PLASTIC MOLDED CONCEPTS, INC.
ASSET PURCHASE AGREEMENT
AGREEMENT, dated as of the 9th day of May 1997, by and among U.S. Home &
Garden, Inc., a Delaware corporation (the "Company"), Easy Gardener Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of the Company (the
"Buyer"), and Plastic Molded Concepts, Inc., a Wisconsin corporation ("PMC").
WHEREAS, PMC owns and distributes a series of products (the "Products") (as
set forth more fully on Schedule 1.2 hereof) known as its Plasti-Chain product
line;
WHEREAS, PMC wishes to sell to Buyer, and Buyer wishes to purchase from
PMC, as a going concern, the business and substantially all of the properties
and assets of PMC related to the Plasti-Chain product line, as specifically
described herein (the "Business"), all subject to the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of and in reliance upon the mutual
premises and the representations, warranties, covenants and conditions herein
contained, the parties agree as follows:
1. Purchase and Sale Agreement.
1.1 Agreement of Purchase and Sale. Subject to the terms and conditions set
forth in this Agreement and in reliance upon the representations, warranties,
covenants and
conditions herein contained, on the Closing Date (as defined in Subsection 2.1
hereof) PMC shall sell, convey, assign, transfer and deliver to Buyer, and Buyer
shall purchase from PMC the Purchased Assets (as defined in Section 1.2 hereof),
free and clear of any and all liens, claims, charges or encumbrances of any
nature whatsoever, other than those which are designated as a "Permitted
Encumbrance" on Schedule 1.1 (the liens, claims, charges and encumbrances which
are so designated being hereinafter collectively called the "Permitted
Encumbrances").
1.2 Purchased Assets. As used in this Agreement, the term "Purchased
Assets" means those properties and assets related to the Plasti-Chain product
line owned by PMC or otherwise employed, used or available for use in the
Business, personal, tangible and intangible, as the same shall exist on the
Closing Date, which are set forth on Schedule 1.2 hereof and all of the
following as they relate to the Business: (i) goodwill; pending or executory
contracts and commitments for the provision of services in connection with the
Business, and other leases and pending or executory contracts and commitments of
any nature relating to the Business; deferred charges, advance payments, prepaid
expenses and deposits as set forth on Schedule 1.2; rights of offset and credits
of all kinds; and rights under governmental and administrative licenses, permits
and approvals, (ii) specifications, manuals and technical data, trade secrets,
trademarks, tradenames, customer lists, discoveries, know-how, formulations and
intangible rights necessary or desirable in connection with the manufacture,
sale or distribution of the
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Products (as hereinafter defined), (iii) purchase orders for customers of the
Business, (iv) EDI addresses and telephone numbers, (v) files, books and records
relating solely to any of the foregoing, (vi) the Purchased Receivables (as
hereinafter defined) and (vii) all inventory of advertising materials related to
the Products. The Purchased Assets shall not include, (i) cash, (ii) accounts
receivable other than the Purchased Receivables or (iii) Inventory (as defined
in paragraph 1.3 below) of the Business other than the Allocated Inventory (as
described in Section 1.3 below).
1.3 Inventory. The "Inventory" shall mean all packaging, work in process,
finished goods, and purchased components related to the Plasti-Chain product
line as of May 6, 1997. The "Allocated Inventory" shall mean Inventory up to a
maximum of Five Hundred Thousand Dollars ($500,000) value as identified on
Schedule 1.2. For purposes of valuing the Allocated Inventory, all purchased
component inventory and packaging material inventory shall be based on the
invoice cost thereof and all finished goods inventory shall be valued at the
internal cost paid by the Plasti-Chain division to PMC's plastics operation for
such inventory.
1.4 Purchased Receivables. The "Purchased Receivables" shall mean the
accounts receivable of the Business existing as of the Closing Date and
reflected on PMC's books of account up to a maximum of Six Hundred Fifty
Thousand Dollars ($650,000). The parties hereto acknowledge and agree that the
accounts receivable purchased hereunder as part of the Purchased
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Assets shall include only the accounts receivable of the Business set forth on
Schedule 1.2 which are designated as Purchased Receivables.
1.5 Product Returns. Buyer and PMC acknowledge and agree that Buyer shall
be responsible for the payment of all claims of customers for Products returned
after the Closing Date, if any, regardless of when such Products were sold (the
"Product Returns") provided, however, PMC shall be responsible for reimbursing
the Buyer for certain Product returns in accordance with the following: (i) for
those Products sold by PMC prior to the Closing Date which are returned in the
normal course and the return of which has been approved by PMC, PMC shall pay to
Buyer the cost of such returned Product based on retail price at which the
returned Product was originally sold, and (ii) for those Products which are sold
by Buyer after the Closing Date and provided by PMC to Buyer under the
Manufacturing Agreement, PMC shall pay to Buyer the cost for all such Products
returned as defective, provided PMC has approved such return, based on the price
established in the Manufacturing Agreement for such returned Products. PMC
agrees that it shall not unreasonably withhold or delay approval for any product
returned in the normal course pursuant to clause (i), above, or returned as
defective pursuant to clause (ii), above.
1.6 Assumed Liabilities. Subject to the terms and conditions set forth in
this Agreement and in reliance upon the representations, warranties, covenants
and conditions herein contained, on the Closing Date Buyer shall, in partial
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consideration of the Purchased Assets, assume, and shall only assume (i) PMC's
obligations under the pending and executory contracts which are included among
the Purchased Assets, including, without limitation, open purchase orders for
the purchase of Inventory items, but only to the extent that they represent
obligations which are by their stated terms to be performed, in the ordinary
course of business, subsequent to the Closing Date, (ii) all claims for (a)
product liability related to Products that were sold after the Closing Date, and
(b) product returns regardless of when sold, subject to PMC's obligations to
Buyer with respect to such product returns as set forth in Section 1.5, above,
(iii) such additional liabilities related to the Business as Buyer specifically
elects to assume in writing (the liabilities and obligations referred to in the
immediately preceding clauses (i), (ii) and (iii) being hereinafter collectively
called the "Assumed Liabilities").
