July 16, 1997
X'Xxxxxxxx Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Melnor Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Gentlemen:
In accordance with your request and in connection with the signing of the
Asset Purchase Agreement (the "Agreement") dated as of July 16, 1997 by and
among X'Xxxxxxxx Corporation, Melnor Inc. ("Melnor"), GH Acquisition Corp.
("GH") and Gardena Holding AG ("Gardena"), Gardena and GH acknowledge that
the managers of Melnor Canada Ltd. (the "Canadian Subsidiary") are currently
negotiating the terms of a collective agreement with National Automobile,
Aerospace, Transportation and General Workers Union of Canada (C.A.W.-
Canada) and its Local 397 (the "Union") that will cover employees of the
Canadian Subsidiary who are members of the Union. Gardena and GH further
acknowledge thast the final terms of the collective ageement will not be
finalized until after the date of the Agreement.
In recognition thereof, Gardena and GH agree that if the Canadian Subsidiary
enters into a collective agreement with the Union prior to the Closing, as
defined in the Agreement, such collective agreement shall not constitute a
material change in the business of the Canadian Subsidiary, a material
increase in compensation, or constitute a condition that would relieve
Gardena and GH of their obligation to consummate the transactions
contemplated under the Agreement, provided that (i) any wage increase agreed
to under the collective agreeent does not, in the aggregate, exceed 4.1%
(over a period of 2 years) of the wages currently being paid to employees who
will be covered under the collective agreement, and (ii) any provisions
concerning the payment of severance to terminated employees do not provide
for payment of amounts that exceed the amounts that would be required to be
paid under applicable Canadian law.
Xxxxxx and X'Xxxxxxxx acknowledge and agree that GH will not assume the
Export Representative Agreement between Xxxxxx and Dorian International
Inc., as amended through January 5, 1996 (the "Dorian Agreement"), in
connection with the transactions contemplated by the Agreement. Xxxxxx and
X'Xxxxxxxx agree that they will use their best efforts to terminate the
Dorian Agreement as soon as possible (provided that X'Xxxxxxxx and Xxxxxx
will not incur any expense with respect to such termination without the
sent of Gardena or Buyer which shall not be unreasonably withheld and GH and
Gardena agree to cooperate with Xxxxxx and X'Xxxxxxxx in attempting to
terminate said agreement). Notwithstanding the foregoing, GH and Gardena agree
to indemnify and hold Melnor and X'Xxxxxxxx harmless from any loss, liability
or expense (including, without limitation, reasonable attorneys' fees) to
which Melnor or X'Xxxxxxxx become subject and which arise from or as a
result of, or is directly or indirectly connected with, the termination of
the Dorian Agreement, provided that Seller and X'Xxxxxxxx will not enter
into any settlement agreement with or incur expenses related to Dorian
International without the consent of Gardena or GH, which shall not be
unreasonably withheld. This indemnification is in addition to and independent
from the indemnification in Section 11.2 and is not subject to the limitation
in Section 11.4. Notwithstanding the first sentence of this paragraph, in
the event said agreement cannot be terminated by Xxxxxx and X'Xxxxxxxx prior
to the Closing, as defined in the Purchase Agreement, GH will assume said
agreement.
GH ACQUISITION CORP.
By: /s/ Xxxx Xxxxx
Title: /s/ Director
By: /s/ Xxxxxxx Xxxxx
Title: /s/ Director
GARDENA HOLDING AG
By: /s/ Xxxx Xxxxx
Title: /s/Director
By: /s/ Xxxxxxx Xxxxx
Title: /s/ Director
Acknowledged and Agreed to:
X'XXXXXXXX CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
Title: /s/ President & C.E.O.
MELNOR INC.
By: /s/ X. Xxxxxx Xxxxxxxxx
Title: /s/ Secretary
