:
4.1. Organization and Qualification. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with all requisite power and authority and
legal right to own, operate and carry on the Brookfield Business. The Seller is
duly qualified to do business and is in good standing in every jurisdiction
where the nature of the Brookfield Business requires such qualification, except
in such jurisdictions where the failure to so qualify would not have a material
adverse effect on the business, revenues, financial condition, properties or
assets of the Brookfield Business (a "Material Adverse Effect"). The Seller has
delivered to the Buyer complete and correct copies of the Seller's Articles of
Organization and By-Laws.
4.2. Authorization. The Seller has all necessary corporate power,
authority and legal right to execute and deliver and to perform its obligations
under this Agreement and to consummate the transactions contemplated herein.
The execution and delivery of this Agreement by the Seller and the performance
by the Seller of its obligations hereunder, and the corporate name change
referred to in Section 3.2(k) have been duly authorized by all requisite
corporate action, including, without limitation, by its Board of Directors and
sole stockholder. No other action on the part of the Seller is necessary to
authorize the execution and delivery of this Agreement or the performance of its
obligations hereunder. This Agreement has been duly and validly executed and
delivered by the Seller and constitutes a legal, valid and binding obligation of
the Seller, enforceable against the Seller in accordance with its terms, except
to the extent that such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and remedies generally.
4.3. No Violation. Neither the execution and delivery of this
Agreement by the Seller, the consummation of the transactions contemplated
hereby, or the performance by the Seller of its obligations hereunder will:
(a) Violate or result in any breach of any provision of the Articles
of Organization or By-laws of the Seller;
(b) Violate, conflict with or result in a violation or breach of, or
constitute a default (with or without due notice or lapse of time or both)
under, or permit the termination of, or require the consent of any other
party to, or result in the acceleration of, or entitle any party to
accelerate any obligation, or result in the loss of any benefit, or give
rise to the creation of any options, pledges, security interests, liens,
mortgages, claims, debts, charges, voting agreements, voting trusts or
other encumbrances or restrictions on transfer of any kind whatsoever
(each, an "Encumbrance") upon any of the Purchased Assets (including the
Assigned Agreements), except for such of the foregoing as could not
reasonably be expected to have Material Adverse Effect; nor
(c) Violate any order, writ, judgment, injunction, decree, statute,
law, rule, regulation or ordinance of any court or governmental, quasi-
governmental or regulatory department or authority ("Governmental
Authority") applicable to the Seller, the Brookfield Business or the
Purchased Assets, except for such violations as could not reasonably be
expected to have a Material Adverse Effect.
4.4. Consents and Approvals. Other than the consents and approvals of
or filings or registrations with the governmental, quasi-governmental or
regulatory departments and authorities listed on Section 4.4 of the Disclosure
Schedule, no filing or registration with, no notice to and no permit,
authorization, consent or approval of any governmental, quasi-governmental or
regulatory department or authority is necessary for the execution and delivery
of this Agreement, or the consummation of the purchase and sale of the
Brookfield Business, except for those the absence of which could not reasonably
be expected to have a Material Adverse Effect. Anything herein to the contrary
notwithstanding, the parties agree that no consents will be obtained relative to
the assignment of the Trade Show Rights, and that Seller does not represent that
such Trade Show Rights are assignable, whether with or without consents.
4.5. Financial Statements. The Seller has delivered to the Buyer the
unaudited balance sheet of the Brookfield Business as of April 4, 1997 and the
related statements of operations and cash flows for the fiscal quarter then
ended, and the unaudited balance sheet of the Brookfield Business as of January
3, 1997 and the related statements of operations and cash flows for the fiscal
year then ended (collectively, the "Financial Statements"). The Financial
Statements are attached hereto as Schedule 4.5. Subject to clauses (i) and (ii)
in the proviso contained in Section 2.1 above, the Financial Statements have
been prepared in accordance with GAAP (except for the absence of footnotes
normally associated with audited financial statements), consistently followed
throughout the periods indicated (subject to the overall requirement of GAAP),
and fairly present in all material respects the financial condition of the
Brookfield Business as of the dates thereof and the results of operations and
cash flows of the Brookfield Business for the periods indicated.
4.6. Inventory. All finished goods in Inventory that will be
reflected on the Closing Balance Sheet are in good condition and are suitable
for retail sale in the ordinary course and the Seller does not have any open
orders with respect to which it has been prepaid, in whole or in part, or has
received deposits or other advances, except as will be reflected on the Closing
Balance Sheet.
4.7. Accounts Receivable. All outstanding accounts and notes
receivable which will be reflected on the Closing Balance Sheet arose (or will
have arisen between the date hereof and the Closing Date) in the ordinary course
of business, are due and valid claims against account debtors for goods or
services delivered or rendered, and are subject to no defenses, offsets or
counterclaims, except as specifically reserved against in such balance sheet,
and will be fully collectible within one hundred twenty (120) days from the
Closing Date. The accruals or reserves which will be reflected in the Closing
Balance Sheet will reflect the historical experience of the Brookfield Business.
No accounts receivable are or will be at Closing subject to prior assignment or
other Encumbrance. To Seller's knowledge, except as will be reflected in the
Closing Balance Sheet, the Company will not have incurred any liabilities in
respect of the Brookfield Business to customers for discounts, returns,
promotional allowances or otherwise.
4.8. Litigation. Except as set forth in Section 4.8 of the Disclosure
Schedule, there is no action, suit, inquiry, judicial or administrative
proceeding, arbitration or investigation (collectively referred to as "Claims")
relating to the Brookfield Business or the Purchased Assets, including, without
limitation, Claims relating to product liability or consumer safety, pending or
threatened against the Seller or any of its properties, assets or rights, before
any court, arbitrator or administrative or governmental body, nor is there any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against, and unsatisfied by, the Seller relating to the Brookfield Business or
the Purchased Assets (any of the foregoing being herein referred to as "Existing
Litigation") nor does the Seller know of any fact, event or condition which
could reasonably be expected to serve as a basis for the assertion of any Claim.
Without limiting the generality of the foregoing, there are no investigations or
proceedings currently existing or threatened relating to the Brookfield Business
or the Purchased Assets before the Consumer Product Safety Commission ( the
"CPSC") or any similar consumer protection agency (whether federal or state),
and all such investigations or proceedings during the last five (5) years are
summarized in all material respects in Section 4.8 of the Disclosure Schedule.
4.9. Absence of Certain Changes. Except as disclosed in Section 4.9
of the Disclosure Schedule, since April 4, 1997 (the "Balance Sheet Date"), the
Seller has conducted the Brookfield Business only in the ordinary course, and,
without limiting the generality of the foregoing, since the Balance Sheet Date,
to the Seller's knowledge, there has not been:
(a) Any event, change or condition of any character in or on the
business, properties, assets, financial condition or results of operations
of the Brookfield Business which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect;
(b) Any entry into any Material Contract (as hereinafter defined) by
the Seller relating to the Brookfield Business or the Purchased Assets; and
(c) Any damage, destruction or loss to the Purchased Assets, whether
or not covered by insurance, which could reasonably be expected to have a
Material Adverse Effect.
