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EXHIBIT 2.2
FIRST AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (the "Amendment") is
entered into effective as of October 10, 1996 (the "Effective Date"), by and
among Stuart Entertainment, Inc., a Delaware corporation ("Purchaser"), Trade
Products, Inc., a Washington corporation ("Seller"), and the undersigned
shareholders of Seller ("Shareholders"). Purchaser, Seller and the
Shareholders are referred to collectively herein as the "Parties" and
individually as a "Party."
RECITALS
A. The Parties are bound by that certain Asset Purchase Agreement
dated August 6, 1996 (the "Agreement").
B. The Parties believe that it is in their best interests to
amend the Agreement pursuant to the terms and conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the Recitals which are incorporated
by reference herein and which shall be deemed to be a substantive part of this
Amendment, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:
1. DEFINITIONS. Unless otherwise defined herein or the context
requires otherwise, terms which are used in this Amendment and which are
defined in the Agreement shall have the same meanings given to them in the
Agreement.
2. TABLE OF CONTENTS. The Table of Contents shall be deleted in
its entirety and the attached Amended Table of Contents shall be substituted in
lieu thereof.
3. DEFINITIONS - "CONSULTING AGREEMENT." The paragraph entitled
"Consulting Agreement" in Section 1.01 of the Agreement shall be deleted in its
entirety and the following new paragraph entitled "Consulting Agreement" shall
be substituted in lieu thereof:
"Consulting Agreement" means the Consulting Agreement, substantially
in the form of Amended Exhibit B hereto, to be entered into between
Purchaser and Xxxxx Poll on the Closing Date.
4. DEFINITIONS - "NOTE." The paragraph entitled "Note" in
Section 1.01 of the Agreement shall be deleted in its entirety.
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5. DEFINITIONS - "SUBORDINATION AGREEMENT." The paragraph
entitled "Subordination Agreement" in Section 1.01 of the Agreement shall be
deleted in its entirety.
6. DEFINITIONS - "WARRANT." The paragraph entitled "Warrant" in
Section 1.01 of the Agreement shall be deleted in its entirety, and the
following new paragraph entitled "Warrant" shall be substituted in lieu
thereof.
"Warrant" means the Warrant to purchase 300,000 shares of Common
Stock, to be evidenced by a warrant certificate, substantially in the
form of Amended Exhibit F hereto, to be issued by Purchaser to Seller
on the Closing Date.
7. EXCLUDED ASSETS. Section 2.01(b)(iv) of the Agreement shall
be deleted in its entirety, and the following new Section 2.01(b)(iv) shall be
substituted in lieu thereof:
(iv) the assets, properties or rights set forth on
Schedule 2.01(b), including the rights of Seller in and to the
proceeds in the amount of $2,000,000 received by Seller in connection
with the settlement of the litigation styled Trade Products, Inc. v.
Battelle Memorial Institute, U.S. District Court for the Western
District of Washington, Cause No. C95-0968R.
8. PURCHASE PRICE. Section 2.03 of the Agreement shall be
deleted in its entirety, and the following new Section 2.03 shall be
substituted in lieu thereof:
(a) Cash. Thirty Seven Million Two Hundred Forty Nine
Thousand One Hundred Thirty Seven Dollars ($37,249,137) to be paid as
follows:
(i) $26,399,137 shall be paid to Seller in
immediately available funds by wire transfer to an account
designated by Seller. The account shall be designated by
Seller by notice to Purchaser not later than two business days
prior to the Closing Date (or if not so designated, then by
certified or official bank check payable in next day funds to
the order of Seller in such amount);
(ii) $9,100,000 shall be paid in immediately
available funds by wire transfer to an account designated by
U.S. Bank of Washington, National Association (the "Bank").
The account shall be designated by Bank by notice to Purchaser
not later than two business days prior to the Closing Date (or
if not so designated, then by certified or official bank check
payable in next day funds to the order of Bank in such
amount), in payment of Seller's existing bank debt.
(iii) $1,750,000 (the "Escrow Funds") shall be
placed in an escrow account (the "Escrow Account") with the
escrow agent ("Escrow Agent") pursuant to an Escrow Agreement
substantially in the form attached hereto and incorporated
herein as Exhibit K (the "Escrow Agreement")
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(b) Warrant. Purchaser shall issue and deliver the
Warrant to purchase 300,000 shares of Common Stock with an exercise
price of $7.75 per share to Seller.
(c) Purchase Price Adjustment. The Purchase Price shall
be increased or decreased to the extent Seller's total stockholder
equity, as reflected on Seller's audited financial statements as of
the Closing Date, is greater or less than Seller's total stockholder
equity as reflected on Seller's audited financial statements as of
September 30, 1996.