1.6 Purchase Price. The purchase price for the Purchased Assets (the
"Purchase Price") shall be the sum of the follow:
(a) Three Million One Hundred Thousand Dollars ($3,100,000) for the
fixed assets of the Business as set forth on Schedule 1.2; plus
(b) an amount equal to the book value of the Purchased Receivables as
set forth on Schedule 1.2 up to a maximum amount of $650,000; plus
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(c) an amount equal to the value of the Allocated Inventory as
determined in accordance with the provisions of Paragraph 1.3, above and as
set forth in Schedule 1.2 up to a maximum amount of $500,000; plus
(d) the amount of the prepaids, if any, set forth on Schedule 1.2
which are to be included in the Purchased Assets and transferred to Buyer
as of the Closing Date.
For the purposes of determining the Purchase Price, PMC shall deliver to
Buyer an amended Schedule 1.2 dated as of the Closing Date setting forth the
fixed assets, Purchased Receivables, Allocated Inventory and prepaids of the
Business existing as of the Closing Date. The purchase price determined as of
Closing pursuant to the provisions of this Section 1.6 shall be subject to
adjustment after the Closing Date pursuant to the provisions of Section 4.12.1
and Section 8, below.
2. Closing.
2.1 Closing Date. The closing of the sale and purchase provided for herein
(the "Closing") shall take place at 10:00 A.M., local time, at the offices of
Xxxxxxx & Xxxx, S.C. on May 8, 1997, or at such other place, time and date as
may hereafter be mutually agreed upon by the parties (such time and date of
Closing being hereinafter called the "Closing Date").
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2.2 Action by Buyer. Subject to the terms and conditions herein contained,
on the Closing Date Buyer shall deliver to PMC (in addition to the documents and
instruments to be delivered by it pursuant to Section 10 hereof), (i) an
Assignment and Assumption Agreement substantially in the form of Exhibit A,
attached hereto (the "Assignment and Assumption Agreement"), duly executed by
Buyer, and (ii) a certified or official bank check, payable to the order of PMC,
or a wire transfer in the amount of the Purchase Price.
2.3 Action by PMC. Subject to the terms and conditions herein contained, on
the Closing Date PMC shall deliver to Buyer (in addition to the documents and
instruments to be delivered by it pursuant to Section 11 hereof): (i) a duly
executed Xxxx of Sale in substantially the form of Exhibit B attached hereto and
made a part hereof; (ii) the Assignment and Assumption Agreement, duly executed
by PMC; (iii) assignments for all trademarks and tradenames related to the
Products, (iv) all third party consents and governmental and administrative
approvals, as shall be, in the opinion of Buyer, reasonably necessary or
appropriate in order to convey, transfer and assign to and vest in Buyer good
and marketable right, title and interest in and to the Purchased Assets, free
and clear of all liens, security interests, claims, charges and encumbrances of
any nature whatsoever, except for the Permitted Encumbrances.
3. Additional Covenants.
3.1 Further Assurances. PMC, the Company and Buyer each agree that they
shall from time to time after the
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Closing Date, at each party's respective cost and expense, take any and all
actions, and execute, acknowledge, deliver, file and/or record any and all
documents and instruments, as Buyer or PMC may reasonably request in order to
more fully perfect the rights which are intended to be granted to Buyer
hereunder and in order to more effectively consummate the transactions
contemplated by this Agreement and the documents delivered in connection
herewith.
3.2 Consummation of Transaction. Each of the parties hereto hereby agrees
to use its best efforts to cause all conditions precedent to its obligations and
to the obligations of the other parties hereto to consummate the transactions
contemplated hereby to be satisfied, including, but not limited to, using
reasonable efforts to obtain all required consents, waivers, amendments,
modifications, approvals, authorizations, novations and licenses; provided,
however, that nothing herein contained shall be deemed to modify any of the
absolute obligations imposed upon any of the parties hereto under this Agreement
or any agreement executed and delivered pursuant hereto.
3.3 Cooperation. Each of the parties hereto hereby agrees to fully
cooperate with the other party hereto in preparing and filing any notices,
applications, reports and other instruments and documents which are required by,
or which are desirable in the opinion of either of the parties hereto in respect
of, any statute, rule, regulation or order of any
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governmental or administrative body in connection with the transactions
contemplated hereby.
3.4 Accuracy of Representations. Each party hereto agrees that prior to the
Closing Date it will enter into no transaction and take no action, and will use
its best efforts to prevent the occurrence of any event, which would result in
any of its representations, warranties or covenants contained in this Agreement
or in any agreement, document or instrument delivered pursuant hereto not to be
true and correct, or not to be performed as contemplated, at and as of the time
immediately after the occurrence of such transaction or event.
3.5 Conduct of Business Pending the Closing. Subject to the express
provisions of this Agreement as to actions to be taken or not to be taken by PMC
between the date hereof and the Closing Date, PMC hereby agrees that it shall,
during the period commencing of the date hereof and ending on the Closing Date,
conduct the Business in a normal manner in accordance with existing policies and
practices and that it shall use normal and reasonable efforts to (i) preserve
its business organization intact, (ii) maintain and preserve the Purchased
Assets, (iii) retain its good will, and (iv) preserve its relationships with its
clients and suppliers.
3.6 Management Agreement; Manufacturing Agreement. PMC, the Company and
Buyer shall enter into a Management Agreement in the form attached hereto as
Exhibit C (the "Management Agreement") and a Manufacturing Agreement in the
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form attached hereto as Exhibit D (the "Manufacturing Agreement").
3.7 Payment of Taxes Upon Transfer of Purchased Assets. Buyer shall be
responsible for, and shall pay, any and all sales, transfer and similar taxes
arising out of the transactions contemplated by this Agreement (the "Taxes");
provided, however, PMC shall pay all such Taxes to the extent that they exceed
$1,000.
