KRANSCO, EXHIBIT 2.1
a California corporation
and
MATTEL, INC.,
a Delaware corporation
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
Dated as of March 26, 1994
(amended and restated
as of May 15, 1994)
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE OF ASSETS ............................. 1
1.1 Asset Acquisition .............................. 1
1.2 Retained Rights in Seller Assets ............... 2
ARTICLE II ASSUMPTION OF LIABILITIES ...................... 2
2.1 Liabilities Assumed ............................ 2
2.2 Retained Liabilities ........................... 3
2.3 Certain Tax Matters ............................ 4
ARTICLE III PURCHASE PRICE 4
3.1 Payment of Purchase Price ...................... 4
3.2 Adjustment to the Initial Price ................ 4
3.3 Contingent Price ............................... 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES ................. 6
4.1 Representations of Buyer ....................... 6
4.2 Representations of Seller ...................... 7
ARTICLE V COVENANTS ...................................... 14
5.1 Further Assurances ............................. 14
5.2 Access to Books and Records .................... 14
5.3 Preservation of Records ........................ 14
5.4 Information Regarding Intellectual Property .... 14
5.5 Announcements .................................. 14
5.6 Access to Properties and Records ............... 15
5.7 General Conduct of the Business Prior to
Closing Date ................................. 15
5.8 Mutual Covenant ................................ 16
5.9 Fulfillment of Conditions to Closing ........... 17
5.10 Obtaining Consents to Assignments .............. 17
5.11 Amendment to Disclosure Schedules .............. 17
5.12 Title Insurance ................................ 18
5.13 Other Insurance ................................ 18
5.14 Charitable Trust ............................... 18
ARTICLE VI EMPLOYEE AND OTHER MATTERS ..................... 19
6.1 Buyer to Offer Employment ...................... 19
6.2 Payroll ........................................ 19
6.3 Accrued Vacation ............................... 20
6.4 Buyer Liable for Employee Continuation Coverage. 20
i.
ARTICLE VII CLOSING ........................................ 20
7.1 Time of Closing ................................ 20
7.2 Deliveries by Seller ........................... 20
7.3 Deliveries by Buyer ............................ 21
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS ............ 21
8.1 Conditions to Obligations of Buyer ............. 21
8.2 Conditions to Obligations of Seller ............ 23
ARTICLE IX MISCELLANEOUS .................................. 24
9.1 Expenses ....................................... 24
9.2 Survival of Representations and Warranties ..... 24
9.3 Notices ........................................ 25
9.4 Knowledge ...................................... 25
9.5 Miscellaneous .................................. 25
9.6 Indemnification ................................ 26
9.7 Termination .................................... 28
9.8 Allocation of Estimated Purchase Price ......... 28
9.9 Prorations ..................................... 28
9.10 Maintenance of Cash Assets ..................... 29
ii.
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as
of March 26, 1994, is entered into by and between KRANSCO, a
California corporation ("Seller"), and MATTEL, INC., a Delaware
corporation, or assigns (collectively, "Buyer"), is amended and
restated as of May 15, 1994 to read in full as follows:
WHEREAS, Seller is presently engaged in the business of
designing, manufacturing and marketing toys and other consumer
products; and
WHEREAS, Seller desires to sell and Buyer desires to
purchase certain of the assets and assume certain of the
liabilities associated with the business of the Seller upon the
terms and conditions provided herein;
In consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties
hereby agree as follows:
ARTICLE I
PURCHASE OF ASSETS
------------------
1.1 Asset Acquisition.
(a) Assets to Be Acquired. Upon the terms and subject
to the conditions set forth in this Agreement, at the Time of
Closing (as hereinafter defined), and except as otherwise
expressly provided herein, Seller agrees to sell, transfer, and
deliver to Buyer, and Buyer agrees to purchase from Seller, all
right, title and interest of Seller in and to all of the assets,
properties, business and goodwill (the "Business") of the Seller
used in or pertaining to the business conducted by the Seller and
the Subsidiaries (as defined below), of every kind and
description, whether real, personal or mixed, including, without
limitation, (i) all trade and other accounts receivable of Seller
related to sales arising out of operations, including trade-
related inter-company accounts receivable (the "Accounts
Receivable"); (ii) all inventories of the Seller, including all
work-in-process, raw materials and finished goods inventories
(the "Inventory"); (iii) all rights of the Seller under all
contracts and agreements with any third parties made by Seller,
including all leases of real or personal property and all
purchase orders for products of the Seller; (iv) all other
tangible assets of the Seller; (v) all intangible assets used in
the Seller's operations, including Intellectual Property, the
books and records of Seller, Seller's corporate name and other
trade names used in Seller's business and any confidential or
proprietary information; and (vi) all of the issued and
outstanding shares of Kransco Limited, a U.K. corporation, and
Juegos California, S.A. de C.V., a Mexico corporation (the
"Subsidiaries") provided, however, that Seller hereby expressly
excludes from the Business and retains the rights to the Retained
Assets as
1.
described in Section 1.2 hereof (the aforesaid assets
to be acquired being herein collectively referred to as the
"Purchased Assets").
As used in this Agreement, the term "Intellectual Property"
includes, without limitation, all (i) patents, patent
applications, patent disclosures, unpatented inventions and
improvements thereto; (ii) copyrights and registrations and
applications for registration thereof; (iii) mask works and
integrated circuit typography and registrations and applications
for registration thereof; (iv) computer software, data, and
documentation; (v) trade secrets (including ideas, formulas,
compositions, inventions, whether patentable or unpatentable and
whether or not reduced to practice, know-how, manufacturing and
production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals,
technical data and copyrightable works; (vi) registered and
common law trademarks, service marks, trade names, trademark and
service mark applications; and (vii) copies and tangible
embodiments thereof (in whatever form or medium).
1.2 Retained Rights in Seller Assets. Notwithstanding
anything herein to the contrary, Seller retains all of its right,
title and interest in and to, and there shall be excluded from
the sale hereunder the following assets used by Seller in the
conduct of the Seller's operations (collectively, the "Retained
Assets"): (i) all cash and cash equivalents of Seller;
(ii) unimproved real property located in Morgan Hill, California;
(iii) all of Seller's interest in the real property and
improvements located at or used in connection with its facilities
in San Gabriel, California; (iv) artwork located at the corporate
headquarters; (v) interest in aircraft N277QS; (vi) all rights
and any recovery in connection with the case "Kransco v. American
Empire Surplus Lines, et al.," S.F. Superior Court No. 939603
(the "Insurance Case"); (vii) Seller's long-term tax deposit
(Subchapter S); (viii) all of Seller's interest in the real
property and improvements located at or used in connection with
its facilities in Virginia Beach, Virginia; (ix) intercompany
receivables related to the Retained Assets or Retained
Liabilities and not included in the Agreement Balance Sheet (as
defined in Section 4.2(g)); and (x) the leases for two Mercedes-
Benz automobiles (the "Vehicle Leases").
ARTICLE II
ASSUMPTION OF LIABILITIES
-------------------------
2.1 Liabilities Assumed. Except as otherwise expressly
provided herein, at the Time of Closing Buyer hereby agrees to
assume, and shall thereafter be responsible for paying and
satisfying, to the extent not discharged prior to the Closing,
all of the debts, liabilities and obligations of Seller of every
kind, character or description, whether accrued, contingent or
otherwise, associated with the Purchased Assets, including,
without limitation, the following (collectively, the "Assumed
Liabilities"):
(a) All trade and other accounts payable, including
trade-related intercompany accounts payable;
2.
(b) All liabilities and obligations related to the
Seller, including, without limitation, all liabilities incurred
in the ordinary course of the business of Seller being sold
pursuant hereto and all unperformed and unfulfilled
obligations of the Seller related to or arising out of the
Purchased Assets or arising out of any accounts payable described
in Section 2.1(a);
(c) All liabilities set forth on the Closing Date
Statement (as hereinafter defined);
(d) All taxes and assessments (including any
liabilities with respect to penalties or interest thereon)
imposed by any governmental authority accruing after the Closing
Date to the extent related to the ownership or use of Purchased
Assets or the conduct by Buyer of the Business after the Closing
Date;
(e) All liabilities for commission payments to
Seller's sales representatives earned on orders for products
produced by the Business booked after the Closing Date pursuant
to price quotations made which are consistent with existing
Seller list prices or which were approved by an employee of the
Seller's sales department on or prior to the Closing Date, and
provided that such commissions conform to Seller commission
guidelines and past practices, and all liabilities for commission
payments to sales representatives earned on orders relating to
the Business booked after the Closing Date; and
(f) All liabilities and obligations, including,
without limitation, minimum royalty payments due under
Intellectual Property licensed to Seller, all costs, expenses
(including costs of investigation, attorneys' fees and court
expenses), penalties, fines, damages, levies, losses and charges
arising out of or in connection with (i) suits, claims,
proceedings and actions of any kind whatsoever made or commenced
against Seller after the Closing Date (including, without
limitation, those instituted by any governmental authority)
resulting from actual or alleged harm, injury or damage to
persons, property or business (including, without limitation, any
direct, incidental or consequential damage), arising from any
product manufactured, sold or distributed by Seller in connection
with the Business or Buyer, or the breach of any implied or
express warranty made in connection with any such product
regardless of when such product was manufactured or sold;
(ii) claims, actions, suits or proceedings related to the
Business with respect to occupational safety, health or
environmental matters asserted or brought against Buyer after the
Closing Date; or (iii) claims, actions, suits or proceedings
arising out of or relating to Buyer's use of any of the
Intellectual Property brought after the Closing Date.
