EXHIBIT 10.26
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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
MAZEL COMPANY L.P.
and
ACTION INDUSTRIES, INC.
October _____, 1996
TABLE OF CONTENTS
SECTION 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . .1
1.1 "Applicable Closing Date". . . . . . . . . . . . . . .1
1.2 "Assets" . . . . . . . . . . . . . . . . . . . . . . .1
1.3 "Bank" . . . . . . . . . . . . . . . . . . . . . . . .1
1.4 "Bank Lien" . . . . . . . . . . . . . . . . . . . . .1
1.5 "Cheswick Facility" . . . . . . . . . . . . . . . . .2
1.6 "Claims" . . . . . . . . . . . . . . . . . . . . . . .2
1.7 "COBRA" . . . . . . . . . . . . . . . . . . . . . . .2
1.8 "Code" . . . . . . . . . . . . . . . . . . . . . . . .2
1.9 "Damages" . . . . . . . . . . . . . . . . . . . . . .2
1.10 "Employee" . . . . . . . . . . . . . . . . . . . . . .2
1.11 "ERISA" . . . . . . . . . . . . . . . . . . . . . . .2
1.12 "First Closing Date" . . . . . . . . . . . . . . . . .2
1.13 "GAAP" . . . . . . . . . . . . . . . . . . . . . . . .2
1.14 "Good and Saleable Inventory" . . . . . . . . . . . .2
1.15 "Gross Sales" . . . . . . . . . . . . . . . . . . . .2
1.16 "Intellectual Property" . . . . . . . . . . . . . . .2
1.17 "Inventory" . . . . . . . . . . . . . . . . . . . . .3
1.18 "Powerhouse Customers" . . . . . . . . . . . . . . . .3
1.19 "Powerhouse Inventory" . . . . . . . . . . . . . . . .3
1.20 "Promotional Customers" . . . . . . . . . . . . . . .3
1.21 "Promotional Inventory" . . . . . . . . . . . . . . .3
1.22 "Second Closing Date" . . . . . . . . . . . . . . . .3
1.23 "Seller's Warranty Claims" . . . . . . . . . . . . . .3
1.24 "Trade Secrets" . . . . . . . . . . . . . . . . . . .3
1.25 "Warehouse Facilities" . . . . . . . . . . . . . . . .3
1.26 "WARN" . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 2 PURCHASE OF ASSETS . . . . . . . . . . . . . . . . . .4
2.1 Sale of Assets . . . . . . . . . . . . . . . . . . . .4
(a) First Closing Date. . . . . . . . . . . . . . . .4
(b) Second Closing Date . . . . . . . . . . . . . . .5
(c) Instructions of Conveyance. . . . . . . . . . . .6
(d) Right of Buyer to Exclude Certain Inventory . . .6
2.2 Excluded Assets. . . . . . . . . . . . . . . . . . . .6
2.3 Consideration. . . . . . . . . . . . . . . . . . . . .6
2.4 Inventory Taking . . . . . . . . . . . . . . . . . . .6
2.5 Purchase Price and Payment . . . . . . . . . . . . . .7
2.6 Allocation of Purchase Price . . . . . . . . . . . . .9
2.7 No Assumption of Liabilities . . . . . . . . . . . . .9
2.8 Unassumed Liabilities. . . . . . . . . . . . . . . . 10
2.9 Bulk Sale Law. . . . . . . . . . . . . . . . . . . . 11
2.10 Non-Assignable Contracts and Rights. . . . . . . . . 11
2.11 Prorations . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3 CLOSING DATE . . . . . . . . . . . . . . . . . . . . 12
SECTION 4 REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . 13
4.1 Organization, Qualification and Authority of Seller. 13
(a) Due Organization and Qualification. . . . . . . 13
(b) Power and Authority to Conduct Business . . . . 13
(c) No Defaults or Violations . . . . . . . . . . . 13
(d) Power and Authority to Enter Into Agreements. . 14
(e) Due Execution and Enforceability. . . . . . . . 14
4.2 Inventory Report . . . . . . . . . . . . . . . . . . 14
4.3 No Equity Interest . . . . . . . . . . . . . . . . . 14
4.4 Title to Assets; No Claims, Liens, Etc.; "AS-IS"
Condition of Inventory . . . . . . . . . . . . . . . 14
4.5 Contracts and Commitments. . . . . . . . . . . . . . 15
(a) Customer Purchase Orders, Sales Bids and Proposals15
(b) Restrictions on Conduct of Business . . . . . . 15
4.6 Intellectual Property. . . . . . . . . . . . . . . . 15
4.7 Trade Secrets and Customer Lists . . . . . . . . . . 16
4.8 Customers and Sales. . . . . . . . . . . . . . . . . 16
4.9 Customer Deposits. . . . . . . . . . . . . . . . . . 16
4.10 Suppliers. . . . . . . . . . . . . . . . . . . . . . 17
4.11 Insurance. . . . . . . . . . . . . . . . . . . . . . 17
4.12 Contracts. . . . . . . . . . . . . . . . . . . . . . 17
4.13 Inventories. . . . . . . . . . . . . . . . . . . . . 17
4.14 Product Warranties . . . . . . . . . . . . . . . . . 18
4.15 Tax Returns. . . . . . . . . . . . . . . . . . . . . 18
4.16 Pending Claims, Litigation and Governmental
Proceedings. . . . . . . . . . . . . . . . . . . . . 18
4.17 Judgments, Orders and Consent Decrees. . . . . . . . 18
4.18 Agents and Employees . . . . . . . . . . . . . . . . 19
4.19 Labor Matters. . . . . . . . . . . . . . . . . . . . 19
4.20 Environmental Matters. . . . . . . . . . . . . . . . 19
4.21 Compliance with Laws . . . . . . . . . . . . . . . . 20
4.22 Evaluation of Terms of Transaction . . . . . . . . . 20
4.23 Full Disclosure. . . . . . . . . . . . . . . . . . . 20
4.24 Duty of Seller to Make Inquiry . . . . . . . . . . . 20
4.25 No Broker's or Finder's Fees . . . . . . . . . . . . 20
4.26 Survival . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5 REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . 21
5.1 Authority, Enforceability, Etc.. . . . . . . . . . . 21
(a) Due Organization. . . . . . . . . . . . . . . . 21
(b) Power and Authority to Conduct Business . . . . 21
(c) No Defaults or Violations . . . . . . . . . . . 21
(d) Power and Authority to Enter Into Agreements. . 22
(e) Due Execution and Enforceability. . . . . . . . 22
5.2 No Broker's or Finder's Fees . . . . . . . . . . . . 22
5.3 Judgments, Orders and Consent Decrees. . . . . . . . 22
5.4 Survival . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6 COVENANTS OF SELLER. . . . . . . . . . . . . . . . . 23
6.1 Conduct of Business Pending Second Closing Date. . . 23
(a) Full Access . . . . . . . . . . . . . . . . . . 23
(b) Customer Purchase Orders, Product Supply Orders,
Bids and Proposals. . . . . . . . . . . . . . . 23
(c) Use of Intellectual Property. . . . . . . . . . 24
(d) Inventory Liquidation Sales . . . . . . . . . . 24
(e) Business Operations . . . . . . . . . . . . . . 24
(f) Insurance . . . . . . . . . . . . . . . . . . . 24
(g) Compliance with Laws. . . . . . . . . . . . . . 25
6.3 Conditions Precedent . . . . . . . . . . . . . . . . 25
6.4 Injunctions. . . . . . . . . . . . . . . . . . . . . 25
6.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 7 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. 25
7.1 Representations and Warranties True on Applicable Closing
Date . . . . . . . . . . . . . . . . . . . . . . . . 25
7.2 Compliance with Agreement. . . . . . . . . . . . . . 25
7.3 Secretary's Certificate. . . . . . . . . . . . . . . 25
7.4 Compliance Certificate . . . . . . . . . . . . . . . 26
7.5 No Litigation. . . . . . . . . . . . . . . . . . . . 26
7.6 Consents and Approvals . . . . . . . . . . . . . . . 26
7.7 Termination of Liens; Warehouseman's Waiver. . . . . 26
7.8 Damage or Destruction. . . . . . . . . . . . . . . . 26
7.9 Warehouse Arrangements . . . . . . . . . . . . . . . 26
7.10 Opinion of Counsel . . . . . . . . . . . . . . . . . 26
7.11 Injunctions. . . . . . . . . . . . . . . . . . . . . 26
SECTION 8 CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE 27
8.1 Representations and Warranties True at the Applicable
Closing Date . . . . . . . . . . . . . . . . . . . . 27
8.2 Compliance With Agreement. . . . . . . . . . . . . . 27
8.3 Secretary's Certificate. . . . . . . . . . . . . . . 27
8.4 Compliance Certificate . . . . . . . . . . . . . . . 27
8.5 No Litigation. . . . . . . . . . . . . . . . . . . . 27
8.6 Consents and Approvals . . . . . . . . . . . . . . . 27
8.7 Opinion of Counsel . . . . . . . . . . . . . . . . . 27
8.8 Approval by Shareholders of Seller . . . . . . . . . 28
SECTION 9 FURTHER AGREEMENTS OF THE PARTIES. . . . . . . . . . 28
9.1 Employees. . . . . . . . . . . . . . . . . . . . . . 28
9.2 Nondisclosure. . . . . . . . . . . . . . . . . . . . 29
9.3. Restrictive Covenants. . . . . . . . . . . . . . . . 29
(a) Confidentiality . . . . . . . . . . . . . . . . 29
(b) Non-Competition . . . . . . . . . . . . . . . . 30
(c) Injunctive Relief . . . . . . . . . . . . . . . 31
9.4 Negotiation with Others. . . . . . . . . . . . . . . 31
9.5 Replenishment Sales Following First Closing Date . . 31
9.6 Approval of Shareholders of Seller . . . . . . . . . 31
9.7 Right of First Refusal with Respect to Other Assets of
Seller . . . . . . . . . . . . . . . . . . . . . . . 31
9.8 Trade Show Deposits. . . . . . . . . . . . . . . . . 32
9.9 Accounts Receivable. . . . . . . . . . . . . . . . . 32
SECTION 10 RISK OF LOSS. . . . . . . . . . . . . . . . . . . . 33
10.1 Risk of Loss . . . . . . . . . . . . . . . . . . . . 33
SECTION 11 TERMINATION AND ABANDONMENT . . . . . . . . . . . . 33
11.1 Termination. . . . . . . . . . . . . . . . . . . . . 33
11.2 Notice of Termination. . . . . . . . . . . . . . . . 33
SECTION 12 INDEMNIFICATION AND REIMBURSEMENT . . . . . . . . . 34
12.1 Indemnification by Seller. . . . . . . . . . . . . . 34
12.2 Indemnification by Buyer . . . . . . . . . . . . . . 35
12.3 Product Liability Matters. . . . . . . . . . . . . . 36
12.4 Claims for Reimbursement . . . . . . . . . . . . . . 36
12.5 Defense of Third-Party Claims. . . . . . . . . . . . 36
12.6 Indemnification as Sole Remedy; Exceptions . . . . . 37
12.7 Limitations. . . . . . . . . . . . . . . . . . . . . 37
SECTION 13 RIGHT TO PROCEED. . . . . . . . . . . . . . . . . . 38
13.1 Waiver of Conditions. . . . . . . . . . . . . . . . 38
SECTION 14 MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . 38
14.1 Costs and Expenses . . . . . . . . . . . . . . . . . 38
14.2 Amendment and Modification . . . . . . . . . . . . . 39
14.3 No Assignment. . . . . . . . . . . . . . . . . . . . 39
14.4 Notices. . . . . . . . . . . . . . . . . . . . . . . 40
14.5 Counterparts . . . . . . . . . . . . . . . . . . . . 40
14.6 Headings . . . . . . . . . . . . . . . . . . . . . . 40
14.7 Recitals, Exhibits and Schedules . . . . . . . . . . 40
14.8 Schedules and Exhibits . . . . . . . . . . . . . . . 40
14.9 Waiver; Remedies . . . . . . . . . . . . . . . . . . 40
14.10 Governing Law . . . . . . . . . . . . . . . . . . . 40
14.11 Jurisdiction and Venue. . . . . . . . . . . . . . . 41
14.12 Severability. . . . . . . . . . . . . . . . . . . . 41
14.13 Entire Agreement. . . . . . . . . . . . . . . . . . 41
14.13 Time is of the Essence. . . . . . . . . . . . . . . 41
Schedules
4.1(c) No Defaults or Violations
4.1(d) Power and Authority to Enter Into Agreements
4.2 Inventory Reports
4.3 Equity Interests
4.5(a) Sales Contracts
4.6 Schedule of Trade Names, Trademarks, Service Marks, and
Copyrights
4.8 Schedule of Customers
4.10 Schedule of Suppliers
4.11 Product Liability Insurance
4.12 Contracts
4.16 Pending Claims, Litigation and Governmental Proceedings
4.18 Agents and Employees
6.1(b) Outstanding Supply Orders for Promotional Inventory
Exhibits
A General Assignment and Xxxx of Sale
B Assignment of Trademarks
C Assignment of Trade Names and Copyrights
D Accounting Standard and Principles/"Wall to Wall"
Inventory Procedures
E Form of Bulk Sales Notice
F Form of Bulk Sales Affidavit
G Opinion of Counsel to Seller
H Opinion of Counsel to Buyer
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made and entered into as of the _____ day of
October, 1996, by and between ACTION INDUSTRIES, INC., a
Pennsylvania corporation ("Seller") and MAZEL COMPANY L.P., a
Delaware limited partnership, or its nominee or successor
("Buyer"), is to evidence the following agreements and
understandings:
W I T N E S S E T H:
WHEREAS, Seller is engaged in the purchase, sale, import and
distribution of a wide variety of replenishment merchandise sold
under the trade name "Powerhouse" and promotional merchandise sold
under a variety of trade names; and
WHEREAS, Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, certain assets of Seller, and Buyer is
not assuming any of the liabilities or obligations of Seller
(except for those specified obligations of Seller delineated in
Section 2.7 hereof) upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises, the mutual
promises made herein and the mutual benefits to be derived
therefrom, the parties hereto hereby represent, warrant, covenant,
agree and understand as follows with the intent to be legally
bound:
SECTION 1
DEFINITIONS
Capitalized terms not otherwise defined in this Agreement
shall have the meanings set forth in this Section 1.
