UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of the earliest event reported) June
17, 2005
Lifetime Brands, Inc
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-19254 11-2682486
(Commission File Number) (IRS Employer Identification No.)
One Merrick Avenue, Westbury, New York 11590
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516)683-6000
LIfetime Hoan Corporation
(Former name or former address, if changed since last report)
Item 1.01. Entry into a Material Definitive Agreement
On June 17, 2005, Lifetime Brands, Inc announced it has
signed an agreement to acquire the business and certain
assets of The Pfaltzgraff Co. ("Pfaltzgraff"), one of
America's leading designers and marketers of dinnerware and
tabletop accessories for the home. Established in 1811,
Pfaltzgraff had sales in 2004 of approximately $148 million.
Its products are broadly distributed through retail chains
and sold through company-owned factory stores as well as
through Internet and catalog operations. Assuming that the
transaction closes in July, Lifetime expects the Pfaltzgraff
business to contribute approximately $72 million in revenues
in 2005 and to be nominally profitable for the year. The
transaction is subject to customary closing conditions and
adjustments. Lifetime expects to fund the transaction
through its credit facility.
Item 9.01. Financial Statements and Exhibits
c) Exhibits
99 - The Asset Purchase Agreement dated as of June 17,
2005 by and among The Pfaltzgraff Co., The Pfaltzgraff
Manufacturing Co., Pfaltzgraff Investment Co. and The
Pfaltzgraff Outlet Co. and Lifetime Brands, Inc., PFZ
Acquisition Corp. and PFZ Outlet Retail, Inc.
Signature
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
Lifetime Hoan Corporation
By: /s/ Robert McNally
Robert McNally
Vice President of Finance and
Chief Financial Officer
Date: June 23, 2005
EXHIBIT 99
ASSET PURCHASE AGREEMENT
by and among
THE PFALTZGRAFF CO.,
THE PFALTZGRAFF MANUFACTURING CO.,
PFALTZGRAFF INVESTMENT CO. and
THE PFALTZGRAFF OUTLET CO.
and
LIFETIME BRANDS, INC.,
PFZ ACQUISITION CORP. and
PFZ OUTLET RETAIL , INC.
dated as of June 17, 2005
ARTICLE 1: DEFINITIONS; CONSTRUCTION 1
1.1 DEFINITIONS 1
1.2 OTHER DEFINITIONS 8
1.3 CONSTRUCTION 10
ARTICLE 2: PURCHASE AND SALE OF ASSETS 11
2.1 AGREEMENT TO PURCHASE AND SELL 11
2.2 ASSETS 11
2.3 EXCLUDED ASSETS 12
2.4 ASSUMPTION OF ASSUMED LIABILITIES 13
2.5 EXCLUDED LIABILITIES 13
ARTICLE 3: PURCHASE PRICE AND METHOD OF PAYMENT 14
3.1 PURCHASE PRICE 14
3.2 PAYMENT OF PURCHASE PRICE; HOLDBACK 14
3.3 ALLOCATION OF CERTAIN ITEMS 15
3.4 PAYMENTS 16
3.5 TAX ALLOCATION 16
3.6 WORKING CAPITAL ADJUSTMENT 16
3.7 NON-CONTINUING STORES 18
3.8 CERTAIN PAYMENTS RELATED TO ASSUMED CONTRACTS 18
ARTICLE 4: THE CLOSING 19
4.1 CLOSING 19
4.2 CLOSING DELIVERIES 19
4.3 NONASSIGNABILITY OF CONTRACTS 21
ARTICLE 5: REPRESENTATIONS AND WARRANTIES OF SELLERS 22
5.1 ORGANIZATION 22
5.2 AUTHORITY; NON-CONTRAVENTION 22
5.3 NO CONSENTS 23
5.4 TAX MATTERS 23
5.5 FINANCIAL STATEMENTS; ACCOUNTS RECEIVABLE;
INVENTORY 23
5.6 ABSENCE OF UNDISCLOSED LIABILITIES 24
5.7 LEGAL PROCEEDINGS 24
5.8 COMPLIANCE WITH LAWS; LICENSES 24
5.9 TITLE TO ASSETS 25
5.10 CONTRACTS 25
5.11 INTELLECTUAL PROPERTY 27
5.12 EMPLOYEES 28
5.13 LABOR AND EMPLOYMENT MATTERS 28
5.14 ABSENCE OF CERTAIN CHANGES 29
5.15 BROKERS 29
5.16 INSURANCE 29
5.17 ENVIRONMENTAL MATTERS 29
5.18 REAL PROPERTY 30
5.19 RELATED PARTY TRANSACTIONS; FOREIGN CORRUPT
PRACTICES ACT 31
5.20 EMPLOYEE PLANS 32
5.21 PRODUCT WARRANTY 32
5.22 SUFFICIENCY OF ASSETS 32
5.23 DISCLOSURE 32
ARTICLE 6: REPRESENTATIONS AND WARRANTIES OF BUYERS AND
LIFETIME 32
6.1 ORGANIZATION 32
6.2 NO VIOLATION 33
6.3 ENFORCEABLE AGREEMENT 33
6.4 NO BROKERS 34
6.5 LITIGATION AND REGULATORY PROCEEDINGS 34