3.8 Survival of Representations and Warranties. Each of the parties hereto
hereby agrees that all representations and warranties made by or on behalf of it
in this Agreement or in any document or instrument delivered pursuant hereto
shall survive the Closing Date and the consummation of the transactions
contemplated until the later of (1) 90 days from the date the Company files its
next Form 10K with the Securities and Exchange Commission or (ii) one year
following the Closing Date, except for representations and warranties of PMC set
forth in Section 5.5 below relating to title to the Purchased Assets, which
shall survive for applicable statutes of limitation.
3.9 Books and Records. PMC shall, for a period of at least three years
following the Closing Date, maintain and make available to Buyer and its
representatives for inspection and reproduction, during regular business hours,
all books and records relating to the Purchased Assets, the Business or the
Assumed Liabilities which Buyer may reasonably require which are not included
among the Purchased Assets and Buyer shall, for a period of three years
following the Closing Date, or such longer
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period as may be required by any governmental authority, maintain and make
available to PMC and its representatives, for inspection and reproduction,
during regular business hours, all books and records relating to the Business
and included among the Purchased Assets.
3.10 Discharge of Liens. PMC shall cause all liens, claims, charges and
encumbrances upon any of the Purchased Assets, other than the Permitted
Encumbrances, to be terminated or otherwise discharged at or prior to the
Closing.
3.11 Accounts Receivable.
3.11.1. Purchased Receivables. For a period of one hundred eighty (180)
days immediately following the Closing Date (the "Collection Period"), Buyer
shall use reasonable efforts to collect the Purchased Receivables; provided,
however, that the Buyer shall not be obligated to retain the services of
collection agencies or attorneys, commence legal action or take extraordinary
efforts in connection with collection of the Purchased Receivables. Payments
received with respect to the Purchased Receivables shall be applied to
outstanding receivables in the order of the occurrence unless otherwise directed
by the account debtor, in which event payment shall be applied as directed by
the account debtor. On or before the 15th day of each calendar month following
the Closing Date the Buyer shall provide PMC with a written update of the
collection of the Purchased Receivables. Any amounts charged against the
Purchased Receivables for returns, allowances or trade credits shall be deemed
as amounts collected with respect
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to such Purchased Receivables. Upon completion of the Collection Period, Buyer
shall provide PMC with a statement of all collections made with respect to the
Purchased Receivables and provide PMC with reasonable access upon reasonable
notice to such records as PMC may reasonably request in order to verify
collection of the Purchased Receivables by Buyer. In the event less than the
aggregate amount of the Purchased Receivables set forth on Schedule 1.2 is
collected by Buyer during the Collection Period, the parties agree that (i) the
Purchase Price shall be reduced by the amount of such short fall, and (ii)the
Buyer shall transfer to PMC the uncollected Purchased Receivables. If the
Purchase Price is reduced pursuant to this Section 3.11.1, then subject to the
provisions set forth below, PMC agrees that is shall pay Buyer the amount of
such Purchase Price reduction within ten (10) days after the Collection Period.
Any amounts received by the Buyer after the Collection Period with respect to
the uncollected Purchased Receivables which have been transferred to PMC shall
be immediately paid to PMC upon receipt by the Buyer. Notwithstanding any
provision of this agreement to the contrary, as a condition to PMC's payment to
Buyer for any Purchase Price reduction pursuant to this Section 3.11.1, with
respect to those uncollected Purchased Receivables which are to be transferred
to PMC, the Buyer shall (i) warrant to PMC that the Buyer has not sold or
shipped any products to account debtors of such uncollected Purchased
Receivables at any time when such account debtor's account was more than ninety
(90) days past due, and (ii) covenant and agree that no product shall be sold or
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shipped to such account debtor until such time as the uncollected Purchased
Receivable is collected by PMC or otherwise settled by PMC.
3.11.2. Retained Receivables. The Buyer acknowledges that accounts
receivable of the Business existing through as of the Closing Date other than
the Purchased Receivables (the "Retained Receivables") are to be retained and
collected solely by PMC after the Closing Date. In the event any of the Retained
Receivables are more than ninety (90) days past due during the Collection
Period, then, provided PMC has used reasonable efforts to collect such account
consistent with past practices, the Buyer agrees that it shall, upon written
notice from PMC (the "PMC Notice"), either (i) forestall all shipments or sales
of goods to the account debtor of such uncollected Retained Receivable until
such time as the Retained Receivable has been paid in full or otherwise settled
by PMC, or (ii) purchase such uncollected Retained Receivable from PMC at the
value thereof as reflected on PMC's books of account. The Buyer shall notify PMC
within seven (7) days after the date of the PMC Notice as to which option under
the foregoing clause (i) or clause (ii) above, Buyer has elected to exercise. If
Buyer fails to notify PMC within such time of its elected option, the Buyer
shall be deemed to have elected the option set forth in clause (i), above. If
the Buyer elects to purchase any uncollected Retained Receivable pursuant to
clause (ii), above, then (x) payment for such uncollected Retained Receivable
shall be made by certified or cashier's check to PMC within ten (10) days of the
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PMC Notice and simultaneously therewith such uncollected Retained Receivables
shall be transferred to Buyer, (y) PMC shall provide access to such accounting
records as the Buyer may reasonably request in order to verify the value of such
uncollected Retained Receivable, and (z) any amounts received by PMC for such
uncollected Retained Receivable after purchase by the Buyer shall be promptly
paid to Buyer upon receipt by PMC.
3.12 Disclosure Schedules. The parties hereto agree that while the
information set forth in the Disclosure Schedules hereto specifically refer to
the paragraph of this Agreement to which the schedules and information is
responsive, each such schedule and information shall be deemed to have been
disclosed with respect to any other paragraph or section of this Agreement but
only if such information appears on such Schedule in such form and detail that
it is reasonably responsive to the information required on such other Schedule.
All capitalized terms not otherwise defined in the Schedules shall have the
meaning set forth in this Agreement for such terms.