1.1 "Applicable Closing Date" means the First Closing Date or the
Second Closing Date, as the context of this Agreement may require.
1.2 "Assets" means those assets of Seller described in Sections
2.1(a) and 2.1(b) of this Agreement, other than the Excluded
Assets, as defined in Section 2.2 of this Agreement.
1.3 "Bank" means Foothill Capital Corporation, Seller's
institutional lender.
1.4 "Bank Lien" means the lien and security interest in certain
assets of Seller granted to Bank, which lien, with respect to the
Assets, will be released on the Applicable Closing Date.
1.5 "Cheswick Facility" means the office/warehouse building
utilized by Seller as its corporate headquarters and located at 000
Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxx.
1.6 "Claims" means all liens, encumbrances, security interests,
mortgages, equities, interests, options or pledges of every kind,
nature and description.
1.7 "COBRA" means the Consolidated Omnibus Budget Reconciliation
Act of 1985.
1.8 "Code" means the Internal Revenue Code of 1986 and any
amendments, predecessor laws, or successor laws.
1.9 "Damages" means all liabilities, deficiencies, losses, costs
or expenses, including, but not limited to, reasonable attorney's
and other professional fees, costs of litigation, interest and
penalties.
1.10 "Employee" means any person employed by Seller pursuant
to either a contractual or at will relationship who works for
Seller, whether or not at the Cheswick Facility or the Warehouse
Facilities (defined below).
1.11 "ERISA" means the Employee Retirement Income Securities
Act of 1974, as amended.
1.12 "First Closing Date" means the date defined in Section 2.1(a).
1.13 "GAAP" means generally accepted accounting principles
consistently applied.
1.14 "Good and Saleable Inventory" means each item of Powerhouse
Inventory and Promotional Inventory of Seller which meets each of
the following criteria: (i) it is not damaged or defective; and
(ii) it is not diminished in fair market value by reason of
factors that Buyer reasonably deems relevant applying standards
similar to those applied in connection with purchases of inventory
at closeout prices.
1.15 "Gross Sales" shall mean the gross invoice sales price, net of
freight, discounts and allowances of all Powerhouse Inventory that
Buyer purchases from Seller pursuant to this Agreement and that is
sold and shipped to Powerhouse Customers within ninety (90) days
following the First Closing Date and paid for within one hundred
eighty (180) days following the First Closing Date.
1.16 "Intellectual Property" includes, but is not limited to: all
Trade Secrets, patents, and patent applications, if any, trade
names, fictitious names, assumed names, trademarks, trade dress,
logos and service marks (whether domestic or foreign, registered or
unregistered), all copyrights (registered or unregistered) licensed
or owned by Seller or by any affiliate of Seller and now or at any
time used by Seller in connection with the sale of the Powerhouse
Inventory and/or the Promotional Inventory.
1.17 "Inventory" means, collectively, the Powerhouse Inventory or
the Promotional Inventory.
1.18 "Powerhouse Customers" means those customers of Seller
identified in Schedule 4.8 attached hereto.
1.19 "Powerhouse Inventory" means the replenishment inventory and
all related point-of-sale inventory, i.e., displays, display
headers (on pallets and dies) and components thereof ("Point-of-Sale
Inventory") of Seller sold under the name "Powerhouse" and
located at the Cheswick Facility or the Columbus Warehouse.
1.20 "Promotional Customers" means those customers of Seller
identified in Schedule 4.8 attached hereto.
1.21 "Promotional Inventory" means all inventory of merchandise,
goods and other products for sale to Seller's Promotional Customers
and all related Point-of-Sale Inventory which are sold or offered
for sale to Seller's Promotional Customers and located at the
Cheswick Facility or the Mount Xxxxxx Warehouse.
1.22 "Second Closing Date" means the date defined in Section
2.1(b).
1.23 "Seller's Warranty Claims" means all warranty,
indemnification, or other contract claims of Seller against third
parties whether implied, express or otherwise, or refunds due to
Seller from third party manufacturers, vendors, carriers or
utilities arising from or relating to Seller's purchase of the
Powerhouse Inventory or Seller's purchase of the Promotional
Inventory.
1.24 "Trade Secrets" includes: marketing materials; program
pricing, merchandising requirements and costs, and display
requirements; sales incentive programs including quotas, actual
performance and bonuses paid; and other information relating to the
sale of Powerhouse and Promotional Inventory that Buyer may
reasonably identify and request.
1.25 "Warehouse Facilities" means, collectively, (i) the
public warehouse located at 000 Xxxxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxx
and owned by Transmanagement Corporation (the "Columbus
Warehouse"); and (ii) the public warehouse located at 000 Xxxxxxxx
Xxxx, Xx. Xxxxxx, Xxxx and owned by Transmanagement Corporation
(the "Mount Xxxxxx Warehouse").
1.26 "WARN" means the Worker Adjustment Retraining
Notification Act of 1988.
SECTION 2
PURCHASE OF ASSETS
2.1 Sale of Assets.
(a) First Closing Date. On the tenth (10th) business day
following the execution and delivery of this Agreement or such
earlier date as the parties may mutually agree in writing (the
"First Closing Date"), Seller shall sell, transfer, assign, grant,
convey and deliver to Buyer, free and clear of all Claims, the
following assets:
(i) all Powerhouse Inventory which as of the First
Closing Date has not been shipped and remains
unsold, subject, however, to Paragraph 2.1(d);
(ii) all of Seller's right, title and interest in and to
the trademarks "Homewares" and "Impressions",
together with any design or logo relating to such
names;
(iii) the non-exclusive right and license to use
(concurrently with Seller) the registered
trademarks "DOLLAR-AMA" and "DOLLAR DAZE,"
together with any design or logo relating to
such names, in connection with the conduct of
business by Buyer between the First Closing
Date and the Second Closing Date; provided,
however, that if the Second Closing Date does
not occur, then such licenses shall terminate
upon the termination of this Agreement but
Buyer shall nonetheless have a first right of
refusal to acquire such Intellectual Property
pursuant to Section 9.7 hereof;
(iv) packaging and labeling material and sales
literature relating to the Powerhouse Inventory;
(v) all of Seller's Warranty Claims with respect to the
Powerhouse Inventory included in the Assets;
(vi) all Intellectual Property that relates exclusively
to the Powerhouse Inventory;
(vii) all customer lists, supplier lists, import
records (including, but not limited to, "point
of origin" records), export records (if any)
and recall notices relating to or associated
with the Powerhouse Inventory ; and
(viii) to the extent (if at all) assumed by Buyer
pursuant to Section 2.7 hereof, Action's bids
and sales proposals and unfulfilled customer
purchase orders and purchase commitments
relating to the Powerhouse Inventory, and such
other contracts, obligations and commitments
of Seller in respect of the Powerhouse
Inventory as Buyer, in its sole discretion,
may elect to assume hereunder.
(b) Second Closing Date. On such date as the parties may
mutually agree in writing, which date shall in no event be later
than January 31, 1997 except as mutually agreed in writing by the
parties, (the "Second Closing Date"), Seller shall sell, transfer,
assign, grant, convey and deliver to Buyer, free and clear of all
Claims, whether tangible, intangible, personal or mixed, the
following assets:
(i) all Promotional Inventory which as of the Second
Closing Date has not been shipped and remains
unsold, subject, however, to Paragraph 2.1(d);
(ii) all of Seller's right, title and interest in and to
all Intellectual Property that has not already been
assigned and transferred to Buyer on the First
Closing Date;
(iii) packaging and labeling material and sales
literature relating to the Promotional
Inventory;
(iv) all of Seller's Warranty Claims with respect to the
Promotional Inventory included in the Assets;
(v) customer lists, supplier lists, import records
(including, but not limited to, "point of origin"
records), export records (if any), recall notices
relating to or associated with the Promotional
Inventory; and
(vi) to the extent assumed by Buyer pursuant to Section
2.7 hereof, Action's bids and sales proposals and
unfulfilled customer purchase orders and purchase
commitments relating to the Promotional Inventory,
and such other contracts, obligations and
commitments of Seller in respect of the Promotional
Inventory as Buyer, in its sole discretion, may
elect to assume hereunder.
(c) Instructions of Conveyance. The assets described in
Sections 2.1(a) and (b) above are hereinafter collectively referred
to as the "Assets". The Assets constituting tangible personal
property shall be conveyed to Buyer by execution and deliver of a
General Assignment and Xxxx of Sale in the form attached hereto as
"Exhibit A". Intellectual Property shall be conveyed to Buyer by
execution and delivery of an Assignment of Trademarks and
Assignment of Trade Names and Copyrights in the forms attached
hereto as Xxxxxxxx "X" xxx "X", xxxxxxxxxxxx.
(x) Right of Buyer to Exclude Certain Inventory.
Notwithstanding anything contained herein to the contrary: (i)
Buyer shall not be required to purchase any item of Powerhouse
Inventory or Promotional Inventory which is not Good and Saleable
Inventory; (ii) Buyer shall not be required to purchase any item of
Powerhouse Inventory or Promotional Inventory if the total number
of units in stock of such item on the Applicable Closing Date is
less than one hundred (100); and (iii) Buyer shall not be required
to purchase any new Inventory not presently in Seller's possession
or on order or any Inventory purchased by Seller other than as
specifically provided in or permitted under Section 6.1(b). Any
Inventory which Buyer elects not to purchase pursuant to this
Section 2.1(d) shall be deemed an Excluded Asset.
2.2 Excluded Assets. Buyer shall not purchase or acquire
hereunder any right, title or interest in or to any of the
properties, rights or assets of Seller not described in Section 2.1
hereof (collectively, the "Excluded Assets").
2.3 Consideration. Upon the terms and subject to the conditions
set forth in this Agreement and in consideration for the Assets,
Buyer shall pay and remit to Seller on the Applicable Closing Date
the Purchase Price (as defined in Section 2.5(a) hereof) in the
manner described in Section 2.4(b) hereof.
2.4 Inventory Taking.
(a) On the day immediately preceding the Applicable Closing
Date, a "wall-to-wall" physical inventory of the Inventory to be
purchased on such date will be conducted at the Warehouse
Facilities and, if applicable, at the Cheswick Facility, by Seller
and by Buyer jointly at their respective cost and expense. Such
inventory will be valued at 63.3% of actual cost of Inventory, as
reflected in Seller's books and records (as previously reviewed by
Buyer). Procedures for the taking and calculation of the Inventory
are set forth in Exhibit "D" attached hereto and made a part
hereof. The parties shall agree upon and sign the report of the
Inventory ("Inventory Report") following the completion of the
physical inventory and the resolution of any disputes. In order to
facilitate the taking of the "wall-to-wall" physical inventory: (i)
all operations of Seller at the facility at which the Inventory to
be purchased is located shall cease during the taking of such
physical inventory; and (ii) no such Inventory shall be shipped and
no goods or materials shall be received during the taking of such
physical inventory. Representatives of Buyer and Seller shall be
entitled to participate at their respective cost and expense in the
observation of the physical inventory.