4.10. Title to Assets; Condition of Property.
(a) Except as reflected in Section 4.10(a) in the Disclosure
Schedule, the Seller has good and marketable title to all of the Purchased
Assets, free and clear of any and all Encumbrances, except for (i)
mechanics', carriers', workmen's, warehousemen's, repairmen's or other like
liens arising or incurred in the ordinary course of business, (ii) liens
arising under original purchase price conditional sales contracts and
equipment leases with third parties entered into in the ordinary course of
business, (iii) other imperfections of title, restrictions or encumbrances,
if any, which liens, imperfections of title, restrictions or other
encumbrances do not materially impair the marketability or use of the
affected asset in any material way. Except as set forth in Section 4.10(a)
of the Disclosure Schedule, the Purchased Assets are all of the properties
and assets that are material to the Brookfield Business as currently
conducted.
(b) All of the material properties and assets used in the conduct of
the Brookfield Business are, in all material respects, in good operating
condition and repair in accordance with industry practice (subject only to
ordinary wear and tear arising out of the use for which such properties and
assets were designed). The Seller has no reason to believe that such
properties and assets will not be in all material respects suitable for the
Buyer to operate the Brookfield Business as heretofore conducted.
4.11. Material Contracts.
(a) Section 4.11(a) of the Disclosure Schedule sets forth a list of
all written contracts, agreements and arrangements and all oral or informal
agreements or arrangements known to the Seller, which are material (either
singly or in the aggregate) to the Brookfield Business (sometimes
hereinafter collectively referred to as the "Material Contracts", each of
which is an Assigned Agreement). Without limiting the generality of the
foregoing, Material Contracts include, without limitation, any and all
contracts, agreements and arrangements to purchase capital equipment,
noncompetition agreements, guarantees, loan or other financing agreements,
profit sharing, employment, collective bargaining or other union
agreements, consulting, distribution, agency and sales representative
agreements, real property leases and all permits, concessions, franchises
and licenses.
(b) Except as identified on Section 4.11(b) of the Disclosure
Schedule, all Material Contracts are in full force and effect, and there
exists no event, occurrence or act (including the execution of this
Agreement and the consummation of the transactions contemplated hereby)
which, with the giving of notice or the lapse of time, or both, could
reasonably become a default by the Seller or, to the Seller's knowledge,
the other party to such Material Contracts.
(c) The Seller has no knowledge of any default under any Material
Contract by any third party, nor is the Seller aware of any fact, condition
or event, including, without limitation, the execution, delivery and
performance of this Agreement, that could cause any third party to
terminate any Material Contract. The Seller is not in default under any
Material Contract and, to the knowledge of Seller, there exists no event,
occurrence, condition or act which, with the giving of notice or the lapse
of time, could reasonably become a default by the Seller or any third party
under any Material Contract the result of which could reasonably be
expected to have a Material Adverse Effect.
(d) Except as set forth in Section 4.11(d) of the Disclosure
Schedule, no consent by, notice to or approval from any third party is
required under any of the Material Contracts as a result of or in
connection with the execution, delivery or performance of this Agreement
and the consummation of the transactions contemplated hereby and such
Material Contracts shall remain in full force and effect immediately
following the consummation of the transactions contemplated hereby.
(e) Section 4.11(e) to the Disclosure Schedule describes all
commitments and obligations with respect to trade promotions (including
coop advertising), refunds and similar promotional campaigns ("Trade
Promotions") and all consumer promotions such as coupons, rebates, refunds
and similar promotional campaigns ("Consumer Promotions") relating to the
Brookfield Business with respect to which, to the Seller's knowledge, the
Seller has any current material liability or will have any material
liability after the Closing.
4.12. Employee Retirement Income Security Act of 1974 and Other
Employment Matters.
(a) Except as otherwise disclosed on Section 4.12(a) of the
Disclosure Schedule, the Seller has not established, and does not maintain
or contribute to, or have any obligation to contribute to, or have any
liability with respect to, any plan, program, arrangement, agreement or
commitment which is an employment, consulting or deferred compensation
agreement, or an executive compensation, incentive bonus or other bonus,
employee pension, profit-sharing, savings, retirement, stock option, stock
purchase, severance pay, life, health, disability or accident insurance or
vacation, plan, program, arrangement, agreement or commitment, including,
without limitation, any "employee benefit plan" as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (individually, an "Employee Plan", and collectively, the
"Employee Plans"), as to which the Brookfield Business would have any
liability or obligation after the consummation of the transactions
contemplated hereby except to the extent reserved for in the Closing
Balance Sheet as provided in Section 8.2 hereof.
(b) All obligations of the Seller, whether arising by operation of
law, by contract or by past custom, for payments to trusts or other funds
or to any governmental agency or to any individual, director, officer,
employee or agent (or his or her heirs, legatees or legal representatives)
with respect to unemployment compensation or Social Security benefits (or
similar benefits under foreign laws, rules and regulations), or for
vacation or holiday pay, overtime, bonuses and other forms of compensation,
which are payable to or in respect of employees or agents of the Brookfield
Business, have been paid when due or will be reserved for in the Closing
Balance Sheet.
(c) There is no petition, charge, claim or other complaint against
the Seller relating to any employees of the Brookfield Business pending
before the National Labor Relations Board or any comparable organization,
domestic or foreign, including, without limitation, any such claims brought
by any workers' counsel or trade union.
(d) There is no labor strike, formal dispute, formal grievance,
lockout or work stoppage pending or, to the Seller's knowledge, threatened
against or affecting the Seller relating to any employees of the Brookfield
Business.
4.13. Permits. Section 4.13 of the Disclosure Schedule sets forth
all of the licenses, franchises, permits, consents and authorizations necessary
for the lawful conduct of the Brookfield Business, except for those the absence
of which could not reasonably be expected to have a Material Adverse Effect.
4.14. Compliance with Applicable Laws.
(a) Except as set forth in Section 4.14(a) of the Disclosure
Schedule, the Seller holds, and at all relevant times has held, all
material licenses, franchises, permits, consents and authorizations
necessary for the lawful conduct of the Brookfield Business, and the
Brookfield Business is not being and has not, during the relevant statute
of limitations period, been conducted in violation of any provision of any
federal, state, local or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit, consent or
license or other governmental authorization or approval applicable to the
Seller, except where the failure to comply with the foregoing could not
reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth in Section 4.14(b) of the Disclosure
Schedule, to the Seller's knowledge, the Seller has not received any
notification of any failure by the Seller to comply with any such federal,
state, local or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit, consent or
license or other governmental authorization or approval applicable to the
Brookfield Business.