4. Representations and Warranties as to PMC. PMC represents and warrants to
Buyer as follows:
4.1 Organization, Standing and Power. PMC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Wisconsin,
with full corporate power and authority to own, lease and operate its properties
and to carry on its Business as presently conducted by it. There are no states
or jurisdictions in which the conduct of the Business makes it necessary for PMC
to qualify to do business as a foreign
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corporation where the failure to so qualify would have a material adverse effect
on the Business or the Purchased Assets. Copies of the Certificate of
Incorporation of PMC and all amendments thereof, and of the By-laws of PMC, as
amended to date, have been furnished to Buyer and are complete and correct.
4.2 Authority. The execution, delivery and performance by PMC of this
Agreement and of all of the agreements to be executed and delivered by it
pursuant hereto, the performance by it of its obligations hereunder and
thereunder, and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate action
on the part of PMC (including, but not limited to, the unanimous consent of its
stockholders and Board of Directors) and PMC has all necessary power with
respect thereto. This Agreement is, when executed and delivered by PMC (and each
of the other agreements to be delivered by it pursuant hereto will be), the
valid and binding obligation of PMC in accordance with its terms.
4.3 Noncontravention. Except as set forth on Schedule 4.3, neither the
execution and delivery by PMC of this Agreement or of any agreement to be
executed and delivered by it pursuant hereto, nor the consummation of any of the
transactions contemplated hereby or thereby, nor the performance by it of any of
its obligations hereunder or thereunder, will (nor with the giving of notice or
the lapse of time or both would) (A) conflict with or result in a breach of any
provision of the Certificate of Incorporation or By-laws of PMC, or (B) give
rise to a default,
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or any right of termination, cancellation or acceleration, or otherwise be in
conflict with or result in a loss of contractual benefits to it under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation related and material to the Business
to which it is a party or by which it or any of the Purchased Assets may be
bound, or require any consent, approval or notice under the terms of any such
document or instrument, or (C) to the best knowledge of PMC, violate any order,
writ, injunction, decree, law, statute, rule or regulation of any court or
governmental authority which is applicable to either the Business or any of the
Purchased Assets, or (D) result in the creation or imposition of any lien,
claim, restriction, charge or encumbrance upon any of the Purchased Assets, or
(E) interfere with or otherwise adversely affect the ability of Buyer to carry
on the Business after the Closing Date on substantially the same basis as is now
conducted by PMC.
4.4 Transactions Since March 31, 1997. Except as otherwise set forth
herein, since March 31, 1997, PMC has not entered into any commitment or
transaction or experienced any event that is material to this Agreement or to
any of the other agreements and documents executed or to be executed pursuant to
this Agreement or to the transactions contemplated hereby or thereby, or that
has affected, or should reasonably be expected to affect, materially and
adversely, the operations, assets, liabilities, financial or other condition of
the Business. PMC has not, with respect to the Business, since March 31, 1997:
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(1) Incurred any liabilities or obligations, either accrued, absolute,
contingent, or otherwise except:
(i) To the extent specifically set forth in any of the schedules
furnished to Buyer in connection herewith; and
(ii) Those incurred in or as a result of the ordinary course of
business of PMC as consistent with past practices.
(2) Mortgaged, pledged or subjected to lien, or otherwise encumbered
any of the Purchased Assets, tangible or intangible;
(3) Sold, assigned or transferred any patents, trademarks, trade
names, copyrights, licenses or other intangible assets related to the
Business or the Purchased Assets;
(4) Suffered any event or condition of any character materially and
adversely affecting the Business; or
(5) Altered, in any material way, the customer lists or price lists
relating to the Business other than in the ordinary course of business; or
(6) Waived any rights of substantial value or entered into any
transactions not in the ordinary course of business.
4.5 Properties. Other than inventory in excess of the Allocated Inventory
and accounts receivable in excess of
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the Purchased Receivables, the Purchased Assets comprise all of the properties
and assets used solely in the Business as of the Closing Date. Buyer
acknowledges that there are certain assets of PMC used in the operation of the
Business which are also used by PMC in its other business operations (the
"Shared Assets") and that the Shared Assets are not included in the Purchased
Assets. PMC has and is transferring to Buyer good and valid title to all of the
Purchased Assets, free and clear of all mortgages, liens, pledges, charges or
encumbrances of any nature whatsoever, except for the Permitted Encumbrances
described on Schedule 1.1 and except for those mortgages, liens, pledges,
charges or encumbrances which are described on Schedule 4.5 (all of which liens
and encumbrances on the Purchased Assets listed on Schedule 4.5 shall be removed
on or prior to the Closing). All machinery and equipment of the Business
included as a Purchased Asset (including all tools, molds and dies) is in
substantially good operating condition and repair, ordinary wear and tear
accepted, and is suitable for the purposes for which it is used.
4.6 Inventory. The Allocated Inventory reflected on Schedule 1.2 consists
of items of a quality and quantity usable or saleable in the ordinary course of
business as previously conducted by PMC, except for obsolete materials,
slow-moving items, materials of below standard quality and not readily
marketable items, all of which have been written down to net realizable value or
adequately reserved against on the books and records of PMC.
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4.7 Absence of Changes. Since March 31, 1997, there has not been (i) any
material adverse change in the condition (financial or otherwise), assets,
liabilities, business, prospects, or results of operations of the Business
(including, without limitation, any such adverse change resulting from damage,
destruction or other casualty loss, whether or not covered by insurance) or (ii)
any waiver by PMC of any right, or cancellation of any debt or claim, of
substantial value related to the Business.
4.8 Litigation. Other than as set forth in Schedule 4.8, there are no suits
or actions, or administrative, arbitration or other proceedings or governmental
investigations, pending or, to the best of the knowledge of PMC, threatened,
against or relating to the Business or any of the Purchased Assets or relating
to the manufacture, sale or distribution of any of the Products which, if
finally determined against PMC, would have a material adverse affect on the
Business or Purchased Assets. There are no judgments, orders, stipulations,
injunctions, decrees or awards in effect which relate to the Business or any of
the Purchased Assets, the effect of which is (A) to limit, restrict, regulate,
enjoin or prohibit any aspect of the Business, or (B) otherwise materially
adverse to the Business or any of the Purchased Assets.