(d) Allocation of Purchase Price. The Purchase Price and
the liabilities assumed by Purchaser in accordance with Section 2.04
hereof and any non-recourse liabilities to which any Asset is subject
as finally determined shall be allocated among the Assets acquired
hereunder as described on Schedule 2.03(d) hereof. Seller and
Purchaser each hereby covenant and agree that it will not take a
position on any income tax return, before any governmental agency
charged with the collection of any income tax, or in any judicial
proceeding that is in any way inconsistent with the terms of this
Section 2.03(d).
9. CLOSING FINANCIAL STATEMENTS. The sixth full paragraph of
Section 2.05 of the Agreement shall be deleted in its entirety, and the
following new sixth full paragraph of Section 2.05 shall be substituted in lieu
thereof:
The amount of the Purchase Price adjustment shall be
determined in accordance with Section 2.03(c) hereof on the later of
the 15th day after delivery of the Report pursuant hereto, or the date
upon which any dispute concerning any GAAP Adjustment is resolved (the
"Adjustment Date"). Any increase to the Purchase Price shall be paid
by Purchaser to Seller and any decrease in the Purchase Price shall be
paid by Seller to Purchaser, in immediately available funds, by wire
transfer to the bank account designated by Purchaser or Seller, as the
case may be, within five business days (the "Due Date") of the
Adjustment Date. If Purchaser or Seller, as the case may be, fails to
make any payment required under this Section 2.05 in full on the Due
Date, Purchaser or Seller, as the case may be, shall pay to the other
interest on the amount outstanding on the Due Date until the actual
date of payment (both dates inclusive) at the rate of 5% over the U.S.
Prime Rate published by the Wall Street Journal on the Due Date to be
adjusted on each 6 month anniversary hereof until all payments
required to be made under this Section 2.05 shall be paid in full.
10. PURCHASER'S DELIVERIES AT CLOSING. Section 3.02(b) of the
Agreement shall be deleted in its entirety and the following new Section
3.02(b) shall be substituted in lieu thereof:
(b) Purchaser shall deliver to Seller the following:
(i) the cash portion of the Purchase Price;
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(ii) the Warrant; and
(iii) the Assignment and Assumption Agreement.
11. DELIVERIES AT CLOSING TO ESCROW AGENT. The following new
Section 3.02(d) shall be added to, and shall be deemed part of, the Agreement:
(d) At Closing, Seller and Purchaser shall deliver the Escrow
Agreement to the Escrow Agent, and Purchaser also shall deliver the
Escrow Funds to the Escrow Agent.
12. PURCHASE FOR INVESTMENT. Sections 4.30(b), (c) and (e) of the
Agreement shall be deleted in their entirety and the following new Sections
4.30(b), (c) and (e) shall be substituted in lieu thereof:
(b) Seller and the Shareholders understand that Purchaser proposes
to issue and deliver the Warrant to Seller and the Shareholders
pursuant to this Agreement without compliance with the registration
requirements of the 1933 Act; that for such purpose Purchaser will
rely upon the representations, warranties, covenants and agreements
contained herein; and that such non-compliance with registration is
not permissible unless such representations and warranties are correct
and such covenants and agreements performed. Seller and the
Shareholders are "accredited investors" as such term is defined in
Rule 501 under the 1933 Act.
(c) Seller and the Shareholders understand that, under existing
rules of the Securities and Exchange Commission (the "SEC"), Seller
and the Shareholders may be unable to sell the Warrant or the Common
Stock issuable thereunder except to the extent that the Warrant or the
Common Stock may be sold (i) pursuant to an effective registration
statement covering such securities pursuant to the 1933 Act or (ii) in
a bona fide private placement to a purchaser who shall be subject to
the same restrictions on any resale or (iii) subject to the
restrictions contained in Rule 144 under the 1933 Act.
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(e) Seller and the Shareholders are purchasing the Warrant for