6.6 CONSENTS AND APPROVALS 34
6.7 FUNDS 34
6.8 INDEPENDENT REVIEW 34
ARTICLE 7: COVENANTS OF THE PARTIES 35
7.1 FURTHER ASSURANCES; POST-CLOSING COOPERATION. 35
7.2 CONDUCT OF BUSINESS 36
7.3 EMPLOYEES 39
7.4 ACCESS TO OPERATIONS 42
7.5 COMMERCIALLY REASONABLE EFFORTS 43
7.6 TRANSFER TAXES 43
7.7 PUBLICITY 44
7.8 EXPENSES 44
7.9 BULK SALES 44
7.10 APPLICATIONS FOR BUYER LICENSES 44
7.11 DC LEASES AND FLEMINGTON LEASE 44
7.12 COOPERATION BY SELLERS 45
ARTICLE 8: CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES 45
8.1 GOVERNMENT APPROVALS 45
8.2 LEGAL ACTION 45
ARTICLE 9: CONDITIONS TO THE OBLIGATIONS OF BUYERS AND
LIFETIME 45
9.1 REPRESENTATIONS AND WARRANTIES OF SELLERS 46
9.2 PERFORMANCE OF OBLIGATIONS OF SELLERS 46
9.3 SELLER CLOSING CERTIFICATE 46
9.4 ANCILLARY AGREEMENTS 46
9.5 CORPORATE AUTHORIZATION 46
9.6 REQUIRED CONSENTS 46
9.7 FIRPTA CERTIFICATES 47
9.8 LICENSES 47
9.9 NO ACTIONS OR ORDERS 47
9.10 PURCHASE ORDER UPDATE 47
9.11 NO LIENS 47
ARTICLE 10:CONDITIONS TO THE OBLIGATIONS OF SELLERS 47
10.1 REPRESENTATIONS AND WARRANTIES OF BUYER AND
LIFETIME 48
10.2 PERFORMANCE OF OBLIGATIONS OF BUYER AND
LIFETIME 48
10.3 BUYER CLOSING CERTIFICATE 48
10.4 ANCILLARY AGREEMENTS 48
10.5 CORPORATE AUTHORIZATION 48
ARTICLE 11:INDEMNIFICATION 48
11.1 INDEMNIFICATION OBLIGATIONS OF SELLERS 48
11.2 INDEMNIFICATION OBLIGATIONS OF BUYER 49
11.3 NOTICE OF CLAIMS 49
11.4 PROCEDURE FOR THIRD PARTY CLAIMS 50
11.5 CLAIMS PERIOD 52
11.6 LIMITATIONS 53
11.7 INVESTIGATIONS 53
11.8 OFFSET FOR INSURANCE RECOVERIES AND TAX
BENEFITS 53
11.9 CONSEQUENTIAL DAMAGES 54
11.10 EXCLUSIVE REMEDY 54
11.11 PARENT AGENCY 54
11.12 TAX TREATMENT OF INDEMNITY PAYMENTS 54
ARTICLE 12:TERMINATION 54
12.1 TERMINATION 54
12.2 EFFECT OF TERMINATION 55
ARTICLE 13:MISCELLANEOUS 56
13.1 ENTIRE UNDERSTANDING 56
13.2 WAIVER AND AMENDMENT 56
13.3 HEADINGS 56
13.4 COUNTERPARTS 56
13.5 INTERPRETATION 56
13.6 NOTICES 56
13.7 ASSIGNMENT; SUCCESSORS IN INTEREST 57
13.8 CONSTRUCTION 58
13.9 CONTROLLING LAW 58
13.10 DISPUTE RESOLUTION; JURISDICTION; SPECIFIC
PERFORMANCE 58
13.11 NO THIRD PARTY BENEFICIARIES 59
13.12 LIFETIME GUARANTEE OF BUYER OBLIGATIONS 59
LIST OF EXHIBITS:
Exhibit 4.2(a)(i) Form of Bills of Sale
Exhibit 4.2(a)(ii) Form of Assignment and Assumption
Agreements
Exhibit 4.2(a)(iii) Form of Assignment and Assumption of
Leases
Exhibit 4.2(a)(iv) Form of Assignment of Trademarks
Exhibit 4.2(a)(v) Form of Assignment of Copyrights
Exhibit 4.2(a)(x) Form of Assignment of Domain Names
LIST OF SCHEDULES:
Schedule 1.1(a) Designated Stores
Schedule 1.1(b) Domain Names
Schedule 1.1(c) Key Stores
Schedule 1.1(d) Net Working Capital
Schedule 1.1(e) Permitted Liens
Schedule 1.1(f) Sellers' Knowledge
Schedule 1.1(g) Buyers' Knowledge
Schedule 2.2(b) Personal Property
Schedule 2.2(c) Assumed Contracts
Schedule 2.2(d) Personal Property Leases
Schedule 2.2(e) Real Property Leases
Schedule 2.3(g) Certain Litigation
Schedule 2.3(h) Certain Excluded Assets
Schedule 3.5 Tax Allocation
Schedule 5.3 Consents
Schedule 5.5(a) Financial Statements
Schedule 5.5(d) Certain Products Liability Matters
Schedule 5.7 Legal Proceedings
Schedule 5.8(a) Compliance with Laws
Schedule 5.8(b) Licenses
Schedule 5.10(a) Contracts
Schedule 5.11(a)(i) Owned I.P. Rights
Schedule 5.11(a)(ii)Licensed I.P. Rights
Schedule 5.11(c) Software
Schedule 5.11(d) Certain Intellectual Property Litigation
Schedule 5.11(e) Design Licenses
Schedule 5.12 Certain Employees
Schedule 5.15 Sellers' Brokers
Schedule 5.16 Insurance
Schedule 5.17(a) Environmental Matters
Schedule 5.17(b) Releases of Hazardous Materials
Schedule 5.18 Leased Real Property
Schedule 5.19(a) Related Party Transactions
Schedule 5.20 Employee Plans
Schedule 5.21 Form of Product Warranty
Schedule 5.22 Sufficiency of Assets