4.15. Brokers' Fees and Commissions. Neither the Seller nor any
of its directors, officers, employees or agents has employed any investment
banker, broker, finder or intermediary, and no fee or other commission is owed
to any third party, in connection with the transactions contemplated herein,
except for a payment required to be made to Chestnut Partners (the "Seller's
Broker Fee"). The Seller's Broker Fee is the sole responsibility of the Seller.
4.16. Proprietary Rights.
(a) Set forth in Section 4.16(a) of the Disclosure Schedule is a list
of all patents, registered copyrights, trademarks and trade names included
in the Purchased Assets (hereinafter referred to as the "Proprietary
Rights"). The Seller is the sole and exclusive owner of the Proprietary
Rights, and has the sole and exclusive right to use, license, sublicense,
assign or sell the Proprietary Rights without liability to, or consent of,
any person. To the Seller's knowledge, the Proprietary Rights are all of
the patents, trademarks and registered copyrights that are material to the
Brookfield Business as currently conducted.
(b) The use of the registered trademark "Brookfield" and, to the
knowledge of the Seller, the use of all other Proprietary Rights do not
infringe upon the rights of any other person or entity, whether or not reg-
istered, patented or copyrighted. The Seller has not received any notice
of a claim of such infringement nor, to Seller's knowledge, were any such
claims the subject of any action, suit or proceeding involving the Seller.
(c) The Seller has no knowledge of any infringement or improper use
by any third party of the Proprietary Rights, nor has the Seller or any
affiliate instituted any action, suit or proceeding in which an act
constituting an infringement of any of the Proprietary Rights was alleged
to have been com mitted by a third party.
(d) Except as set forth on Section 4.16(d) of the Disclosure
Schedule, there are no licenses, sublicenses or agreements relating to (i)
the use by third parties of the Proprietary Rights or (ii) the use by the
Seller of the Proprietary Rights, and there is no prior right of any other
party or other impediment which would invalidate or could reasonably be
expected to materially adversely affect any of the Proprietary Rights.
(e) Included as Material Contracts on Section 4.11(a) of the
Disclosure Schedule are all license, royalty or similar agreements
entitling the Seller to use any trademarks or copyrights of third parties,
subject to the provisions of Section 1.1(i) hereof.
4.17. Computer Software. Section 4.17 of the Disclosure Schedule
identifies (i) all of the software and computer databases that are material to
the conduct of the Brookfield Business (collectively, the "Computer Systems"),
(ii) whether such Computer Systems are owned or licensed by the Seller and,
(iii) if licensed, the name of such licensor. The Seller has all legal right to
use the Computer Systems as they are currently being used. To the Seller's
knowledge, the use of the Computer Systems does not infringe upon the rights of
any other person or entity, nor has the Seller received any notice of a claim of
such infringement. Except as set forth in Section 4.17 of the Disclosure
Schedule, there are no licenses, sublicenses or other agreements relating to the
use of the Computer Systems by the Seller or third parties. Subject to the
provisions set forth in clauses (c) and (i) of Section 1.1 above, except as
reflected on Schedule 4.17, the Purchased Assets include all software and data
bases that are material to the Brookfield Business as currently conducted.
4.18. Regulatory Reports. The Seller has filed all material
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file in respect of the
Brookfield Business in the last five (5) year period with any federal, state,
local or foreign governmental, quasi-governmental or regulatory department,
authority or agency, including, without limitation, the CPSC or the Federal
Trade Commission (hereinafter sometimes collectively referred to as the
"Regulatory Agencies"), and has paid all fees or assessments due and payable in
connection therewith, except where the failure to comply with the foregoing
could not reasonably be expected to have a Material Adverse Effect. Except for
normal periodic examinations conducted by the applicable Regulatory Agency in
the regular course of the Brookfield Business, no Regulatory Agency has
initiated any proceeding or investigation into the business or operations of the
Brookfield Business in the last five (5) year period, nor has the Seller
initiated any such proceeding. There is no unresolved violation, criticism or
exception by any Regulatory Agency with respect to any report or statement
relating to an examination of the Brookfield Business, except for such as could
not reasonably be expected to have a Material Adverse Effect.
4.19. Agreements with Regulatory Agencies. Except as set forth in
Section 4.19 of the Disclosure Schedule, the Seller is not subject to any cease-
and-desist or other order issued by, or a party to any written agreement or
memorandum of understanding with, any Regulatory Agency that materially
restricts or could reasonably be expected to have a Material Adverse Effect.
4.20. Business Relationships of the Seller. Section 4.20(a) of
the Disclosure Schedule contains an accurate and complete list of the twenty
five (25) largest customers of the Seller (the "Key Customers"), the ten (10)
largest Licensors of products manufactured by the Brookfield Business (the "Key
Licensors"), and the ten (10) largest suppliers of products manufactured by the
Brookfield Business (the "Key Suppliers"), in each such case during the fiscal
year ended January 3, 1997. Except as set forth in Section 4.20(b) of the
Disclosure Schedule, the Seller's relationship with the Key Customers, Key
Licensors and Key Suppliers is good and the Seller does not know of any fact,
condition or event (including, without limitation, the consummation of the
transactions contemplated herein) which would adversely affect the relationship
of the Seller with any of its customers, licensors or suppliers generally or
with any Key Customer, Key Licensor or Key Supplier identified in Section
4.20(a) of the Disclosure Schedule. Buyer is not aware of any intention of any
of the Key Customers, Key Licensors or Key Suppliers to curtail or terminate
their relationship with the Brookfield Business. Nothing in this Section 4.20
shall constitute any representation, guaranty or assurances as to the
continuation or extent of any such relationships after the Closing.
4.21. Knowledge of the Seller, Etc. To the extent that the Seller
represents and warrants itself to have had knowledge or belief as to any event,
fact, condition or other matter set forth in this Agreement, "knowledge" or
"belief" (or similar words) shall mean the conscious awareness, after reasonable
inquiry, of ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ or
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (the "▇▇▇▇ Persons"). Without limiting the generality of the
foregoing, in no event shall the knowledge, awareness or belief of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ or any other director, officer or employee of Hyde or Seller be
attributed to Seller for purposes of the representations of Seller contained
herein.
4.22. Copies of Documents. The Seller has caused to be made
available for inspection and copying by the Buyer and its advisers true,
complete and correct copies of all documents referred to in any Section of the
Disclosure Schedule.
4.23. Disclaimer of Warranties. The representations and
warranties made herein and in any certificate, document or instrument being
delivered herewith or at the Closing, are the sole representations being made by
the Seller in respect of the Brookfield Business and the Purchased Assets, and
the Seller disclaims any other representations and warranties, whether express
or implied, written or oral, with respect to the Brookfield Business and the
Purchased Assets.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents, warrants and covenants to the Seller as of the date
hereof as follows:
5.1. Organization and Qualification. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, with all requisite power and authority and legal
right to own, operate and carry on its business as it is now being conducted.
