AMENDMENT NO. 9 TO FINANCING AGREEMENTS
January 11, 1999
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Congress Financial Corporation (together with its successors and assigns,
"Lender") and Worksafe Industries Inc., formerly known as Eastco Industrial
Safety Corp. ("Worksafe") and Eastco Glove Technologies, Inc. ("Eastco Glove",
and together with Worksafe and their respective successors and assigns, each
individually a "Borrower", and collectively, "Borrowers") and Puerto Rico Safety
Equipment Corporation ("PR Equipment"), Worksafe Industries of Puerto Rico Inc.,
formerly known as Puerto Rico Safety Corporation ("PR Safety"), Disposable
Safety Wear Inc. ("Disposable"), Safety Wear Corp. ("Safety") and Protective
Knitting Inc. ("PKI", and together with PR Equipment, PR Safety, Disposable and
Safety, each individually a "Guarantor", and collectively, "Guarantors") have
entered into financing arrangements pursuant to which Lender may make loans and
provide other financial accommodations to Borrowers as set forth in the Accounts
Financing Agreement [Security Agreement], dated as of October 1, 1991, by and
among Lender and Borrowers, as amended (and together with all supplements
thereto and as amended hereby and as the same may hereafter be further amended,
modified, supplemented, extended, renewed, restated or replaced, the "Loan
Agreement") and other agreements, documents and instruments referred to therein
or at any time executed and/or delivered in connection therewith or related
thereto, including this Amendment (all of the foregoing, together with the Loan
Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements"). All capitalized terms used
herein shall have the meaning assigned thereto in the Loan Agreement, unless
otherwise defined herein.
Worksafe has entered into an agreement to sell substantially all of the
assets of the Distribution Division of Worksafe listed on Exhibit A hereto
(collectively, the "Sale Assets") pursuant to the Asset Purchase Agreement,
dated December 14, 1998, between Arbill Industries, Inc. ("Arbill") and Worksafe
(the "Sale Agreement").
Borrowers and Guarantors have requested that Lender consent to such sale
and agree to certain amendments to the Loan Agreement in connection therewith,
and Lender is willing to so consent and agree to such amendments, subject to the
terms and conditions contained herein. By this Amendment, Lender and Borrower
desire and intend to evidence such amendment.
In consideration of the foregoing and the agreements and covenants
contained herein, the parties hereto agree as follows:
1. Consent. Subject to the terms and conditions contained herein, Lender
hereby consents to the sale by Worksafe of the Sale Assets in accordance with
the terms of the Sale Agreement as in
effect on the date hereof, provided, that, (a) the sale of the Sale Assets other
than the Distribution Division Accounts (as hereinafter defined) pursuant to the
Sale Agreement shall have occurred by no later than January 19, 1999 and (b) the
sale of the Sale Assets consisting of the Distribution Division Accounts
pursuant to the Sale Agreement shall have occurred by no later than March 31,
1999.
2. Additional Representations, Warranties and Covenants. Borrowers and
Guarantors hereby jointly and severally represent, warrant and covenant with and
to Lender as follows, which representations, warranties and covenants are
continuing and shall survive the execution and delivery hereof, and the truth
and accuracy of, or compliance with each, together with the representations,
warranties and covenants in the other Financing Agreements, being a continuing
condition of the making of loans and providing other financial accommodations by
Lender to Borrowers:
(a) On or about the date hereof, Worksafe has sold to Arbill all of
the Sale Assets pursuant to the Sale Agreement other than the Sale Assets
consisting of the Distribution Division Accounts (as hereinafter defined)
and on or about January 12, 1999 all of the proceeds thereof have been or
shall be remitted to Lender for application to the Obligations (other than
the principal amount of the Term Loan) in such order and manner as Lender
determines. The net cash proceeds from the sale of such Sale Assets are not
less than the amount equal to: $2,450,000 plus the amount equal to ninety
(90%) percent of the Distribution Division Accounts, minus $315,000 which
is represented by the Promissory Note issued by Arbill payable to Worksafe.