2.2 Retained Liabilities. Seller shall retain and Buyer
shall not assume or otherwise be responsible for any liability or
obligation of Seller for the following (collectively, the
"Retained Liabilities"): (i) any liability or obligation related
to the Retained Assets, including any costs or expenses arising
out of the Insurance Case; (ii) the payment of any dividends
Seller's stockholders declared prior to or after the Closing
Date; (iii) taxes described in Section 9.6.1(a)(iii); (iv) any
damages or liability, including attorneys' fees and
3.
expenses, in
the case of "Chighisola v. Kransco," Plymouth Superior Court
No. 90-1333; (v) obligations relating to the County of Los
Angeles Industrial Development Authority's Variable Rate Demand
Industrial Revenue Refunding Bonds relating to Seller's San
Gabriel, California, property; (vi) obligations relating to the
City of Virginia Beach Development Authority Industrial
Development Bonds and related Letter of Credit relating to
Seller's Virginia Beach, Virginia property; (vii) intercompany
payables related to Retained Assets or Retained Liabilities and
not included in the Agreement Balance Sheet; (viii) the
obligations of Kransco Building and Equipment Investment Co.
under the 10.125% Senior Secured Notes with National Home Life
Assurance Company; (ix) any liability associated with the Vehicle
Leases; and (x) any Seller guarantee related to the purchase by
John G. Bowes and John N. Rosekrans, Jr. of Yakima Corporation
and any other Seller guarantee related to any of the other
Excluded Liabilities.
2.3 Certain Tax Matters. Seller shall bear all federal and
state taxes accruing or arising from the operations of the Seller
during any period ending on or prior to the Time of Closing,
including without limitation all such income taxes arising out of
the sale and purchase of the Purchased Assets hereunder. Buyer
shall bear all transfer, sales and use taxes arising out of the
sale and purchase of the Purchased Assets hereunder and all
federal and state taxes accruing or arising from the operations
of the Purchased Assets during any period commencing after the
close of business on the Closing Date. To the extent that Seller
shall be required to pay any sales or use taxes with respect to
the sale and purchase of the Purchased Assets hereunder, Buyer
shall promptly reimburse Seller therefor.
ARTICLE III
PURCHASE PRICE
--------------
3.1 Payment of Purchase Price. The total purchase price
due and payable at Closing (the "Initial Price") for the
Purchased Assets to be sold pursuant to this Agreement shall be
$260,000,000 in immediately available funds, and the assumption
of the Assumed Liabilities. In addition, Buyer shall pay the
"Contingent Price" provided in Section 3.3 hereof as, and to the
extent, if any, the same shall be due hereunder.
3.2 Adjustment to the Initial Price.
(a) Closing Date Statement. Not more than 30 days
following the Closing Date, Seller shall deliver to Buyer a
preliminary, unaudited draft of the Closing Date Statement (as
defined below). Not less than 40 nor more than 60 days following
the Closing Date, Seller's independent accountants ("Seller's
Accountants") shall deliver to Buyer a closing balance sheet
audited by Seller's Accountants of the Purchased Assets and, to
the extent required to be reflected on a balance sheet, the
Assumed Liabilities (the "Closing Date Statement") prepared in
accordance with generally accepted accounting principles ("GAAP")
and on a basis consistent with the Agreement Balance Sheet (as
hereinafter defined) which shall set forth the net book value of
such assets and liabilities as of the
4.
Closing Date (the "Closing
Net Value"). Seller's Accountants shall conduct such audit in
accordance with generally accepted auditing standards and shall
permit representatives of Buyer's independent accountants
("Buyer's Accountants") to observe and consult with respect to
such audit. Upon receipt of the Closing Date Statement, Buyer's
Accountants shall be permitted during the succeeding 15
business-day period to examine, at Buyer's expense, the books and
records of Seller associated with the Seller and any work papers
prepared by Seller or Seller's Accountants in the preparation of
the Closing Date Statement. As promptly as possible and in no
event later than the last day of such 15 business-day period,
Buyer shall either inform Seller in writing that the Closing Date
Statement is acceptable or object to the Closing Date Statement
by delivering to Seller a written statement setting forth a
specific description of Buyer's objections to the Closing Date
Statement (the "Statement of Objections"). If the Objection is
based on an amount less than $250,000, then the Closing Date
Statement shall be deemed accepted without adjustment.
If Buyer fails to deliver such a Statement of Objections
within such 15 business-day period, the Closing Date Statement
shall be deemed to have been accepted by Buyer. In the event
Buyer objects to the Closing Date Statement as provided above,
Seller and Buyer shall attempt to resolve any such objections
within 10 business days of Seller's receipt of Buyer's Statement
of Objections. If Seller and Buyer are unable to resolve the
matter within such 10 business-day period, they shall jointly
select and engage another nationally recognized firm of U.S.
independent certified public accountants to resolve the disputes
and to make any adjustments to the Closing Date Statement. The
fees of such other firm shall be divided equally between Seller
and Buyer. Seller and Buyer and their respective accountants
shall each make readily available to such firm all relevant books
and records and work papers prepared by them relating to the
Closing Date Statement requested by such firm to resolve the
disputes. Such firm's resolution of the dispute and its
adjustments to the Closing Date Statement shall be conclusive and
binding upon the parties and shall be delivered within 20
business days after such firm is selected.
(b) Adjustment to Initial Price. Upon the later of
acceptance of the Closing Date Statement or the resolution of
Buyer's objections in connection therewith, Buyer shall pay to
Seller the amount (if any) by which the Closing Net Value exceeds
the net value reflected in the Agreement Balance Sheet, as
defined in Section 4.2(g), or Seller shall pay to Buyer the
amount (if any) by which the net value reflected in the Agreement
Balance Sheet exceeds the Closing Net Value, in each case
together with interest at the prime rate established by Bank of
America from the Closing Time to payment. The applicable amount
shall be paid by wire transfer within five business days after
its determination.
3.3 Contingent Price.
There shall be payable by Buyer to Seller additional
purchase price ("Contingent Price") with respect to each of
calendar years 1994, 1995 and 1996 an amount
5.
in immediately
available funds equal to $8,625,000 for each such year that net
sales of the Power Wheels[registered trademark] line of products
equals or exceeds the following amounts for such year:
1994 - $157,505,000
1995 - $175,500,000
1996 - $188,325,000
Provided that if such net sales are less than the foregoing
amount for any year but equal to or greater than 95% of such
amount, then the amount payable with respect to such year shall
be prorated (for example, if net sales of Power Wheels[registered
trademark] in 1994 are 96% of $157,505,000, then Buyer shall pay
to Seller as the Contingent Price for such year 96% of
$8,625,000, or $8,280,000); and any excess in net sales in 1994
or 1995 over the amounts stated in the foregoing table shall be
carried over and credited to the following year, provided,
however, that the amount of such credit shall in no event exceed
$10,000,000. In no event shall the amount payable with respect
to any such year exceed $8,625,000. As used in this Section 3.3,
"net sales" shall be calculated in the manner used by Buyer
in Buyer's publicly available financial statements.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
4.1 Representations of Buyer. Buyer hereby represents and
warrants to Seller that:
(a) Organization of Buyer. Buyer is a corporation
duly organized and validly existing under the laws of the State
of Delaware.
(b) Authority. Buyer has full corporate power and
authority to enter into this Agreement, perform its
obligations hereunder and consummate the transactions
contemplated hereby. This Agreement has been duly authorized,
executed and delivered and constitutes a valid and binding
obligation of Buyer, enforceable in accordance with its terms
subject to bankruptcy, insolvency, fraudulent transfer,
moratorium, reorganization and other similar laws of general
applicability relating to creditors' rights and to general equity
principles.
(c) No Conflict or Default. Neither the
execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will violate any statute,
regulation or ordinance of any governmental authority, or
conflict with or result in the breach of any provision of the
charter or bylaws of Buyer or of any agreement, deed, contract,
mortgage, indenture, writ, order, decree or instrument to which
Buyer is a party or by which it is bound.
6.
(d) Brokers, Finders. Except for Donaldson, Lufkin &
Jenrette Securities Corporation, whose fees and expenses will be
paid by Buyer, there is no broker, finder or other person who has
been retained by Buyer or authorized to act on its behalf and who
is entitled to a commission, fee or like payment in connection
with the transactions contemplated by this Agreement.
4.2 Representations of Seller. Except as set forth in the
Disclosure Schedules noted below (the "Disclosure Schedules") and
subject to amendment thereof in accordance with the terms of
Section 5.11, Seller hereby represents and warrants to Buyer
that:
(a) Corporate Organization, etc. Seller is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of California with all
requisite corporate power and authority to carry on the business
conducted by it. Each of the Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the
laws of its respective jurisdiction of organization with all
requisite corporate power and authority to carry on the business
conducted by it. At the closing, the Purchased Assets will
include all of the issued and outstanding shares of the
Subsidiaries and there will be no outstanding right or option
held by any other person to purchase or cause to be issued any
shares of any Subsidiary. The Subsidiaries constitute the only
entities in which Seller owns or controls any equity or profit
interest.