The Buyer is duly qualified to do business and is in good standing in each
jurisdiction where the nature of its business requires such qualification,
except in such jurisdictions where the failure to so qualify would not have a
material adverse effect on the ability of the Buyer to consummate the
transactions contemplated hereby. The Buyer has delivered to the Seller
complete and correct copies of the Buyer's Certificate of Incorporation and by-
laws.
5.2. Authorization. The Buyer has all necessary corporate power,
authority and legal right to execute and deliver and to perform its obligations
under this Agreement and to consummate the transactions contemplated herein.
The execution and delivery of this Agreement by the Buyer and the performance by
the Buyer of its obligations hereunder have been duly authorized by all
requisite corporate action, including, without limitation, by its Board of
Directors. No other action on the part of the Buyer is necessary to authorize
the execution and delivery of this Agreement or the performance of its
obligations hereunder. This Agreement has been duly and validly executed and
delivered by the Buyer, and constitutes a legal, valid and binding obligation of
the Buyer, enforceable against the Buyer in accordance with its terms, except to
the extent that such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and remedies generally.
5.3. No Violation. Neither the execution and delivery of this
Agreement by the Buyer, the consummation of the transactions contemplated
hereby, or the performance by the Buyer of its obligations hereunder, will:
(a) Violate or result in any material breach of any provision of the
Certificate of Incorporation or By-Laws of the Buyer;
(b) Violate, conflict with or result in a violation or breach of, or
constitute a default (with or without due notice or lapse of time or both)
under, or permit the termination of, or require the consent of any other
party to any material agreement binding on the Buyer, or result in the
acceleration of, or entitle any party to accelerate any obligation, or
result in the loss of any benefit, or give rise to the creation of any
options, pledges, security interests, liens, mortgages, claims, debts,
charges, voting agreements, voting trusts or other encumbrances or
restrictions on transfer of any kind whatsoever, which, in any case, could
reasonably be expected to have a material adverse effect on the ability of
Buyer to consummate the transactions contemplated hereby;
(c) Violate any order, writ, judgment, injunction, decree, statute,
rule or regulation of any court or Governmental Authority applicable to the
Buyer or its properties or assets which, in any case, could reasonably be
expected to have a material adverse effect on ability of Buyer to
consummate the transactions contemplated hereby.
5.4. Consents and Approvals. No filing or registration with, no
notice to and no permit, authorization, consent or approval of any third party
or any public or governmental body or authority is necessary for the execution,
delivery or consummation by the Buyer of the transactions contemplated herein.
5.5. Broker's Fees and Commissions. Neither the Buyer nor any of its
shareholders, directors, officers, employees or agents has employed any
investment banker, broker, finder or intermediary, and no such fee or other
commission is owed to any third party, in connection with the transactions
contemplated herein, except for a payment required to be made to ▇▇▇▇▇▇ & Co.
(the "Buyer's Broker Fee"). The Buyer's Broker Fee is the sole responsibility
of the Buyer.
5.6. Equity Investment by Brynwood. On or before the date hereof,
Brynwood. has invested at least $6,000,000 in the equity of the Buyer.
5.7. Buyer's Examination of the Brookfield Business. Buyer
acknowledges that ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, the current President and General Manager
of Seller, is to become the chief executive officer of the Buyer following the
Closing. The Seller has made available to the Buyer all documents requested by
Buyer and the Buyer does not have any outstanding questions to Seller concerning
the Brookfield Business and the Purchased Assets. The Buyer has completed its
due diligence investigation of the Brookfield Business and the Purchased Assets
to its satisfaction, and acknowledges that it is relying on no other
representation or warranty concerning the Brookfield Business and the Purchased
Assets except as contained herein and in any certificate, document or instrument
being delivered herewith or at the Closing.
ARTICLE VI.
COVENANTS OF THE SELLER
The Seller hereby agrees and covenants:
6.1. Interim Conduct of Brookfield Business. From the date hereof
until the Closing, the Seller shall preserve, protect and maintain the
Brookfield Business and the Purchased Assets consistent with past practice, and
shall operate the Brookfield Business consistent with prior practice and in the
ordinary course of business. Without limiting the generality of the foregoing,
from the date hereof until the Closing, except for transactions expressly
approved in writing by the Buyer, the Seller shall, with respect to the
Brookfield Business (it being agreed that the Seller shall not be responsible
for any violations of this Section 6.1 to the extent resulting from the actions
or failures to act of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (or persons under his direction or
control) unless such actions or failures to act are consistent with prior
practice or pursuant to specific directive of any of the Hyde Persons):
(a) Maintain the properties of the Brookfield Business and Purchased
Assets in good repair, order and condition, reasonable wear and tear
excepted;
(b) Maintain and keep in full force and effect all insurance on
assets and property or for the benefit of employees of the Brookfield
Business, all liability and other casualty insurance, and all bonds on
personnel, presently carried;
(c) Use commercially reasonable efforts to preserve intact the
organization and reputation of the Brookfield Business and the good will of
suppliers, licensors, customers and others having business relationships
with the Brookfield Business;
(d) Not sell, lease or otherwise dispose of or agree to sell, lease
or otherwise dispose of any material Purchased Assets, other than in the
ordinary course of business;
(e) Not enter into any Material Contracts;
(f) Not waive any material rights nor forgive any material debts or
claims, in any such case relating to the Brookfield Business, other than in
the ordinary course of business; or
(g) Not take any action that would be required to be disclosed under
the terms of Section 4.9.
The Seller shall promptly notify the Buyer of any breach of this covenant
known to the Seller and shall keep the Buyer reasonably informed of events
relating thereto.
6.2. Cooperation; Access. From the date hereof through the Closing
Date, the Seller shall cooperate reasonably in assisting the Buyer in the
planning and implementation of a transitional plan for the transfer of the
Brookfield Business, including allowing reasonable access to its employees
involved in the Brookfield Business and others having business relationships
with the Brookfield Business. Without limiting the foregoing, Seller shall
afford to representatives of the Buyer reasonable access, during normal business
hours and with reasonable advance notice, to the offices, plants, properties,
books and records of the Brookfield Business.
6.3. Use of Name. For a period of eighteen (18) months from the
Closing Date, Buyer shall be permitted to sell and distribute Products in
inventory at the Closing and to utilize packaging existing at the Closing (and
any of the foregoing manufactured pursuant to orders placed prior to the
Closing) in connection with the sale and distribution of the Products even
though such Products and packaging contain or include Excluded Marks or other
marks, logos or tradenames not included with the Purchased Assets; provided,
however, that Buyer shall not order any new packaging after the Closing Date
which bears any of such other tradenames, trademarks or logos; and provided
further that Buyer shall acquire no interest in any such other logos, tradenames
and trademarks. In addition, nothing herein shall restrict the continued
existence in the wholesale or retail marketplace of products bearing such other
logos, tradenames or trademarks after the expiration of eighteen (18) months
following the Closing Date.