By no later than March 31, 1999, (i) Worksafe shall sell the Distribution
Division Accounts to Arbill in accordance with the terms of the Sale
Agreement (as in effect on the date hereof), (ii) Borrowers shall deliver
to Lender a true, correct and complete list of the Distribution Division
Accounts which are being sold to Arbill and a true, correct and complete
list of the Distribution Division Accounts which are being retained by
Worksafe, and (iii) Borrowers shall cause all proceeds of such sale to be
paid by Arbill directly to Lender for application to the Obligations in
such order and manner as Lender determines (other than the principal amount
of the Term Loan, so long as no Event of Default exists or has occurred).
In respect of the purchase price for the Distribution Division Accounts,
Worksafe shall receive not less than the amount equal to ninety (90%)
percent of the Distribution Division Accounts. Exhibit A hereto contains a
true, correct and complete list of all of the assets and properties of
Worksafe sold to Arbill pursuant to the Sale Agreement as of the date
hereof. No assets or properties of Borrowers or Guarantors other than those
listed on Exhibit A hereto have been sold to Arbill as of the date hereof.
(b) Exhibit B hereto is a true, correct and complete copy of the Sale
Agreement, together with all exhibits and schedules thereto, as executed by
the parties thereto (other than Schedules 3.15, 3.24 and 3.26 to the Sale
Agreement, true, correct and complete copies of which shall be delivered to
Lender by no later than January 15, 1999).
(c) The security interests in and liens upon the Collateral of Lender
are and shall continue to be in full force and effect (including, but not
limited to, all of the Distribution Division Accounts and all amounts at
any time payable to any Borrower, Guarantor or any of its affiliates
pursuant to the Sale Agreement (and all related agreements, documents and
instruments), and all rights, benefits and remedies of any Borrower or
Guarantor pursuant to the Sale Agreement and all related agreements,
documents and instruments), except for the Sale Assets sold to Arbill as of
the date hereof (which do not include the Distribution Division Accounts).
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(d) Borrowers and Guarantors shall cause all amounts at any time
payable to any Borrower, Guarantor or any of its affiliates pursuant to the
Sale Agreement or any related agreements, documents and instruments to be
paid by Arbill directly to Lender for application to the Obligations in
such order and manner as Lender shall determine (other than the principal
amount of the Term Loan, so long as no Event of Default exists or has
occurred). The net amount payable by Arbill to Worksafe in cash or other
immediately available funds pursuant to the Sale Agreement shall be not
less than $2,450,000 (minus $315,000 paid pursuant to the Promissory Note
issued by Arbill payable to Worksafe) in respect of all Sale Assets other
than the Distribution Division Accounts and not less than ninety (90%)
percent of the Distribution Division Accounts in respect of the Sale Assets
consisting of the Distribution Division Accounts.
(e) In the event any Borrower or Guarantor receives any amounts at any
time pursuant to the Sale Agreement or any related agreement, document or
instrument, such amounts shall be collected by such Borrower or Guarantor
as the property of Lender and held by it in trust for Lender and shall on
the day received be remitted to Lender in the form received, with any
necessary assignments or endorsements, for application to the Obligations
in such order and manner as Lender shall determine (other than the
principal amount of the Term Loan, so long as no Event of Default exists or
has occurred).
(f) On or about December 17, 1998, Eastco Industrial Safety Corp.
changed its name to Worksafe Industries Inc. and all references to Eastco
Industrial Safety Corp. in any of the Financing Agreements shall be deemed
to refer to Worksafe and its successors and assigns. Borrowers and
Guarantors have delivered to Lender a true, correct and complete copy of
the amendment to the certificate of incorporation effectuating such name
change as certified by the New York Secretary of State. On or about
December 24, 1998, Puerto Rico Safety Corporation changed its name to
Worksafe Industries of Puerto Rico Inc. and all references to Puerto Rico
Safety Corporation in any of the Financing Agreements shall be deemed to
refer to PR Safety and its successors and assigns. Borrowers and Guarantors
have delivered to Lender a true, correct and complete copy of the amendment
to the certificate of incorporation to effectuate such name change as
certified by the New York Secretary of State.