(b) Authorization of Seller. Seller has full
corporate power and authority to enter into this Agreement,
perform its obligations hereunder and consummate the transactions
contemplated hereby. This Agreement has been duly authorized,
executed and delivered and constitutes a valid and binding
obligation of Seller, enforceable in accordance with its terms
subject to bankruptcy, insolvency, fraudulent transfer
moratorium, reorganization and other similar laws of general
applicability relating to creditors' rights and to general equity
principles.
(c) No Conflict or Default. Except as set forth in
Schedule 4.2(c) and except with respect to Retained Assets or
Retained Liabilities, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will violate any statute, regulation or ordinance of any
governmental authority, or conflict with or result in the breach
of any provision of the certificate of incorporation or bylaws of
Seller or any Subsidiary or of any material agreement, deed,
contract, mortgage, indenture, writ, order, decree or instrument
to which Seller or any Subsidiary is a party or by which it or
any of the Purchased Assets are bound, or constitute a default
(or an event which, with the lapse of time or the giving of
notice, or both, would constitute a default) thereunder, or
result in the creation or imposition of any lien, charge or
encumbrance, or restriction of any nature whatsoever with respect
to any of the Purchased Assets, or give to others any rights of
termination, acceleration or cancellation in or with respect to
the Purchased Assets.
7.
(d) Contracts and Commitments. Schedule 4.2(d) sets
forth all material contracts, commitments, leases, permits and
other instruments binding upon Seller other than purchase orders
entered into in the ordinary course of business and other than
those contracts, commitments, leases, permits and other
instruments that may relate to the Retained Assets or the
Retained Liabilities (collectively, "Contracts"). For purposes
of this subsection (d), "material" shall mean any contract,
agreement, commitment, arrangement or understanding involving
payment or receipt by the Seller or any Subsidiary of an amount
greater than or equal to $50,000, or having a duration of more
than one year, or otherwise material to the Business. Prior to
the date of this Agreement, Seller has delivered to Buyer true
and complete copies of all items listed in Schedule 4.2(d), and
any amendments thereof. Except as disclosed in Schedule 4.2(d),
all such contracts, commitments, leases, permits and instruments
are in full force and effect and, to the best of Seller's
knowledge, are valid, binding and enforceable in all material
respects in accordance with their respective provisions subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles,
and none of Seller or any Subsidiary, or, to the best of Seller's
knowledge, any other party is in default nor has there occurred
an event or condition which, with the passage of time or giving
of notice (or both), would constitute a default with respect to
the payment or performance of any obligation thereunder; and no
claim of such a default has been asserted and there is no
reasonable basis upon which such a claim could validly be made.
(e) Inventory. All items included in the
Inventory are the property of Seller or a Subsidiary and are in
good working condition and not defective, except for obsolete
items or items used as demonstration items, which have been
written down on the books of the Seller or have been provided for
with adequate reserves. Except as set forth on Schedule 4.2(e),
no items included in the Inventory are pledged as collateral or
are held by Seller or any Subsidiary on consignment from others.
All items included in inventory are of a quantity and quality
merchantable, marketable, or, in the case of raw materials,
usable, in accordance with reasonable business practices and
represent a distribution of the type of inventory utilized by
Seller or a Subsidiary in the conduct of its business in
accordance with reasonable business practices.
(f) Receivables. The Accounts Receivable arose from
valid sales in the ordinary course of business, have been
collected or, to the best knowledge of Seller, are collectible in
the book amounts thereof, less an amount not in excess of the
allowance for doubtful accounts reflected in the Financial
Statements (as hereinafter defined), except as set forth in
Schedule 4.2(f). Neither Seller nor any Subsidiary has any oral
return policy; however, Seller has in the past accommodated
customer excess inventory where it deemed such accommodation
appropriate, although Seller had no legal obligation to do so.
8.
(g) Financial Statements. The Seller has delivered
to Buyer the following financial statements (collectively, the
"Financial Statements"): (i) audited balance sheet and statement
of operations and cash flows for Kransco as of and for the fiscal
year ended December 31, 1993 (the "Most Recent Fiscal Year End");
and (ii) unaudited combined pro forma balance sheet ("Agreement
Balance Sheet") and statement of operations of Seller which
excludes Retained Assets and Retained Liabilities as of and for
the year ended December 31, 1993 ("Balance Sheet Date"). The
Financial Statements fairly present the financial position of the
Seller as of the dates of each balance sheet included therein
and results of operations of Seller for the periods covered
thereby and are consistent with the books and records of Seller.
The audited Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the
periods covered thereby except as set forth thereon.
(h) Events Subsequent to Most Recent Fiscal Year End.
Except as set forth on Schedule 4.2(h), since the Most Recent
Fiscal Year End, there has not been (i) any material adverse
change in the assets, liabilities, business, properties,
financial condition, or results of operations of Seller or any
Subsidiary or, to the best knowledge of Seller, future prospects
for the Business (provided that no change or event attributable
to or proximately caused by the execution by Seller of this
Agreement or the consummation by Seller of the transactions
contemplated hereby shall be deemed a material adverse change in
breach of this representation); (ii) any transaction entered into
by Seller or any Subsidiary other than in the ordinary course of
business; (iii) any actual or threatened material labor dispute
(including any union representation proceeding or organizational
activities); (iv) any increase or decrease in the rates of direct
compensation payable or to become payable by Seller or any
Subsidiary to any employee, agent or consultant, or any bonus,
percentage compensation, service award or other like benefit,
granted, made or accrued to or to the credit of any such
employee, agent or consultant, or any welfare, pension,
retirement or similar payment or arrangement made or agreed to by
Seller or any Subsidiary (other than pursuant to any previously
existing collective bargaining agreement); or (v) any
modification of an existing contract having a materially adverse
effect on the Business.
(i) Assets Are All Assets of the Seller. The
Purchased Assets include all of the real and personal property
(or interests therein), machinery, tools, equipment, inventory,
Intellectual Property and other property in which Seller has any
right, title and interest and which are used in the conduct of
the Seller's operations in the usual and ordinary course of
business. The Purchased Assets are sufficient to operate the
Business as presently conducted and are in good operating
condition in all material respects, normal wear and tear
excepted.
(j) Title to the Property. Schedule 4.2(j)
constitutes a true and complete list and description of all real
property owned by or leased to Seller. Except as disclosed in
Schedule 4.2(j) and except for (i) the lien of any current
assessments or taxes not yet delinquent and mechanics and similar
liens arising in the ordinary course of business, (ii) such
insignificant encumbrances which individually or in the aggregate
do not adversely
9.
affect the Purchased Assets or the Business, or
adversely affect the use currently made of the affected property
or equipment, and (iii) with respect to Purchased Assets that are
contracts or rights thereunder, the express contractual rights of
the other parties thereto (collectively, the "Permitted Liens"),
Seller has, or will have, and upon the Closing, Seller will
convey or cause to be conveyed to Buyer, good and marketable
title to the Purchased Assets, free and clear of all pledges,
liens, encumbrances, security interests, equities, charges,
encroachments, defects of title, clouds and restrictions of any
nature whatsoever. Except as set forth on Schedule 4.2(j), to
the knowledge of Seller: (A) there is not any pending or
contemplated condemnation of any real or personal property of
Seller or any intended public improvement which will result in
any charge being levied or assessed against, or in the creation
of any lien or assessment upon, any real or personal property of
Seller; and (B) there are not any facts or conditions which will
result in the termination of any present access from any real
property of Seller or any Subsidiary to any utility services or
from any real property of Seller or any Subsidiary to existing
highways, roads, and alleys.
(k) Intellectual Property. Schedule 4.2(k) lists or
describes all Intellectual Property, whether or not owned by
Seller, used in the conduct of the business. Except as set forth
in Schedule 4.2(k), (i) none of such Intellectual Property has
been assigned, transferred or licensed to or from any third
party, (ii) the validity or enforceability of such Intellectual
Property as used in the conduct of the Business has not been
challenged by others in any proceeding or dispute about which
Seller or any Subsidiary has received notice in writing, nor is
there any pending or, to the best knowledge of Seller, threatened
litigation or proceeding challenging Seller's right to use any of
such Intellectual Property or any basis therefor, (iii) to the
best of Seller's knowledge, Seller's and the Subsidiaries' use of
the Intellectual Property does not conflict with or constitute an
infringement of the rights of any other person. To the best of
Seller's knowledge, the Intellectual Property constitutes all
intellectual property necessary to conduct the Business and the
consummation of the transactions contemplated by this Agreement
will not materially adversely affect Buyer's rights to the
Intellectual Property.
(l) Litigation. Except as set forth on Schedule
4.2(l), there is no claim, litigation, action, suit or
proceeding, administrative or judicial, pending or, to the best
knowledge of Seller, threatened against or relating to Seller or
any Subsidiary, at law or in equity, before any federal, state,
local or foreign court or regulatory agency, or other
governmental authority expected by Seller in Seller's reasonable
judgment to involve the payment of damages, claims or fines in
excess of $25,000.