6.4. Transfer of Inventory. Title to the Purchased Assets shall pass
to Buyer at the Effective Time on the Closing Date. Seller will retain custody
of the tangible Purchased Assets as a bailee and the parties' respective
agreements in connection therewith shall be set forth in the Transitional
Services Agreement.
6.5. Returns. From and after the Closing, the Seller shall accept
returns (whether from the trade or consumers) of finished goods sold prior to
the Closing by the Seller only to the extent (i) consistent with past practice
of the Seller (including without limitation the past practice of reserving the
right to inspect finished goods before authorizing returns and not accepting any
returns without prior authorization) and (ii) that the aggregate amount of such
returns exceeds the reserve therefor set forth in the Closing Balance Sheet.
The Buyer and the Seller shall cooperate reasonably in addressing any proposed
returns of finished goods to the extent in excess of the reserve therefor set
forth in the Closing Balance Sheet.
6.6. Confidentiality. After the Closing, the Seller shall not use,
publish or disclose to any third person any confidential or proprietary
information comprising part of the Purchased Assets or relating to the
Brookfield Business; provided, however, that the foregoing restrictions shall
not apply to information: (i) that is necessary to enforce its rights under or
defend against a claim asserted under this or any other agreement with the Buyer
or any agreement with a third party, (ii) that is necessary or appropriate to
disclose to any regulatory authority or governmental agency having jurisdiction
over the Seller or as otherwise required by law or (iii) that is or becomes
generally known other than through a breach of this Agreement by Seller. The
Seller acknowledges that there may not be an adequate remedy at law for the
breach of this Section 6.6 and that, in addition to any other remedies
available, injunctive relief may be granted for any such breach.
6.7. Efforts. The Seller shall use its commercially reasonable
efforts to consummate the transactions contemplated by this Agreement.
6.8. Further Assurances. Following the Closing, the Seller shall, at
the Buyer's expense, take all action reasonably requested by the Buyer to
confirm, facilitate or perfect the transfer of the Purchased Assets.
ARTICLE VII.
COVENANTS OF THE BUYER
The Buyer hereby agrees and covenants:
7.1. Efforts. The Buyer shall use its commercially reasonable efforts
to consummate the transactions contemplated by this Agreement.
7.2. Returns. From and after the Closing, the Buyer shall accept
returns (whether from the trade or consumers) of finished goods sold prior to
the Closing by the Seller only to the extent (i) consistent with past practice
of the Seller and (ii) that the aggregate amount of such returns does not exceed
the reserve therefor set forth in the Closing Balance Sheet. From and after the
Closing, the Buyer shall not authorize or instruct customers (whether wholesale
or consumer) to return any finished goods to the Seller, except Buyer may direct
inquiries to the Seller. The Buyer and the Seller shall cooperate reasonably in
addressing any proposed returns of finished goods to the extent in excess of the
reserve therefor set forth in the Closing Balance Sheet.
7.3. Bulk Sales Act. The Buyer waives compliance by the Seller with
any applicable bulk sales act with respect to the purchase and sale of the
Purchased Assets.
7.4. Hyde Employees. The Buyer agrees that for a period of one year
following the Closing, it will not solicit any management level (including sales
executives) employee of the Hyde or any subsidiary of Hyde (other than Seller)
to leave the employ or retention of Hyde or any subsidiary of Hyde (other than
Seller), or hire any such person.
7.5. ▇▇▇▇▇▇▇▇ Non-Compete. Buyer agrees that so long as ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ is an employee of Buyer or any affiliate of Buyer, Buyer will be bound
by the provisions of Section 3(a) of the ▇▇▇▇▇▇▇▇ Agreement as though Buyer were
named with ▇▇▇▇▇▇▇▇ in such Section 3(a).
7.6. Further Assurances. Following the Closing, the Buyer shall, at
the Seller's expense, take all action reasonably requested by the Seller to
confirm, facilitate or perfect the transfer of the Purchased Assets.
ARTICLE VIII.
TRANSFERRED EMPLOYEES
8.1. Transferred Employees. Buyer has notified Seller on or prior to
the date hereof which employees of the Brookfield Business that Buyer will be
offering employment to for the period following the Closing (the "Transferred
Employees"). The Seller agrees that it will not interfere with the Buyer in
Buyer's efforts to hire such Transferred Employees.
8.2. Benefit Accruals. The Seller agrees to provide an accrual on the
Closing Balance Sheet for all unused vacation days, sick days or other leaves
(including Paid Time Off as described in Section 4.12(a)(viii) to the Disclosure
Schedule) to which any of the Transferred Employees are entitled and the Buyer
agrees to assume the liability for such accrued benefits.
ARTICLE IX.
CLOSING CONDITIONS
9.1. Conditions to Each Party's Obligations Under this Agreement. The
respective obligations of each party under Articles I and II of this Agreement
shall be subject to the satisfaction, or the waiver by such party hereto, at or
prior to the Closing of the condition precedent that there is not in effect any
injunction, restraining order or other ruling or order issued by any court of
competent jurisdiction or governmental, quasi-governmental or regulatory
department or authority or other law, rule, regulation, legal restraint or
prohibition preventing the purchase and sale of the Brookfield Business and the
Purchased Assets.
9.2. Conditions to the Obligations of the Buyer under this Agreement.
The obligations of the Buyer under Articles I and II of this Agreement shall be
further subject to the satisfaction, or to the waiver by the Buyer, at or prior
to the Closing, of the condition precedent that the Seller shall have complied
in all material respects with its obligations set forth in Section 6.1.
9.3. Conditions to the Obligations of the Seller under this Agreement.
The obligations of the Seller under Articles I and II of this Agreement shall be
further subject to the satisfaction, or to the waiver by the Seller, at or prior
to the Closing, of the condition precedent that the Buyer shall have in place
letters of credit, reasonably satisfactory in form and substance to the Seller,
issued by a major money center bank to fully secure all of Hyde's or Seller's
letters of credit that remain open on the Closing Date in accordance with the
Transitional Services Agreement.
ARTICLE X.