(g) Borrowers and Guarantors shall physically segregate and clearly
and conspicuously xxxx and label all goods of any Borrower or Guarantor at
any time located at any premises owned or leased by Arbill.
(h) By no later than February 5, 1999, (i) Lender shall have received,
in form and substance satisfactory to Lender, UCC-3 Amendments with respect
to each UCC-1 financing statement between Worksafe, as debtor, and Lender,
as secured party, amending such financing statements to change the name of
Worksafe from Eastco Industrial Safety Corporation to Worksafe Industries
Inc., duly authorized, executed and delivered by Worksafe, and (ii) Lender
shall have received, in form and substance satisfactory to Lender, UCC-3
Amendments with respect to each UCC-1 financing statement between PR
Safety, as debtor, and Lender, as secured party, amending such financing
statements to change the name of PR Safety from Puerto Rico Safety Corp. to
Worksafe Industries of Puerto Rico Inc., duly authorized, executed and
delivered by PR Safety.
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(i) No Event of Default or act, condition or event which with notice
or passage of time or both would constitute an Event of Default exists or
has occurred as of the date of this Amendment (after giving effect to the
amendments to the Financing Agreements made by this Amendment).
(j) This Amendment has been duly executed and delivered by Borrowers
and Guarantors and is in full force and effect as of the date hereof and
the agreements and obligations of Borrowers and Guarantors contained herein
constitute legal, valid and binding obligations of Borrowers and Guarantors
enforceable against each of them in accordance with its terms.
3. Conditions Precedent. The effectiveness of the consent of Lender
contained in Section 1 hereof is subject to the satisfaction of each of the
following conditions precedent in a manner satisfactory to Lender:
(a) all representations and warranties contained herein shall be true
and correct;
(b) Lender shall have received, in form and substance satisfactory to
Lender, evidence that Worksafe has received on the date hereof not less
than $2,600,000 as proceeds from the sale of the Sale Assets pursuant to
the Sale Agreement (as in effect on the date hereof), other than the
Distribution Division Accounts and other amounts related thereto minus
$315,000 represented by the Arbill Note (as defined below), of which not
less than $2,000,000 is being remitted by wire transfer directly to Lender
(representing the inventory valuation amount of $1,562,641 plus the
$915,000 portion of the purchase price provided for in the Asset Purchase
Agreement as reduced by the $315,000 being paid with the Arbill Note and
$100,000 being paid from the escrow arrangements provided for in the Asset
Purchase Agreement) and the balance of which is being paid by checks issued
by Arbill payable to Worksafe, approximately $98,000 of which shall be
promptly deposited in the blocked account of Worksafe used for the
remittance of collection of receivables to Lender;
(c) Lender shall have received, in form and substance satisfactory to
Lender, the Collateral Assignment of Note by Worksafe in favor of Lender
with respect to the Promissory Note, dated on or about the date hereof,
issued by Arbill payable to Worksafe in the original principal amount of
$315,000 (the "Arbill Note"), duly authorized, executed and delivered by
Worksafe (which note shall be in form and substance satisfactory to
Lender), together with the original of the Arbill Note as endorsed and
assigned by Worksafe to Lender in a manner satisfactory to Lender;
(d) Lender shall have received, in form and substance satisfactory to
Lender, the Collateral Assignment of Sale Agreements by Worksafe in favor
of Lender, duly authorized, executed and delivered by Worksafe in favor of
Lender;
(e) Lender shall have received, in form and substance satisfactory to
Lender, the agreement by Arbill in favor of Lender providing for, inter
alia, the waiver of any claims by Arbill to inventory of Borrowers located
at premises owned or leased by Arbill, the waiver of, or limitation on,
certain rights of setoff against accounts receivable of Borrowers and the
waiver of any claims to funds received by Lender and related matters, duly
authorized, executed and delivered by Arbill;
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(f) Lender shall have received, in form and substance satisfactory to
Lender, the agreement of Arbill acknowledging the collateral assignment by
Worksafe to Lender of all of its rights and remedies, and claims for
damages and other relief under the Sale Agreement and such other rights as
Lender may require, duly authorized, executed and delivered by Arbill;
(g) Lender shall have received, in form and substance satisfactory to
Lender, the acknowledgment by Arbill in favor of Lender to the collateral