(m) Taxes. Neither Seller nor any Subsidiary has any
tax, deficiency or claim outstanding or assessed against it or
any Subsidiary, or, to the best of Seller's knowledge,
proposed against it or any Subsidiary, and, to the best of
Seller's knowledge, there is no basis for any such deficiency or
claim. All tax returns and reports by Seller required to be
filed by Seller and which are material to the Business have been
duly and timely filed and all taxes which were required to be
paid have been paid.
10.
(n) Compliance with Law. Seller and each
Subsidiary is in compliance in all material respects with all
applicable federal, state, local and foreign laws, statutes,
licensing requirements, rules and regulations, and judicial or
administrative decisions applicable to the Business. Except for
any such licenses, permits, authorizations or approvals which are
not individually or in the aggregate material to the conduct of
the Business, Seller or any Subsidiary has been granted any and
all licenses, permits (temporary and otherwise), authorizations
and approvals from federal, state, local and foreign government
regulatory bodies necessary to carry on the Business as currently
conducted, all of which are valid and in full force and effect.
As of the date of this Agreement, there has been no order issued,
investigation or proceeding pending, or, to the best knowledge of
Seller, threatened, or notice served with respect to, any
violation of any law, ordinance, order, writ, decree, rule or
regulation issued by any federal, state, local or foreign court
or governmental agency or instrumentality applicable to the
Business.
(o) Labor Relations. Except as set forth on
Schedule 4.2(o), (i) neither Seller nor any Subsidiary is a party
to any collective bargaining or union contract; (ii) there are no
labor controversies pending or, to the best of Seller's
knowledge, threatened as of the date of this Agreement between
Seller or any Subsidiary and any of the employees of the Seller
or any Subsidiary or any labor union or other collective
bargaining unit representing any of the employees of Seller or
any Subsidiary, and Seller is not aware of any basis for such
controversies; (iii) neither Seller nor any Subsidiary is a party
to or bound by any employment contracts with any of its
employees; and (iv) neither Seller nor any Subsidiary has
employee benefit plans or policies, including vacation,
severance, health, retirement and similar plans.
(p) Environmental Matters.
(i) Except as set forth on Schedule 4.2(p),
Seller and each Subsidiary (1) has secured and maintained all
material environmental permits, certificates, licenses,
appraisals, registrations, authorizations, variances and
exemptions from government authorities and has made all noti
fications, reports and applications to governmental authorities
that are legally required in connection with the conduct of the
Business (collectively, "Permits"); (2) to the best of Seller's
knowledge, is presently and always has been in full compliance
with all Environmental Laws (as defined in subsection (v) below)
and Permits; (3) has no notice of any threatened or pending
claims, investigations, reviews, or actions against the Seller or
any Subsidiary under any Environmental Law; (4) is not currently
operating any facility or equipment under any compliance order,
decree or similar agreement issued or entered into under any
Environmental Law.
(ii) Except as set forth on Schedule 4.2(p)
Seller knows of no Environmental Liabilities or any past or
current releases of Hazardous Substances on, at, over, from, into
or near any facility owned or operated by Seller or any
Subsidiary. Seller has disclosed to Buyer in writing any known
presence of asbestos in any of its premises other than fully
encapsulated asbestos-containing construction materials.
11.
(iii) Seller has delivered to Buyer copies
of all environmental audits and other similar reports which
have been prepared by or for Seller or any Subsidiary with
respect to its owned or leased real property.
(iv) Except as set forth on Schedule 4.2(p),
there is no facility that Seller or, to the best of Seller's
knowledge, any predecessor in interest has owned or operated at
or from which Seller or any Subsidiary or any predecessor in
interest manufactured, processed, distributed, used, treated,
stored, disposed, transported, released or otherwise handled any
pollutant, contaminant, Hazardous Substance or waste.
(v) For purposes of this Section 4.2(p), the
following terms have the following meanings:
"Environmental Laws" shall mean any and all
foreign and domestic federal, state and local laws,
regulations or ordinances, relating to the protection
of human health, the environment or to emissions,
discharges or releases of pollutants, contaminants,
Hazardous Substances or wastes into the environment or
otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants,
Hazardous Substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" shall mean all
liabilities, whether vested or unvested, contingent or
fixed, which (i) arise under or relate to Environmental
Laws and (ii) relate to actions occurring or conditions
existing on or prior to the Closing Date.
"Hazardous Substances" shall mean any toxic,
radioactive, caustic or otherwise hazardous substance
regulated by any Environmental Law, including
petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any material
constituent elements displaying any of the foregoing
characteristics.
(q) Undisclosed Material Liabilities. There are no
undisclosed liabilities of any kind whatsoever that are
material to the Business (and, to the best knowledge of Seller,
there is no basis for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or
demand against Seller or any Subsidiary giving rise to any such
liability) except for (i) liabilities disclosed or provided for
on the Agreement Balance Sheet, (ii) liabilities under the
agreements set forth on Schedule 4.2(d) (which, to the extent
appropriate under generally accepted accounting principles are
reflected on the Agreement Balance Sheet), and (iii) liabilities
which have arisen after the Balance Sheet Date in the ordinary
course of business and which would not reasonably be expected to
have a material adverse effect on the Business, assets or results
of operations of the Seller; and (iv) liabilities otherwise
disclosed pursuant to this Agreement.
12.
(r) Brokers, Finders. Except for Morgan Stanley &
Co. Incorporated and Grand-Jean Capital Management, Inc., whose
fees and expenses will be paid by Seller, there is no broker,
finder or other person who has been retained by Seller or any
Subsidiary or authorized to act on its behalf and who is
entitled to a commission, fee or like payment in connection with
the transactions contemplated by this Agreement.
(s) Personnel. Schedule 4.2(s) constitutes a
complete and correct list of (i) all employment, bonus, profit-
sharing, percentage compensation, employee benefit plans,
incentive plans, pension or retirement plans, stock purchase and
stock option plans, contracts or agreements with officers,
employees or unions, or consulting agreements, to which Seller is
a party or is subject as of the date of this Agreement; (ii) the
names and current salary rates of all the executive officers
(vice president and above) of Seller; and (iii) the wage rates
for the non-executive employees of Seller by classification.
Schedule 4.2(s) also sets forth a listing of all bonuses paid to
employees of Seller since December 31, 1992.
(t) Insurance. Schedule 4.2(t) constitutes a list of
all insurance policies and bonds in force with respect to Seller
(other than those listed in Schedule 4.2(s)) showing for each
such policy or bond: (i) the owner, (ii) the coverage of such
policy or bond, (iii) the premium, (iv) the name of the insurer,
and (v) the termination date of the policy or bond.
(u) Accuracy of Documents and Information. The
copies of all instruments, agreements, other documents and
written information delivered to Buyer by Seller or any
representative of Seller are and will be complete and correct in
all material respects as of the date hereof and as of the Closing
Date subject to changes made in the ordinary course of business.
(v) Property Taxes. Schedule 4.2(v) constitutes a
complete list of all real property and personal property tax
bills of Seller and the Subsidiaries for the current and two
prior property tax years, indicating whether or not Seller is
aware of any proposal by any such taxing authority to change the
assessed values or assessment rate reflected in such bills.
(w) Product Warranties and Returns. Except as set
forth on consumer warranties enclosed with Seller's products,
Seller has made no warranties or guarantees relating to its
products other than as implied by law. Schedule 4.2(w) sets
forth all product liability claims with respect to such products
made since January l, 1992. Except as set forth on Schedule
4.2(w), to the best knowledge of Seller, Seller has not
manufactured, sold, licensed or supplied products or parts which
are, were or will become, in any material respect, faulty or
defective, or which do not comply in any material respects with
the warranties expressly made by Seller with respect thereto.
(x) Order Backlog. Schedule 4.2(x) constitutes a
complete and correct list as of March 25, 1994, of all purchase
orders for delivery of Seller's products.
13.
ARTICLE V
COVENANTS
---------
5.1 Further Assurances.
(a) At or after the Time of Closing, Seller and Buyer
shall prepare, execute and deliver such further instruments of
conveyance, sale, assignment or transfer and shall take or
cause to be taken such other or further action as either party
shall reasonably request at any time or from time to time in
order to consummate the terms and provisions of this Agreement.
(b) After the Closing, Seller and Buyer shall
reasonably cooperate to maintain the full force and effect of all
sales and supply contracts and agreements between the Seller and
all third parties under which Seller or any entity affiliated
with Seller has obligations which continue after the Closing
Date. Seller agrees to transfer promptly orders for and
correspondence and inquiries related to Seller's products which
it receives on or after the Closing Date to Buyer. Buyer agrees
to transfer promptly orders for and correspondence and inquiries
related to the Excluded Assets and Excluded Liabilities which
Buyer receives on or after the Closing Date to the Seller.
5.2 Access to Books and Records. After the Closing, both
parties shall provide each other with reasonable access to books
and records pertinent to the Purchased Assets and Assumed
Liabilities during regular business hours for five years
following the Closing Date. Except as set forth on Schedule 5.2,
Seller agrees that, from and after the Closing, Buyer shall have
possession of all documents, books, records, agreements and
financial data of any sort relating to the Purchased Assets and
Assumed Liabilities, but shall provide Seller with reasonable
access to such books, records, agreements and financial data.
