ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of September 28, 1999, by and between The Lamaur Corporation, a Delaware
corporation ("Seller"), and Tiro Industries, Inc., a Minnesota corporation
("Purchaser").
1. Purchase and Sale of Assets. Purchaser agrees to purchase from Seller,
and Seller agrees to sell, convey and assign to Purchaser, for the Purchase
Price set forth below, and on the terms and conditions set forth in this
Agreement, the following described assets (the "Assets") which are located at or
which relate to the land and building (the "Land" and the "Building";
collectively, the "Property") commonly known as 0000 Xxxx Xxxxx Xxxx, Xxxxxxx,
Xxxxxxxxx:
(a) Personal Property. All Building fixtures, trade fixtures, equipment and
other tangible personal property owned by Seller and/or a
Seller-related entity, and now located on or at the Property,
including, without limitation, the property listed on the
Schedule of Personal Property attached hereto (collectively,
the "Personal Property"). (The Schedule of Personal Property
consists of a cover page followed by 50 pages of listings. The Personal
Property includes (i) the package engineering equipment,
(ii) the aerosol research and development laboratory equipment,
and (iii) certain additional laboratory equipment.
(Notwithstanding Purchaser's acquisition of title to the equipment
described in clauses (ii) and (iii), Seller may share in the use of
the same, upon the terms and conditions set forth in the lease
between Seller and Purchaser of even date herewith (the "Lease
to Seller"), for a period of two years from the Closing Date, as
that term is hereinafter defined. Similarly, during such two-year
period, Seller shall have access to the package engineering department
for Seller's use, again pursuant to the terms and conditions of the
Lease to Seller.)
(b) Capital Leases. In addition to Purchaser's acquisition of the Personal
Property, Purchaser shall also assume Seller's interest in certain
capital leases with Cargill Leasing Corporation (Lease Nos. 05491-001,
002, 003 and 004); Trans-Alarm Inc.; and bioMerieux Xxxxx, Inc.
(Account No. 07083 for a Bactometer) (collectively, the "Capital
Leases"). Seller shall cooperate with Purchaser with respect to the
assignment and assumption of the Capital Leases. The lease obligations
to be assumed shall be those in effect on the Closing Date.
(c) Certain Building Equipment. Pursuant to paragraphs (a) and (b) above,
Purchaser will acquire title to, or assume the lease with respect to,
the Building's telephone and security systems. The telephone system
shall be shared with Seller during the term of the Lease to Seller, in
accordance with the terms and conditions of the Lease to Seller.
Purchaser shall also take possession of, and Seller shall convey
unencumbered title to, the Building's computer network, including the
cabling and connectors, as shown on computer network drawing dated
September 10, 1999 appended hereto, but subject to Notes A, B, C and D
shown on the bottom of the drawing. During the term of the Lease to
Seller, Seller shall have access to the computer network cabling in
order to maintain its computer network.
(d) Formulas and Technology. In addition to the Purchase Price, Purchaser
agrees to a limited monthly license fee of $7,000.00 for twenty-four
(24) months the following items, regardless of whether the same are
used by Purchaser, with the first installment due at Closing:
(i) Royalty Free License. Seller shall convey to Purchaser a royalty free
license to use any and all of Seller's current contract manufacturing
formulas in any manufacturing done by Purchaser for Seller or by
Purchaser for any of Seller's contract manufacturing customers, which
license shall become perpetual and irrevocable upon the final license
payment.
(ii) Aerosol Technology.
(A) Changes to Seller's Formulas. Purchaser shall have the
unrestricted right to amend, change, add to, improve or otherwise
alter any of Seller's aerosol formulas (the "Updated Formulas")
and to use the Updated Formulas, without restriction, and without
additional compensation to Seller; provided, however, that Seller
shall then have the limited right to use any such Updated
Formulas in products to be marketed to any of Seller's customers,
but only to the extent that the manufacturing of such products is
contracted with and performed by Purchaser, which rights shall
become perpetual upon the final license payment.
(B) Newly Developed Formulas. Purchaser shall have the unrestricted
right to develop Purchaser's own aerosol formulas and technology.
Purchaser shall be the sole and exclusive owner of technology and
formulas developed by it, and Seller shall have no right to
receive royalties, fees, compensation or other benefits from any
of the same.
(iii) CARB Exemption. Seller shall assist Purchaser in gaining exemptions
from regulations promulgated by the California Air Resources Board
("CARB") for any products or formulas to be manufactured by
Purchaser.
Purchaser may set off amounts due Seller hereunder from amounts
due Purchaser from Seller under the Lease between Seller and
Purchaser. Conversely, Seller may set off amounts due Purchaser under
the Lease between Seller and Purchaser from amounts due from Purchaser
hereunder.
(e) Right of First Refusal. At Closing, Seller shall execute and deliver a
right of first refusal agreement pursuant to which Seller grants
Purchaser a right of first refusal to purchase the Excluded Assets
described in clauses (1) and (3) below. The right of first refusal
shall apply to the sale of any one or more of such assets, but shall
not apply in the event such assets are proposed to be sold as part of
a package with Seller's other assets. The right of first refusal shall
provide Purchaser the right to purchase the asset or assets being sold
for a period of ten (10) days after notice is given by Seller to
Purchaser of a pending sale of such asset or assets to a third-party
purchaser on terms substantially the same as those offered to such
third-party purchaser.
Notwithstanding the all inclusive definition of the term "Personal
Property", the Personal Property shall not include the following described
assets (the "Excluded Assets"):
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(1) Computer. The AS400 Computer System and related furniture and
equipment in the Building's computer room, as described on the
Schedule of Excluded Assets attached hereto. The Schedule consists of
a cover page followed by 19 pages of listings. Notwithstanding the
fact that the AS400 Computer System and related furniture and
equipment are part of the Excluded Assets, Purchaser shall have the
right to use the same, and the software associated therewith, in
common with Seller during the term of the Lease between Seller and
Purchaser. Purchaser shall pay Seller the allocated use of Seller's
computer employees. Purchaser shall not be required to pay for
computer run time. Purchaser shall pay any license fees which are
required to be paid to allow Purchaser's lawful use of the computer
software.