assignment by Worksafe to Lender of the Arbill Note, duly authorized,
executed and delivered by Arbill;
(h) the sale by Worksafe of the Sale Assets to Arbill pursuant to the
Sale Agreement shall have occurred by no later than January 18, 1999 and
the sale by Worksafe of the Distribution Division Accounts to Arbill
pursuant to the Sale Agreement shall have occurred by no later than March
31, 1999;
(i) as of the date hereof and after giving effect to the transactions
contemplated by the Sale Agreement, no Event of Default, or event, act or
condition which with notice or passage of time or both would constitute an
Event of Default, shall exist or have occurred; and
(j) Lender shall have received an original of this Amendment, duly
authorized, executed and delivered by Borrowers and Guarantors.
4. Arbill Receivables. Notwithstanding anything to the contrary contained
in any of the other Financing Agreements, except in Lender's discretion, Lender
shall only make advances to Worksafe based on Eligible Accounts due from Arbill,
up to the amount equal to seventy (70%) percent of the Net Amount of Eligible
Accounts due from Arbill.
5. Additional Defaults. The failure of any Borrower or Guarantor to comply
with the representations, warranties, covenants, conditions and agreements
contained herein or in any other agreement, document or instrument at any time
executed and/or delivered by any Borrower or Guarantor with, to or in favor of
Lender shall constitute an Event of Default under the Financing Agreements.
6. Additional Definitions. As used herein, the following terms shall have
the respective meanings given to them below:
(a) "Account Debtor" shall mean with respect to any Distribution
Division Accounts, any Person that is obligated on such account.
(b) "Distribution Division Accounts" shall mean each and every account
for goods sold or leased by or for services rendered by the Distribution
Division which account is owned by Worksafe and arose from the sale of
goods or services by the Distribution Division in its ordinary course of
business and that meets the following conditions:
(i) such Distribution Division Account arose in an arms-length
transaction with an unrelated third party during the period commencing
on December 1, 1998 and ending on December 31, 1998;
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(ii) all or any part of such Distribution Division Account
remains outstanding on the sixtieth (60th) day after January 11, 1999;
(iii) the amount of such Distribution Division Account is not, as
of March 16, 1999, subject to setoff, charges, credits or defenses of
any nature whatsoever;
(iv) the Account Debtor for such Distribution Division Account is
not an Excluded Customer (as such term is defined in the Sale
Agreement as in effect on the date hereof);
(v) such Distribution Division Account is subject to no liens;
(vi) such Distribution Division Account is based on an
enforceable order or contract for goods shipped or services rendered
that contains selling terms of not more than thirty (30) days past the
original invoice date;
(vii) the property giving rise to such Distribution Division
Account shall have been shipped to the Account Debtor or delivered to
an agent of an Account Debtor for shipment to an Account Debtor,
provided that any property returned or refused by an Account Debtor
shall not give rise to a Distribution Division Account from and after
the date of such return or refusal;
(viii) the Distribution Division Account arose from the sale of
goods that were not placed on consignment, xxxx and hold, sale and
return, sale on approval, or other terms by reason of which the
payment by an Account Debtor may be conditional (except from and after
the time such condition no longer applies);
(ix) such Distribution Division Account is denominated in United
States Dollars;
(x) such Distribution Division Account arose under a contract
that has been duly authorized and is in full force and effect and
constitutes the legal, valid and binding obligations of an Account
Debtor, enforceable against such Account Debtor in accordance with its
terms;
(xi) the Account Debtor for such Distribution Division Account is
not any government or any department, agency or instrumentality of any
government, any state, city town or municipality or division thereof;
(xii) the Account Debtor for such Distribution Division Account
is not a subsidiary or an affiliate of Worksafe; and
(xiii) neither Worksafe nor any of its subsidiaries or affiliates
shall have knowledge of (A) the death of the Account Debtor for such
Distribution Division Account, or (B) the dissolution, termination of
existence of, or the insolvency, business failure or cessation of, or
the filing of a petition in bankruptcy or reorganization for, or the
appointment of a receiver or custodian for, or any similar event with
respect to, such Account Debtor.