(b) In the event of a dispute between the parties as to the
accuracy of any items contained in the Inventory Report, then the
Buyer shall pay the undisputed amount to the Seller on the
Applicable Closing Date and Seller and Buyer shall negotiate in
order to agree upon the proper valuation. If they shall fail to
come to an agreement with respect thereto within fifteen (15) days
after such negotiation shall commence, then the amount of the
Inventory valuation shall be referred for determination to the
Cleveland, Ohio offices of Deloitte & Touche (the "Dispute
Accountants"), who shall be instructed, with respect to each item
in dispute, to choose between the position taken on that issue by
Buyer and the position taken on that issue by Seller (as opposed to
adopting either a compromise position or any position not taken by
one or the other of Buyer and Seller). The Dispute Accountants
shall have no right, authority or discretion to employ any
accounting standard or principles or valuation method except for
those reflected in "Exhibit D". The determination by the Dispute
Accountants shall be final, binding, and conclusive on the parties.
The fees and disbursements of the Dispute Accountants shall be
allocated between Buyer and Seller so that the dollar amount of
such fees and disbursements borne by each of them is in direct
proportion to that portion of the dollar amount of the items in
dispute (i.e.: the aggregate dollar spread between the positions
taken by each of Buyer and Seller) with respect to which the
Dispute Accountants find against each of Buyer and Seller,
respectively. Nothing herein contained shall be construed (i) to
authorize or permit the Dispute Accountants to arbitrate or
determine any question or matter whatsoever under or in connection
with this Agreement except the valuation of inventory, or (ii) to
require the Dispute Accountants to follow rules of the American
Arbitration Association or of any other body in making such
determination.
2.5 Purchase Price and Payment.
(a) The aggregate purchase price for the Assets (the
"Purchase Price") will be an amount equal to (i) $100,000 plus (ii)
an amount equal to 63.3% of Seller's actual cost of the Inventory
plus (iii) an amount equal to five percent (5%) of Gross Sales of
Powerhouse Inventory. It is the present intention of Buyer to sell
Powerhouse Inventory to the Powerhouse Customers from the Columbus
Warehouse.
(b) The Purchase Price will be paid as follows:
(i) On the First Closing Date, Buyer shall pay the sum
of $25,000 plus an amount equal to 63.3% of
Seller's actual cost of Powerhouse Inventory;
(ii) On the Second Closing Date, Buyer shall pay the sum
of $75,000 plus an amount equal to 63.3% of
Seller's actual cost of the Promotional Inventory;
and
(iii) Within one hundred and eighty (180) days
following the First Closing Date, Buyer shall
make the payment described in subsection
2.5(a)(iii) above (such payment shall
accompanied by a sales report indicating Gross
Sales upon which such payment is based,
together with such additional documentation as
Seller may reasonably require).
Any dispute between the parties with respect to the
calculation or payment of the royalties described in subsection
2.5(a)(iii) which remains unresolved for a period of thirty (30)
days following the date on which notice of such dispute is received
by Buyer or Seller, as the case may be, shall be referred to the
Dispute Accountants for determination in accordance with Section
2.4(b), and such determination shall be final, binding and
conclusive on the parties.
(c)(i) To the extent that the Purchase Price for the
Assets paid on the First Closing Date or
Second Closing Date is greater than the
purchase price for the Assets sold on such
Applicable Closing Date, as finally
determined, such excess resulting from
breakage of or damage to perishable or fragile
container Inventory that is discovered within
thirty (30) days following the Applicable
Closing Date and which renders such Inventory
non-saleable (such excess payment being
hereinafter referred to as the "Adjustment"),
Buyer may, at its sole election and upon
notice to Seller, set off against the royalty
payments described in subparagraph 2.5(b)(iii)
an amount equal to such excess payment. Any
notice delivered by Buyer pursuant to the
preceding sentence shall set forth in
reasonable detail the type, unit quantity and
cost to Buyer of each item of Inventory in
respect of which an adjustment is being
claimed by Buyer. In the event such setoff is
insufficient to satisfy any Purchase Price
Adjustment in Buyer's favor, Seller shall pay
to Buyer by certified check or by wire
transfer in immediately available federal
funds, the amount of the deficiency plus
interest thereon from the Applicable Closing
Date at the rate of nine percent (9%) per
annum. Notwithstanding anything in this
subsection to the contrary, Buyer shall not be
entitled to claim any Adjustment in its favor
unless, and solely to the extent, the total
Purchase Price paid for the damaged or broken
container Inventory in respect of which the
Adjustment is being claimed, exceeds ten
percent (10%) of the Purchase Price paid on
the Applicable Closing Date;
(ii) To the extent the Purchase Price for the Assets,
sold on the First Closing Date or Second Closing
Date, as finally determined, is greater than the
purchase price paid on the Applicable Closing Date,
Buyer shall pay to Seller, by certified check or by
wire transfer of immediately available federal
funds, an amount equal to such difference plus
interest thereon from the Applicable Closing Date
at the rate of nine percent (9%) per annum.
2.6 Allocation of Purchase Price. The Purchase Price represents
the amount agreed upon by the parties to be the fair market value
of the Assets. The Purchase Price shall be allocated for income
tax purposes among the Assets in a manner consistent with Section
1060 of the Code. Buyer shall provide to Seller, not later than
sixty (60) days after the date on which the Purchase Price is
finally determined, a written proposal for the allocation of the
Purchase Price among the Assets. Seller shall notify Buyer within
thirty (30) days of receipt of the proposal whether or not and to
what extent Seller agrees with the proposal. If Buyer and Seller
cannot agree on the allocation within forty-five (45) days of
Seller's receipt of the proposal, each of Buyer and Seller shall be
free to allocate the Purchase Price among the Assets as it may
independently deem appropriate. If, however, Buyer and Seller
agree upon the allocation, each of the parties hereby covenants and
agrees that it will not take a position on any federal, state or
local tax return before any governmental agency charged with the
collection of any tax, or in any judicial proceeding that is in any
way inconsistent with the purchase price allocation and will
cooperate with one another in the timely filing consistent with
such purchase price allocation on Form 8594 with the Internal
Revenue Service.
2.7 No Assumption of Liabilities.
(a) Buyer and Seller agree that Buyer is not purchasing,
assuming, or accepting any debts, liabilities or obligations
whatsoever of Seller, contingent or non-contingent, liquidated or
unliquidated, asserted or unasserted, all of which remain the
debts, liabilities, and obligations of Seller, except as provided
in Section 2.7(b) hereof.
(b) On the Applicable Closing Date, Buyer shall assume and
agree to pay, perform and discharge the following (and only the
following) obligations of Seller (collectively, the "Assumed
Liabilities"):
(i) such customer purchase orders for Powerhouse
Inventory and Promotional Inventory accepted by
Seller in the ordinary course of business (to the
extent the same remain unfulfilled on the
Applicable Closing Date) as Buyer shall review,
approve and elect in writing to assume in its sole
and absolute discretion; and
(ii) such other contracts, obligations and commitments
of Seller in respect of the Inventory as Buyer
shall review, approve and elect in writing to
assume in its sole and absolute discretion.
2.8 Unassumed Liabilities. Buyer shall not assume or be liable to
Seller or any other person or entity for or in respect of any
debts, liabilities and obligations of Seller not specified in
Section 2.7 hereof (collectively, the "Unassumed Liabilities").
Notwithstanding the provisions of Section 2.7 hereof and without
limiting the generality of the preceding sentence, Buyer shall not
assume or be liable to Seller or any other person or entity for or
in respect of the following debts, liabilities and obligations of
Seller:
(a) Any debt, liability or obligation of Seller to taxing or
other governmental authorities for any foreign or domestic,
federal, state or local income taxes or similar taxes based upon
the income of Seller for periods ending on or prior to the Closing
Date;
(b) Any debt, liability or obligation with respect to any
event which shall have occurred on or prior to the Closing Date
whether or not such event and the liability relating thereto is
insured against under any of the coverages under the insurance
policies and/or self-insurance programs of Seller;
(c) Any debt, liability or obligation of Seller under or in
respect of any compensation or benefit plan, policy or arrangement
in favor of the Employees of Seller;
(d) Any debt, liability or obligation of Seller to any of its
shareholders, directors, officers or Employees arising out of the
transactions contemplated hereby, including, without limitation,
any liability for severance or termination pay;
(e) Any of Seller's products liability obligations or product
warranty obligations; or
(f) Any debt, liability or obligation of Seller arising from
or relating to, directly or indirectly, of Seller's employee
welfare plans or employee benefit plans.
2.9 Bulk Sale Law. The parties hereto understand and agree that
the transfer which is the subject matter of this Agreement may be
subject to the provisions of Chapter 1306 of the Ohio Revised Code,
Uniform Commercial Code (Bulk Transfers) ["Bulk Sales Law"] and
that Buyer is not assuming any debts or obligations of Seller in
connection with this Agreement in its sole discretion, except for
such unfilled customer purchase orders and other agreements or
obligations as Buyer may elect to assume pursuant to subparagraphs
2.7(b)(i) and (ii).
Buyer hereby waives compliance by Seller with the Bulk Sales
Law solely with respect to the transactions to be consummated on
the First Closing Date; provided, however, that such waiver does
not as between Buyer and Seller relieve Seller of any of the
Unassumed Liabilities. Seller agrees to furnish in adequate time
to comply with the Bulk Sales Law affidavits, list of creditors
with addresses and such other instruments and documents as are
customary pursuant to the Bulk Sales Law as Buyer's counsel shall
require for Buyer to comply with the Bulk Sales Law with respect to
the transactions to be consummated on the Second Closing Date.
Forms of the Bulk Sales Notice and Bulk Sales Affidavit are
attached hereto as Exhibits "E" and "F", respectively.
2.10 Non-Assignable Contracts and Rights. To the extent that the
assignment by Seller of any property, right or asset to be assigned
to Buyer pursuant to this Agreement shall require the consent or
approval of any other party, and such consent or approval shall not
have been obtained on or prior to the Applicable Closing Date, this
Agreement shall not constitute a contract to assign the same if an
attempted assignment would constitute a breach thereof or would in
any way adversely affect the rights of Seller (or Buyer as
assignee) thereunder. In such case, the beneficial interest in or
to such property, right or asset shall in any event pass as of the
Closing Date to Buyer hereunder, and Seller covenants and agrees:
(a) From and after the Applicable Closing Date to hold and
declare that Seller holds any and all such properties, rights or
assets in trust for the benefit of Buyer and its successors and
assigns;
(b) To use their reasonable best efforts to obtain and secure
any and all consents and approvals that may be necessary to effect
the valid sale, transfer or assignment of the same to Buyer without
change in any of the material terms or conditions thereof,
including, without limitation, the formal assignment or novation of
any of the same, if so required;
(c) To make or complete such transfers as soon as reasonably
possible;
(d) To cooperate with Buyer in any other reasonable
arrangement designed to provide for Buyer the benefits of and to
such properties, rights or assets; and
(e) From and after the Applicable Closing Date to use
reasonable efforts, at the request and expense of Seller, to
enforce for the account of Buyer (and its successors and assigns)
any and all rights of Seller arising from or in respect of such
properties, rights or assets.
2.11 Prorations. The following items shall be prorated as of the
Applicable Closing Date to the extent that Seller has paid such
items for any period after the Applicable Closing Date or Buyer
will be required to pay such items for any period prior to the
Applicable Closing Date:
(i) Personal property taxes and other taxes with
respect to the Assets (the parties shall cooperate
fully to avoid, to the extent legally possible, the
payment of duplicate personal property taxes); and
(ii) any other item which may be mutually agreed to by
the parties.
Any net amount owed hereunder shall be paid within thirty (30)
days following the Applicable Closing Date by the party owing such
amount or within thirty (30) days after the date of determination,
if later.
SECTION 3
CLOSING DATE
Consummation of the purchase and sale of Assets and the other
transactions provided for in this Agreement shall take place at the
offices of Kahn, Kleinman, Xxxxxxxx & Xxxxxx Co., L.P.A. located at
Tower at Erieview, Suite 2600, 1301 East Ninth Street, Cleveland,
Ohio, on the Applicable Closing Date. Each Closing shall commence
at 10:00 a.m. local time on the Applicable Closing Date or such
other time as the parties hereto may mutually agree in writing; and
the purchase and sale of Assets and all other transactions provided
for herein to occur on and as of the Applicable Closing Date shall
be deemed to have occurred simultaneously and to be effective as of
the opening of business on such date.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF SELLER
In order to induce Buyer to purchase the Assets and perform
its other obligations herein, Seller hereby makes the following
representations, warranties and covenants, each of which shall be
true and correct on the execution hereof and shall be true and
correct on each Applicable Closing Date and which shall survive
such Applicable Closing Date for the period of time specified in
Section 4.26 below;
4.1 Organization, Qualification and Authority of Seller.
(a) Due Organization and Qualification. Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania and is qualified
to transact business as a foreign corporation in the State of Ohio
and all other jurisdictions where the nature of its business or the
ownership, leasing or operation of Seller's properties or assets
requires qualification, except where the failure to be so qualified
is not likely to have a material adverse effect on the business
operations or financial condition of Seller, the value of the
Assets or the ability of Seller to convey the Assets (a "Material
Adverse Effect").