TERMINATION AND ABANDONMENT
10.1. Termination. This Agreement may be terminated and the
purchase and sale of the Purchased Assets contemplated hereby may be abandoned
at any time prior to the Closing:
(a) by the mutual written consent of the Buyer and the Seller;
(b) by the Buyer if the Seller shall have failed to comply with its
obligations under Section 6.1 hereof in all material respects, within five
(5) business days following receipt by the Seller of notice of such breach,
subject in each case to a reasonable opportunity to cure such breach (but
in no event more than five (5) business days following such breach);
(c) by either the Buyer or the Seller:
(i) If a court of competent jurisdiction or a governmental,
quasi-governmental, regulatory or administrative department, agency,
commission or authority shall have issued an order, decree or ruling
or taken any other action (with respect to which order, decree, ruling
or action the parties hereto shall use commercially reasonable efforts
to lift or dissolve), in each case restraining, enjoining or otherwise
prohibiting the purchase and sale of the Purchased Assets or the other
transactions contemplated hereby; or
(ii) if the Closing shall not have occurred on or before July 15,
1997; provided, however, that the right to terminate this Agreement
shall not be available to any party whose material breach of this
Agreement, has been the cause of, or resulted in, the failure of the
Closing to occur on or before such date (including for these purposes
any failure by Buyer to have complied in all material respects with
its obligations under Section 6.1 hereof).
10.2. Procedure and Effect of Termination. In the event of the
termination of this Agreement and the abandonment of the purchase and sale of
the Purchased Assets pursuant to Section 10.1 hereof, written notice thereof
shall forthwith be given to the other party to this Agreement and this Agreement
shall terminate and the purchase and sale of the Purchased Assets shall be
abandoned, without any further action by any of the parties hereto. If this
Agreement is terminated as provided herein:
(a) upon request therefor, each party will redeliver all documents,
work papers and other material of any other party relating to the
transactions contemplated hereby, whether obtained before or after the
execution hereof, to the party furnishing the same;
(b) no party hereto shall have any liability or further obligation to
any other party to this Agreement resulting from such termination, except
(i) that the provisions of this Section 10.2 shall remain in full force and
effect, and (ii) to the extent that any such termination results from a
breach by a party of any of its obligations set forth in this Agreement, or
any failure of a party to satisfy the condition to the other party's
obligations under Article IX, the non- breaching party shall retain the
right to ▇▇▇ for damages attributable to any breach of this Agreement by
the other party occurring prior to such termination (including its out-of-
pocket costs in connection with the preparation and negotiation of this
Agreement, and all other related transactional expenses incurred by such
other party); and
(c) the Initial Payment shall be returned to the Buyer on the next
business day following the date of termination.
ARTICLE XI.
SURVIVAL AND INDEMNIFICATION
11.1. Survival. All representations, warranties, covenants and
agreements contained in this Agreement, and in any certificate, schedule,
document or other writing delivered pursuant hereto shall be in all cases deemed
to have been relied upon by the parties hereto, and shall survive the Closing;
provided that any such representations, warranties, covenants and agreements
shall be fully effective and enforceable only for a period of eighteen (18)
months after the Closing Date, and shall thereafter be of no further force or
effect, except that the indemnification obligations in respect of the Assumed
Liabilities and in respect of the Excluded Liabilities and Obligations shall
survive indefinitely. Additionally, the parties agree that the indemnification
obligations set forth in this Article XI shall survive with respect to any
claims made within the applicable survival period until finally resolved or
judicially determined, including any appeal thereof. The representations,
warranties, covenants and agreements contained in this Agreement or any
certificate, schedule, document or other writing delivered pursuant hereto shall
not be affected by any investigation, verification or examination by any party
hereto or by any person acting on behalf of any such party.
11.2. Indemnification of the Buyer. From and after the Closing,
the Seller agrees to indemnify, defend and save the Buyer and its directors,
officers, employees, owners, agents and affiliates and their successors and
assigns or heirs and personal representatives, as the case may be (each a "Buyer
Indemnified Party"), harmless from and against, and to promptly pay to a Buyer
Indemnified Party or reimburse a Buyer Indemnified Party for. any and all
losses, damages, expenses (including, without limitation, court costs, amounts
paid in settlement, judgments, reasonable attorneys' fees or other expenses for
investigating and defending, including, without limitation, those arising out of
the enforcement of this Agreement), suits, actions, claims, deficiencies,
liabilities or obligations (collectively, the "Losses") sustained or incurred by
such Buyer Indemnified Party relating to, caused by or resulting from:
(a) Any misrepresentation or breach of warranty, or failure to
fulfill or satisfy any covenant or agreement, made by the Seller contained
herein or in any certificate, schedule, document or other writing delivered
by the Seller pursuant hereto;
(b) Any liability of the Buyer for causes of action arising in
connection with the Brookfield Business or the Purchased Assets to the
extent based upon actions or omissions which occurred prior to the Closing,
or relating to the period prior to the Closing (provided that nothing
herein shall require Seller to indemnify any Buyer Indemnified Party in
respect of the Assumed Liabilities);
(c) The Excluded Liabilities and Obligations; and
(d) The non-compliance of Seller with the provisions of any
applicable bulk sales act governing the purchase and sale of the Purchased
Assets,
11.3. Indemnification of the Seller. From and after the Closing,
the Buyer agrees to indemnify, defend and save the Seller and its directors,
officers, employees, owners, agents, and affiliates and their successors and
assigns or heirs and personal representatives, as the case may be (each, a
"Seller Indemnified Party") harmless from and against, and to promptly pay to a
Seller Indemnified Party or reimburse a Seller Indemnified Party for, any and
all Losses sustained or incurred by such Seller Indemnified Party relating to,
caused by or resulting from any (a) misrepresentation or breach of warranty, or
failure to fulfill or satisfy any covenant or agreement made by the Buyer
contained herein or in any certificate, schedule, document or other writing
delivered by the Buyer pursuant hereto, (b) any liability of the Seller for
causes of action arising in connection with the Brookfield Business or the
Purchased Assets to the extent based upon actions or omissions which occurred
following the Closing, or relating to the period following the Closing, and (c)
the Assumed Liabilities.
11.4. Indemnification Procedure for Third Party Claims Against
Indemnified Parties.
(a) In the event that subsequent to the Closing any Buyer Indemnified
Party or Seller Indemnified Party (each, an "Indemnified Party") receives
notice of the assertion of any claim or of the commencement of any action,
suit or proceeding by any entity which is not a party to this Agreement
(including, without limitation, any governmental, quasi-governmental or
regulatory agencies) (a "Third Party Claim") against such Indemnified
Party, with respect to which the Buyer or the Seller (the "Indemnifying
Party"), as the case may be, are required to provide indemnification under
this Agreement, the Indemnified Party shall promptly give written notice,
together with a statement of any available information regarding such claim
(collectively, the "Third Party Indemnification Notice"), to the
Indemnifying Party. The Indemnifying Party shall have the right, upon
delivering written notice to the Indemnified Party (the "Defense Notice")
within thirty (30) days after receipt from an Indemnified Party of a Third
Party Indemnification Notice, to conduct, at the Indemnifying Party's sole
cost and expense, the defense of such Third Party Claim in the Indemnifying
Party's own name, or, if necessary, in the name of the Indemnified Party;
provided, however, that the Indemnified Party shall have the right to
approve the defense counsel representing the Indemnifying Party, which
approval shall not be unreasonably withheld or delayed, and in the event
that the Indemnifying Party and the Indemnified Party cannot agree upon
such counsel within ten (10) days after the Defense Notice is provided,
then the Indemnifying Party shall propose an alternate defense counsel,
which shall be subject again to the Indemnified Party's approval in
accordance with the terms hereof.