4.9 No Violation of Law. To the best knowledge of PMC, PMC is not engaging
in any activity or omitting to take any action as a result of which (A) it is in
violation of any law, rule, regulation, zoning or other ordinance, statute,
order,
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injunction or decree, or any other requirement of any court or governmental or
administrative body or agency, applicable to the Business or any of the
Purchased Assets, including, but not limited to, those relating to: occupational
safety and health; environmental and ecological protection (e.g., the use,
storage, handling, transport or disposal of pollutants, contaminants or
hazardous or toxic materials or wastes, and the exposure of persons thereto) and
(B) the Business and/or any of the Purchased Assets have been or may be
materially and adversely affected.
4.10 Insurance. Schedule 4.10 is a complete and correct list and summary
description of all policies of insurance relating to any of the Purchased Assets
or the Business in which PMC is an insured party, beneficiary or loss payable
payee. Such policies are in full force and effect, all premiums due and payable
with respect thereto have been paid, and no notice of cancellation or
termination has been received by PMC with respect to any such policy. In the
opinion of PMC, such policies cover risks normally insured against, and are in
amounts normally carried, by companies engaged in businesses similar to that of
the Business.
4.11 Certain Business Matters. Except as is set forth in Schedule 4.11, (A)
PMC is not a party to or bound by any distributorship, dealership, sales agency,
franchise or similar agreement which relates to the sale or distribution of any
of the Purchased Assets or the Products of the Business, (B) with respect to the
Business, PMC has no sole-source supplier of significant goods or services
(other than utilities) with respect
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to which practical alternative sources are not available on comparable terms and
conditions, (C) there are no pending, or to the best of the knowledge of PMC
threatened, labor negotiations, work stoppages or work slowdowns involving or
affecting the Business, and (D) PMC is not a party to or bound by any agreement
which limits its freedom to compete in any line of business or with any person,
or which is otherwise materially burdensome to it.
4.12 Certain Contracts. Schedule 4.12 is a complete and correct list of all
contracts, commitments, obligations and understandings which relate to the
Business and which are not set forth in any other schedule delivered hereunder
and to which PMC is a party or otherwise bound, except for each of those which
(A) was made in the ordinary course of business, and (B) either (1) is
terminable by PMC (and will be terminable by Buyer) without liability, expense
or other obligation on 30 days' notice or less, or (2) may be anticipated to
involve aggregate annual payments to or by PMC of $10,000 (or the equivalent) or
more. Complete and correct copies of all contracts, commitments, obligations and
undertakings set forth on any of the schedules delivered pursuant to this
Agreement have been furnished or made available by PMC to Buyer, and except as
expressly stated on the schedule on which they are set forth, (A) each of them
is in full force and effect, and, to the best knowledge of PMC, no person or
entity which is a party thereto or otherwise bound thereby is in default
thereunder, and, to the best knowledge of PMC, no event, occurrence, condition
or act
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exists which does (or which with the giving of notice or the lapse of time or
both would) give rise to a default or right of cancellation, acceleration or
loss of contractual benefits thereunder; (B) to the best knowledge of PMC, there
has been no threatened cancellations thereof, and there are no outstanding
disputes thereunder; and (C) none of them is materially burdensome to the
Business.
4.13 Approvals. Set forth on Schedule 4.13, is a complete and correct list
of all governmental and administrative consents, permits, appointments,
approvals, licenses, certificates and franchises which, to the best knowledge of
PMC, are necessary for the operation of the Business, all of which have been
obtained by PMC and are in full force and effect.
4.14 Customers and Suppliers. Set forth on Schedule 4.14, is a complete and
correct list setting forth, with respect to the years ended December 31, 1995
and December 31, 1996, and the period ended March 31, 1997, (i) the ten (10)
largest customers of the Business and the amount for which each such customer
was invoiced and (ii) the ten (10) largest suppliers of the Business and the
amount of goods and services purchased from each such supplier. To the best of
the knowledge of PMC, (i) there has been no material adverse change in the
business relationship between the Business and any such customer or supplier,
and (ii) there is no reason to believe that said suppliers and customers will
not continue their respective relationships with the Business after the Closing
Date on substantially the same basis as now exists.
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4.15 Business Practices and Commitments. Set forth on Schedule 4.15 is a
summary description of (i) PMC's rebate and volume discount practices and
obligations with respect to the Business, (ii) PMC's allowance and customer
return practices and obligations with respect to the Business, and (iii) PMC's
warranty practices and obligations with respect to the Business.
4.16 Backlog. Set forth on Schedule 4.16 is the backlog of PMC with respect
to the Business as at April 24, 1997.
4.17 Brokers. Except as set forth on Schedule 4.17, no agent, broker,
person, or firm acting on behalf of PMC, or under its authority, is or will be
entitled to a financial advisory fee, brokerage commission or other like payment
in connection with any of the transactions contemplated hereby.
4.18 Information as to PMC. None of the representations or warranties made
by PMC in this Agreement or in any agreement executed and delivered by or on
behalf of any of them pursuant hereto are false or misleading with respect to
any material fact, or omit to state any material fact necessary in order to make
the statements therein contained not misleading.
5. Representations and Warranties as to the Company and Buyer. The Company
and Buyer jointly and severally represent and warrant to PMC as follows:
5.1 Organization, Standing and Power. The Company and Buyer are each a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full corporate power and authority to own, lease
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and operate its properties and to carry on its business as presently conducted
by it. Copies of the Certificate of Incorporation of Buyer and all amendments
thereto, and of the ByLaws of Buyer, as amended to date, have been furnished to
PMC and are complete and correct.