(b) Power and Authority to Conduct Business. Seller has the
full power and authority to own or lease its properties and to
conduct its business in the manner and the places where such
property is owned or leased and its business is conducted. Seller
possesses all permits and licenses from state, local, or Federal
agencies or subdivisions necessary to operate its business the
failure of which to obtain would have a Material Adverse Effect,
all of which are in full force and effect.
(c) No Defaults or Violations. As of the Applicable Closing
Date, except as disclosed in Schedule 4.1(c), the execution and
delivery of this Agreement, and the performance by Seller of
obligations under this Agreement: (i) will not violate,
contravene, be in conflict with, result in a breach of or
constitute (with or without notice or lapse of time or both) a
default under: (A) any provision of law or any rule or regulation
of any governmental agency; (B) any order, rule or decree of any
court, arbitrator or other agency of government; (C) any provision
of the Articles of Incorporation or By-Laws of Seller; or (D) any
lease, indenture, agreement or other instrument to which Seller or
any of the Assets is or may be bound (in each case, solely with
respect to clause (A) and (D), which would be likely to have a
Material Adverse Effect); and (ii) will not result in the creation
or imposition of any claim of any nature whatsoever upon the
Assets.
(d) Power and Authority to Enter Into Agreements. Seller has
the right, power and authority to enter into and perform its
obligations under this Agreement and the other agreements provided
for herein. No consent, approval or authorization of, or
registration, declaration, or filing with any court, governmental
authority (federal, state, or local), collective bargaining unit,
lending institution (other than Bank, which approval has been
obtained) or other third party is required in connection with the
execution and delivery by Seller of this Agreement or its
performance of, or compliance with, the terms, provisions, and
conditions hereof, except as disclosed in Schedule 4.1(d)
(e) Due Execution and Enforceability. The execution,
delivery and performance of this Agreement and the other agreements
provided for herein by and on behalf of Seller have been duly and
validly authorized and approved by the Board of Directors of
Seller, and if the Second Closing Date occurs, will be duly and
validly authorized and approved by the shareholders of Seller.
Seller has taken and will take all such other corporate action as
is necessary or required to enter into, execute and deliver this
Agreement and the other agreements provided for herein and to
perform their respective obligations hereunder and thereunder.
This Agreement and the other agreements provided for herein
constitute the valid and legally binding obligations of Seller,
enforceable against Seller in accordance with their respective
terms and conditions (except to the extent the same may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditor's rights generally or by general equitable
principles).
4.2 Inventory Report. Attached as Schedule 4.2 is Seller's
perpetual inventory reports, which fairly and accurately describe
the type, quantity and cost to Seller of its Powerhouse Inventory
and Promotional Inventory in each case as of September 30, 1996.
4.3 No Equity Interest. Seller does not own or hold (directly or
indirectly) any equity or debt interest in any corporations, joint
venture, partnerships, business associations, trusts, or other
firms or entities which are engaged in the sale of replenishment
merchandise and/or promotional merchandise, except as set forth in
Schedule 4.3. .
4.4 Title to Assets; No Claims, Liens, Etc.; "AS-IS" Condition of
Inventory.
(a) As of each Applicable Closing Date, Seller will have good
and marketable title to all of the Assets to be transferred and
sold to Buyer on such Applicable Closing Date, free and clear of
all Claims whatsoever.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT: SELLER MAKES
NO EXPRESS OR IMPLIED WARRANTIES WITH RESPECT TO THE PHYSICAL
CONDITION OF THE INVENTORY; THE WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY EXPRESSLY DISCLAIMED;
AND THE INVENTORY WILL BE TRANSFERRED AND CONVEYED "AS IS, WHERE
IS" AND WITH ALL FAULTS.
4.5 Contracts and Commitments.
(a) Customer Purchase Orders, Sales Bids and Proposals. Set
forth on Schedule 4.5(a) hereto is a true and complete list and
description of each individual written customer purchase order,
sales contract or indication of interest as is documented by
initial order processing (IOP) forms with respect to Powerhouse
Inventory, together with a list of all other contracts, obligations
and commitments of Seller with respect to the Powerhouse Inventory,
as of September 30, 1996. A similar schedule containing the
information described in the preceding sentence with respect to the
Promotional Inventory, as of a date not less than three (3) days
prior to the Second Closing Date, will be delivered by Seller to
Buyer on the Second Closing Date, and shall be deemed to be a part
of Schedule 4.5(a).
(b) Restrictions on Conduct of Business. Seller is not
restricted by commitment (including, without limitation, any non-competition
agreement or covenant) from carrying on the sale of
Inventory as carried on at the date hereof.
4.6 Intellectual Property.
(a) Set forth on Schedule 4.6 is a list of all patents, trade
names, trademarks, service marks, and copyrights ("Schedule of
Trade Names, Trademarks, Service Marks, and Copyrights") both
domestic and foreign, owned by Seller in respect of its
replenishment inventory business and its promotional inventory
business and used in such business now or, to Seller's knowledge,
at any time within the last three (3) years and indicating their
registration number and dates of registration. Except as set forth
on Schedule 4.6 hereto, and except for limited licenses granted to
those customers solely in connection with promotions which licenses
terminate upon termination of the promotion (Seller will endeavor
to furnish copies or written summaries of such promotions to Buyer
prior to the First Closing Date), Seller owns all right, title and
interest in and to its Intellectual Property.
(b) Except as set forth on Schedule 4.6., Seller has not
received any notification, and has no knowledge that Seller has
infringed, within the past three (3) years, nor is now infringing,
on any patent, trade name, trademark, service xxxx or copyright
belonging to any other person, firm, or corporation, except for (i)
claims which have been fully and finally adjudicated or settled for
an individual amount not exceeding Five Thousand Dollars ($5,000)
or totaling Twenty Five Thousand Dollars ($25,000) in the
aggregate; and (ii) claims or demands asserted by third parties in
respect of which no further action has been taken by such third
parties within the past eighteen (18) months. Seller owns or holds
adequate licenses or other rights to use all trademarks, service
marks, trade names, and copyrights necessary for the sale and
promotion of Inventory. To Seller's knowledge, such use does not,
and will not, conflict with, infringe on, or otherwise violate any
rights of others.
4.7 Trade Secrets and Customer Lists. Seller is the owner of all
Trade Secrets and customer lists required for the sale,
distribution and marketing of the Assets, free and clear of any
Claims. Seller is not using, or in any way making use of, any
confidential information, trade secrets or customer lists of any
third party, including, without limitation, to Seller's knowledge,
any former employer of any present or past Employee of Seller.
There are no suits pending or, to Seller's knowledge, threatened
with respect to any Trade Secrets or customer lists of Seller.
4.8 Customers and Sales. Attached as Schedule 4.8 are complete
and accurate schedules of Powerhouse Customers and Promotional
Customers during the twelve (12) months ended June 30, 1996,
ranking (by sales dollar volume) all customers that made purchases
of (i) Powerhouse Inventory; and (ii) Promotional Inventory during
such period. Except as expressly set forth in the Summary of
Relations attached to Schedule 4.8: (x) Seller has not been
notified, and is not otherwise aware, that any of the twenty-five
(25) largest customers listed in Schedule 4.8 of any Powerhouse
Inventory or Promotional Inventory has ceased, or intends to cease,
purchasing from Seller, has materially altered or intends to
materially alter the amount of business that it is presently doing
with Seller, or, to Seller's knowledge, will refuse to do business
with Buyer following the Closing; and (y) there are no disputes or
controversies pending or, to Seller's knowledge, threatened between
Seller and any of the twenty-five (25) largest customers listed in
Schedule 4.8. Seller will deliver to Buyer, within ten (10) days
following the First Closing Date, a supplemental Schedule 4.8
containing the same type information set forth in Schedule 4.8 for
the period July 1, 1996 through September 30, 1996 except that
Seller shall endeavor, but shall not be required to, add new
customers to the Summary of Relations attached to Schedule 4.8.
Buyer acknowledges and understands that Seller does not make,
and expressly disclaims, any representation or warranty with
respect to the present or future intention of any of Seller's
customers to purchase Inventory from Buyer following the Applicable
Closing Date, except as expressly provided in clause (x) of the
second sentence of the preceding paragraph.
4.9 Customer Deposits. Seller has not received, and will not
receive prior to the Applicable Closing Date, any deposits,
payments on account or similar payment with respect to any of its
Inventory contracts or orders (except with respect to Inventory
delivered to customers prior to the Applicable Closing Date), and
no such deposits, payments on account or similar payments are due
or owing to Seller.
4.10 Suppliers. Attached as Schedule 4.10 is, to Seller's
knowledge, a complete and accurate schedule of vendors of each
current Inventory item. Except as expressly set forth in the
Summary of Relations attached to Schedule 4.10: (i) Seller has not
been notified, and is not otherwise aware, that any of the ten (10)
largest suppliers listed in Schedule 4.10 intends to cease doing
business with Seller materially reduce the amount of its product
available to Seller, or, to Seller's knowledge, refuse to sell
Products to Buyer; and (ii) there are no current disputes or
controversies pending or, to Seller's knowledge, threatened between
Seller and any of the ten (10) largest suppliers listed in
Schedule 4.10. Seller is current in its payment obligations to its
ten (10) largest suppliers except as specifically described in the
Summary of Relations attached to Schedule 4.10.
Buyer acknowledges and understands that Seller does not make,
and expressly disclaims, any representation or warranty with
respect to the present or future intention of any of Seller's
suppliers to sell products to Buyer following the Applicable
Closing Date, except as expressly provided in clause (i) of the
second sentence of the preceding paragraph.
4.11 Insurance. Seller maintains policies of product liability
insurance in respect of the Inventory in amounts reasonably deemed
by its management to be sufficient. All such policies are
described in Schedule 4.11.
4.12 Contracts. Except as set forth on Schedule 4.5(a) or on
Schedule 4.12, attached hereto, Seller is not, and on the
Applicable Closing Date will not be a party to any contract or
commitment (whether oral or written), including, without
limitation, any franchise agreement, licensing agreement, sales
representative agreement, distributorship agreement, or employment
agreement, which relates to the sale of Inventory.
4.13 Inventories.
(a) Any merchandise located at the Cheswick Facility or the
Warehouse Facilities which is on consignment from others will
either be clearly marked or physically segregated from the
Inventory being purchased by Buyer. Any merchandise owned by
Seller and which has been consigned to others will not be included
in the Inventory to be purchased by Buyer.
(b) Seller has not maintained records of defective product
return expense with respect to Powerhouse Inventory and Promotional
Inventory for several years, because it was determined that such
expense was minimal in relation to total sales dollar volume and
not significant enough to justify the cost of continuing to
maintain such records. Nothing has come to the attention of Seller
since these records were discontinued to indicate that defective
product return expense has increased significantly.
(c) Seller is not aware of, and has not received notice of
any design, structural or manufacturing defect or condition
(whether latent or patent) with respect to the Inventory which is,
has been or is reasonably likely to be: (i) the subject of legal or
administrative proceedings; (ii) in violation of any applicable
laws, rules or regulations; or (iii) except for DeMinimis Claims,
(defined in Section 4.16) the subject of any third party claim of
patent, trademark, trade name or copyright infringement or any
similar claim.
4.14 Product Warranties. There are no express outstanding product
warranty obligations of Seller, nor any express representations,
guarantees or indemnifications given or made by Seller in
connection with the sale of Inventory.
4.15 Tax Returns. Seller has filed with the Internal Revenue
Service and with all other appropriate foreign, federal, state,
provincial and local governmental agencies, and will continue to
file through and after the Second Closing Date, all personal
property tax returns and tax reports required to be filed by Seller
in respect of the Assets, and has paid and will continue to pay all
amounts due in connection therewith. No claims for assessment or
collection of taxes in respect of the Assets has been asserted
against Seller, and Seller does not know of any proposed tax
assessment against or in respect of the Assets.
4.16 Pending Claims, Litigation and Governmental Proceedings. Set
forth on Schedule 4.16 is a list and description of each recall
notice, government or manufacturer's warning notice, claim, suit,
action, arbitration or regulatory, administrative, or governmental
proceeding or investigation or any other proceeding or
investigation filed against or commenced by Seller with respect to
the Inventory in the last five (5) years and which relates solely
or primarily to product liability or product use or safety except
for: (i) claims which have been fully and finally adjudicated or
settled for an individual amount not exceeding Five Thousand
Dollars ($5,000), or totaling Twenty-Five Thousand Dollars
($25,000) in the aggregate; and (ii) complaints or demands asserted
by customers in respect of which no further action has been taken
by such customers within the past eighteen (18) months ("DeMinimis
Claims"). Except as set forth on Schedule 4.16 and except for
DeMinimis Claims no litigation is pending or, to the knowledge of
Seller, threatened against Seller in respect of the sale, import,
marketing or use of Inventory.