Seller shall retain books and records of Seller set forth on
Schedule 5.2, but shall provide Buyer with reasonable access to
such other books and records. Seller and Buyer shall cooperate
to enable delivery of the Closing Date Statement pursuant to
Section 3.2(a).
5.3 Preservation of Records. After the Closing, both
parties agree to preserve such books, records and filings
relating to the Purchased Assets and Assumed Liabilities as may
be required by applicable law.
5.4 Information Regarding Intellectual Property. After the
Closing, both parties agree to provide each other such
documentation as is reasonably requested relating to the
Intellectual Property.
5.5 Announcements. All press releases or other public
communications relating to this transaction will require the
prior approval of both parties (which approval shall not be
unreasonably withheld); provided, however, either party may issue
such press release or public communication to the extent such
party reasonably determines that such action is legally required.
14.
5.6 Access to Properties and Records. Between the date of
this Agreement and the Closing Date, Seller shall give Buyer and
Buyer's authorized representatives full access as may be
reasonably requested during reasonable business hours, in such a
manner as not unduly to disrupt the normal business activities of
Seller, to any and all of the premises and properties of Seller
and to the contracts, internal reports, data processing files and
records, state and local tax returns and records, commitments,
books, records and affairs of Seller. Seller shall furnish to
Buyer any and all financial, technical and operating data and
other information pertaining to the business of Seller as Buyer
shall from time to time reasonably request, including, without
limitation, financial statements and schedules. Such access
shall also include, but shall not be limited to, the placing of
one or more employees or representatives of Buyer at the
facilities of Seller for the purpose of enabling such employees
to become familiar with the operations of Seller.
5.7 General Conduct of the Business Prior to Closing Date.
Pending the Closing Date, and except as otherwise consented to or
approved by an officer of Buyer in writing (such requests to be
directed to John W. Amerman or N. Ned Mansour, Esq., or their
designees) or as required or permitted by this Agreement, Seller
covenants as follows:
(a) The Business shall be conducted in the
ordinary course and in a normal business-like fashion and Seller
shall use Seller's best efforts to preserve and maintain the
goodwill of the Business, including relationships with suppliers
and customers.
(b) Seller shall not take any action, or suffer any
action to be taken against Seller or any Subsidiary, which would
cause any material change in any of the items and matters
concerning Seller covered by the representations any warranties
of Seller set forth above in Article IV of this Agreement,
including, without limitation:
(i) incurring or becoming subject to, or
agreeing to incur or become subject to, any obligation or
liability (absolute or contingent) except current
liabilities incurred and any obligations under contracts
entered into, in the ordinary course of business and
provided specifically that neither Seller nor any Subsidiary
shall enter into any material lease or extension of any
material lease with respect to any real or personal property
of Seller or any Subsidiary.
(ii) discharging or satisfying any lien or
encumbrance or payment of any obligation or liability
(absolute or contingent) other than as called for by the
Agreement or current liabilities in the ordinary course of
business;
(iii) mortgaging, pledging or assuming any lien,
charge or any other encumbrance, or the agreement so to do,
with respect to any of the Purchased Assets;
15.
(iv) selling, transferring, or agreeing to sell
or transfer, any of the Purchased Assets, or canceling or
agreeing to cancel any debts or claims, except in each case
in the ordinary course of business;
(v) entering into any transaction in which an
extraordinary loss would be incurred or waiving any
rights of substantial value;
(vi) entering into any transaction other than in
the ordinary course of business;
(vii) increasing (other than pursuant to any
collective bargaining agreement in effect as of the date of
this Agreement) the rate of compensation payable or to
become payable by Seller or any Subsidiary to any officers,
employees, consultants, or agents over the rate being paid
to them on the date of this Agreement except for routine
regularly scheduled merit increases;
(viii) terminating any material contract,
agreement, license or other instrument to which Seller or
any Subsidiary is a party, except agreements which are by
their terms terminable in the ordinary course of business;
(ix) negotiating or otherwise making any
commitment or incurring any liability or obligation to any
labor organization not binding and enforceable against
Seller or any Subsidiary on the date of this Agreement;
(x) making, or agreeing to make, any accrual or
arrangement for or payment of any bonus or special
compensation of any kind to any officer, employee,
consultant, or agent other than pursuant to any program
presently in effect;
(xi) directly or indirectly paying or making a
commitment to pay any severance or termination pay to any
officer, employee, consultant, or agent; or
(xii) entering into commitments for captial
expenditures exceeding the aggregate amount of $100,000.
5.8 Mutual Covenant. Seller and Buyer each, prior to, or
as of, the Closing Date, shall use its best efforts to obtain all
consents, approvals, orders, authorizations, registrations,
qualifications, designations or declarations from, and make any
filings with, any governmental authority required in connection
with the consummation of the transactions contemplated by this
Agreement. Seller and Buyer each shall furnish promptly to each
other information reasonably requested by the other party for
inclusion in any statement or application made by either party to
any governmental or regulatory body in connection with the
transactions contemplated by this Agreement. The obligations of
the parties under this Section 5.8 shall include prompt filing
under the Hart-Scott-Rodino Act ("HSR Act").
16.
5.9 Fulfillment of Conditions to Closing. Each of the
parties hereto shall use its best efforts to cause the
fulfillment at the earliest practicable date of all of the
conditions to the parties' respective obligations to consummate
the transactions contemplated hereby. At or prior to Closing,
Seller shall cause any shares of the Subsidiaries not held by
Seller to be duly endorsed over for transfer to Buyer (or to
Seller for reconveyance to Buyer), and such shares shall be
deemed Purchased Assets for all purposes of this Agreement.
5.10 Obtaining Consents to Assignments. Seller shall use
best efforts to obtain all approvals, consents or waivers as
shall be necessary to convey and assign to and vest in Buyer all
of its right, title and interest to the Purchased Assets,
including, without limitation, any claim, right, or benefit
arising thereunder or resulting therefrom, as soon as
practicable. To the extent that rights under any agreement,
contract, commitment, lease, license, permit, authorization or
other Purchased Asset to be assigned to Buyer hereunder may not
be assigned without the consent of another person, and such
consent has not been obtained by the Closing Date, neither this
Agreement nor any document executed by the parties hereto in
connection with this Agreement shall constitute an agreement to
assign the same if any attempted assignment would constitute a
breach thereof or would be unlawful, and Seller shall use
reasonable efforts to obtain any such required consent as
promptly as possible after the Closing Date. If such consent
shall not be obtained or if any attempted assignment would be
ineffective or would impair Buyer's rights under the instrument
in question so that Buyer would not in effect acquire the benefit
of all such rights, Seller, to the maximum extent permitted by
law and the instrument, shall act as Buyer's agent in order to
obtain for it the benefits thereunder and shall cooperate, to the
maximum extent permitted by law and the instrument, with Buyer in
any other reasonable arrangement designed to provide such
benefits to Buyer at no additional cost to Seller for a period
not to exceed twelve (12) months after the Closing Date. With
respect to any supply contract or arrangement pursuant to which
Seller currently obtains parts, supplies or other materials for
use of the Business that, in spite of Seller's reasonable efforts
is not assigned to Buyer by the Closing Date, Seller shall allow
Buyer to purchase such parts, supplies or other materials subject
to such contract or arrangement (a) from Seller at Seller's cost;
or (b) through Seller, for the Business, until twelve (12) months
after the Closing; and Seller will resell to Buyer and Buyer will
buy from Seller all such materials and supplies at the price paid
for same by Seller; provided, that Seller shall not have any
obligation to allow Buyer to buy such parts and other materials
from Seller or through Seller if doing so would violate any
applicable law, regulation, rule, order or ordinance or would
constitute, or result in, a breach or termination of Seller's
rights under such contract or would exceed Seller's rights under
such contract.
5.11 Amendment to Disclosure Schedules. At any time prior
to the close of business on the 10th business day following the
date of execution of this Agreement, Seller may deliver to Buyer
amended, completed or supplemented Disclosure Schedules, and the
Disclosure Schedules shall be deemed amended thereby. Buyer
shall have five business days following delivery to review the
amended Disclosure Schedules, and if no Objection (as herein
defined) is made by Buyer prior to the close of business on the
fifth business day
17.
following delivery of the amended Disclosure
Schedules, the same shall be deemed accepted for all purposes
hereunder. If Buyer shall object to the amended Disclosure
Schedules as containing information not previously disclosed and
significant in the reasonable judgment of Buyer to the Business
(an "Objection"), Buyer and Seller shall negotiate in good faith
for a period of up to 10 business days after delivery thereof for
the purpose of resolving such Objection, and if such Objection is
not resolved by the close of business on the 10th business day
then either party may elect to terminate this Agreement.
5.12 Title Insurance. Within 20 business days after the
date of execution of this Agreement, Buyer shall, at Buyer's
expense, cause title surveys and extended coverage title
insurance preliminary reports to be issued for each parcel of
real property included in the Purchased Assets. If such surveys
and reports shall reveal any exception to or defect in title
inconsistent with the representations set forth in Section 4.2(j)
(an "Exception"), Buyer shall promptly advise Seller of such
Exception and the parties shall negotiate in good faith to
resolve the same or make appropriate adjustments to this
Agreement. If the parties are unable to resolve the matter prior
to Closing, then Buyer may elect either (A) to proceed with
Closing, in which case the Exception shall be deemed included in
the Disclosure Schedule, or (B) to terminate this Agreement. If
there is an Exception which remains unresolved as of the close of
business on May 31, 1994, then Seller may elect to terminate this
Agreement at any time thereafter.