(2) Artwork. Seller's artwork.
(3) Office Furniture and Equipment and Krones Machine. The office
equipment and furniture in the executive, sales and marketing,
purchasing and accounting areas of the Building and the Krones Machine
("Seller's Retained Equipment"), all as further described on Schedule
6 hereto.
(4) Seller's Raw Material Inventory. Seller's raw material inventory.
Purchaser may purchase from Seller, after the Closing Date, that raw
material inventory of Seller that Purchaser, in its sole discretion,
deems useful to it, but only on a when-and-if-used basis. Any such
subsequent purchases of raw material inventory shall be at Seller's
cost therefor, as documented by vendor or supplier invoices to Seller.
(5) Work in Process Inventory. Seller's work in process inventory. With
respect to Seller's work in process inventory, Purchaser will agree to
convert the same to finished product at a mutually agreed-upon
up-charge.
(6) Seller's Finished Goods Inventory. Seller's finished goods inventory.
(7) Contract Manufacturing Finished Goods Inventory. Seller's contract
manufacturing finished goods inventory.
(8) Seller's Books and Records. Seller's accounting and corporate records.
(9) Intangible Property and Accounts. Except as described in paragraph
1(d) hereof, Seller's intangible property or accounts receivable.
(10) Molds, Tools, Dies. Seller's molds, tools and dies.
(11) Show Booths. Seller's trade fair show booths.
2. Purchase Price. The total purchase price to be paid to Seller by
Purchaser for the Assets shall be Four Million Eight Hundred Thousand and No/100
Dollars ($4,800,000.00) (the "Purchase Price"). Provided that all conditions
precedent to Purchaser's obligations to close, as set forth in this Agreement
(the "Conditions Precedent"), have been satisfied and fulfilled, or waived in
writing by Purchaser, the Purchase Price shall be paid to Seller, plus or minus
prorations and other adjustments hereunder, by federal wire transfer of
immediately available funds at Closing. The Assets are being sold and purchased
at their fair market value, as determined by arm's-length negotiation,
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and such allocation properly reflects the value of the Assets. The
allocation of the Purchase Price to the Assets shall be binding on both parties
for federal and state income tax purposes and shall be consistently so reflected
by each party in its respective federal and state income tax returns.
3. Closing. The purchase and sale contemplated herein shall be consummated
at a closing (the "Closing") to take place at the offices of Purchaser's counsel
in Minneapolis, Minnesota. The Closing shall occur contemporaneously with the
closing of the purchase and sale of the Property pursuant to the terms of the
Purchase and Sale Agreement of even date herewith between Seller and Purchaser
(the "Purchase and Sale Agreement"). In the event the closing contemplated by
the Purchase and Sale Agreement does not occur, the closing contemplated by this
Agreement shall not occur. Conversely, if the closing contemplated by this
Agreement does not occur, the closing contemplated by the Purchase and Sale
Agreement shall not occur, it being the understanding and agreement of the
parties hereto that both such agreements shall close simultaneously, or neither
shall close. The Closing shall be effective as of 12:01 a.m. on the Closing
Date. Notwithstanding the foregoing, the risk of loss of all or any portion of
the Assets shall be borne by Seller up to and including the actual time of the
Closing and wire transfer of the Purchase Price to Seller, and thereafter by
Purchaser, subject to the terms and conditions of paragraph 16 below.
4. Xxxxxxx Money. The Xxxxxxx Money paid by Purchaser pursuant to the
Purchase and Sale Agreement shall also be xxxxxxx money under this Agreement,
but the Xxxxxxx Money shall only be credited against the purchase price due on
the closing of the sale of the Property.
5. Seller's Deliveries. Seller has delivered to Purchaser all documents
listed on Exhibit B to the Purchase and Sale Agreement (the "Seller's
Deliveries"), which Seller's Deliveries include deliveries with respect to the
Assets.
6. Inspection Period.
(a) Property Inspection. At all times prior to Closing (the "Inspection
Period"), Purchaser, its agents and representatives, shall be entitled
to conduct an "Assets Inspection" (provided Purchaser shall not
perform any invasive or intrusive testing without the prior written
consent of Seller, which consent shall not be unreasonably withheld or
delayed), which will include the right to enter upon the Land and
Building, on reasonable notice to Seller, to perform inspections and
tests of the Assets. The Assets Inspection shall also include a review
and analysis of Seller's research, development, chemical formulation,
manufacturing, packaging and other practices and procedures utilized
by Seller in manufacturing Seller's brand name products, which review
and analysis shall include, without limitation, a review, analysis and
inventory of Seller's formulas, raw materials, work in process and
manufactured goods, and such other inspections and investigations of
the Assets as Purchaser deems necessary or advisable. In addition,
Seller shall provide Purchaser with copies of, or access to, such
factual information as may be reasonably requested by Purchaser, and
in the possession or control of Seller, with respect to any part or
all of the Assets.
During the Inspection Period, Seller shall not assign or contract
out any of its manufacturing business, and shall conduct its business
substantially in accordance with its current business and
manufacturing practices and procedures, so as to maintain as closely
as possible the status quo of the manufacturing facilities and
workforce, including, without limitation, the aerosol technical
personnel, the Building engineers, the equipment technicians and the
manufacturing lead persons.
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(b) Environmental Assessment; Environmental Due Diligence. The
provisions of paragraph 6(b) of the Purchase and Sale Agreement shall
also be applicable to Purchaser's inspection of the Assets.