4.17 Judgments, Orders and Consent Decrees. Seller is not subject
to any judgment, ruling, injunction, order, writ or decree of, or
agreement with, any court, arbitrator or regulatory authority
limiting, restricting or adversely affecting the sale by Seller of
the Inventory or Seller's ownership of the Assets.
4.18 Agents and Employees. No Employee of Seller is subject to any
confidentiality, non-disclosure or non-compete agreement with
Seller or, to Seller's knowledge, any other entity except as
described in Schedule 4.18. As used in this Section 4.18, the term
"Seller's knowledge" means, and is limited to, the actual
knowledge, without independent investigations, of T. Xxxxxx Xxxxxx
and Xxxxxxx Xxxxxxxx.
4.19 Labor Matters.
(a) Seller acknowledges that Buyer is not assuming any of
Seller's obligations or liabilities relating to or arising from any
employment contract, collective bargaining agreement, Plan or
program in favor of Seller's Employees, all of which remain the
sole obligation of Seller.
(b) Seller shall bear all liability, if any, caused by or
arising from the termination and/or permanent layoff of its
Employees.
(c) Seller represents and warrants that it has taken or will
take prior to Closing all actions necessary, including but not
limited to any notice required to be given to its employees, local,
state or federal government agencies, to comply with WARN (if
applicable), COBRA and any other local or state laws applicable to
the transactions contemplated by this Agreement. Notwithstanding
the foregoing, Seller agrees that it will make no filings regarding
this transaction concerning or relating to Seller's Employees with
governmental, employment or worker's compensation agencies without
providing a copy thereof to Buyer at least five (5) days prior to
such filing.
4.20 Environmental Matters. Seller is in compliance with all
federal, state, and local laws, regulations, and ordinances
relating to the environment or to the discharge of matter into the
air, water, or earth, including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, and the Resource Conservation and Recovery
Act of 1976, as amended, except for such non-compliance as is not
likely to have a Material Adverse Effect. There are no actions,
suits, or proceedings pending or, to the best knowledge of Seller,
threatened against Seller in connection with the Inventory, the
Cheswick Facility or the Warehouse Facilities by or before any
federal, state, or local court or government authority or agency
concerning any non-compliance or alleged non-compliance with any
such laws, regulations, and ordinances in respect of said
facilities.
4.21 Compliance with Laws. Seller has at all times conducted its
business in compliance and conformity in all material respects with
all applicable federal, state, local and foreign laws, statutes and
ordinances and the rules and regulations promulgated thereunder
(including, but not limited to, laws, rules and regulations
relating to the sale, marketing, packaging, labeling, export,
import, transport or distribution of the Inventory), except for
such non-compliance as is not likely to have a Material Adverse
Effect; and there are no pending or, to Seller's knowledge,
threatened claims or notices of violation by Seller in any such
laws, statutes, ordinances, rules and regulations or claims which
are likely of assertion.
4.22 Evaluation of Terms of Transaction. Seller, through its Board
of Directors, with the assistance of Xxxxxx/Hunter Incorporated,
its independent financial adviser, has determined to proceed with
the transactions provided for in this Agreement as the best
transaction for the sale of the Assets, taking into account the
purchase price for the Assets and the terms and conditions of the
transaction.
4.23 Full Disclosure. To Seller's knowledge, no representation,
covenant or warranty by Seller in this Agreement and no statement,
Schedule or Exhibit furnished to Buyer pursuant to this Agreement
omits or will omit to state a material fact necessary to make any
representations, covenants and/or warranties of Seller under this
Agreement not misleading.
4.24 Duty of Seller to Make Inquiry. To the extent that any of the
representations and warranties made by Seller in this Agreement are
qualified by the knowledge or belief of Seller, and except as
expressly otherwise provided in this Agreement, Seller represents
and warrants that it has made due and reasonable inquiry and
investigation concerning the matters to which such representations
and warranties relate, including, without limitation, diligent
inquiry of all key management personnel of Seller whose position
entails having detailed knowledge of the subject matter of such
representations and warranties.
4.25 No Broker's or Finder's Fees. No person or firm other than
Seller (and its directors, officers, employees and independent
accountants and attorneys) and Xxxxxx/Xxxxxx Incorporated have
arranged or participated in arranging, on behalf of Seller, the
transactions provided for herein. Any broker's or finder's fees to
be paid by Seller to Xxxxxx/Hunter Incorporated or to others shall
be borne exclusively by Seller. Except as described in the
preceding sentence, Seller has no knowledge of any claim (or the
reasonable basis therefor) for a broker's or finder's fee to be
paid in connection with the consummation of the transactions
provided for herein.
4.26 Survival. All representations and warranties made by Seller
in this Agreement, including but not limited to, those contained in
Section 4 hereof, shall survive the Applicable Closing Date
(irrespective of any investigation of the Assets made by Buyer) for
a period of eighteen (18) months and shall be true and correct on
as of the Applicable Closing Date as if specifically made thereon;
provided, however, that (i) the representations and warranties
contained in Sections 4.1 and 4.4 shall survive the Closing for a
period of ten (10) years; and (ii) the representations and
warranties contained in Section 4.15 shall survive the Closing
through the date that is thirty (30) days after the expiration of
the longest statute of limitations (including any waivers)
applicable to any action that may be brought by any governmental
entity with respect to liability for the relevant tax period.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer, in order to induce Seller to sell the Assets and
perform its other obligations hereunder, hereby makes the following
representations and warranties to Seller, each of which shall be
true and correct as of the execution hereof and shall be true and
correct on the First Closing Date and the Second Closing Date and
which shall survive the Closing for the period of time specified in
Section 5.3.
5.1 Authority, Enforceability, Etc.
(a) Due Organization. Buyer is a limited partnership duly
organized, validly existing and in good standing under the laws of
Delaware and is duly qualified to transact business as a foreign
limited partnership in the State of Ohio and in all other
jurisdictions where the nature of its business or the ownership,
leasing or operation of Buyer's properties or assets requires
qualification, except where the failure to be so qualified is not
likely to have a Material Adverse Effect on the business operations
and financial condition of Buyer or the ability of Buyer to
purchase the Assets.
(b) Power and Authority to Conduct Business. Buyer has the
full power and authority to own or lease its properties and to
conduct its business in the manner and the places where such
property is owned or leased and its business is conducted.
(c) No Defaults or Violations. As of the Applicable Closing
Date, the execution and delivery of this Agreement, and the
performance by Buyer of its obligations under this Agreement will
not violate, contravene, be in conflict with, result in a breach of
or constitute (with or without notice or lapse of time, or both) a
default under: (A) any provision of law; (B) any order, rule or
regulation of any court, arbitrator or other agency of government;
(C) any provision of the Third Amended and Restated Agreement of
Limited Partnership of Buyer; or (D) any lease, indenture,
agreement or other instrument to which Buyer is or may be bound, in
each case which will be likely to have a Material Adverse Effect.
(d) Power and Authority to Enter Into Agreements. Buyer has
the right, power and authority to enter into and perform its
obligations under this Agreement and the other agreements provided
for herein. No consent, approval or authorization of, or
registration, declaration or filing with any court, governmental
authority (federal, state or local), collective bargaining unit,
lending institution or other third party is required in connection
with the execution and delivery by Buyer of this Agreement or its
performance of or compliance with the terms, provisions and
conditions hereof.
(e) Due Execution and Enforceability. The execution,
delivery and performance of this Agreement and the other agreements
provided for herein by and on behalf of Buyer have been duly and
validly authorized and approved by all requisite partnership
action, and Buyer has taken all such other action as is necessary
or required to enter into, execute and deliver this Agreement and
the other agreements provided for herein and to perform Buyer's
obligations hereunder and thereunder. This Agreement and the other
agreements provided for herein constitute the valid and legally
binding obligations of Buyer, enforceable in accordance with their
respective terms and conditions (except to the extent the same may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditor's rights generally or by general
equitable principles).
5.2 No Broker's or Finder's Fees. No person or firm has been
engaged by Buyer in arranging or participating in arranging, on
behalf of Buyer, the transactions provided for herein. Any
broker's or finder's fees to be paid by Seller to Xxxxxx/Xxxxxx
Incorporated or to others shall be borne exclusively by Seller.
Except as described in the preceding sentence, Buyer has no
knowledge of any claim (or the reasonable basis therefor) for a
broker's or finder's fee to be paid in connection with the
consummation of the transactions provided for herein.
5.3 Judgments, Orders and Consent Decrees. Buyer is not subject
to any judgment ruling, injunction, order, writ or decree of, or
agreement with any court, arbitrator, or regulatory authority,
limiting, restricting or adversely affecting the purchase by Buyer
of the Assets or Buyer's ownership thereof immediately following
the Applicable Closing Date, nor is Buyer party to any litigation
or other legal proceeding which would restrict or adversely affect
Buyer's ability to purchase the Assets.
5.4 Survival. All representations and warranties made by Buyer in
this Agreement, including, but not limited to, those contained in
Section 5 hereof, shall survive the Applicable Closing Date for a
period of ten (10) years and shall be true and correct as of the
Applicable Closing Date as if specifically made thereon.
SECTION 6
COVENANTS OF SELLER
6.1 Conduct of Business Pending Second Closing Date. From and
after the date of this Agreement and until the Second Closing Date,
Seller hereby covenants and agrees as follows:
(a) Full Access. Buyer and its authorized representatives
shall have full access during normal business hours and upon prior
notice, but without unreasonably interrupting business, to the
premises and to all books of account, financial records, contracts,
pricing practices, warranty records, sales and credit records and
other business information of Seller, but only to the extent that
same relate to the Assets, and to Seller's personnel, and Seller
shall furnish or cause to be furnished to Buyer and its authorized
representatives all information with respect to the Business and
affairs of Seller as Buyer and its authorized representatives may
reasonably request.
(b) Customer Purchase Orders, Product Supply Orders, Bids and
Proposals. Seller shall not:
(i) purchase any additional Powerhouse Inventory or
Promotional Inventory except: (A) pursuant to
currently outstanding supply orders issued by
Seller for Promotional Inventory, true and complete
copies of which are attached hereto as Schedule
6.1(b); and (B) as otherwise necessary to fill
customer orders prior to the Applicable Closing
Date and as may be preapproved in writing by Buyer;
provided, however, that Seller may place orders for
"point of sale" inventory in an aggregate amount
not exceeding Forty Five Thousand Dollars ($45,000)
without obtaining the prior written approval of
Buyer, and Seller shall furnish Buyer copies of
each such order. Seller shall promptly furnish
Buyer true and complete copies of any new supply
orders placed by Seller pursuant to Clause (B) of
the preceding sentence; or
(ii) solicit or accept new customer orders for
Powerhouse Inventory or Promotional Inventory,
whether from existing customers or new customers of
Seller, provided, however that Seller may solicit,
accept and fill customer orders received following
the date hereof for the sole purpose of disposing
of Seller's existing Inventory as well as the
Promotional Inventory ordered by Seller that is
described in the supply orders attached to Schedule
6.1(b) and any additional Promotional Inventory
ordered by Seller following the date hereof and
which has been preapproved in writing by Buyer.
(c) Use of Intellectual Property. Seller will not license
any person or entity other than Buyer to use any of its
Intellectual Property, other than licenses granted to customers in
connection with promotions in accordance with past practice.
(d) Inventory Liquidation Sales. Seller will not conduct any
liquidation sale, "going out of business" sale or similar sales
activities (or offer any extraordinary price reductions), and
Seller shall offer sales discounts solely to the extent such
discounts are consistent with those offered by Seller during the
six (6) months immediately preceding the date of execution of this
Agreement; provided, however, that the covenants and agreements
contained in this Section 6.1(d) shall not apply with respect to
any of the Excluded Assets.
(e) Business Operations.
(i) Seller will use its reasonable efforts to sell
(without replacing) its Promotional Inventory
between the First Closing Date and the Second
Closing Date by filling existing customer orders.
(ii) Prior to the Second Closing Date, Seller shall
refrain from the following:
(A) making sales on other than Seller's customary
terms and conditions within the past six (6)
months (including price and terms of payment)
and in the ordinary course of business; or
(B) selling, assigning, transferring, abandoning
or permitting to lapse any Intellectual
Property, Trade Secrets or other intangible
assets, or disclosing any Trade Secrets or
other material proprietary confidential
information to any person other than Buyer or
its representatives; provided, however, that
if preventing the lapse of any Intellectual
Property requires the payment of money, then
Buyer shall reimburse Seller on the Second
Closing Date for Buyer's pro rata portion of
such expense.