(b) In the event that the Indemnifying Party shall fail to give the
Defense Notice within the time and as prescribed by Section 11.4(a) hereof,
then in any such event the Indemnified Party shall have the right to
conduct such defense in good faith with counsel reasonably acceptable to
the Indemnifying Party, but the Indemnified Party shall be prohibited from
compromising or settling any such claim without the prior written consent
of the Indemnifying Party, which consent shall not be unreasonably withheld
or delayed and shall be deemed given in the absence of providing the
Indemnified Party with a written response within ten (10) days of any
request therefor. If the Indemnified Party fails to diligently defend such
claim with counsel reasonably satisfactory to the Indemnifying Party, or
settles any such claim without the Indemnifying Party's prior written
consent or otherwise breaches this Article XI, the Indemnified Party will
be liable for all costs, expenses, settlement amounts or other Losses paid
or incurred in connection therewith and the Indemnifying Party shall have
no obligation to indemnify the Indemnified Party with respect to such
claim.
(c) In the event that the Indemnifying Party does deliver a Defense
Notice and thereby elects to conduct the defense of the subject Third Party
Claim, the Indemnified Party will cooperate with and make available to the
Indemnifying Party such assistance and materials as the Indemnifying Party
may reasonably request, all at the sole cost and expense of the
Indemnifying Party. Regardless of which party defends such claim, the
other party hereto shall have the right at its own cost and expense to
participate in the defense assisted by counsel of its own choosing.
Without the prior written consent of the Indemnified Party, which consent
shall not be unreasonably withheld or delayed, the Indemnifying Party will
not enter into any settlement of any Third Party Claim if pursuant to or as
a result of such settlement, such settlement would lead to liability or
create any financial or other obligation on the part of the Indemnified
Party for which the Indemnified Party is not entitled to indemnification
hereunder. If a firm decision is made to settle a Third Party Claim, which
offer the Indemnifying Party is permitted to settle under this Section
11.4(c), and the Indemnifying Party desires to accept and agree to such
offer, the Indemnifying Party will give at least five (5) days' prior
written notice to the Indemnified Party to that effect, setting forth in
reasonable detail the terms and conditions of any such settlement (the
"Settlement Notice"). If the Indemnified Party objects to such firm offer
within ten (10) calendar days after its receipt of such Settlement Notice,
the Indemnified Party may continue to contest or defend such Third Party
Claim and, in such event, the maximum liability of the Indemnifying Party
as to such Third Party Claim will not exceed the amount of such settlement
offer described in the Settlement Notice, plus indemnifiable costs and
expenses paid or incurred by the Indemnified Party up to the point such
Settlement Notice had been delivered. If an Indemnified Party settles any
Third Party Claim without the prior written consent of the Indemnifying
Party, the Indemnifying Party shall have no obligation to indemnify the
Indemnified Party with respect to such Third Party Claim.
(d) Any judgment entered or settlement agreed upon in the manner
provided herein shall be binding upon the Indemnifying Party, and shall be
conclusively deemed to be an obligation with respect to which the
Indemnified Party is entitled to prompt indemnification hereunder, subject
to the Indemnifying Party's right to appeal an appealable judgment or
order. Such indemnification shall be required to be made no later than the
tenth (10th) day following the expiration of any period in which an appeal
may be taken, and shall be satisfied by payment of the amount thereof in
cash.
11.5. Failure to Give Timely Third Party Indemnification Notice.
Any failure by an Indemnified Party to give a timely, complete or accurate Third
Party Indemnification Notice as provided in this Article XI will not affect the
rights or obligations of any party hereunder except and only to the extent that,
as a result of such failure, any party entitled to receive such Third Party
Indemnification Notice was deprived of its right to recover any payment under
its applicable insurance coverage or was otherwise adversely affected or damaged
as a result of such failure to give a timely, complete and accurate Third Party
Indemnification Notice.
11.6. Notice of Claims. In the case of a claim for
indemnification under Section 11.2 or Section 11.3 hereof, upon determination by
a Buyer Indemnified Party or a Seller Indemnified Party, as the case may be,
that it has a claim for indemnification, the Indemnified Party shall deliver
notice of such claim to the Indemnifying Party, setting forth in reasonable
detail the basis of such claim for indemnification (each, an "Indemnification
Notice"). Upon the Indemnification Notice having been given to the Indemnifying
Party, the Indemnifying Party shall have thirty (30) days in which to notify the
Indemnified Party in writing (the "Dispute Notice") that the amount of the claim
for indemnification is in dispute, setting forth in reasonable detail the basis
of such dispute. In the event that a Dispute Notice is not given to the
Indemnified Party within the required thirty (30) day period the Indemnifying
Party shall be obligated to pay to the Indemnified Party the amount set forth in
the Indemnification Notice within sixty (60) days after the date that the
Indemnification Notice had been given to the Indemnifying Party.
In the event that a Dispute Notice is timely given to an Indemnified Party,
the parties hereto shall have thirty (30) days to resolve any such dispute. In
the event that such dispute is not resolved by such parties within such period,
the parties shall have the right to pursue all available legal remedies to
resolve such dispute.
11.7. Limitations. Notwithstanding anything to the contrary
herein, neither the Seller nor the Buyer shall have any indemnification
obligations hereunder except to the extent that the aggregate amount of all
Losses incurred by the indemnified party exceeds $50,000, and upon the amount of
such Losses exceeding $50,000, then the indemnifying party shall be liable for
all losses from the first dollar (i.e., this limitation shall no longer apply
and the indemnified party shall also be entitled to indemnification for the
first $50,000 previously incurred). In no event shall either party's
indemnification obligations exceed an aggregate amount equal to fifty percent
(50%) of the Purchase Price. None of the foregoing limitations shall apply to
the obligation of the Buyer to pay the Purchase Price or in respect of the
parties' obligations to provide indemnification with respect to the Assigned
Agreements as provided in Section 1.5 hereof.
11.8. Exclusive Remedy. The rights of the Buyer and the Seller
under this Article XI shall be the exclusive remedy of the Buyer and the Seller,
respectively, with respect to claims resulting from or relating to any
misrepresentation, breach of representation or warranty or failure to perform
any covenant or agreement of the Buyer or the Seller, respectively, contained in
this Agreement or in any certificate, schedule, document or other writing
delivered by Buyer or Seller, respectively, pursuant hereto.