5.13 Other Insurance. Effective as of the Closing, Seller
shall cause Buyer to be named as an additional named insured on
all of Seller's presently maintained insurance policies (other
than those relating to employee benefits) and shall assign to
Buyer all of Seller's rights and benefits under all of Seller's
past and present insurance policies (other than those relating to
employee benefits), except as such rights and benefits may relate
to coverages for Retained Assets and Retained Liabilities.
Except as provided below, Seller shall grant to Buyer the right
and power to control the administration of such policies,
including the decision as to whether to make claims thereunder
and the timing thereof. Seller shall, however, retain all right
and power to control the administration of such policies as they
relate to coverage for any of the Retained Assets. Buyer agrees
that it shall (i) procure and maintain for a period of three
years following the Closing Date insurance with respect to
product liability claims arising out of the Business with
coverage levels at least as great as those maintained by Seller
as of the date hereof, and (ii) cause those entities and persons
named on Schedule 5.13 to be named as additional insureds on such
new insurance policies.
5.14 Charitable Trust. Seller is considering contributing a
portion of its goodwill to a charitable trust. If Seller makes
such a contribution, Seller will cause such charitable trust to
join in this Agreement and be bound by all of the terms and
provisions hereof, and to convey at Closing to Buyer all of the
interest in the goodwill in the Business so contributed to the
charitable trust; provided, however, Seller shall remain fully
responsible for all of Seller's representations, warranties and
covenants under this Agreement.
18.
ARTICLE VI
EMPLOYEE AND OTHER MATTERS
--------------------------
6.1 Buyer to Offer Employment.
(a) With respect to all employees of Seller other
than the employees listed on Schedule 6.1 hereto ("Excluded
Employees"), Buyer shall either (i) offer employment, effective
as of the close of business on the Closing Date, with a level of
compensation and benefits and on other terms and conditions of
employment similar to each such employee's existing arrangements
with Seller or (ii) pay to such employees severance in an amount
equal to and upon terms similar to what such employees would have
received if discharged by Seller prior to the date hereof.
(b) If any employees of Seller do not accept an offer
of employment from Buyer, Buyer may require Seller to retain
such employees for a period of thirty (30) days following the
Closing Date provided that Buyer shall be responsible for and
pay, or to the extent paid by Seller, reimburse Seller for wages,
benefits and severance payments to such employees.
(c) Effective at the close of business on the
Closing Date, all employees of the Seller who accept Buyer's
offer of employment shall cease to be covered by Seller's
employee welfare benefit plans, including plans, programs,
policies and arrangements which provide medical and dental
coverage, life and accident insurance and disability coverage
(collectively, "Welfare Plans"). As soon as practicable after
the Closing Date, Seller shall cause entire account balances of
Transferring Employees under the Seller's profit sharing and
401(k) plan to be transferred to an appropriate qualified plan of
Buyer. Seller shall retain responsibility for all Welfare Plans
claims incurred by all employees of the Seller (and their
dependents) on or prior to the Closing Date. Buyer shall assume
responsibility for all claims under Buyer's employee welfare
benefit plans incurred by such employees who accept Buyer's offer
of employment (and their covered dependents) ("Transferring
Employees") after the Closing Date. For purposes of this
paragraph, a claim shall be deemed to have been incurred on the
date treatment is rendered except as to claims resulting from
hospital confinement commencing on or prior to the Closing Date
or from illness, injury or a condition which requires medical or
dental treatment being treated on or prior to the Closing Date;
provided, however, that, with respect to those employees who
accept Buyer's offer of employment, Seller shall not be liable,
and Buyer shall be solely responsible for, all Welfare Plan
claims the treatment for which is not rendered within six months
after the Closing Date.
(d) Other than as set forth herein or reflected in
the Closing Date Statement, Buyer shall have no obligation to any
employees of Seller.
6.2 Payroll. Seller shall pay all employees of Seller all
wages to which they are entitled through the Closing Date as of
its regular pay date.
19.
6.3 Accrued Vacation. Effective as of the Closing Date,
Buyer shall assume all liability for and thereafter have sole
responsibility for all vacation time accrued for all full-time
employees of Seller who accept Buyer's offer of employment.
Seller agrees that it will, if requested by Buyer in writing,
solicit from those employees of Seller who have accepted offers
of employment from Buyer consents concerning transfer of accrued
but unpaid vacation time from Seller to Buyer.
6.4 Buyer Liable for Employee Continuation Coverage.
Effective as of the Closing Date, Buyer shall assume all
liability and thereafter have sole responsibility for providing
the continuation coverage required by Section 4980B of the
Internal Revenue Code of 1986 for those Seller employees as of
the Closing Date who accept an offer of employment from Buyer.
ARTICLE VII
CLOSING
-----------
7.1 Time of Closing. The closing (the "Closing") of the
purchase and sale of the Purchased Assets and the assumption of
the Assumed Liabilities shall take place at the offices of
Brobeck, Phleger & Harrison, Spear Street Tower, One Market
Plaza, San Francisco, California, at 10:00 a.m. (local time) on
May 31, 1994 or such earlier date as shall be five business days
after the expiration as earlier termination of the waiting under
the HSR Act (or such later date as to which Buyer and Seller
shall mutually agree) (the "Closing Date") (the time of such
Closing being referred to herein as the "Time of Closing"), and
the transactions effected by this Agreement shall be effective at
the close of business on the Closing Date.
7.2 Deliveries by Seller. At the Closing, Seller shall
deliver to Buyer the following, all duly and properly executed
(where necessary):
(a) A good and sufficient Bill of Sale, which shall
be in form and substance satisfactory to Buyer and Seller,
selling, delivering, transferring and assigning to Buyer all of
Seller's right, title and interest to the Purchased Assets other
than the contracts and agreements to be assigned pursuant to
subsection (b) below and share certificates evidencing all issued
and outstanding shares of the Subsidiaries duly endorsed for
transfer to Buyer, in each case free and clear of all liens other
than Permitted Liens;
(b) Good and sufficient assignments of all
Contracts, which shall be in form and substance satisfactory to
Buyer and shall include the written consents of all parties
necessary in order to transfer all of Seller's rights thereunder
to Buyer;
(c) A certificate of the Chairman or Chief
Financial Officer of Seller in accordance with Section 8.1(f);
and
20.
(d) Such other separate instruments of sale,
assignment or transfer that Seller and Buyer may reasonably deem
necessary or appropriate in order to perfect, confirm or evidence
in Buyer title to all or any part of the Purchased Assets.
7.3 Deliveries by Buyer. At the Closing, Buyer shall
deliver to Seller the following, all duly and properly executed
(where necessary):
(a) A payment into an account designated by Seller
by wire transfer in an amount equal to the Initial Price in
accordance with Section 3.1 above;
(b) A certificate of the General Counsel of Buyer in
accordance with Section 8.2(c); and
(c) Such other separate instruments of assumption
that Seller and Buyer may reasonably deem necessary or
appropriate in order to perfect, confirm or evidence the
assumption by Buyer of the Assumed Liabilities.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS
-----------------------------------
8.1 Conditions to Obligations of Buyer. Each and every
obligation of Buyer to be performed at the Closing shall be
subject to the satisfaction as of or before the Time of Closing
of the following conditions (unless waived in writing by Buyer):
(a) Consents. Seller shall have obtained and
delivered to Buyer all consents which Buyer shall reasonably deem
necessary in order to consummate the transactions contemplated
herein, including the consent of the lessors under the real
property leases included in the Purchased Assets;
(b) Performance of Agreement. All covenants,
conditions and other obligations under this Agreement which are
to be performed or complied with by Seller shall have been fully
performed and complied with in all material respects at or prior
to the Time of Closing, including the delivery of the instruments
and documents in accordance with Section 7.2;
(c) No Adverse Proceeding. There shall be no
material pending or threatened claim, action, litigation or
proceeding, judicial or administrative, or governmental
investigation against Seller for the purpose of enjoining or
preventing the consummation of this Agreement, or otherwise
claiming that this Agreement or the consummation of this
Agreement is illegal;
21.
(d) No Material Adverse Change. There shall have
been no material adverse change in the properties, business or
financial condition of Seller since the Balance Sheet Date or, to
the best knowledge of Seller, the prospects for the Business
(provided that no change or event attributable to or proximately
caused by the execution by Seller of this Agreement or the
consummation by Seller of the transactions contemplated hereby
shall be deemed a material adverse change for purposes of this
condition to Closing);
(e) Representations and Warranties. All
representations and warranties (including any Schedules contained
therein) contained in Section 4.2 of this Agreement shall be true
and correct as of the Closing Date;
(f) Certificate. Seller shall have delivered to
Buyer a certificate executed by its Chairman or Chief Financial
Officer, dated the date of the Closing, to the effect that the
conditions set forth in subsections (a), (b), (d) and (e), and,
to the best knowledge of such officer, subsection (c), of this
Section 8.1, have been satisfied;
(g) Approval of Documentation. The form and
substance of all certificates, instruments and other documents
delivered or to be delivered to Buyer under this Agreement shall
be satisfactory to Buyer and Buyer's counsel in all reasonable
respects; and
(h) Title Policies. Buyer shall have been
furnished, at Buyer's expense, with evidence that one or more
title insurance companies acceptable to Buyer (each, a "Title
Company") is prepared to issue at the Closing its extended
coverage policy of title insurance in an amount reasonably fixed
by Buyer insuring that fee simple title to any real property
being purchased by Buyer under this Agreement is vested in Buyer
as of the Closing Date free and clear of all encroachments and of
all other matters affecting title except for (i) the lien of non-
delinquent property taxes for the current year; and (ii) those
easements, covenants, conditions and restrictions of record
approved by Buyer as will be set forth on Schedule 8.1(h). Buyer
shall either have obtained such title policy or waived this
condition by the Closing.