(f) Insurance. Seller shall continue in full force and
effect its existing insurance and bonding coverages in respect of
the Assets.
(g) Compliance with Laws. Seller shall comply in all
material respects with all applicable statutes, laws, ordinances,
rules and regulations as may be required in connection with the
maintenance and operation of the Assets or for the valid and
effective transfer to Buyer of the Assets and the consummation of
the transactions contemplated by this Agreement.
6.3 Conditions Precedent. Seller and Buyer shall use all
reasonable efforts to assure that the conditions precedent set
forth in Section 7 and 8 hereof, respective are satisfied on or
prior to the Applicable Closing Date.
6.4 Injunctions. If any court of competent jurisdiction over
Seller or the Assets issues or otherwise promulgates any injunction
order or decree which prohibits the sale of, or otherwise adversely
affects, the Assets, Seller shall use its reasonable efforts to
have such injunction dissolved or otherwise eliminated as promptly
as possible.
6.5 Taxes. Seller covenants and agrees that it will prepare and
file all tax returns required to be filed by it in respect of the
Assets for periods ending on or prior to the Closing Date
including, without limitation, personal property taxes, and pay all
amounts due thereunder.
SECTION 7
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Each and every obligation of Buyer to be performed on the
First Closing Date or the Second Closing Date shall be subject to
the satisfaction on or prior thereto of each of the following
conditions:
7.1 Representations and Warranties True on Applicable Closing
Date. The representations and warranties made by Seller in this
Agreement and in the Schedules and Exhibits hereto shall be true
and correct in all material respects on and as of the Applicable
Closing Date as though such representations and warranties had been
made again and reaffirmed on and as of the Applicable Closing Date.
7.2 Compliance with Agreement. Seller shall have performed and
complied in all material respects with all of its obligations under
this Agreement which are to be performed or complied with by it on
or prior the Applicable Closing Date.
7.3 Secretary's Certificate. Seller shall have delivered to Buyer
the certificate of its Secretary or Assistant Secretary certifying
as of the Applicable Closing Date to the authorization and approval
of this Agreement and the transactions provided for herein by duly
adopted resolutions of the Board of Directors of Seller.
7.4 Compliance Certificate. Seller shall have delivered to Buyer
the certificate of T. Xxxxxx Xxxxxx, President of Seller
certifying, as of the Applicable Closing Date, the fulfillment of
the conditions set forth in Sections 7.1 and 7.2 hereof.
7.5 No Litigation. No investigation, suit, action or other
proceeding shall be pending or threatened before or by any court of
governmental agency which in the reasonable opinion of Buyer, may
adversely affect this Agreement or the consummation of the
transactions provided for herein.
7.6 Consents and Approvals. Seller and Buyer shall have obtained
all necessary and material authorizations, consents and approvals
required for the valid consummation of the transactions provided
for in this Agreement, and each of them shall be in full force and
effect.
7.7 Termination of Liens; Warehouseman's Waiver. The Bank Lien
shall have been released with respect to the Assets being
transferred to Buyer on the Applicable Closing Date, and original
UCC-3 Partial Releases, executed by Bank, as well as a written
waiver or other written instrument from Transmanagement Corporation
and any and all other persons or entities with a Claim against any
of the Assets, delivered to Buyer, each in form and substance
reasonably satisfactory to Buyer.
7.8 Damage or Destruction. There shall not have been any material
damage to or destruction of the Assets (whether or not covered by
insurance).
7.9 Warehouse Arrangements. Buyer shall have entered into
arrangements with the owner of the Warehouse Facilities upon terms
and conditions satisfactory to Buyer in its sole discretion;
provided, however, that the foregoing condition shall automatically
be deemed waived upon consummation of the transactions to be
completed on the First Closing Date.
7.10 Opinion of Counsel. Seller shall have delivered to Buyer an
opinion of Xxxxx & Xxxxxxx, P.C., counsel to Seller, in the form
attached hereto as Exhibit "G".
7.11 Injunctions. There shall not be in effect any injunctions,
decrees or orders prohibiting the sale of, or otherwise adversely
affecting, the Assets.
SECTION 8
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Each and every obligation of Seller to be performed on the
First Closing Date or the Second Closing Date shall be subject to
the satisfaction on or prior thereto of each of the following
conditions:
8.1 Representations and Warranties True at the Applicable Closing
Date. The representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects
on and as of the Applicable Closing Date as though such
representations and warranties had been made again and reaffirmed
on and as of the Applicable Closing Date.
8.2 Compliance With Agreement. Buyer shall have performed and
complied in all material respects with all of its obligations under
this Agreement which are to be performed or complied with by it on
or prior to the Applicable Closing Date.
8.3 Secretary's Certificate. Buyer shall have delivered to Seller
a certificate of the Secretary or Assistant Secretary of its
Managing General Partner certifying as of the Applicable Closing
Date to the authorization and approval of this Agreement and the
transactions provided for herein by duly adopted partnership
authorization of the General Partners of Buyer.
8.4 Compliance Certificate. Buyer shall have delivered to Seller
the certificate of the President or any duly authorized Vice
President of Buyer certifying as of the Applicable Closing Date to
the fulfillment of the conditions set forth in Sections 8.1 and 8.2
hereof.
8.5 No Litigation. No investigation, suit, action or other
proceeding shall be pending or threatened before or by any court or
governmental agency which in the reasonable opinion of Seller may
adversely affect this Agreement or the consummation of the
transactions provided for herein.
8.6 Consents and Approvals. Buyer shall have obtained all
necessary and material authorizations, consents and approvals as
required for the valid consummation of the transaction provided for
in this Agreement, and each of them shall be in full force and
effect.
8.7 Opinion of Counsel. Buyer shall have delivered to Seller an
opinion of Kahn, Kleinman, Xxxxxxxx & Xxxxxx Co., L.P.A., counsel
to Buyer, in the form attached hereto as Exhibit "H".
8.8 Approval by Shareholders of Seller. The shareholders of
Sellers shall have approved and ratified the transactions described
in this Agreement at a Special Meeting of Shareholders called for
such purpose; provided, further, that this condition precedent
shall apply solely with respect to those transactions that are to
be consummated on the Second Closing Date; provided, however, that
if the shareholders of Seller fail or refuse to approve and ratify
the transactions and the Second Closing does not occur, then the
provisions of Section 14.1(b) shall apply.
SECTION 9
FURTHER AGREEMENTS OF THE PARTIES
9.1 Employees.
(a) The parties acknowledge that prior to the date hereof,
Buyer has notified Seller that Buyer may desire to enter into
arrangements for the employment by Buyer of (or other association
of Buyer with) one or more of the following individuals: Xxxxxxx
Xxxxxxx, Xxxxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxxxx XxXxxx, Xxxxxx
Xxxxxx, Xxxxxx Xxxxxxx, Xxxxx Xxxxx and Xxxxx Xxxxxx, as such
Employees of Seller may be potentially relevant to Buyer's
business, and Buyer agrees to notify Seller prior to extending any
offer of employment or other association to any of the
aforementioned individuals or to any other present or future
Employee of Seller, provided, that any such offer to then-current
employees of Seller made prior to the Second Closing Date shall be
made only with the prior written consent of Seller. Seller agrees
to notify Buyer prior to terminating, laying off or otherwise
taking any action directly affecting the employment status of any
of the aforementioned Seller's Employees. Buyer may, but shall not
be obligated pursuant to this Agreement or for any other reason to,
offer full or part-time employment or other association (i.e.,
consulting) after the First Closing Date to any of the
aforementioned individuals or to any other present or future
Employees of Seller on such terms and conditions as Buyer, in its
sole discretion, may determine, subject however, to the preceding
sentence. Buyer may communicate with the present employees or
agents of Seller prior to the Closing upon reasonable prior notice
to Seller. Seller shall not directly or indirectly induce, suggest
or recommend to Employees of Seller that they reject offers of
employment or other association with Buyer. Seller shall cooperate
with Buyer in all reasonable respects in connection with any offers
of employment or other association that Buyer may make to Seller's
employees and to transition any such employees from Seller's
employment to possible association with Buyer. Seller shall also
cooperate with Buyer, to the extent reasonably consistent with
Seller's operational requirements, between the First Closing Date
and the Second Closing Date, to make available to Buyer Seller's
employees whose services are reasonably required by Buyer. In any
such case, Buyer shall reimburse Seller on the Second Closing Date
for a portion of the direct employee-related costs incurred by
Seller for any such employees on an hourly or per diem basis for
service committed to or utilized exclusively by Buyer. "Direct
employee-related costs" means, and shall be limited to, direct
wages, payroll taxes, insurance benefits and travel expenses
directly related to Buyer's business, provided, however, that
Buyer's obligation to reimburse Seller for the cost of Employee
insurance benefits shall in no event exceed $300 per full calendar
month per Employee.
(b) Seller hereby agrees that it will not, without the prior
written consent of Buyer, notify, promise, represent, advise, state
or otherwise communicate to any employee of Seller that Buyer will
be hiring any or all such employees or make any offer of employment
or other association on behalf of Buyer.
9.2 Nondisclosure. Seller and Buyer shall not disclose, directly
or indirectly, the terms of or reveal the existence of this
Agreement, its Schedules or Exhibits to any person, firm or entity
other than their respective attorneys, accountants, lenders, and
representatives who are required to be informed thereof in
connection with their representation of the parties in connection
with the transactions, except for proxy statements, press releases
and other filings and disclosures as, in the reasonable judgment of
Seller's counsel, required by applicable securities or other laws.
Seller will advise Buyer in writing and, to the fullest extent
practicable, will consult with Buyer prior to any such disclosure.
No press release or governmental notification, report or other
filing by either party shall be made without the other party's
prior written approval of the content thereof, except as provided
in the first sentence of this Section. The parties will issue a
joint press release upon the consummation of the transactions
contemplated by this Agreement.
9.3. Restrictive Covenants.
(a) Confidentiality. Each party covenants and agrees that
from and after the date hereof, it shall not directly or indirectly
disclose, divulge, discuss, copy or otherwise use or cause to be
used in any unlawful manner, any confidential information relating
to the sale and promotion of the Inventory, including but not
limited to, information regarding operations, accounts, books and
records, sales, customers, pricing and other activities of Seller
which constitute "trade secrets" within the meaning of Section
133.51(a)(3) of the Ohio Revised Code, except for (i) in the case
of Seller, the conduct of its business through the Second Closing
Date in the manner contemplated by Section 6.1; and (ii) in the
case of Buyer, the sale and promotion of Powerhouse Inventory
following the first Closing Date and the sale and promotion of
Powerhouse Inventory and Promotional Inventory following the Second
Closing Date. Each party recognizes and agrees that the disclosure
of such trade secrets to parties other than the other party or the
improper use thereof will cause serious and irreparable injury to
such other party. In the event a party is requested or required
(by oral questions, interrogatories, requests for information or
documents, subpoena, civil investigation, demand or similar
process) to disclose any confidential information, such party
agrees to provide the other party with prompt notice of such
request so that the other party may seek an appropriate protective
order and/or waive such party's compliance with the provisions of
this paragraph. The foregoing shall not prevent either party from
making such disclosures as are in the reasonable judgment of such
party's counsel, required by applicable securities laws, except
that each party shall advise the other party in writing and, to the
fullest extent practicable, will consult with the other prior to
making any such disclosure. Upon termination of this Agreement,
for whatever reason, prior to the Second Closing Date, Buyer agrees
to deliver to Seller all written materials, reports and information
(including Trade Secrets) furnished by Seller concurrently with or
prior to the execution of this Agreement (except for Assets
purchased by Buyer on the First Closing Date), and Buyer will
destroy all copies of same.
(b) Non-Competition. Seller agrees that commencing on the
First Closing Date and for a period expiring five (5) years
following the First Closing Date (if the First Closing occurs but
the Second Closing fails to occur) or expiring five (5) years
following the Second Closing Date (if the Second Close Date occurs)
(the "Restricted Period"), Seller will not, directly or indirectly,
either as principal, agent, partner, lender, investor, or in any
other capacity, engage in, have a financial interest in or be in
any way connected or affiliated with any enterprise (whether or not
incorporated) which engages in the purchase, sale, marketing,
import, distribution or brokerage of replenishment inventory or
promotional inventory of a format, category or product line which
is sold or offered for sale by Seller in the United States of
America at the date of this Agreement ("Competitive Products"),
except for the sale of Promotional Inventory pending the Second
Closing Date, and except for Inventory included in the Excluded
Assets. In addition, Seller will not, during the Restricted
Period, divert or take away or attempt to divert or take away any
of Buyer's or any Buyer's affiliates' employees and, solely with
respect to the Competitive Products and Competitive Business
(defined below), Buyer's or Buyer's affiliates' customers or
suppliers, and, further, Seller shall refrain from, directly or
indirectly: (i) committing any act which would in any way
jeopardize any relationship Buyer or any Buyer affiliate has or may
come to have with any such employee, customer or supplier; or (ii)
engaging in, having a financial interest in, or being in any way
connected or affiliated with any enterprise which engages in the
wholesale or retail sale and distribution of closeout merchandise.