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(c) "Distribution Division" shall mean that division of Worksafe's
business involving the sale of industrial protective clothing, including
gloves, glasses, earmuffs, earplugs, respirators, goggles, face xxxxxxx,
rainwear, protective footwear, first aid kits, monitoring devices, signs
and related industrial safety products to end-users (as opposed to
distributors), including, manufacturing companies and service businesses,
public utilities, fisheries, pharmaceutical plants, the transportation
industry and companies engaged in hazardous materials abatement.
7. Effect of this Amendment. Except as modified pursuant hereto, no other
changes or modifications to the Financing Agreements are intended or implied,
and in all other respects the Financing Agreements are hereby specifically
ratified, restated and confirmed by all parties hereto as of the effective date
hereof. Any acknowledgment or consent contained herein shall not be construed to
constitute a consent to any other or further action by any Borrower or Guarantor
or to entitle any Borrower or Guarantor to any other consent. To the extent of
conflict between the terms of this Amendment and the other Financing Agreements,
the terms of this Amendment shall control. The Loan Agreement and this Amendment
shall be read and construed as one agreement.
8. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary or
desirable to effectuate the provisions and purposes of this Amendment.
9. Governing Law. The validity, interpretation and enforcement of this
Amendment and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of laws).
10. Headings. The headings listed herein are for convenience only and do
not constitute matters to be construed in interpreting this Amendment.
11. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
12. Binding Effect. This letter agreement shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors and
assigns.
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The parties hereto have caused this letter agreement to be duly executed
and delivered by their authorized officers as of the day and year first above
written.
Very truly yours,
WORKSAFE INDUSTRIES INC.,
formerly known as Eastco
Industrial Safety Corp.
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
----------------------------
Title: Vice President
EASTCO GLOVE TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
----------------------------
Title: Vice President
AGREED:
PUERTO RICO SAFETY EQUIPMENT
CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
-----------------------------
Title: Vice President
WORKSAFE INDUSTRIES OF PUERTO RICO INC., formerly known as Puerto Rico Safety
Corporation
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
-----------------------------
Title: Vice President
DISPOSABLE SAFETY WEAR INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
-----------------------------
Title: Vice President
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[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUE FROM PRIOR PAGE]
SAFETY WEAR CORP.