ARTICLE XII.
ACCOUNTS RECEIVABLE AGREEMENT
Buyer agrees that it will use customary business efforts to collect all
Accounts Receivable reflected on the Closing Balance Sheet. The parties agree
that any Accounts Receivable (other than the barter credits described in
Schedule 4.7) reflected on the Closing Balance Sheet that have not been
collected by the Buyer within One Hundred Twenty (120) days following the
Closing may, at the Buyer's option, be put back to the Seller. The Seller shall
pay the Buyer an amount equal to the amount of such uncollected Accounts
Receivable put back to the Seller, less any reserve attributable to such
uncollected Accounts Receivable as was reflected on the Closing Balance Sheet,
within ten (10) business days. The Seller thereafter shall have the sole right
to collect such Accounts Receivable in a commercially reasonable manner, and any
such collections shall be for the account of the Seller. Any sums received by
the Buyer in respect of the Accounts Receivable for which Buyer has received
payment from the Seller pursuant to this Article XII shall promptly be paid over
to the Seller.
ARTICLE XIII.
MISCELLANEOUS PROVISIONS
13.1. Waiver; Modification. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by a duly authorized representative of each of
the parties hereto. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
13.2. Invalidity. If any provision of this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable or invalid
to any extent, the remainder of this Agreement shall not be affected thereby,
and this Agreement shall be construed to the fullest extent possible to as to
give effect to the intentions of the provision found unenforceable or invalid.
13.3. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, expressed or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
13.4. Expenses. Except as otherwise specifically provided for
herein, each party hereto shall bear all expenses incurred by it in connection
with this Agreement including, without limitation, the charges of its counsel,
accountants and other experts. The parties shall share equally all sales,
transfer and other similar taxes associated with the purchase and sale of the
Purchased Assets, and the Buyer agrees to provide the Seller with a
Massachusetts Sales Tax Resale Certificate on Form ST-4.
13.5. Notices. All notices and other communications provided for
hereunder shall be in writing and shall be delivered to each party hereto by
hand or sent by reputable overnight courier, with receipt verified, or by
facsimile, with receipt verified, or by registered or certified mail, return
receipt requested, addressed as follows:
(a) If to the Buyer:
Brookfield International, Inc.
c/o Brynwood Partners III L.P.
Two Soundview Drive
Greenwich, Connecticut 06830
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇. ▇▇▇▇ ▇. ▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Four Stamford Plaza
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Seller:
Hyde Athletic Industries, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 10017
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as either party may specify by notice to the other
party given as aforesaid. Such notices shall be deemed to be effective when the
same shall be deposited, postage prepaid, in the mail and/or when the same shall
have been delivered by hand or overnight courier, and/or upon facsimile
transmission, as the case may be.
13.6. Governing Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the
Commonwealth of Massachusetts without regard to its conflicts of law principles.
The parties hereto further agree that, in the event of any action or suit as to
any matters of dispute between the parties, service of any process may be made
upon the other party by mailing a copy of the summons and/or complaint to the
other party at the address set forth herein and a party's refusal to accept any
such notice shall be equivalent to service.
13.7. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
13.8. Headings. All headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of any provision or provisions of this Agreement.
13.9. Integration. This Agreement, and the documents to be
delivered in connection therewith, and the exhibits and schedules thereto, set
forth the entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all prior and contemporaneous agreements,
promises, covenants, arrangements, understandings, arrangements, communications,
representations or warranties, whether oral or written, by any director,
officer, partner, employee or representative of any party hereto; and any prior
agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and cancelled. No agreements or representations,
whether written, oral, express or implied, with respect to the subject matter
hereof have been made by either party that are not set forth expressly in this
Agreement and the other documents to be delivered in connection herewith and
therewith.
13.10. Assignment. Neither party may assign its rights hereunder
without the prior written consent of the other party; provided, however, that
the Buyer may assign its rights to any wholly-owned subsidiary of the Buyer,
provided such affiliate agrees in writing to be bound to all of the terms and
liabilities of this Agreement to the same extent that the Buyer is bound.
13.11. Publicity. No party shall issue any press release or public
announcement of any kind concerning the transactions contemplated by this
Agreement without the prior written consent of the other parties hereto, except
as may be required by law or by the rules of any stock exchange, and if so
required the parties shall to the extent that it is reasonably practicable
consult with each other prior to such publicity. The parties agree to issue an
announcement following the Closing in form and content satisfactory to each of
the parties hereto.
[Signature Page Follows.]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
BROOKFIELD ATHLETIC CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
BROOKFIELD INTERNATIONAL, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
SCHEDULE 1.4(f)
"Hazardous Substances" shall mean:
(i) Any petroleum or petroleum products, flammable explosives, radioactive
material, asbestos in any form that is or could reasonably be expected to become
friable, urea formaldehyde foam insulation and transformers or other equipment
that contain dielectric fluid containing levels of polychlorinated biphenyls;
(ii) Any chemicals or other materials or substances which are defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," ''extremely hazardous wastes,'' "restricted hazardous
wastes,'' toxic substances," "toxic pollutants'' or words of similar import,
under any Environmental Laws; and
(iii) Any other chemical or other material or substance, exposure to
which is prohibited, limited or regulated under any Environmental Laws by any
governmental entity.
"Environmental Laws" shall mean:
(i) The Comprehensive Environmental Response, Compensation and Liability
Act, as amended by the Superfund Amendments and Reauthorization Act (42 U.S.C.
Section 9601 et seq.) ("CERCLA") and/or the Solid Waste Disposal Act, as amended
by RCRA and/or the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.)
("TSCA") and/or the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
Section 136 et seq.) ("FIFRA") and/or the Clean Air Act (42 U.S.C. Section 7401
et seq.) ("CAA") and/or the Federal Water Pollution Control Act (33 U.S.C.
Section 1251 et seq.) ("FWPCA") and/or the Safe Drinking Water Act (42 U.S.C.
Section 300f et seq.) ("SDWA") including any amendments or extensions thereof;
and
(ii) All applicable present statutes, laws, regulations, rules, ordinances,
codes, licenses, permits, guidelines, standards, orders, requirements, and
similar items of all governmental agencies, departments, commissions, boards,
bureaus and instrumentalities of the United States, any foreign country, or any
state and political subdivision thereof, and all applicable judicial,
administrative, and regulatory decrees, judgments, and orders relating to
pollution and/or the environment, including, without limitation those pertaining
to reporting, licensing, permitting, investigating, and remediating emissions,
discharges, releases, or threatened releases of Hazardous Substances, whether
solid, liquid, or gaseous in nature, into the air, surface water, groundwater,
or land, or relating to the manufacture, processing, distribution, use,
generation, treatment, removal, storage, disposal, transport, or handling of
Hazardous Substances, whether solid, liquid or gaseous in nature.