Notwithstanding anything to the contrary contained in the
above paragraph, in the event the Second Closing does not occur
solely as a result of Buyer's breach of its obligations hereunder
(as finally determined by a court of law), the covenants contained
in Paragraph 9.3(b) shall be inoperative and of no force and
effect.
(c) Injunctive Relief. Seller and Buyer agree that the
remedy at law for any breach by them of the foregoing provisions of
this section will be inadequate, and Buyer shall be entitled to
both temporary and permanent injunctive relief (without bond)
enforcing such provisions, in addition to any other remedy it may
have at law or in equity.
9.4 Negotiation with Others. From and after the date hereof until
the earlier to occur of: (i) the termination of this Agreement
pursuant to Section 11, or (ii) December 31, 1996, neither Seller
nor any of Seller's officers, directors, employees or agents will,
directly or indirectly: (a) solicit or initiate discussions or
engage in negotiations with any person (whether such negotiations
are initiated by them or otherwise), other than Buyer, with respect
to the possible acquisition of the Assets or any portion thereof,
(b) provide any information with respect to the Assets to any
person, other than Buyer, relating to the possible acquisition of
the Assets or any portion thereof, or (c) enter into a transaction
with any person, other than Buyer, concerning the possible
acquisition of the Assets or any portion thereof . Nothing in this
Section shall be deemed to prevent sales to customers prior to the
Applicable Closing Date in the ordinary course of business. If
Seller or any of Seller's officers, directors, employees or agents
receives any unsolicited offer or proposal to enter into
negotiations relating to any of the above, Seller shall immediately
notify Buyer of such fact.
9.5 Replenishment Sales Following First Closing Date. Except for
the payments described in Section 2.5(a), any sales of Powerhouse
Inventory by Buyer at any time following the First Closing Date for
replenishment of goods originally ordered by a Powerhouse Customer
or a Promotional Customer prior to the First Closing Date, which
replenishment request is filled by Buyer, shall be for the sole
account of Buyer (it being understood, however, that Buyer shall
not be obligated to fill any such replenishment order).
9.6 Approval of Shareholders of Seller. Seller will use its best
efforts to obtain the approval of its shareholders the execution
and delivery by Seller of this Agreement and the consummation of
the transactions described herein. Seller represents and warrants
that it is not aware of any reason why shareholder consent and
approval will not be obtained by December 31, 1996.
9.7 Right of First Refusal with Respect to Other Assets of Seller.
Unless the First Closing Date does not occur solely by reason of
Buyer's default or breach hereunder, in the event Seller receives
an offer for all or a significant portion of its assets other than
the Assets at any time within thirty (30) days following the First
Closing Date (such other assets may include, but are not limited
to, warehouse and office fixture and equipment, electronic and
computer equipment, and transferable software), Buyer shall have a
right of first refusal to acquire all or any portion of such assets
upon the same terms and conditions as offered by the third party.
Seller shall promptly furnish Buyer with a complete description of
the terms and conditions of such offer, including the purchase
price, the terms and conditions of purchase, the proposed Closing
Date, and the identity of the Purchaser. In addition to the
foregoing, in the event the First Closing occurs but the Second
Closing does not occur (other than solely by reason of Buyer's
default or breach under this Agreement), Buyer shall have a right
of first refusal to purchase any Intellectual Property which is not
conveyed to Buyer at the First Closing upon the same terms and
conditions as offered by a third party at any time prior to the
fifth (5th) anniversary of the First Closing Date, and Seller shall
furnish a copy of the third party offer containing the same detail
as prescribed in the preceding sentence. Buyer shall notify Seller
in writing within twenty (20) days following receipt of the third
party offer ("Notice of Exercise") whether Buyer desires to
exercise its rights of refusal hereunder, and the purchase and sale
of assets under this Section shall occur on the later of the
closing date described in the third party offer or thirty (30) days
following the date of Buyer's Notice of Exercise.
9.8 Trade Show Deposits. Buyer acknowledges that Seller has
heretofore provided to Buyer written evidence of payment by Seller
of deposits (collectively, "Trade Show Deposits") for floor space
for show booths for the following trade conventions: (i) National
Housewares Merchants Association (NHMA), XxXxxxxxx Place, Chicago,
Illinois (to be held January 1997) - $12,375.00, and (ii)
Association of Retail Marketing Services (ARMS), Ramada Congress
Hotel, Chicago, Illinois (to be held January 1997) - such amounts
as have been paid by the Second Closing Date, not to exceed $2,360
(collectively, the "Trade Show Deposits"). On the Second Closing
Date, Buyer will pay to Seller an amount equal to the Trade Show
Deposit pertaining to such convention trade show, and shall assume
Seller's remaining payment obligations, if any, in respect of the
ARMS convention. Seller represents and warrants that its floor
space for trade show booth for the NHMA Trade Show has been paid in
full.
9.9 Accounts Receivable. The parties acknowledge that Buyer is not
acquiring any of Seller's accounts receivable. Any payments
received by Buyer in respect of Seller's receivables shall be
allocated in accordance with the customer's designation; absent
such designation, such payments shall be allocated and paid first
to Seller to the extent of the unpaid balance owed by such customer
to Seller for goods shipped and billed prior to the applicable
Closing Date. Each party agrees to properly remit to the other, in
precisely the form received, with endorsement, any and all
payments received by such party which payment is actually due and
owing to the other party, and any such sums erroneously paid by the
customer to such party shall be held in trust for the other party.
Each party agrees to furnish the other access to deposit slips,
bank reconciliation statements, customer correspondence and other
documents upon the reasonable request of such other party in order
to verify the prompt remittance of all sums required to be remitted
to the other party pursuant to this Section 9.9.
SECTION 10
RISK OF LOSS
10.1 Risk of Loss. Risk of Loss with respect to the Assets being
transferred on an Applicable Closing Date shall pass to Buyer
effective as of the opening of business on such Applicable Closing
Date.
SECTION 11
TERMINATION AND ABANDONMENT
11.1 Termination. This Agreement may be terminated forthwith upon
the receipt of notice of termination as provided for in Section
11.2 hereof, and the purchase and sale and the other transactions
provided for by this Agreement may be abandoned, without liability
on the party of either party to the other, except as otherwise
provided in Section 14.1(b):
(a) By mutual written consent of Seller and Buyer;
(b) By Buyer, if any of the conditions of Section 7 of this
Agreement have not been satisfied on the intended Closing Date and
have not been waived by Buyer in writing;
(c) By Seller, if any of the conditions of Section 8 of this
Agreement have not been satisfied on the intended Applicable
Closing Date and have not been waived by Seller in writing;
(d) By either Buyer or Seller, if the Second Closing Date has
not occurred (for any reason other than a breach of any
representation, warranty, covenant or agreement contained herein or
in any Schedule or Exhibit hereto by the party seeking to so
terminate) on or before January 31, 1997; or
(e) By either Buyer or Seller, if the other party files on or
before the Second Closing Date a petition in bankruptcy,
reorganization, liquidation or receivership or a petition in
bankruptcy, reorganization, liquidation or receivership is filed on
or before the Second Closing Date against such other party.
11.2 Notice of Termination. In the event of termination and
abandonment by either party as provided in Section 11.1 hereof,
prompt written notice thereof shall forthwith be given to the other
party.
SECTION 12
INDEMNIFICATION AND REIMBURSEMENT
12.1 Indemnification by Seller.
(a) In order to induce Buyer to enter into this Agreement and
to consummate transactions contemplated hereby, Seller covenants
and agrees to and shall indemnify Buyer and its partners (and their
constituent partners and shareholders), officers, employees and
agents, and their heirs, executors, administrators, personal
representatives, successors and assigns (collectively, the "Buyer
Interests") and shall hold the Buyer Interests harmless against and
with respect to any and all Damages incurred in connection with or
arising out of or resulting from or incident to:
(i) any misrepresentation, omission, breach of
warranty, representation or covenant, or non-fulfillment
of any obligation on the part of Seller
under this Agreement, any certificate, Schedule or
Exhibit, or other instrument furnished to Buyer in
connection with this Agreement;
(ii) the Unassumed Liabilities;
(iii) Seller's failure to comply with the provisions
of the Bulk Sales Law;
(iv) any claims, violations or alleged violations by
Seller of any laws, statutes, codes, ordinances,
rules or regulations whether foreign or domestic,
state, federal or local;
(v) the filing (or failure to file) or payment (or non-payment)
of any taxes by Seller, pursuant to any
federal, state, local or foreign income tax, excise
or franchise tax, ad valorem, sales and use tax,
payroll tax, and/or F.I.C.A. taxes or any
deficiencies in any taxes payable by or on behalf
of Seller;
(vi) arising from or relating to any and all claims,
grievances or arbitrations under any collective
bargaining agreement to which Seller may have been
a party at any time prior to the Closing Date,
including, but not limited to, claims and/or
judgments for unfair labor practices incurred on or
limited to, before the Closing Date whether filed
(by either union or non-union employees) prior to,
on, or after the Closing Date with the National
Labor Relations Board or any comparable federal,
state or local board, agency, or commission, or any
state or federal court;
(vii) any damages, obligation or penalty for
contributions to any Plan with respect to
Seller's employees for all periods on and
before the Closing Date, ERISA claims or
violations;
(viii) any and all amounts owed by Seller to Bank or
to Transmanagement Corporation;
(ix) any liability related to any Excluded Asset; and
(x) any and all actions, suits, proceedings, demands,
assessments, penalties, fines, judgments, costs and
legal and other expenses incident to any of the
foregoing.
(b) The indemnification of this Section shall survive the
Closing; provided, however, that any claim for the incorrectness or
breach of the representations, warranties or covenants of Seller
contained in Section 4 must be brought within the applicable
limitations period as described in Section 4.26.
12.2 Indemnification by Buyer.
(a) In order to induce Seller to enter into this Agreement
and to consummate the transactions contemplated hereby, Buyer
covenants and agrees to and shall indemnify Seller, its directors,
officers, employees, agents, successors and assigns (collectively,
the "Seller Interests") and shall hold the Seller Interests
harmless against and with respect to any and all Damages, incurred
in connection with or arising out of or resulting from or incident
to:
(i) a breach of any representation, warranty, covenant
or agreement on the party of Buyer under this
Agreement or under any document executed and
delivered by Buyer in connection therewith;
(ii) the failure of Buyer to pay or perform any of the
Assumed Liabilities;
(iii) the conduct by Buyer of its business following
the Closing Date; and
(iv) any and all actions, suits, proceedings, demands,
assessments, penalties, fines, judgments, costs and
legal and other expenses incident to any of the
foregoing.
(b) The indemnification in this Section shall survive the
Closing.
12.3 Product Liability Matters. Notwithstanding anything to the
contrary contained in this Agreement, none of the provisions of
this Section 12 shall apply to any Damages claimed under Section
12.1(a)(ii) or Section 12.2(a)(ii) or (iii) which directly result
from any product liability claims, suits, demands or causes of
action arising following the Applicable Closing Date and that
pertain to any of the Inventory. With respect to such matters, the
parties do not intend for this Agreement to alter the legal
relationship between them that would exist in the absence of this
Agreement.
12.4 Claims for Reimbursement. In the event that the Buyer
Interests or the Seller Interests shall have suffered any Damages
(as hereinabove defined) with respect to any liability or claim to
which the foregoing indemnities relate, the Buyer Interests or the
Seller Interests, as the case may be (the "Indemnified Party"),
shall give Seller or Buyer, as the case may be (the "Indemnifying
Party"), prompt written notice of the nature and amount of such
Damages and the Indemnified Party's claim for reimbursement
therefor. The Indemnifying Party shall have thirty (30) days from
the date of said notice to investigate and dispute the nature,
validity or amount of any such claim. During said 30-day period,
the Indemnifying Party shall have reasonable access, during normal
business hours and upon prior notice, to the books and records of
the Indemnified Party for the purpose of such investigation in
accordance with the provisions of Sections 12.1 or 12.2 hereof. In
the event that the Indemnifying Party shall dispute the nature,
validity or amount of said claim, the Indemnifying Party shall give
the Indemnified Party written notice of such dispute within said
30-day period, and the parties shall attempt in good faith to
resolve such dispute.