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
-----------------------------
Title: Vice President
PROTECTIVE KNITTING, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
-----------------------------
Title: Vice President
CONGRESS FINANCIAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Title: Vice President
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EXHIBIT A
TO
AMENDMENT NO. 9
For purposes of this Amendment, the term "Sale Assets" shall mean the
following assets owned by Worksafe used exclusively and directly in the
Distribution Division (as defined below) of Worksafe, to the extent such assets
exist on January 11, 1999 and are sold and transferred by Worksafe to Arbill
Industries, Inc. pursuant to the Asset Purchase Agreement, dated as of December
14, 1998, between Worksafe and Arbill Industries, Inc. (but in no event shall
such assets be deemed to include the Excluded Assets as such term is defined
below):
(a) the Distribution Division Accounts (as defined in Amendment No. 9);
(b) all office and warehouse equipment, furniture, fixtures and catalogs of
or relating to the Distribution Division wherever located listed on Schedule 1
hereto;
(c) the list of all customers of, and suppliers of goods and services to,
the Distribution Division as well as the end-users (including manufacturing
companies and service businesses, public utilities, fisheries, pharmaceutical
plants, the transportation industry and companies engaged in hazardous materials
abatement) of all safety products sold by Worksafe or any other division,
subsidiary or affiliate of Worksafe other than the Distribution Division, but
excluding all customers of the Manufacturing Subsidiaries who are not end-users
of the goods manufactured by the Manufacturing Subsidiaries;
(d) the Intellectual Property used in the operation of the Distribution
Division listed on Schedule 2 hereto;
(e) Inventory;
(f) all Open Sourcing Orders or Contracts and Open Purchase Orders or
Contracts of the Distribution Division existing as of January 11, 1999 and not
otherwise constituting Excluded Assets;
(g) all of the Worksafe's rights under and pursuant to all warranties,
representations and guarantees made by suppliers in connection with the
Inventory and the Open Sourcing Orders or Contracts identified in clause (f)
above;
(h) all of Worksafe's rights, claims and interests to and with respect to
any pending or executory contracts relating exclusively to the Inventory, Open
Sourcing Orders or Contracts, Open Purchase Orders or Contracts identified in
clause (f) above;
(i) all of Worksafe's rights, if any, in and to the names Eastco Industrial
Safety and Puerto Rico Safety;
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(j) any and all significant records, files and papers (or copies or
computer printouts thereof) relating to the other Sale Assets wherever located,
including without limitation, Inventory records, catalogs, slogans, sales and
advertising materials, sales and purchase correspondence, lists of former
customers and suppliers, customer credit information and customer pricing
information relating to the Sale Assets; and
(k) all of Worksafe's rights in and to any 800 telephone numbers used in
connection with the Distribution Division, but not the telephone equipment or
system used in connection with the Distribution Division.
Capitalized terms used herein shall have the following meanings:
(a) "Distribution Division" shall mean that division of Worksafe's business
involving the sale of industrial protective clothing, including gloves, glasses,
earmuffs, earplugs, respirators, goggles, face xxxxxxx, rain wear, protective
footwear, first aid kits, monitoring devices, signs and related industrial
safety products to end-users (as opposed to distributors), including,
manufacturing companies and service businesses, public utilities, fisheries,
pharmaceutical plants, the transportation industry and companies engaged in
hazardous materials abatement.
(b) "Excluded Assets" shall mean:
(i) Worksafe's cash on hand;
(ii) Worksafe's bank accounts;
(iii) Worksafe's computer hardware and software systems (other than
the software associated with Website www.Eastco);
(iv) any Open Source Orders or Contracts, Open Purchase Orders or
Contracts or tangible assets (other than Inventory) or intangible assets
that would otherwise be included in the term "Sale Assets" which Arbill
Industries, Inc. shall have identified as "Excluded Assets" in a written
notice delivered to Worksafe on or before January 11, 1999;
(v) all assets of the Manufacturing Subsidiaries and the Manufacturing
Business of Worksafe; and
(vi) any and all pre-paid insurance, prepaid deposits and similar
items of Worksafe.
(c) "Intellectual Property" shall mean the right, title and interest of
Worksafe, if any, with respect to the Distribution Division and with respect to:
(i) all inventions (whether patentable or unpatentable and whether or
not reduced to practice), all improvements thereto, and all patents, patent
applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof;
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(ii) all trademarks, service marks, trade dress, logos, trade names,
and corporate names, including the name Eastco Industrial Safety and Puerto
Rico Safety, together with all translations, adaptions, derivations and
combinations thereof and including all goodwill associated therewith, and
all applications, registrations and renewals in connection therewith,
together with all license agreements relating to any of the foregoing;
(iii) all copyrightable works, all copyrights and all applications,
registrations and renewals in connection therewith;
(iv) all mask works and all applications, registrations and renewals
in connection therewith;
(v) all trade secrets and confidential business information (including
ideas, research and development, know-how formulas, compositions,
manufacturing and production processes and techniques, technical data,
designs, drawings, specifications, customer and supplier lists, pricing and
cost information, and business and marketing plans and proposals);
(vi) all computer software (including data and related documentation),
including any license agreement relating to the foregoing;
(vii) the website, xxx.Xxxxxx.xxx.;
(viii) all other proprietary rights of or relating to any of the
foregoing; and
(ix) all copies and tangible embodiments of or relating to any of the
foregoing (in whatever form or medium).