investment for their own accounts and not with a view to, or for sale
in connection with, the distribution thereof within the meaning of the
1933 Act.
13. CONDUCT OF BUSINESS UNTIL CLOSING DATE. The first full
paragraph of Section 6.02(a) shall be deleted in its entirety, and the
following new first full paragraph of Section 6.02(a) shall be substituted in
lieu thereof:
(a) Conduct of Business Until Closing Date. From the date of this
Agreement and until the Closing Date except with the prior written
consent of Purchaser and subject to the provisions of Section 6.02(h),
Seller shall conduct the Business in the ordinary course
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and consistent with past practices and use its best efforts to
preserve intact its business organization and goodwill, keep available
the services of its present officers and key employees and preserve
the goodwill and business relationships with suppliers, customers and
others having business relationships with it. Without limiting the
generality of the foregoing, Seller shall:
14. CESSATION OF LOS ANGELES OPERATIONS. The following new
Section 6.02(h) shall be added to, and shall be deemed part of, the Agreement:
(h) Notwithstanding any provision contained herein, on or before
December 31, 1996 (the "Termination Date"), Seller shall have ceased
and closed all of its operations in Los Angeles, California (the "Los
Angeles Operations") and shall have terminated all of the employees of
the Los Angeles Operation (the "Los Angeles Employees"), except for
Xxxxx Xxxxxxx, Xxxxxx Xxxxxx and Xxxxxxxx Xxxxxxxxx (collectively, the
"Retained Employees") who for purposes of this Section shall not be
deemed to be Los Angeles Employees, and in connection therewith,
Seller shall pay directly to each Los Angeles Employee all compen-
sation due to any Los Angeles Employee up and through the Termination
Date, as well as any severance pay and benefits due to each such Los
Angeles Employee, including without limitation, all benefits under any
Plan which have been accrued or reserved on Seller's financial
statements on behalf of any Los Angeles Employee (or is attributable
to expenses properly incurred for any such Los Angeles Employee), as
of the Closing Date, and Purchaser shall assume no liability therefore.
Notwithstanding any provision contained herein, Seller shall use its
best efforts to retain the services of the Retained Employees beyond
the date of Closing through the Termination Date.
15. SUBORDINATION AGREEMENT. Section 7.01(g) of the Agreement
shall be deleted in its entirety, and Section 7.01(h) of the Agreement shall
become new Section 7.01(g) of the Agreement.
16. INDEMNIFICATION PROCEDURES - ESCROW ACCOUNT. Section 8.03(b)
of the Agreement shall be deleted in its entirety and the following new Section
8.03(b) shall be substituted in lieu thereof:
(b) All payments for Damages pursuant to this Article
VIII shall be paid as follows: (i) First, from the Escrow Account to
the extent that funds held under the Escrow Agreement are sufficient
to pay such items; and (ii) Second, by Seller and Shareholders.
17. EQUITABLE RELIEF. Section 8.04 of the Agreement shall be
deleted in its entirety, and the following new Section 8.04 shall be
substituted in lieu thereof:
Section 8.04. EQUITABLE RELIEF. In the event of a breach or
threatened breach by Seller, Mr. Poll and/or Xx. Xxxxx of Section 9.08
hereof regarding noncompetition and nonsolicitation, Seller, Mr. Poll
and Xx. Xxxxx hereby consent and agree that Purchaser
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shall be entitled to an injunction or similar equitable relief
restraining the breaching party from committing or continuing any such
breach or threatened breach or granting specific performance of any
act required to be performed by Seller, Mr. Poll and/or Xx. Xxxxx
under any such provision, without the necessity of showing any actual
damage or that money damages would not afford an adequate remedy and
without the necessity of posting any bond or other security. Nothing
herein shall be construed as prohibiting or limiting Purchaser from
pursuing any other remedies at law or in equity which it may have.
18. NON-SOLICITATION; NONCOMPETITION. Section 9.08 of the
Agreement shall be deleted in its entirety, and the following new Section 9.08
shall be substituted in lieu thereof:
Section 9.08. NON-SOLICITATION; NONCOMPETITION. Seller, Mr.
Poll and Xx. Xxxxx acknowledge and recognize at all times for a period
of five years subsequent to the Closing Date as follows:
(a) That Seller, Mr. Poll and/or Xx. Xxxxx will
not directly or indirectly own, manage, operate, finance,
join, control or participate in the ownership, management,
organization, financing or control of, or be connected as an
officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with any business or
enterprise engaged in a business the same as or similar to the
business of Purchaser except as a holder of fewer than 5% of
the outstanding shares or other equity interests of a company
whose shares or other equity interests are registered under
the 1934 Act; provided, however, that the restrictions in this
subparagraph shall not apply with respect to Seller's, Mr.
Poll's and/or Xx. Xxxxx'x ownership of an interest in a
company that is engaged in the business of real estate
development or the building and development of mini-storage
units or bicycle-related products.
(b) That Seller, Mr. Poll and/or Xx. Xxxxx will
not directly or indirectly induce any employee of the Company
or any of its affiliates to engage in any activity in which
Seller, Mr. Poll and/or Xx. Xxxxx are prohibited from engaging
by this Section 9.08 or to terminate his employment with
Purchaser or any of its affiliates, and will not directly or
indirectly employ or offer employment to any person who was
employed by Purchaser or any of its affiliates unless such
person shall have been terminated without cause or ceased to
be employed by any such entity for a period of at least 12
months.
(c) That Seller, Mr. Poll and/or Xx. Xxxxx will
not use or permit its or their name to be used in connection
with any business or enterprise engaged in the business the
same as or similar to Purchaser or its Affiliates or any other
business engaged in by Purchaser or any of its Affiliates.