In the absence of a dispute, the Indemnifying Party shall
promptly, and in any event not later than the expiration of said
30-day period, reimburse the Indemnified Party in full for any such
Damages, as set forth in the Indemnified Party's notice. In the
event that the Indemnifying Party shall dispute only the amount of
the claim, the Indemnifying Party shall, concurrently with the
delivery of its notice of dispute, pay to the Indemnified Party the
undisputed portion of the claim.
12.5 Defense of Third-Party Claims. If any lawsuit or enforcement
action is filed against an Indemnified Party by a third party and
the Indemnified Party is entitled to indemnification pursuant to
this Agreement, written notice thereof shall be given to the
Indemnifying Party as promptly as practicable (and in any event
within ten (10) days after the service of the citation or summons);
provided, however, that the failure of any Indemnified Party to
give timely notice shall not affect rights to indemnification
hereunder except to the extent that the Indemnifying Party
demonstrates actual damages caused by such failure, if (i) such
failure to give timely notice does not materially affect the
ability or right of the Indemnifying Party to participate in the
defense of such lawsuit or enforcement action, (ii) actual notice
is given to the Indemnifying Party within a reasonable time, and
(iii) to the extent that such failure to give timely notice causes
the Indemnifying Party to incur additional expense with respect to
such lawsuit or enforcement action, the Indemnified Party promptly
reimburses the Indemnifying Party for such additional expense.
After such notice, if the Indemnifying Party shall acknowledge
in writing to such Indemnified Party that such Indemnifying Party
may be obligated under the terms of its indemnity hereunder in
connection with such lawsuit or action, then the Indemnifying Party
shall be entitled, if it so elects, to take control of the defense
and investigation of such lawsuit or action, and to employ and
engage attorneys of its own choice to handle and defend the same,
at the Indemnifying Party's cost, risk and expense; and such
Indemnified Party shall cooperate in all reasonable respects, at
its cost, risk and expense, with the Indemnifying Party and such
attorneys in the investigation, trial and defense of such lawsuit
or action any appeal arising therefrom.
12.6 Indemnification as Sole Remedy; Exceptions. Absent fraud on
the part of Seller, and subject to Section 14.1(b), the
indemnification provided to Buyer in this Agreement shall be the
sole remedy of Buyer against Seller in respect of any claims
arising under or out of this Agreement or any of the documents
delivered on the Applicable Closing Date that are based upon any
action, fact or circumstance existing as of the date of this
Agreement; provided, however, that should Buyer assert a claim for
indemnification between the First Closing Date and Second Closing
Date, Buyer, upon notice to Seller, and to the extent that Seller
does not dispute said claim in writing within five (5) days
following receipt thereof, may satisfy such indemnification claim
by setting off the amount of such claim against its payment
obligations on the Second Closing Date. Should Seller dispute said
claim, or a portion of said claim, in writing, Buyer shall deposit
the disputed portion of the claim in a joint signature interest-
bearing escrow account pending full and final resolution of the
claim (costs of escrow to be paid or reimbursed by the non-prevailing party).
Subject to Section 14.1(b), the indemnification provided to
Seller in this Section 12 shall be the sole remedy of Seller
against Buyer against Buyer in respect of any claims arising under
or out of this Agreement or any of the documents delivered on the
Applicable Closing Date that are based upon any action, fact or
circumstance existing as of the date of this Agreement.
12.7 Limitations. Buyer acknowledges and agrees that, absent fraud
on the part of Seller: (i) the indemnification obligations of
Seller pursuant to this Section 12 shall in no event exceed the
aggregate Purchase Price; (ii) should the First Closing occur but
the Second Closing fail to occur, for whatever reason, neither
party shall be required to indemnify the other pursuant to this
Section 12 except in the event that the aggregate amount of Damages
suffered or incurred by the Indemnified Party exceeds Five Thousand
Dollars ($5,000), whereupon the Indemnifying Party shall be liable
to the Indemnified Party for the full extent of such Damages
(including the first Five Thousand Dollars ($5,000)); and (iii)
should the Second Closing occur, neither party shall be required to
indemnify the other pursuant to this Section 12 except in the event
that the aggregate amount of Damages suffered or incurred by the
Indemnified Party exceeds Fifteen Thousand Dollars ($15,000),
whereupon the Indemnifying Party shall be liable to the Indemnified
Party for the full extent of such Damages (including the first
Fifteen Thousand Dollars ($15,000)).
SECTION 13
RIGHT TO PROCEED
13.1 Waiver of Conditions. Anything in this Agreement to the
contrary notwithstanding, if any of the conditions specified in
Section 7 hereof have not been satisfied, Buyer shall have the
right to waive one or more conditions precedent and proceed with
the transactions contemplated hereby without waiving any of its
other rights hereunder, and if any of the conditions specified in
Section 8 hereof have not been satisfied, Seller shall have the
right to waive one or more conditions precedent and proceed with
the transactions contemplated hereby without waiving any of its
other rights hereunder; provided, however, that if a party shall so
elect to proceed, such party shall not thereafter attempt to hold
the other party responsible for Damages resulting from the
condition or conditions waived and such other party shall not be
responsible for such Damages.
SECTION 14
MISCELLANEOUS PROVISIONS
14.1 Costs and Expenses.
(a) Each party covenants and agrees that it shall be
responsible for and bear its respective costs and expenses in
connection with, or arising out of, the negotiation and execution
of this Agreement and consummation of the transactions provided for
herein; provided, however, that Seller shall bear and be
responsible for any and all sales or transfer taxes applicable to
the transfer of Assets provided for herein.
(b) In the event any or all of the transactions described in
this Agreement fail to close in accordance with the terms hereof
because Seller is in default hereunder or has failed to obtain
director or shareholder approval or any other required consent and
provided Buyer is not in default hereunder, Seller shall pay to
Buyer, as liquidated damages, within three (3) days following
demand by Buyer, the amount of $150,000, the parties having
attempted in good faith to ascertain the damages which will result
should the transactions fail to close other than due to the fault
or breach of Buyer, and said sum represents the parties' best
efforts to estimate such damage. In the event any or all of the
transactions described in this Agreement fail to close in
accordance with the terms hereof, and such failure is due solely to
the breach by Buyer of its obligations hereunder or because any of
the conditions described in Sections 8.1 through 8.7 have not been
satisfied or waived in writing by Seller, Buyer shall pay to
Seller, as liquidated damages, immediately upon demand by Seller
the amount of $100,000, the parties having attempted in good faith
to ascertain the damages which will result should the transactions
fail to close due solely to the fault or breach of Buyer, and said
sum represents the parties' best efforts to estimate such damage.
(c) Seller agrees that should Seller fail to pay in full to
Buyer as liquidated damages the sum of $150,000 within three (3)
days following demand by Buyer as required pursuant to the first
sentence of Section 14.1(b), Buyer may, at its sole election and
upon notice to Seller, satisfy such payment obligations of Seller
by selecting, removing and retaining for Buyer's own account for
no additional consideration, such Promotional Inventory of Seller
as remains on hand and which Buyer desires to acquire, having a
purchase price (calculated in accordance with Section 2.5(b)) equal
to (x) $150,000 less (y) the amount of liquidated damages actually
paid by Seller to Buyer pursuant to Section 14.1(b). Buyer agrees
that, should it elect to satisfy Seller's payment obligations under
Section 14.1(b) by selecting and retaining for its account
Promotional Inventory (subject to the terms and conditions
contained in this Paragraph 14.1(c)), Buyer shall, prior to
selecting such Inventory, satisfy Seller's liquidated damages
payment obligation by setting off such amount, to the fullest
extent possible, against its royalty payment obligations (described
in Section 2.5(a)(iii)) then due and owing to Seller. Seller
agrees to cooperate with Buyer and shall use its best efforts to
cause Bank and others to cooperate with Buyer, in all reasonable
respects in connection with Buyer's selection, removal and
transport of Promotional Inventory pursuant to this Section
14.1(c).
14.2 Amendment and Modification. This Agreement may be amended,
modified or supplemented only in writing executed by each of the
parties hereto.
14.3 No Assignment. No party hereto shall assign, in whole or in
part, this Agreement or its respective rights and obligations
hereunder without the prior written consent of the other party
hereto, and, absent such consent, any assignment (including,
without limitation, any assignment by merger, death, dissolution or
operation of law) shall be null and void. Notwithstanding the
foregoing, Buyer may assign its rights and delegate its obligations
hereunder to Mazel Stores, Inc., an Ohio corporation, without the
consent of Seller; provided, that no such assignment shall relieve
Buyer of any of its obligations hereunder.
14.4 Notices. All notices, requests, demands or other
communications hereunder must be in writing executed by an
authorized representative of the party responsible therefor, and
must be given either by hand or telex, telecopy, telefax or other
telecommunications device capable of creating a written record
(confirmed by registered or certified mail or by overnight courier)
(i) if to Buyer, to: Mazel Company L.P., 00000 Xxxxxx Xxxx, Xxxxx,
Xxxx 00000 (telecopier number (000) 000-0000, Attention: Xxxxxx
Xxxxxxx, Chairman) or to such other person or place as Buyer shall
furnish to Seller in writing, with a copy to Xxxxxxx Xxxxxxxx,
Esq., Kahn, Kleinman, Xxxxxxxx & Xxxxxx Co., L.P.A., 0000 Xxxxx xx
Xxxxxxxx, Xxxxxxxxx, Xxxx 00000 or (ii) if to Seller to: Action
Industries, Inc., 000 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxx 00000
(telecopier number (000) 000-0000, Attention: T. Xxxxxx Xxxxxx,
President) or to such other person or place as Seller shall furnish
to Buyer in writing, with a copy to Xxxxxx Xxxxxxx, Esq., Xxxxx &
Xxxxxxx, P.C., 2900 CNG Tower, 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx 00000-0000 (telecopier number (000) 000-0000).
14.5 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute but one and
the same instrument.
14.6 Headings. Section and paragraph headings in this Agreement
are provided for convenience of reference only and shall not be
deemed to constitute a part hereof.
14.7 Recitals, Exhibits and Schedules. The recitals contained at
the beginning of this Agreement and all Schedules and Exhibits
attached hereto shall be deemed an integral part of this Agreement
and shall be incorporated herein by reference.
14.8 Schedules and Exhibits. Any Schedules and Exhibits which are
to be attached hereto at Closing, updated as of the Closing Date or
delivered separately upon execution hereof or on the Closing Date
shall be initialed by the parties hereto and shall be deemed
delivered under this Agreement.
14.9 Waiver; Remedies. No waiver of any breach of any provision of
this Agreement shall be held to be a waiver of any other subsequent
breach, and the failure of a party to enforce at any time any
provision hereof shall not be deemed a waiver of any right of such
party to subsequently enforce such provision or any other provision
hereof. All remedies afforded in this Agreement shall be taken and
construed as cumulative, that is, in addition to every other remedy
provided herein or by law.
14.10 Governing Law. This Agreement shall be construed,
interpreted and enforced in accordance with the laws of the State
of Ohio and applicable federal law.
14.11 Jurisdiction and Venue. Both parties agree that in the
event that any lawsuit is filed by one of them against the other in
connection with any matter arising from or connected with this
Agreement, any related agreement, and/or the transactions
contemplated hereby, such lawsuit shall be filed exclusively in the
United States District Court for the Northern District of Ohio,
Eastern Division, or the United States District Court for the
Western District of Pennsylvania or the Court of Common Pleas for
Cuyahoga County, Ohio or for Allegheny County, Pennsylvania (at the
election of the party filing suit) and each party covenants and
agrees that it shall voluntarily consent and irrevocably submit to
the personal and subject matter jurisdiction of said courts.
14.12 Severability. In the event that any provision or any
portion of any provision of this Agreement shall be held invalid,
illegal or unenforceable under applicable law, the remainder of
this Agreement shall remain valid and enforceable to the maximum
extent permitted by law.
14.13 Entire Agreement. This Agreement, the Schedules and
Exhibits hereto and the ancillary documents executed hereunder set
forth the entire agreement and understanding between the parties
hereto with respect to the transactions provided for herein and
supersede and cancel any and all prior discussions, correspondence,
agreements or understandings (whether oral or written) between the
parties hereto with respect to such matters (including, but not
limited to, the Summary of Preliminary Terms and Conditions dated
August 30, 1996).
14.13 Time is of the Essence. Time is of the essence in the
performance of the terms and conditions of this Agreement.
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound, have caused this Agreement to be executed by their
authorized representatives on and as of the date first above set
forth.
ACTION INDUSTRIES, INC. MAZEL COMPANY L.P.
By: ZS Mazel L.P., Managing
General Partner
By: T. XXXXXX XXXXXX
----------------------
T. Xxxxxx Xxxxxx,
President By: ZS Mazel, Inc., General
Partner of ZS Mazel L.P.
By: XXXXXX XXXXXXX
------------------------
Xxxxxx Xxxxxxxx,
Authorized Agent