(c) Purchaser's Undertaking. Purchaser hereby covenants and
agrees that it shall cause all studies, investigations and inspections
performed pursuant to this paragraph 6 to be performed in a manner
that does not disturb or disrupt the tenancies or business operations
of the Seller or of any of the Property's tenant. In the event that,
as a result of Purchaser's exercise of its rights under subparagraphs
6(a) and 6(b), any damage occurs to the Assets, then Purchaser shall
promptly repair such damage, at Purchaser's sole cost and expense, so
as to return the Assets to substantially the same condition as exists
on the date hereof. Purchaser hereby indemnifies, protects, defends
and holds Seller harmless from and against any and all losses,
damages, claims, causes of action, judgments, costs and expenses,
incurred or sustained by the claim of any person made by reason of
Purchaser's activities as permitted pursuant to this paragraph 6. This
covenant shall survive the termination of this Agreement.
(d) Confidentiality. Each party agrees to maintain in confidence,
and not to disclose to third parties, the information contained in
this Agreement or pertaining to the sale contemplated hereby and the
information and data furnished or made available by Seller to
Purchaser, its agents and representatives in connection with
Purchaser's investigation of the Assets and the transactions
contemplated by this Agreement; provided, however, that each party,
its agents and representatives may disclose such information and data
(i) to such party's accountants, attorneys, prospective lenders,
partners, shareholders, consultants and other advisors in connection
with the transactions contemplated by this Agreement (collectively,
the "Representatives") to the extent that such Representatives
reasonably need to know such information and data in order to assist
and perform services on behalf of Purchaser or Seller; (ii) to the
extent required by any applicable statute, law, regulation or
Governmental Authority (as hereinafter defined); and (iii) in
connection with any litigation that may arise between the parties in
connection with the transactions contemplated by this Agreement.
7. Title Matters.
(a) Conveyance of Title. At Closing, Seller agrees to deliver to
Purchaser a warranty xxxx of sale (the "Xxxx of Sale") conveying the
Personal Property to Purchaser, or to Purchaser's assignee pursuant to
paragraph 18 hereof, together with such other conveyance, transfer and
assignment documents as are referred to in paragraph 13 hereof, so as
to transfer all of the Assets to Purchaser free and clear of all
liens, claims and encumbrances, except for the Permitted Exceptions,
as that term is defined in the Purchase and Sale Agreement.
(b) No Assumption of Liabilities. Purchaser will not assume any
liabilities of Seller, except as expressly set forth in this
Agreement. All liabilities of Seller not assumed by Purchaser will
either be paid in full at Closing or retained by Seller as the
obligations of Seller. To the extent there are liens or other
encumbrances on the Assets, the Purchase Price shall be applied in
such manner as to release those liens and other encumbrances effective
at Closing.
8A. Seller's Representations and Warranties. Seller represents
and warrants to Purchaser that the following matters are true as of
the Contract Date and shall be true in all material respects as of the
Closing Date.
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(a) Title. Other than as described in the Commitment, as that
term is defined in the Purchase and Sale Agreement, the Seller is the
legal, lawful and rightful owner of the Assets, and, other than with
respect to the Permitted Exceptions, has or will at Closing have good
and marketable title to the Assets, free and clear of all mortgages
and security interests, leases, agreements and tenancies, licenses,
claims, options, options to purchase, liens, covenants, conditions,
restrictions, rights-of-way, easements, judgments and other matters
affecting title to the Assets.
(b) Y2K Compliance. Seller has made or has caused to be made an
examination and evaluation of the various computer systems which are
integral to the Assets, including, without limitation, any computer
systems utilized in the operation and/or maintenance of the Assets,
and has disclosed the extent and results of that examination and
evaluation to Purchaser.
(c) Defaults. Seller is not in default under any of the documents
referred to as the Seller's Deliveries.
(d) Contracts. The only contracts ("Contracts") of any kind
relating to the management, leasing, operation, maintenance or repair
of the Assets are those which have been disclosed to Purchaser as part
of the Seller's Deliveries.
(e) Physical Condition. To the best of Seller's knowledge, the
Personal Property is in operating condition. None of the Personal
Property shall be removed from the Property, unless replaced by
personal property of equal or greater utility and value.
(f) Compliance with Laws and Codes. Seller has received no
written notice of any violations (collectively, "Violations" and
individually, a "Violation") of any applicable local, state or federal
laws, municipal ordinances or regulations, orders, rules or
requirements of any federal, state or municipal department or agency
having jurisdiction over or affecting the Assets or the construction,
management, ownership, maintenance, operation, use, improvement,
acquisition or sale of the Assets, including, without limitation,
building, health and environmental laws, regulations and ordinances,
any equal access opportunity laws, regulations and ordinances
(collectively, "Legal Requirements"), whether or not officially noted
or issued.
(g) Litigation. Except as disclosed in Exhibit D to the Purchase
and Sale Agreement, there are no actions, suits, proceedings, claims,
orders, decrees or judgments affecting Seller, its business, prospects
or conditions (financial or otherwise), or the Assets, or any portion
thereof, or relating or arising out of the ownership or operation of
the Assets or any portion thereof which are pending in any court or by
or before any federal, state, county or municipal department,
commission, board, bureau or agency or governmental instrumentality.
Seller is not now a party to any litigation affecting the Assets, and,
to the best of Seller's knowledge, no litigation has been threatened.
There is no litigation pending, nor, to the best of Seller's
knowledge, threatened which would affect the Assets or Purchaser after
Closing.
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(h) Seller's Deliveries. All Seller's Deliveries are complete,
accurate, true and correct in all material respects, and accurately
set forth the subject matter thereof. There has been no material
adverse change in any of the information and other disclosures set
forth in Seller's Deliveries since the respective dates thereof.
(i) Authority. The execution and delivery of this Agreement by
Seller, and the performance of this Agreement by Seller, are to be
duly authorized by Seller, its shareholders and board of directors,
pursuant to paragraph 27 of the Purchase and Sale Agreement, and are
so authorized, and this Agreement is binding on Seller and enforceable
against Seller in accordance with its terms. No consent of any
creditor, investor, judicial or administrative body, Governmental
Authority or other governmental body or agency, or other party to such
execution, delivery and performance by Seller is required. Neither the
execution of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in a breach of, default under or
acceleration of any agreement to which Seller is a party or by which
Seller or the Assets is or are bound; or (ii) violate any restriction,
court order, agreement or other legal obligation to which Seller
and/or the Assets is or are subject.