5.2 Authority. The execution and delivery by the Company and Buyer of this
Agreement and of each agreement to be executed and delivered by them pursuant
hereto, the compliance by the Company and Buyer with the provisions hereof and
thereof, and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate action
on the part of the Company and Buyer, and the Company and Buyer have all
necessary corporate power with respect thereto. This Agreement is, when executed
and delivered by the Company and Buyer, and each other agreement to be executed
and delivered by them pursuant hereto will be, the valid and binding obligation
of each of the Company and Buyer in accordance with its terms. Neither the
execution and delivery by the Company and Buyer of this Agreement or of any of
the aforementioned other agreements, nor the consummation of the transactions
contemplated hereby or thereby, nor the compliance by the Company and Buyer with
the provisions hereof and thereof, will (nor with the giving of notice or the
lapse of time or both, would) conflict with or result in a violation of any
provision of the Certificates of Incorporation or By-laws of the Company or
Buyer, or in the breach of any material agreement to which the Company or Buyer
is a party or otherwise bound or violate any order, writ,
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injunction, decree, law, statute, rule or regulation of any court or
governmental authority which is applicable to either the Company or Buyer or
interfere with or otherwise adversely affect the ability of the Company and
Buyer to carry out the transactions contemplated by this Agreement.
6. Indemnification.
6.1 Indemnification by PMC. PMC hereby agrees to indemnify and hold the
Company and Buyer harmless from and against any and all losses, obligations,
deficiencies, liabilities, claims, damages, costs and expenses (including,
without limitation, the amount of any settlement entered into pursuant hereto,
and all reasonable legal and other expenses incurred in connection with the
investigation, prosecution or defense of any matter indemnified pursuant hereto)
which Buyer may sustain, suffer or incur and which arise out of, are caused by,
relate to, or result or occur from or in connection with (i) the noncompliance
with Wisconsin bulk transfer laws, (ii) the breach by PMC of any representation,
warranty or covenant made by it in this Agreement or in any agreement or
instrument executed and delivered pursuant hereto or (iii) any failure of PMC to
pay or perform any liability or obligation of PMC other than the Assumed
Liabilities.
6.2 Indemnification by the Company and Buyer. The Company and Buyer hereby
agree jointly and severally to indemnify and hold PMC harmless from and against
any and all losses, obligations, deficiencies, liabilities, claims, damages,
costs and expenses (including, without limitation, the amount of
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any settlement entered into pursuant hereto, and all reasonable legal and other
expenses incurred in connection with the investigation, prosecution or defense
of any matter indemnified pursuant hereto), which it may sustain, suffer or
incur and which arise out of, are caused by, relate to, or result or occur from
or in connection with (i) the failure of Buyer to pay or perform the Assumed
Liabilities, or (ii) the breach by Buyer of any representation, warranty or
covenant made by it in this Agreement or in any agreement or instrument executed
and delivered pursuant hereto, including, without limitation, the Management
Agreement, the Manufacturing Agreement and the Confidentiality Agreement.
6.3 Procedure Relative to Indemnification.
(a) In the event that any party hereto shall claim that it is entitled to
be indemnified pursuant to the terms of this Section 6, it (the "Claiming
Party") shall so notify the party or parties against which the claim is made
(the "Indemnifying Party") in writing of such claim within thirty (30) days
after receipt of a notice of such claim or notice of any claim of a third party
that may reasonably be expected to result in a claim by such party against the
party to which such notice is given; provided, however, that failure to give
such notification shall not affect the indemnification provided hereunder except
to the extent the Indemnifying Party shall have been actually prejudiced as a
result of such failure. Such notice shall specify the breach of representation,
warranty or agreement claim by the Claiming Party and the liability, loss, cost
or expense incurred by, or imposed upon the Claiming Party
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on account thereof. If such liability, loss, cost or expense is liquidated in
amount, the notice shall so state and such amount shall be deemed the amount of
the claim of the Claiming Party. If the amount is not liquidated, the notice
shall so state and in such event a claim shall be deemed asserted against the
Indemnifying Party on behalf of the Claiming Party, but no payment shall be made
on account thereof until the amount of such claim is liquidated and the claim is
finally determined; provided, however that the Indemnifying Party shall
nonetheless bear the expenses of investigating, defending and negotiating such
claim in accordance with the terms hereof.
(b) The following provisions shall apply to any claim of the Claiming Party
which is based upon (i) a suit, action or proceeding filed or instituted by any
third party, or (ii) any form of proceeding or assessment instituted by any
governmental entity:
(i) The Indemnifying Party shall, upon receipt of such written notice
and at its expense, defend such claim in its own name or, if necessary, in
the name of the Claiming Party; provided, however, that if the proceeding
involves a matter solely of concern to the Claiming Party in addition to
the claim for which indemnification under Section 7 is being sought, such
matter of sole concern shall be within the sole responsibility of the
Claiming Party and its counsel. The Claiming Party will cooperate with and
make available to the Indemnifying Party such assistance and materials as
may be reasonably requested of it, and the Claiming Party shall have the
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right, at its expense, to participate in the defense. The Indemnifying
Party shall have the right to settle and compromise such claim only with
the consent of the Claiming Party (which consent shall not be unreasonably
withheld).
(ii) In the event the Indemnifying Party shall notify the Claiming
Party that it disputes any claim made by the Claiming Party and/or it shall
fail to defend such claim actively and in good faith, then the Claiming
Party shall have the right to conduct a defense against such claim and
shall have the right to settle and compromise such claim upon ten (10) days
prior notice to, and with the consent of, the Indemnifying Party, which
consent shall not be unreasonably withheld. The Claiming Party shall be
entitled to pursue each and every remedy available to it at law or in
equity to enforce the indemnification provisions of this Section 6 and, in
the event it is determined, or the Indemnifying Party agrees, that it is
obligated to indemnify the Claiming Party for such claim, the Indemnifying
Party agrees to pay all costs, expenses and fees, including all reasonable
attorneys' fees which may be incurred by the Claiming Party in attempting
to enforce indemnification under this Section 6, whether the same shall be
enforced by suit or otherwise.