(d) "Inventory" shall mean industrial protective clothing, including
gloves, glasses, earmuffs, earplugs, respirators, goggles, face xxxxxxx, rain
wear, protective footwear, first aid kits, monitoring devices, signs, and other
safety products which are recorded on the books and records of the Distribution
Division and held by the Distribution Division, or are deliverable to the
Distribution Division, on December 31, 1998 for sale to end-users of such safety
products (as distinguished from distributors of such safety products), which
Inventory shall meet all of the following criteria:
(i) such Inventory consists solely of finished goods;
(ii) no account receivable or document of title in favor of any
purchaser of such Inventory has been created or issued with respect to such
Inventory;
(iii) such Inventory is readily saleable in a bona fide arm's length
termination, or is usable in the ordinary course of the business of the
Distribution Division and no portion of such Inventory represents returned,
rejected, lost, obsolete, damaged or defective goods;
(iv) if such Inventory is located on leased premises, a valid lease,
sublease or license agreement for such premises has been delivered to
Arbill Industries, Inc. for such premises, except that
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if such Inventory is located on the premises of certain specified third
parties, such Inventory shall be segregated from other products of such
companies, marked as the property of Worksafe;
(v) such Inventory is not subject to any liens;
(vi) such Inventory is not on consignment or located in a public
warehouse;
(vii) such Inventory has been manufactured or acquired in compliance
with the Fair Labor Standards Act, 29 U.S.C. ss.201 et seq;
(viii) such Inventory conforms to all environmental, health and safety
laws and regulations and any other applicable laws as the same exist as of
January 11, 1999;
(ix) such Inventory is packaged in standard packaging cases;
(x) the quantity as to each SKU of Inventory shall not exceed the
aggregate quantity sold by Worksafe during the twelve-month period
immediately preceding December 31, 1998, to persons other than Excluded
Customers (as such term is defined in the Asset Purchase Agreement referred
to above); and
(xi) such obsolete, damaged or defective goods as Arbill Industries,
Inc. may reasonably specify in writing as of January 11, 1999.
(e) "Manufacturing Business" shall mean with respect to Worksafe or any
division of the Worksafe or with respect to the Manufacturing Subsidiaries and
any other direct or indirect subsidiaries of Worksafe, the acquisition of raw
materials and finished goods for and the manufacturing, marketing and sale to
distributors (as distinguished from end-users) of disposable and reusable
industrial protective apparel, including, but not limited to, products such as
gloves, coveralls, shirts, pants, hats, hoods, aprons, smocks, lab coats,
hazardous material handler suits, examination gloves, sleeves, shoe covers and
related items.
(f) "Manufacturing Subsidiary" or "Manufacturing Subsidiaries" shall mean
each and all, respectively, of the following: Disposable Safety Wear, Inc., a
Delaware corporation, Safety Wear Corp., a Delaware corporation, Eastco Glove
Technologies, Inc., a Minnesota corporation, Puerto Rico Safety Equipment
Corporation, a Delaware corporation.
(g) "Open Sourcing Order or Contract" shall mean the rights of Worksafe
under all outstanding contracts and all servicing orders placed by the
Distribution Division for new industrial protective clothing and other safety
products of the type constituting the Inventory being acquired by Arbill
Industries, Inc. on January 11, 1999.
(h) "Open Purchase Order or Contract" shall mean all outstanding contracts
of the Distribution Division for and all outstanding servicing orders placed by
customers of the Distribution Division for
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new industrial protective clothing and other safety products of the type of
inventory being acquired by Arbill Industries, Inc., or inventories that are
customarily carried by Arbill Industries, Inc.
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