(j) Existing Indebtedness on the Assets. To the best of Seller's
knowledge, the Existing Financing (as hereinafter defined) is in full
force and effect, and, to the best of Seller's knowledge, Seller is
not in default thereunder. Seller will (and is legally entitled to),
on or before the Closing Date, pay off, satisfy and discharge (of
record and in fact) the Existing Financing, and shall pay all fees,
costs and penalties related to or required pursuant to such payment.
"Existing Financing" shall mean any documents evidencing or securing
any loans with respect to the Assets, but shall not include the
Capital Leases.
The representations and warranties made in this Agreement by
Seller shall be continuing, and shall be deemed remade by Seller as of
the Closing Date with the same force and effect as if in fact
specifically remade at that time. Notwithstanding anything to the
contrary provided herein, Purchaser shall have no right to pursue any
action against Seller pursuant to this paragraph 8A as a result of any
of Seller's representations and warranties being untrue, inaccurate or
incorrect, if Purchaser has actual knowledge at the time of Closing
that such representation or warranty was untrue, inaccurate or
incorrect at the time of Closing, and Purchaser nevertheless closes
the transfer of title hereunder. The representations and warranties of
Seller contained in this paragraph 8A will survive the Closing for a
period of eighteen (18) months after the Closing, and (i) any claim
based upon any alleged breach must be alleged (in writing) within such
eighteen (18) month period, and (ii) any action based upon any such
alleged breach must be commenced within twenty-four (24) months after
Closing. Failure to give notice or commence an action on any such
alleged breach within the time period specified herein shall
constitute a waiver of any such claim.
8B. Purchaser's Representations and Warranties. The Purchaser's
representations and warranties, as set forth in paragraph 8B of the
Purchase and Sale Agreement shall also apply to Purchaser's purchase
of the Assets and to this Agreement.
9. Covenants of Seller. Effective as of the execution of this
Agreement, Seller hereby covenants with Purchaser as follows:
(a) New Leases. Subsequent to the Contract Date, Seller shall
neither amend any Capital Lease in any material respect nor execute
any new lease, license or other agreement affecting the ownership or
operation of the Assets, without Purchaser's prior written consent,
which consent will not be unreasonably withheld, delayed or
conditioned.
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(b) New Contracts. Subsequent to the Contract Date, Seller shall
not enter into any contract with respect to the ownership or operation
of the Assets that will survive the Closing, or that would otherwise
affect the use, operation or enjoyment of the Assets, without
Purchaser's prior written consent, which consent shall not be
unreasonably withheld or delayed, except for service contracts entered
into in the ordinary course of business which are terminable without
penalty on not more than thirty (30) days notice.
(c) Insurance. Seller shall maintain its current insurance on the
Assets and keep the same continuously in force and effect through and
including the Closing Date.
(d) Operation of Assets. Seller shall operate and manage the
Assets in a manner consistent with past practices, maintaining present
services, and shall maintain the Assets in their present condition,
normal wear and tear and loss due to fire or other casualty excepted
(as provided in paragraph 16 hereof); shall keep on hand sufficient
materials, supplies, equipment and other personal property for the
efficient operation and management of the Assets consistent with past
practices; and shall perform, when due, all of Seller's obligations
under the Capital Leases, Governmental Approvals and other agreements
relating to the Assets and otherwise in accordance with applicable
laws, ordinances, rules and regulations affecting the Assets. Except
as otherwise specifically provided herein, Seller shall deliver the
Assets at Closing in substantially the same condition as they are on
the Contract Date, reasonable wear and tear excepted and loss due to
fire or other casualty excepted (as provided in paragraph 16 hereof).
(e) Pre-Closing Expenses. Seller has paid or will pay in full,
prior to Closing, all bills and invoices then due and payable for
labor, goods, material and services of any kind relating to the Assets
and utility charges, relating to the period prior to Closing. Any
alterations, installations, decorations and other work required to be
performed under any and all agreements affecting the Assets have been
or will, by the Closing, be completed and paid for in full, to the
extent payable as of the Closing Date. After Closing, Seller shall pay
when due and payable all bills and invoices for expenses incurred
before the Closing Date.
(f) No Assignment. After the Contract Date and prior to Closing,
Seller shall not assign, alienate, lien, encumber or otherwise
transfer all or any part of the Assets or any interest therein.
(g) Availability of Records. Upon Purchaser's request, for a
period of two (2) years after Closing, Seller shall use good faith
efforts to (i) make all records relating to the Assets and the
operation thereof available to Purchaser for inspection, copying and
audit by Purchaser's designated accountants; and (ii) cooperate with
Purchaser (without any expense to Seller) in obtaining any and all
permits, licenses, authorizations and other Governmental Approvals
necessary for the operation of the Assets.
(h) Change in Conditions. Seller shall promptly notify Purchaser
of any change in any condition with respect to the Assets or of the
occurrence of any event or circumstance that makes any representation
or warranty of Seller to Purchaser under this Agreement untrue or
misleading, or any covenant of Purchaser under this Agreement
incapable or less likely of being performed, it being understood that
the Seller's obligation to provide notice to Purchaser under this
paragraph 9(g) shall in no way relieve Seller of any liability for a
breach by Seller of any of its representations, warranties or
covenants under this Agreement.
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All covenants made in this Agreement by Seller shall survive the Closing
and shall not be merged into any All covenants made in this Agreement by Seller
shall survive the Closing and shall not be merged into any instrument of
conveyance delivered at Closing. The covenants of Seller contained in this
paragraph 9 will survive the Closing for a period of eighteen (18) months after
the Closing; and (i) any claim based upon any alleged breach of such covenant
must be alleged (in writing) within such eighteen (18) month period, and (ii)
any action based upon any such alleged breach must be commenced within
twenty-four (24) months after Closing. Failure to give notice of commence an
action on any such alleged breach within the time period as specified herein
shall constitute a waiver of any such claim.