6.4 Limitations. Notwithstanding anything to the contrary contained herein,
none of the parties hereto shall be required to make any indemnification payment
pursuant to this Section 7 until such time as the total amount of all damages
sustained, suffered or incurred by such party seeking
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indemnification exceeds $50,000 in the aggregate, and if the total amount of
such damages exceeds $50,000, then the indemnified party shall be entitled to be
indemnified against and compensated and reimbursed for all of such damages in
excess of $50,000; provided, however, that if any single claim is in excess of
$25,000, the indemnified party shall be entitled to be indemnified against and
compensated and reimbursed for all of such damages (provided that the aggregate
of such claims equals or exceeds such $50,000 threshold), and provided, further
that the maximum aggregate liability of any party hereunder shall in no event
exceed $2,000,000. Notwithstanding anything contained herein to the contrary the
$50,000 limitation described above shall not apply to claims by Buyer with
respect to Buyer's failure to receive amounts due with respect to Purchased
Receivables or PMC's failure to fulfill its obligations with respect to Product
Returns or the failure to comply with Wisconsin bulk transfer laws.
7. Treatment of Indemnity Payments. Any indemnity payments made pursuant to
Section 6 shall be treated as an adjustment to the Purchase Price.
8. Nondisclosure; Noncompete. PMC shall enter into a Confidentiality and
Non-Compete Agreement with the Company and Buyer in the form attached hereto as
Exhibit E, (the "Confidentiality Agreement").
9. Right of Buyer to Abandon. Buyer shall have the right to terminate this
Agreement and abandon the transactions contemplated hereby in the event that any
of the following shall
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not be true or shall not have occurred, as the case may be, as of the Closing
Date:
9.1 Accuracy of Representations and Warranties. The representations and
warranties of PMC contained in this Agreement or in any document, agreement or
instrument delivered by it pursuant hereto shall have been true in all material
respects when made, and, in addition, shall be true, in all material respects,
on and as of the Closing Date with the same force and effect as though made on
and as of the Closing Date.
9.2 Performance of Agreements. PMC shall have performed all material
obligations and agreements, and complied, in all material respects, with all
covenants and conditions, contained in this Agreement or in any document,
agreement or instrument delivered by it pursuant hereto and required to be
performed or complied with by it at or prior to the Closing Date.
9.3 Certificate. PMC shall have furnished Buyer with a certificate executed
by its President, dated the Closing Date, to the effect that it has fulfilled
the conditions specified in Subsections 9.1 and 9.2 above.
9.4 Opinion of Counsel for PMC. Buyer shall have received the opinion of
Xxxxxxx & Xxxx, S.C., counsel for PMC, dated the Closing Date, in substantially
the form of Exhibit F attached hereto and made a part hereof.
9.5 Litigation. No order of any court or administrative agency shall be in
effect which restrains or prohibits the transactions contemplated hereby, and no
suit, action, inquiry, investigation or proceeding in which it will be,
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or it is, sought to restrain, prohibit or change the terms of or obtain damages
or other material relief in connection with this Agreement or any of the
transactions contemplated hereby shall have been instituted or threatened by any
person or entity against the Company or Buyer.
9.6 Due Diligence Investigation. Buyer shall have been satisfied with the
results of its "due diligence" investigation of PMC's relationship with its
customers.
9.7 Financing. Buyer shall have consummated financing arrangements
necessary to engage in the transactions set forth herein.
9.8 Consents and Approvals. All consents, waivers, approvals, licenses and
authorizations by third parties and governmental and administrative authorities
(and all amendments or modifications to existing agreements with third parties)
required as a precondition to the performance by PMC of its obligations
hereunder and under any agreement delivered pursuant hereto, or which in Buyer's
reasonable judgment are necessary to continue unimpaired any rights in and to
the Purchased Assets which could be impaired by the purchase and sale hereunder,
shall have been duly obtained and shall be in full force and effect.
9.9 Manufacturing Agreement. PMC, the Company and Buyer shall have executed
and delivered the Manufacturing Agreement.
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9.10 Management Agreement. PMC, the Company and Buyer shall have executed
and delivered the Management Agreement in the form attached hereto as Exhibit D.
9.11 Confidentiality Agreement. PMC shall have executed and delivered the
Confidentiality Agreement in the form attached hereto as Exhibit E.
9.12 Date of Consummation. The sale and purchase of the Purchased Assets
pursuant hereto shall have been consummated on or prior to May 16, 1997.
9.13 Validity of Transactions. The validity of all transactions
contemplated hereby, as well as the form and substance of all agreements,
instruments, opinions, certificates and other documents delivered by PMC
pursuant hereto, shall be reasonably satisfactory in all material respects to
Buyer and its counsel.
10. Right of PMC to Abandon. PMC shall have the right to terminate this
Agreement and abandon the transactions contemplated hereby in the event that any
of the following shall not be true or shall not have occurred, as the case may
be, as of the Closing Date:
10.1 Accuracy of Representations and Warranties. The representations and
warranties of the Company and Buyer contained in this Agreement or in any
document, agreement or instrument delivered by it pursuant hereto shall have
been true when made, and, in addition, shall be true on and as of the Closing
Date with the same force and effect as though made on and as of the Closing
Date.
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10.2 Performance of Agreements. The Company and Buyer shall have performed
all obligations and agreements, and complied with all covenants and conditions,
contained in this Agreement or in any document, agreement or instrument
delivered by them pursuant hereto and required to be performed or complied with
by them at or prior to the Closing Date.
10.3 Certificate. The Company and Buyer shall have furnished PMC with
certificates, executed by an executive officer at each of the Company and Buyer,
as the case may be, dated the Closing Date, to the effect that each of them has
fulfilled the conditions specified in Subsections 10.1 and 10.2 hereof.
10.4 Opinion of Counsel for Buyer. PMC shall have received an opinion of
Xxxxxx Xxxxxxxxxx LLP, counsel for Buyer, dated the Closing Date, in
substantially the form of Exhibit G attached hereto and made a part hereof.