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(d) That Seller, Mr. Poll and/or Xx. Xxxxx will
not make any public statement, make any unprovoked statements
to regulatory agencies, nor take any such actions where the
primary purpose of such public statement, unprovoked statement
or action is intended to (i) impair the goodwill or the
business reputation of Purchaser or any of its Affiliates or
(ii) benefit a competitor of Purchaser or to be otherwise
detrimental to the material interests of Purchaser.
(e) That Seller, Mr. Poll and/or Xx. Xxxxx will
not (i) disclose any customer lists or any part thereof to any
person, firm, corporation, association or other entity for any
reason or purpose whatsoever; (ii) assist in obtaining any of
Purchaser's customers for any other similar business; (iii)
encourage any customer to terminate, change or modify its
relationship with Purchaser; or (iv) solicit or divert or
attempt to solicit or divert Purchaser's customers.
(f) Purchaser shall have the right, subject to
applicable law, to inform any other third party that Purchaser
reasonably believes to be, or to be contemplating
participating with Seller, Mr. Poll and/or Xx. Xxxxx or
receiving from Seller, Mr. Poll and/or Xx. Xxxxx in violation
of this Agreement and of the rights of Purchaser hereunder,
and that participation by any such third party with Seller,
Mr. Poll and/or Xx. Xxxxx in activities in violation of this
Section 9.08 may give rise to claims by Purchaser against such
third party.
The primary purpose of this Section 9.08 is Purchaser's
legitimate interest in protecting its economic welfare and business
goodwill. Purchaser, Seller, Mr. Poll and Xx. Xxxxx further agree
that this covenant shall in no way be construed as a mere limitation
on competition nor shall it be construed as a restraint on Seller's,
Mr. Poll's and/or Xx. Xxxxx'x right to engage in a common calling.
It is expressly understood and agreed that although Purchaser,
Seller, Mr. Poll and Xx. Xxxxx consider the restrictions contained in
this Section 9.08 to be reasonable, if a final judicial determination
is made by a court of competent jurisdiction that the time or
territory or any other restriction contained in this Section 9.08 is
an unenforceable restriction against Seller, Mr. Poll and/or Xx.
Xxxxx, the provisions of this Section 9.08 shall not be rendered void
but shall be deemed amended to apply as to such maximum time and
territory and to such maximum extent as such court may judicially
determine or indicate to be enforceable. Alternatively, if any court
of competent jurisdiction finds that any restriction contained in this
Agreement is unenforceable, and such restriction cannot be amended so
as to make it enforceable, such finding shall not affect the
enforceability of any of the other restrictions contained herein.
19. EXHIBIT B. Exhibit B to the Agreement shall be deleted in its
entirety and the attached Amended Exhibit B shall be substituted in lieu
thereof.
20. EXHIBIT D. Exhibit D to the Agreement shall be deleted in its
entirety.
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21. EXHIBIT E. Exhibit E to the Agreement shall be deleted in its
entirety.
22. EXHIBIT F. Exhibit F to the Agreement shall be deleted in its
entirety and the attached Amended Exhibit F shall be substituted in lieu
thereof.
23. EFFECT OF AMENDMENT. This Amendment is a modification of the
Agreement and is incorporated therein. Except as expressly set forth in this
Amendment, the Parties shall not be deemed to have amended or modified the
Agreement in any other respect.
24. FACSIMILE TRANSMISSION; COUNTERPARTS. Signatures on this
Amendment may be communicated by facsimile transmission and shall be binding
upon the Parties transmitting the same by facsimile transmission. Counterparts
with original signatures shall be provided within three (3) days of the
applicable facsimile transmission, provided, however, that the failure to
provide the original counterpart shall have no effect on the validity or the
binding nature of the Amendment. If executed in counterparts, the Amendment
shall be effective as if simultaneously executed.
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IN WITNESS WHEREOF, the Parties have duly executed this Amendment
effective as of the Effective Date.
PURCHASER:
STUART ENTERTAINMENT, INC.,
a Delaware corporation
By /S/ XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx, Vice Chairman
and Chief Executive Officer
Attest:
By /S/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx,
Corporate Secretary
SELLER:
TRADE PRODUCTS, INC.,
a Washington corporation
By /S/ XXXXX POLL
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Xxxxx Poll, Chairman and Chief
Executive Officer
Attest:
By /S/ XXXXX X. XXXXX
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Xxxxx X. Xxxxx,
Executive Assistant
SHAREHOLDERS:
/S/ XXXXX POLL
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Xxxxx Poll
/S/ XXXXXX X. XXXX
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Xxxxxx X. Xxxx
/S/ XXXXX XXXXX
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Xxxxx Xxxxx
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