10. Environmental Warranties. To Seller's best knowledge, and except as may
be disclosed in the February 14, 1996 Phase I Environmental Assessment prepared
for Seller by The Xxxxxxxxx Group, as updated by the Update Report dated March
28, 1999, during the period of Seller's ownership of the Assets, the Assets have
been and continue to be owned and operated in compliance with all Environmental
Laws, as that term is defined in the Purchase and Sale Agreement. Seller has not
received any written notice or written report from any Governmental Authority or
third party alleging that Seller has not been issued or is not in compliance
with all orders, directives, requirements, permits, certificates, approvals,
licenses or other authorizations from applicable Governmental Authorities
relating to Environmental Laws with respect to the Assets. The warranties made
in this paragraph 10 by Seller shall be continuing, and shall be deemed remade
by Seller as of the date of Closing with the same force and effect as if in fact
specifically remade at that time. Notwithstanding anything to the contrary
provided herein, Purchaser shall have no right to pursue any action against
Seller pursuant to this paragraph 10 as a result of any of Seller's warranties
being untrue, inaccurate or incorrect if Purchaser has actual knowledge at the
time of Closing that such warranty was untrue, inaccurate or incorrect at the
time of Closing, and Purchaser nevertheless closes the transfer of title
hereunder. The warranties of Seller contained in this paragraph 10 will survive
the Closing for a period of eighteen (18) months after the Closing; and (i) any
claim based upon any alleged breach must be alleged (in writing) within such
eighteen (18) month period, and (ii) any action based upon any such alleged
breach must be commenced within twenty-four (24) months after Closing. Failure
to give notice or commence an action on any such alleged breach within the time
period specified herein shall constitute a waiver of any such claim.
11. Additional Conditions Precedent to Closing. In addition to the other
conditions enumerated in this Agreement, the following shall be additional
Conditions Precedent to Purchaser's obligation to close hereunder:
(a) Physical Condition. The physical condition of the Assets
shall be substantially the same on the Closing Date as on the Contract
Date, reasonable wear and tear excepted, unless the alteration of said
physical condition is the result of Damage (as defined in paragraph 16
hereof).
(b) Pending Actions. At Closing, there shall be no administrative
agency, litigation or governmental proceeding of any kind whatsoever,
pending or threatened, that, after Closing, would, in Purchaser's sole
discretion, materially and adversely affect the value or marketability
of the Assets, or the ability of Purchaser to operate the Assets in
the manner they are being operated on the Contract Date.
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(c) Other Agreements. On the Closing Date, Seller shall have
executed and delivered to Purchaser the following agreements between
Seller and Purchaser: the Purchase and Sale Agreement, the Lease to
Seller and the Contract Manufacturing Agreement, together with the
documents contemplated by such agreements, and together with the
documents described in paragraph 13 hereof.
(d) Material Adverse Change. As of the Closing Date, there shall
have been no material adverse change with respect to the Assets
occurring after the Contract Date that information relevant thereto
was presented to Purchaser.
12. Capital Leases - Conditions Precedent and Warranties with Respect
Thereto. With respect to each of the Capital Leases, Seller represents and
warrants to Purchaser as follows, the ongoing truth of the following being a
Condition Precedent to Purchaser's obligation to close:
(a) Each of the Capital Leases is in full force and effect
according to the terms set forth therein, and has not been modified,
amended or altered, in writing or otherwise.
(b) Seller, as tenant, is not in default under any of the Capital
Leases. All obligations of the Seller under the Capital Leases that
accrue to the date of Closing have been performed, including, but not
limited to, all required payments due the landlords thereunder.
(c) Seller is not in default under and is not in arrears in the
payment of any sums or in the performance of any obligations required
of it under the Capital Leases.
(d) No controversy, complaint, negotiation or renegotiation,
proceeding, suit or litigation relating to all or any of the Capital
Leases, is pending nor to the best of Seller's knowledge, threatened,
whether in any tribunal or informally.
The warranties made in this paragraph 12 by Seller shall be
continuing, and shall be deemed remade by Seller as of the date of
Closing with the same force and effect as if in fact specifically
remade at that time. Notwithstanding anything to the contrary provided
herein, Purchaser shall have no right to pursue any action against
Seller pursuant to this paragraph 12 as a result of any of Seller's
warranties being untrue, inaccurate or incorrect if Purchaser has
actual knowledge at the time of Closing that such warranty was untrue,
inaccurate or incorrect at the time of Closing, and Purchaser
nevertheless closes the transfer of title hereunder. The warranties of
Seller contained in this paragraph 12 will survive the Closing for a
period of eighteen (18) months after the Closing; and (i) any claim
based upon any alleged breach must be alleged (in writing) within such
eighteen (18) month period, and (ii) any action based upon any such
alleged breach must be commenced within twenty-four (24) months after
Closing. Failure to give notice or commence an action on any such
alleged breach within the time period specified herein shall
constitute a waiver of any such claim.
13. Seller's Closing Deliveries. At Closing (or at such other times as may
be specified below), Seller shall deliver or cause to be delivered to Purchaser
the following, in form and substance acceptable to Purchaser:
(a) Xxxx of Sale. The Xxxx of Sale, executed by Seller, conveying the
Personal Property to Purchaser free and clear of all liens, claims and
encumbrances, except the Permitted Exceptions.
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(b) General Assignment. An assignment, executed by Seller, to
Purchaser of all right, title and interest of Seller and its agents in and
to all matters relating to the use and operation of the Assets, including,
but not limited to, the Governmental Approvals, to the extent assignable,
which assignment shall list and identify, without limitation, on an exhibit
thereto, all licenses, permits and approvals pertaining to the Assets, the
issuer and date thereof, and the expiration date, if any, related thereto.