10.5 Manufacturing and Management Agreement. PMC, the Company and Buyer
shall have executed and delivered the Manufacturing Agreement and the Management
Agreement.
10.6 Litigation. No order of any court or administrative agency shall be in
effect which restrains or prohibits the transactions contemplated hereby, and no
suit, action, inquiry, investigation or proceeding in which it will be, or it
is, sought to restrain, prohibit or change the terms of or obtain damages or
other relief in connection with this Agreement or any of the transactions
contemplated hereby, and which in the judgment of PMC makes it inadvisable to
proceed with the
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consummation of such transactions, shall have been instituted or threatened by
any person or entity.
10.7 Consents and Approvals. All consents, waivers, approvals, licenses and
authorizations by third parties and governmental and administrative authorities
(and all amendments and modifications to existing agreements with third parties)
required as a precondition to the performance by the Company and Buyer of its
obligations hereunder shall have been duly obtained and shall be in full force
and effect.
10.8 Date of Consummation. The sale and purchase of the Purchased Assets
pursuant hereto shall have been consummated on or prior to May 16, 1997.
10.9 Validity of Transactions. The validity of all transactions
contemplated hereby, as well as the form and substance of all agreements,
instruments, opinions, certificates and other documents delivered by Buyer
pursuant hereto, shall be satisfactory in all material respects to PMC and its
counsel.
11. Miscellaneous Provisions.
11.1 Effect of Abandonment. In the event that this Agreement is terminated
and the transactions contemplated hereby are abandoned pursuant to the terms
hereof, this Agreement shall forthwith become wholly void and of no force and
effect; provided, however, that nothing in this Agreement contained shall be
deemed to relieve any party hereto from liability for any breach of this
Agreement prior to termination.
11.2 Expenses. Except as otherwise provided in this Agreement, each of the
parties hereto shall pay its own
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costs and expenses in connection with this Agreement and the transactions
contemplated hereby.
11.3 Execution in Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement, and shall become effective when one
or more counterparts has been signed by each of the parties hereto and delivered
to each of the other parties hereto.
11.4 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given or
made as of the date delivered or mailed if delivered personally or mailed by
registered or certified mail, postage prepaid, return receipt requested, as
follows:
If to the Company,
to: U.S. Home & Garden, Inc.
000 Xxxxxxxxxx Xxxxxx - Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxx
If to Buyer, to: Easy Gardener Acquisition Corp.
000 Xxxxxxxxxx Xxxxxx - Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxx
Copy to: Xxxxxx Xxxxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
If to PMC, to: Plastic Molded Concepts, Inc.
000 Xxxxxx Xxxxx
X.X. Xxx 000
Xxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
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Copy to: Xxxxxxx & Xxxx, S.C.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx Xxxx, Esq.
or to such other address as any party shall have designated by like notice to
the other parties hereto (except that a notice of change of address shall only
be effective upon receipt).
11.5 Amendment. This Agreement may only be amended by a written instrument
executed by each of the parties hereto.
11.6 Entire Agreement. This Agreement (together with the other agreements
and documents being delivered pursuant to or in connection with this Agreement)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter hereof.
11.7 Applicable Law. This Agreement shall be governed by the laws of the
State of Wisconsin applicable to contracts made and to be wholly performed
therein.
11.8 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
11.9 Assignment. Prior to the Closing Date, neither this Agreement nor any
rights, interests or obligations hereunder may be assigned (by operation of law
or otherwise) by any party hereto without the prior written consent of all of
the
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parties hereto, except that this Agreement may be assigned to a wholly-owned
subsidiary of Buyer without the need for such prior consent; provided, however,
in no event shall such assignment relieve the Company or Buyer of any of such
party's respective obligations hereunder.
11.10 Binding Effect; Benefits. This Agreement shall inure to the benefit
of, and shall be binding upon, the parties hereto and their respective legal
representatives, successors and permitted assigns. Nothing herein contained,
express or implied, is intended to confer upon any person other than the parties
hereto and their respective legal representatives, successors and permitted
assigns, any rights or remedies under or by reason of this Agreement.
11.11 Waiver, etc. The failure of any of the parties hereto to at any time
enforce any of the provisions of this Agreement shall not be deemed or construed
to be a waiver of any such provision, nor to in any way affect the validity of
this Agreement or any provision hereof or the right of any of the parties hereto
to thereafter enforce each and every provision of this Agreement. No waiver of
any breach of any of the provisions of this Agreement shall be effective unless
set forth in a written instrument executed by the party or parties against whom
or which enforcement of such waiver is sought; and no waiver of any such breach
shall be construed or deemed to be a waiver of any other or subsequent breach.
11.12 Severability. Any provision of this Agreement which is held by a
court of competent jurisdiction to
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be prohibited or unenforceable in any jurisdiction(s) shall be, as to such
jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
11.13 Announcements. No party hereto shall issue any press release or
otherwise divulge the existence of this Agreement or the transactions
contemplated hereby without the prior approval of the other parties hereto,
except as may be required by applicable law or the applicable rules or
regulations of any stock exchange.
11.14 Schedules and Exhibits. The Schedules and Exhibits delivered pursuant
to this Agreement are an integral part hereof. Notwithstanding any
cross-references in the schedules (all of which are included as a matter of
convenience only), each schedule shall be deemed to include the information
contained in all other schedules such that reference to a matter or item under
one schedule shall be deemed to constitute disclosure under all other schedules.
Buyer acknowledges and agrees that PMC shall have the right to supplement, on or
before the Closing Date, any schedule required by this Agreement; provided,
however, that if any such supplement adversely affects the rights of Buyer
hereunder, Buyer shall have the right to terminate this Agreement and abandon
the transactions contemplated hereby.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.
U.S. HOME & GARDEN, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: C.O.O.
EASY GARDENER ACQUISITION
CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: VP and Secretary
PLASTIC MOLDED CONCEPTS, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: President
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