(i) HSR Act. The applicable waiting period under the
HSR Act shall have expired or been terminated.
(j) Non-Competition Agreements. Buyer shall have
received non-competition agreements from John Bowes and John
Rosekrans, Jr. in form and substance reasonably satisfactory to
Buyer.
(k) Bulk Sales Laws. The parties shall have complied
with all applicable bulk sales and similar laws with respect
to the transfer of the Purchased Assets or satisfactory provision
shall have been made therefor.
(l) Lease Agreements. Seller and Buyer shall have
entered into lease agreements in mutually satisfactory form and
substance with respect to Seller's present
22.
facilities in San
Gabriel, California for one year and Virginia Beach, Virginia for
three years (the "Lease Agreements") on commercial terms and
rates for the area, and such agreements shall remain in full
force and effect.
(m) Failure of Conditions. In the event that any
condition set forth in this Section 8.1 is not fulfilled within
the time required, Buyer shall either waive fulfillment of such
condition or give Seller notice that such condition has not been
fulfilled, setting forth the reason that such condition has not
been fulfilled. In the event that any such failure to fulfill a
condition is curable, Seller shall have a reasonable period (but
in no event exceed 45 days) to attempt to fulfill such condition.
In the event such failure is not curable or that Seller fails to
secure fulfillment of such condition within such period, Buyer
shall within a reasonable period not to exceed 45 days, in the
exercise of Buyer's absolute discretion, either elect to waive
fulfillment of such condition or to terminate this Agreement.
8.2 Conditions to Obligations of Seller. Each and every
obligation of Seller to be performed at the Closing shall be
subject to the satisfaction as of or before the Time of Closing
of the following conditions (unless waived in writing by Seller):
(a) Performance of Agreement. All covenants,
conditions and other obligations under this Agreement which are
to be performed or complied with by Buyer shall have been fully
performed and complied with in all material respects at or prior
to the Time of Closing including the delivery of all payments
pursuant to Section 7.3(a) and the instruments and documents in
accordance with Section 7.3.
(b) No Adverse Proceeding. There shall be no
material pending or threatened claim, action, litigation or
proceeding, judicial or administrative, or governmental
investigation against Buyer for the purpose of enjoining or
preventing the consummation of this Agreement, or otherwise
claiming that this Agreement or the consummation hereof is
illegal.
(c) Certificate. Buyer shall have delivered to Seller
at the Closing a certificate, dated the date of the Closing,
executed by the General Counsel or Chief Financial Officer of
Buyer, to the effect that the conditions set forth in subsection
(a) and, to the best knowledge of such officer, subsection
(b) of this Section 8.2 have been satisfied.
(d) Approval of Documentation. The form and
substance of all certificates, instruments and other documents
delivered or to be delivered to Seller under this Agreement shall
be satisfactory to Seller and Seller's counsel in all reasonable
respects.
(e) HSR Act. The applicable waiting period under the
HSR act shall have expired or been terminated.
(f) Lease Agreements. Seller and Buyer shall have
entered into the New Lease Agreements, and such agreements shall
remain in full force and effect.
23.
(g) Failure of Conditions. In the event that any
condition set forth in this Section 8.2 is not fulfilled within
the time required, Seller shall either waive fulfillment of such
condition or give Buyer notice that such condition has not been
fulfilled, setting forth the reasons that such condition has not
been fulfilled. In the event that any such failure to fulfill a
condition is curable, Buyer shall have a reasonable period (but
not to exceed 45 days) to attempt to fulfill such condition. In
the event such failure is not curable within such period, Seller
shall, within a reasonable period not to exceed 45 days, in the
exercise of Seller's absolute discretion, elect to waive
fulfillment of such condition or to terminate this Agreement.
ARTICLE IX
MISCELLANEOUS
-------------
9.1 Expenses. Each party shall pay its own expenses and
costs incidental to the preparation of this Agreement and to the
consummation of the transactions contemplated hereby.
9.2 Survival of Representations and Warranties. The
representations, warranties and covenants contained in this
Agreement shall survive the Closing for the periods set forth
below and any claim made with respect thereto pursuant to Section
9.6 shall be made prior to the expiration of such period.
Terminate at Closing [Section] 4.1(a), 4.1(b), 4.1(c),
Time: 4.2(a), 4.2(b), 4.2(j) (solely as
to the real property for which
preliminary title reports are
obtained pursuant to Section 5.12),
4.2(m), 4.2(p), 4.2(t), 4.2(w),
5.5, 5.6, 5.8, 5.9, 5.11, 5.12,
5.14, 7.1, 7.2, 7.3, 8.1, 8.2.
Terminate 6 Months [Section] 4.2(c), 4.2(d), 4.2(e),
following Closing Time: 4.2(f), 4.2(g), 4.2(h), 4.2(i),
4.2(j) (as to all property for
which preliminary title reports are
not obtained pursuant to Section
5.12), 4.2(k), 4.2(l), 4.2(n),
4.2(o), 4.2(p), 4.2(q), 4.2(s),
4.2(u), 4.2(v), 4.2(x), 5.7.
No Termination: Articles I, II, III; [Section]
4.1(d), 4.2(r), 5.1, 5.2, 5.3, 5.4,
5.10, 5.13 (terminates three years
from the Closing Date), 6.1, 6.2,
6.3, 6.4, 9.1, 9.2, 9.3, 9.4, 9.5,
9.6, 9.7, 9.8, 9.9.
4.2(r), 5.1, 5.2, 5.3, 5.4, 5.10,
5.13 (terminates three years from
the Closing Date), 6.1, 6.2, 6.3,
6.4, 9.1, 9.2, 9.3, 9.4, 9.5, 9.6,
9.7, 9.8, 9.9.
Buyer agrees that Buyer will not offset against payment due under
Section 3.3 on the basis of any claim of Seller's breach of a
provision of this Agreement for which indemnity under Section
9.6(a)(ii) would be available if such claim were timely made
unless such a timely
24.
claim with respect to such breach has been
made under Section 9.6(a)(ii) prior to termination of such
provision under this Section 9.2.
9.3 Notices. All notices and other communications
hereunder shall be in writing and shall be delivered by facsimile
transmission with telephone confirmation of receipt, or, if such
means should be available, by hand or sent by first-class mail,
postage prepaid, or by overnight courier, as follows:
If to Buyer: Mattel, Inc.
333 Continental Boulevard
El Segundo, CA 90245-5012
Attention: N. Ned Mansour, Esq.
General Counsel
With a copy to: Latham & Watkins
505 Montgomery Street
Suite 1900
San Francisco, CA 94111-2562
Attention: Christopher L. Kaufman, Esq.
If to Seller: Kransco
160 Pacific Avenue
San Francisco, CA 94111
Attention: Douglas E. Tinker
Senior Vice President
With a copy to: Brobeck, Phleger & Harrison
One Market Plaza
Spear Street Tower
San Francisco, CA 94105
Attention: Ronald B. Moskovitz, Esq.
or, in each case, at such address and to the attention of such
person as either party shall have furnished to the other by
notice.
9.4 Knowledge. The phrase "to the knowledge" of an entity
shall refer to the actual knowledge of the chief executive
officer, chief financial officer or any other corporate officers
after appropriate inquiry with respect thereto.
9.5 Miscellaneous. This Agreement together with all
Schedules and Exhibits hereto constitutes the entire
understanding between the parties hereto, and supersedes all
prior agreements or letters of intent, representations and
understandings of the parties hereto. This Agreement may be
modified or terminated only by an instrument in writing
25.
signed by
the party against which enforcement is sought. This Agreement
shall inure to the benefit of the parties hereto and may not be
assigned by any party without the express written consent of the
other parties hereto. This Agreement shall be governed by the
laws of the State of California as applied to contracts made and
fully performed in California. This Agreement may be executed in
one or more separate counterparts, each of which shall be deemed
an original but all of which together shall constitute one and
the same instrument. The headings of the sections of this
Agreement are solely for convenience of reference and shall not
affect the meaning of any of the provisions hereof.