(c) Assignment of Capital Leases. An assignment, executed by Seller,
to Purchaser of the Capital Leases with (i) the agreement of Seller to
indemnify, protect, defend and hold Purchaser harmless from and against any
and all claims, damages, losses, suits, proceedings, costs and expenses
(including, but not limited to, reasonable attorneys' fees) arising in
connection with the Capital Leases and relating to the period of time prior
to Closing, and (ii) the corresponding agreement of Purchaser to indemnify
Seller for claims arising in connection with the Capital Leases and
relating to the period of time after the Closing. Seller and Purchaser
shall work cooperatively to obtain such consents or approvals of the
Capital Leases as the lessors thereunder may require in connection with the
assignment and assumption of the Capital Leases as contemplated hereby.
(d) Building Equipment. A xxxx of sale, assignment of lease or other
document of conveyance as may be necessary to transfer the Building
equipment described in paragraph 1(c) hereof to Purchaser, free and clear
of all liens, claims and encumbrances, except the Permitted Exceptions.
(e) Formulas and Technology. The royalty-free license described in
paragraph 1(d)(i) hereof, together with such other documents as may be
necessary to transfer the rights described in paragraph 1(d) hereof to
Purchaser, free and clear of all liens, claims and encumbrances, except the
Permitted Exceptions. In addition, Seller agrees to execute such
applications, consents and approvals as may be necessary or appropriate in
assisting Purchaser in gaining exemptions from regulations promulgated by
CARB, in transferring and assigning all ATF formula registrations, and in
transferring any other regulatory or customer required documentation.
(f) Original Documents. To the extent not previously delivered to
Purchaser, originals of the Capital Leases and Governmental Approvals, or,
if the originals are not in Seller's control, Seller certified copies
thereof.
(g) Closing Statement. A closing statement conforming to the proration
and other relevant provisions of this Agreement.
(h) Other. Such other documents and instruments as may reasonably be
required by Purchaser, its (or its lenders') counsel, and that may be
necessary to consummate this transaction and to otherwise effect the
agreements of the parties hereto.
After Closing, Seller shall execute and deliver to Purchaser such further
documents and instruments as Purchaser shall reasonably request to effect this
transaction and otherwise effect the agreements of the parties hereto, which
documents and instruments shall be prepared at Purchaser's expense.
14. Prorations and Adjustments. The following shall be prorated and
adjusted between Seller and Purchaser as of the Closing Date, except as
otherwise specified:
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(a) Amounts paid or payable under the Capital Leases shall be
prorated.
(b) Such other items that are customarily prorated in transactions of
this nature shall be ratably prorated.
For purposes of calculating prorations, Purchaser shall be deemed to be in
title to the Assets, and therefore entitled to the income therefrom and
responsible for the expenses thereof, for the entire day upon which the Closing
occurs. All such prorations shall be made on the basis of the actual number of
days of the year and month that shall have elapsed as of the Closing Date. The
amount of such prorations shall be adjusted in cash after Closing, as and when
complete and accurate information becomes available. Seller and Purchaser agree
to cooperate and use their good faith and diligent efforts to make such
adjustments no later than thirty (30) days after the Closing. Items of income
and expense for the period prior to the Closing Date will be for the account of
Seller, and items of income and expense for the period on and after the Closing
Date will be for the account of Purchaser, all as determined by the accrual
method of accounting. Bills received after Closing that relate to expenses
incurred, services performed or other amounts allocable to the period prior to
the Closing Date shall be paid by Seller. Any amounts not so paid by Seller may
be set off against amounts (if any) otherwise due Seller hereunder.
15. Closing Expenses. Purchaser shall pay any cost, fee or other expense of
obtaining consents to the assignments and assumptions contemplated hereby,
including any assumption fees charged by the landlords under or pursuant to the
Capital Leases. Each party shall pay one-half of the cost of any escrows
hereunder. Notwithstanding the foregoing, Seller's obligations under the
preceding sentences of this paragraph 15, when added to Seller's obligations
under paragraph 15 of the Purchase and Sale Agreement, shall not exceed
$50,000.00. Each party shall pay its own legal, accounting and other expenses
associated with the transaction contemplated by this Agreement, whether or not
consummated. The parties shall share the expense of the Personal Property
appraisal on an equal 50/50 basis.
16. Destruction, Loss or Diminution of Assets. If, prior to Closing, all or
any portion of the Assets is damaged by fire or other natural casualty
(collectively "Damage"), or is taken or made subject to condemnation, eminent
domain or other governmental acquisition proceedings (collectively "Eminent
Domain"), then the following procedures shall apply:
(a) If the aggregate cost of repair or replacement or the value of the
Eminent Domain (collectively, "repair and/or replacement"), when added to
the loss occasioned by Eminent Domain involving the Property, is
$200,000.00 or less, in the opinion of Purchaser's and Seller's respective
engineering consultants, Purchaser shall close and take the Assets as
diminished by such events, subject to a reduction in the Purchase Price
applied against the cash otherwise due at the Closing, in the full amount
of the repair and/or replacement. Any casualty insurance or condemnation
proceeds shall be the sole property of Seller.
(b) If the aggregate cost of repair and/or replacement of the Assets
and Property is greater than $200,000.00, in the opinion of Purchaser's and
Seller's respective engineering consultants, then Purchaser, at its sole
option, may elect either to (i) terminate this Agreement by written notice
to Seller, and neither party shall have any further liability to the other
hereunder, except as otherwise provided herein; or (ii) proceed to close
subject to (1) a credit against the Purchase Price in the amount of the
deductible under the applicable insurance policies, and (2) an assignment
of the proceeds of Seller's casualty insurance for all such Damage (or
condemnation awards for any Eminent Domain). In such event, Seller shall
fully cooperate with Purchaser in the adjustment and settlement of the
insurance claim. (Termination of this Agreement shall result in the
automatic termination of the Purchase and Sale Agreement, and termination
of the Purchase and Sale Agreement shall result in the automatic
termination of this Agreement.)
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(c) In the event of a dispute between Seller and Purchaser with
respect to the cost of repair and/or replacement with respect to the
matters set forth in this paragraph 16, an engineer designated by Seller
and an engineer designated by Purchaser shall select an independent
engineer licensed to practice in Minnesota who shall resolve such dispute.
All fees, costs and expenses of such third engineer so selected shall be
shared equally by Purchaser and Seller.
17. Default/Failure of Condition Precedent.
(a) Default by Seller. Except as otherwise provided herein, if any of
Seller's representations and warranties contained herein shall not be true
and correct on the Contract Date and continuing thereafter through and
including the Closing Date, or if Seller shall have failed to perform any
of the covenants and agreements contained herein to be performed by Seller
within the time for performance as specified herein (including Seller's
obligation to close), Purchaser may elect either to (i) terminate
Purchaser's obligations under this Agreement by written notice to Seller;
or (ii) except as otherwise provided in this Agreement, pursue an action
for specific performance of this Agreement to compel Seller to perform its
obligations under this Agreement.
(b) Default by Purchaser. In the event Purchaser defaults in its
obligations to close the purchase of the Assets, then Seller's sole and
exclusive remedy shall be to retain the Xxxxxxx Money and receive an
additional $200,000.00 from Purchaser, the total $450,000.00 amount thereof
being fixed and liquidated damages, it being understood that Seller's
actual damages in the event of such default are difficult to ascertain and
that such proceeds represent the parties' best current estimate of such
damages for the breach of this Agreement and/or for the breach of the
Purchase and Sale Agreement. Seller shall have no other remedy for any
default by Purchaser. The total $450,000.00 liquidated damage amount
represents the total liquidated damages in the event of default by
Purchaser under either this Agreement, the Purchase and Sale Agreement, or
both this Agreement and the Purchase and Sale Agreement.
(c) Failure of a Condition Precedent. In the event any Condition
Precedent described herein shall not at or before Closing have been
fulfilled or waived in writing by the Purchaser, then Purchaser may, at
Closing, elect to terminate its obligations under this Agreement, in which
event both this Agreement and the Purchase and Sale Agreement shall
terminate, and the Xxxxxxx Money shall be returned immediately to
Purchaser.
18. Successors and Assigns. The terms, conditions and covenants of this
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective nominees, successors and assigns; provided, however, no
conveyance, assignment or transfer of any interest whatsoever of, in or to the
Assets or of this Agreement shall be made by Seller during the term of this
Agreement. Purchaser may assign all or any of its right, title and interest
under this Agreement to any related entity, including (i) a wholly-owned
subsidiary of Purchaser ("Affiliate"), (ii) an entity owned or controlled by
Purchaser or an Affiliate, (iii) an entity which owns or controls Purchaser, or
(iv) an entity which is owned or controlled by either one or both of Purchaser's
owners, namely, Xxxxxx X. Vaa or Xxxxxxx X. Xxxxxx.
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No such assignee shallaccrue any obligations or liabilities hereunder until
the effective date of such assignment. In addition to its right of assignment,
Purchaser shall also have the right, exercisable prior to Closing, to designate
any such related entity as the grantee or transferee of any or all of the
conveyances, transfers and assignments to be made by Seller at Closing
hereunder, independent of, or in addition to, any assignment of this Agreement.
In the event of an assignment of this Agreement by Purchaser, its assignee shall
be deemed to be the Purchaser hereunder for all purposes hereof, and shall have
all rights of Purchaser hereunder (including, but not limited to, the right of
further assignment), and the assignor shall remain liable hereunder. In the
event that any such related entity shall be designated as a transferee
hereunder, that transferee shall have the benefit of all of the representations
and rights which, by the terms of this Agreement, are incorporated in or relate
to the conveyance in question.
19. Dispute Resolution. The dispute resolution provisions of paragraph 19
of the Purchase and Sale Agreement are hereby incorporated by reference, and
shall be applicable to any dispute arising out of or relating to this Agreement.
20. Notices. Any notice, demand or request which may be permitted, required
or desired to be given in connection therewith shall be given in writing and
directed to Seller and Purchaser as follows:
Seller: Xxxx X. Xxxxxxxx
Lamaur Corporation
0000 Xxxx Xxxxx Xxxx
Xxxxxxx, XX 00000-0000
Fax: 000.000.0000
With a Copy to: Xxxx X. Xxxxxx
Xxxxxxx, Xxxxxx and Deinard, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Fax: 000.000.0000
And: Xxxxxx Xxxxxx
Xxxx Xxxx Xxxx Freidenrich
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Purchaser: Tiro Industries, Inc.
Attn: Xxxxxx X. Vaa
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Fax: 000.000.0000
With a Copy to: Xxxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000-0000
Fax: 000.000.0000
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And: Xxxx X. Xxxxxxx
Xxxxxxx Law Office
4420 IDS Center
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Fax: 000.000.0000
Notices shall be deemed properly delivered and received when and if either
(i) personally delivered; (ii) delivered by Federal Express or other overnight
courier; (iii) on the first business day following transmission by facsimile to
the number indicated; or (iv) two (2) business days after being deposited in the
U.S. mail, by registered or certified mail, return receipt requested, postage
prepaid.
21. Benefit. This Agreement is for the benefit only of the parties hereto
and their nominees, successors, beneficiaries and assignees as permitted in
paragraph 18, and no other person or entity shall be entitled to rely hereon,
receive any benefit herefrom or enforce against any party hereto any provision
hereof.