9.6 Indemnification.
(a) Seller's Indemnification of Buyer. Seller shall
indemnify Buyer and hold Buyer harmless at all times after the
Closing against and in respect of any of the following
(collectively, "Buyer Losses"):
(i) Obligations Not Assumed. Any and all
claims, losses, costs, expenses, commitments, agreements,
liabilities and obligations of Seller, or arising from the
operations of Seller either before or after the Time of Closing
(including, without limitation, the operation of the Business
prior to the Time of Closing), whether accrued, absolute,
contingent or otherwise and whether or not disclosed in this
Agreement or the Schedules, to the extent not expressly assumed
by Buyer pursuant to the Agreement;
(ii) Breach of Agreement. Any and all
damages resulting to Buyer from any misrepresentation, breach of
warranty, or nonfulfillment, in whole or in part, of any
obligation on the part of Seller under this Agreement or any
Schedule;
(iii) Taxes. Any and all taxes of Seller, or
applicable to operation of the Business prior to the Time of
Closing, to the extent not provided for on the Closing Date
Statement; and
(iv) Associated Costs. All costs,
assessments, judgments (including reasonable costs and attorneys'
fees and other expenses) arising out of any claim, or the defense
or investigation thereof, made with respect to any of the matters
described in Section 9.6(a)(i), (ii) or (iii).
Provided, however, that Seller's obligation to indemnify Buyer
with respect to Buyer Losses arising from breach by Seller of any
representation or warranty under this Agreement and any
associated costs constituting Buyer Losses with respect to such
breach under Section 9.6(a)(ii) shall only apply to the extent
that such Buyer Losses exceed $1,000,000 and notice of claims
therefor has been made on or before the expiration of such
representation or warranty as set forth in Section 9.2 hereof;
and provided further, however, that in no event shall Seller's
indemnity obligation under this Section 9.6 with respect to Buyer
Losses for breaches by Seller under Section 9.6(a)(ii) exceed
$35,000,000 in the aggregate.
26.
(b) Buyer's Indemnification of Seller. Buyer shall
indemnify Seller and hold Seller harmless at all times after
the Closing against and in respect of any of the following
(collectively, "Seller Losses").
(i) Obligations Assumed. Any and all claims,
losses, costs, expenses, commitments, agreements, liabilities
and obligations of Seller to the extent expressly assumed by
Buyer pursuant to this Agreement;
(ii) Breach of Agreement. Any and all
damages resulting to Seller from any misrepresentation, breach of
warranty, or nonfulfillment, in whole or in part, of any
obligation on the part of Buyer under this Agreement or any
Schedule;
(iii) Post-Closing Operations. Any and all
claims, losses, costs, expenses, commitments, agreements,
liabilities and obligations of Buyer arising from events
occurring in the operations of the Purchased Assets (including
the Business) after the Time of Closing not related to events
occurring prior to the Time of Closing; and
(iv) Associated Costs. All costs,
assessments, judgments (including reasonable costs and attorneys'
fees and other expenses arising out of any claim, or the defense
or investigation thereof, made with respect to any of the matters
described in Section 9.6(b)(i), (ii) or (iii).
(c) Notice of Claims - Participation in Third Party
Suits. Any party with a right to indemnification pursuant to
this Section 9.6 ("Indemnified Party") shall be reimbursed by the
other party ("Indemnifying Party") for any damage subject to such
indemnification. Any Indemnified Party making any claim
against an Indemnifying Party for indemnification shall make such
claim in writing, setting forth in general terms the facts upon
which the Indemnified Party bases such claim. In the event of
any claim or demand asserted against any Indemnified Party by a
third party upon which the Indemnified Party may claim
indemnification under this Section 9.6, the Indemnified Party
shall give the Indemnifying Party written notice within thirty
(30) days after receipt thereof indicating whether the
Indemnified Party intends to assume the defense of such claim or
demand. The Indemnifying Party shall have the right, at its own
expense, to participate in such defense, by written notice given
to the Indemnified Party within fifteen (15) days from the date
of the Indemnified Party's notice of such claim. If the
Indemnified Party assumes the defense and the Indemnifying Party
does not participate, the Indemnified party shall have the right
fully to control and to settle the proceeding. If the
Indemnifying Party elects to participate in such defense, and
does not dispute liability for indemnification of all damages
arising out of such action, the Indemnifying Party may elect to
control the proceeding, but shall not settle the same without the
consent of the Indemnified Party, which consent shall not be
unreasonably withheld. If the Indemnifying Party does not so
elect to control the proceeding, the Indemnified Party shall
control the proceeding but shall not settle the same without the
consent of the Indemnifying Party, which consent shall not be
unreasonably withheld. If the Indemnified Party elects not to
assume the defense, the Indemnifying Party
27.
shall have the right
to do so and to control the proceeding, but the Indemnified Party
shall nonetheless have the right to participate therein, and the
Indemnifying Party shall not settle the same without the consent
of the Indemnified Party, which consent shall not be unreasonably
withheld.
9.7 Termination.
(a) Mutual Agreement. This Agreement may be
terminated and abandoned at any time prior to the Closing Date by
the written agreement of Seller and Buyer.
(b) Failure of Conditions. This Agreement may be
terminated on the grounds of failure of fulfillment of conditions
as provided in Sections 8.1 and 8.2.
(c) 120 Days. This Agreement shall terminate if the
Closing shall not have been consummated on or prior to July 31,
1994; provided, however, that such date shall be extended to the
extent that the parties are awaiting any response under the HSR
Act.
(d) Other Provisions. This Agreement may be
terminated as provided in Sections 5.11 or 5.12.
(e) Effect of Termination. In the event of
termination of this Agreement in accordance with this Article
9.7, neither party shall have any obligation to the other
whatsoever with respect to this Agreement, the transactions
provided for herein, or the expenses either of them incurred in
connection with or in contemplation of such transactions.
9.8 Allocation of Estimated Purchase Price. Within 10
business days after the execution of the Agreement, the parties
shall agree upon a final Schedule 9.8, a preliminary copy of
which is attached hereto. Schedule 9.8 shall constitute the
allocation agreed to by Seller and Buyer of the Initial Purchase
Price among the various items included in the assets, properties,
business and rights being transferred by Seller to Buyer. The
allocation of any differential between the Final Purchase Price
established pursuant to Section 3.2 and the Initial Purchase
Price shall (i) with respect to accounts receivable or inventory,
be applied to accounts receivable or inventory, as the case may
be, (ii) to the extent any portion of the differential shall
relate to any other specific account, be applied to such account,
and (iii) with respect to all other items, be prorated in the
same manner as the Initial Purchase Price. Buyer and Seller
shall file all tax returns and reports in a manner consistent
with Schedule 9.8.
9.9 Prorations. All items of income or expense respecting
the Purchased Assets and business being transferred pursuant to
this Agreement, including, without limitation, salaries and other
fringe benefits to be assumed by Buyer and premiums on any
insurance policies to be transferred to Buyer, which properly
apply to periods commencing prior to
28.
and ending after the Closing
Date shall be prorated as of the close of business on the Closing
Date. Such items of income or expense shall include, without
limitation, the following, which shall be governed by any special
proration principles set forth below:
(a) Current real and personal property taxes. In the
event that such taxes are not determinable on the Closing Date,
such taxes shall be tentatively prorated upon the basis of taxes
for the preceding tax year and appropriate adjustments shall
be made when such taxes are finally determined; and
(b) Utility charges. Buyer and Seller shall
cooperate so as to cause utility companies to read all utility
meters on the morning of the Closing date so as to minimize the
need for such proration.
9.10 Maintenance of Cash Assets. Seller agrees that Seller
will maintain, for a period of six months from the Closing Date,
cash, cash equivalents, marketable securities, cash-like
instruments and government deposits of at least $50,000,000 and
that after six months from the Closing Date, Seller will maintain
cash and cash equivalents equal to the lesser of (i) $50,000,000
and (ii) the aggregate of all claims made by Buyer against Seller
under Section 9.6(a).
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the date first above written and amended and
restated this Agreement as of the date second above written.
KRANSCO
-------
By /s/ John G. Bowes
-----------------
Title: Chairman
MATTEL, INC.
------------
By /s/ N. Ned Mansour
--------------------------
Title: Senior Vice President
29.
Schedules from the Amended and Restated Asset Purchase Agreement
omitted pursuant to Item 601 (b)(2) of Regulation S-K of the
Securities Exchange Act of 1934 are as follows:
Schedule 4.2 (c) Conflict or Default
Schedule 4.2 (d) Contracts and Commitments
Schedule 4.2 (e) Inventory Pledged or Assigned on Consignment
Schedule 4.2 (f) Receivables
Schedule 4.2 (g) Kransco Financial Statements
Schedule 4.2 (h) Events Subsequent to 12/31/93
Schedule 4.2 (j) Title to the Property
Schedule 4.2 (k) Intellectual Property
Schedule 4.2 (l) Litigation
Schedule 4.2 (o) Employee Benefit Plans, Collective Bargaining
Agreement
Schedule 4.2 (p) Environmental Matters
Schedule 4.2 (s) Kransco Personnel
Schedule 4.2 (t) Insurance
Schedule 4.2 (v) List of Real Property and Personal Property
Tax Bills
Schedule 4.2 (w) Product Liability Claims
Schedule 4.2 (x) Order Backlog as of March 25, 1994
Schedule 5.2 Access to Books and Records
Schedule 5.13 Additional Insured
Schedule 6.1 Exluded Employees
Schedule 9.8 Allocation of Purchase Price
Registrant agrees to provide supplementally to the Securities and
Exchange Commission copies of any omitted schedule upon request.