22. Limitation of Liability. Upon the Closing, Purchaser shall neither
assume nor undertake to pay, satisfy or discharge any liabilities, obligations
or commitments of Seller other than those specifically agreed to between the
parties and set forth in this Agreement. Purchaser shall not assume or otherwise
become responsible for any liabilities of Seller, except those which are
assigned to Purchaser by Seller and which are assumed by Purchaser pursuant to
this Agreement. Seller will indemnify Purchaser for all liabilities, except
those expressly assumed by Purchaser. Without limiting the foregoing, (i)
Purchaser shall have no obligation to hire any of Seller's employees currently
employed at the Property, except as provided in paragraph 29 of the Purchase and
Sale Agreement, and (ii) all employee-related liabilities and obligations,
whether for salary, benefits, severance, notice under the Worker Adjustment and
Retraining Notification Act or comparable state statute or otherwise, shall be
the responsibility of Seller, except to the extent Purchaser fails to comply
with paragraph 29 of the Purchase and Sale Agreement. Again, without limiting
the foregoing, all accrued liability for employee vacation time shall be and
remain the responsibility of Seller, notwithstanding the fact that various
employees of Seller may come to be employed by Purchaser. Notwithstanding the
foregoing, but again without creating any liability for Purchaser, Seller and
Purchaser shall work cooperatively with respect to any hiring of Seller's
employees that Purchaser may elect to employ, such that Purchaser shall not
solicit employees of Seller whom Seller desires to retain as employees, and such
that Seller shall encourage those of its employees whom it does not desire to
retain, and whom Purchaser desires to hire, to enter the employ of Purchaser.
Purchaser shall in no event be liable and assumes no obligation or liability
with respect to any benefit plans to any employees or former employees of
Seller, and in any event shall assume no liability to any such employees
regardless of whether they become employees of Purchaser, for benefits
attributable to periods to Closing. Seller shall have the obligation to notify
its employees of any benefits available under federal, state or local law. The
provisions of this Agreement shall not inure to the benefit of any third party,
and nothing herein is intended to confer upon any employee of Seller or
Purchaser, or any legal representative or beneficiary of any such employee, any
rights of employment or any other legal rights or remedies of any nature
whatsoever.
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23. Brokerage. Each party hereto represents and warrants to the other that
it has dealt with no brokers or finders in connection with this transaction.
Seller and Purchaser each hereby indemnify, protect and defend and hold the
other harmless from and against all losses, claims, costs, expenses, damages
(including, but not limited to, reasonable attorneys' fees of counsel selected
by the indemnified party) resulting from the claims of any broker, finder or
other such party claiming by, through or under the acts or agreements of the
indemnifying party. The obligations of the parties pursuant to this paragraph 23
shall survive any termination of this Agreement.
24. Reasonable Efforts. Seller and Purchaser shall use their reasonable,
diligent and good faith efforts, and shall cooperate with and assist each other
in their efforts, to obtain such consents and approvals of third parties
(including, but not limited to, the landlords under the Capital Leases and
Governmental Authorities), to the transaction contemplated hereby, and to
otherwise perform as may be necessary to effectuate the transfer of the Assets
to Purchaser in accordance with this Agreement.
25. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire
understanding between the parties with respect to the transactions
contemplated herein, and all prior or contemporaneous oral agreements,
understandings, representations and statements, and all prior written
agreements, understandings, letters of intent and proposals are merged into
this Agreement. Neither this Agreement nor any provision hereof may be
waived, modified, amended, discharged or terminated except by an instrument
in writing signed by the party against which the enforcement of such
waiver, modification, amendment, discharge or termination is sought, and
then only to the extent set forth in such instrument.
(b) Time of the Essence. Time is of the essence of this Agreement. If
any date herein set forth for the performance of any obligations by Seller
or Purchaser or for the delivery of any instrument or notice as herein
provided should be on a Saturday, Sunday or legal holiday, the compliance
with such obligations or delivery shall be deemed acceptable on the next
business day following such Saturday, Sunday or legal holiday. As used
herein, the term "legal holiday" means any state or federal holiday for
which financial institutions or post offices are generally closed in the
State of Minnesota for observance thereof.
(c) Conditions Precedent. The obligations of Purchaser to make the
payments described in paragraph 2 and to close the transaction contemplated
herein are subject to the express Conditions Precedent set forth in this
Agreement, each of which is for the sole benefit of Purchaser and may be
waived at any time by written notice thereof from Purchaser to Seller. The
waiver of any particular Condition Precedent shall not constitute the
waiver of any other.
(d) Seller's Representations and Warranties. Relative to each
representation and warranty made by Seller in this Agreement, Seller shall
be charged with making reasonable inquiries as to the accuracy thereof to
its officers and to the current managers of the Property and/or Assets.
(e) Construction. This Agreement shall not be construed more strictly
against one party than against the other merely by virtue of the fact that
it may have been prepared by counsel for one of the parties, it being
recognized that both Seller and Purchaser have contributed substantially
and materially to the preparation of this Agreement. The headings of
various paragraphs in this Agreement are for convenience only, and are not
to be utilized in construing the content or meaning of the substantive
portions hereof.
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(f) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Minnesota.
(g) Partial Invalidity. The provisions hereof shall be deemed
independent and severable, and the invalidity or partial invalidity or
enforceability of any one provision shall not affect the validity or
enforceability of any other provision hereof.
(h) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of such counterparts together
shall constitute one and the same Agreement.
(i) Good Faith. All action required pursuant to this Agreement that is
necessary to effectuate the transaction contemplated herein will be taken
promptly and in good faith by Seller and Purchaser, and Seller and
Purchaser shall furnish to the other party hereto such documents or further
assurances as the other party hereto may reasonably require.
26. Additional Provisions. The additional provisions set forth in
paragraphs 26, 27, 28 and 29 of the Purchase and Sale Agreement shall also be
applicable to this Agreement, with the understanding that both the Purchase and
Sale Agreement and this Agreement shall, for the purposes of said paragraphs 26,
27, 28 and 29, be considered but one agreement as to which said paragraphs shall
be applicable.
IN AGREEMENT, the parties hereto have executed this Agreement as of
September 28, 1999, being the Contract Date referred to herein.
SELLER:
THE LAMAUR CORPORATION
By: /s/
_________________________________
Its_____________________________
PURCHASER:
TIRO INDUSTRIES, INC.
By: /s/
__________________________________
Its_____________________________
17