Schedule 6.4 Buyer's Brokers
Schedule 6.6 Buyer's Consents
Schedule 7.2(b)(v) Permitted Raises
Schedule 7.3(a) Candidate Employees
Schedule 9.6 Required Consents
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made
and entered into as of this 17th day of June, 2005, by and
among, (a) on one hand, THE PFALTZGRAFF CO. ("Parent"), a
corporation organized under the laws of the Commonwealth of
Pennsylvania, THE PFALTZGRAFF MANUFACTURING CO.
("Manufacturing"), a corporation organized under the laws of
the Commonwealth of Pennsylvania, PFALTZGRAFF INVESTMENT CO.
("InvestCo"), a corporation organized under the laws of the
State of Delaware, and THE PFALTZGRAFF OUTLET CO., a
corporation organized under the laws of the State of Maryland
("Outlet" and together with Parent, Manufacturing and
InvestCo, each a "Seller" and collectively the "Sellers");
and (b) on the other hand, LIFETIME BRANDS, INC., a
corporation organized under the laws of Delaware
("Lifetime"), PFZ ACQUISITION CORP., a corporation organized
under the laws of Delaware and a wholly-owned subsidiary of
Lifetime ("Acquisition Sub"), and PFZ OUTLET RETAIL, INC., a
corporation organized under the laws of Delaware and a wholly-
owned subsidiary of Lifetime ("Retail Sub" and, together with
Acquisition Sub, each a "Buyer" and collectively the
"Buyers"). Buyers, Lifetime and Sellers are sometimes
individually referred to herein as a "Party" and collectively
as the "Parties".
WHEREAS, the Parties desire to enter into this Agreement
pursuant to which Sellers propose to sell to Buyers, and
Buyers propose to purchase from Sellers (the "Acquisition"),
substantially all of the assets used or held for use by
Sellers in the conduct of the Business (as defined below),
and Buyers propose to assume certain of the liabilities and
obligations of Sellers with respect to the Business; and
WHEREAS, the Parties desire to make and enter into
certain representations, warranties, covenants and agreements
in connection with the Acquisition.
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants,
agreements and conditions hereinafter set forth, and
intending to be legally bound hereby, the Parties agree as
follows:
ARTICLE 1: DEFINITIONS; CONSTRUCTION
1.1 Definitions.
The terms defined in this Section 1.1 shall, for all
purposes of this Agreement, have the meanings herein
specified:
"Affiliate" shall have the meaning assigned thereto in
Rule 12b-2 under the United States Securities Exchange Act of
1934.
"Ancillary Agreements" means the Conveyance Documents,
the Transition Services Agreement, the Product Supply
Agreement, the DC Leases and the Flemington Lease.
"Annual Financial Statements" means the audited
consolidated balance sheet and the related audited
consolidated statements of income and cash flows of Parent as
of and for the twelve (12) month periods ended December 31,
2004, 2003 and 2002, together with the reports thereon of
KPMG, independent certified public accountants.
"Benchmark Working Capital" means Twenty-Seven Million
Dollars ($27,000,000).
"Benefit Plan" means each written or oral plan, fund,
program, Contract or scheme providing for employee benefits
or for remuneration, including each deferred compensation,
bonus, incentive compensation, pension, retirement, stock
purchase, stock option or other equity compensation plan;
each "welfare" plan (within the meaning of Section 3(1) of
ERISA, determined without regard to whether such plan is
subject to ERISA); each "pension" plan (within the meaning of
Section 3(2) of ERISA, determined without regard to whether
such plan is subject to ERISA); each severance plan or
Contract providing severance benefits; and each health,
vacation, summer hours, supplemental unemployment benefit,
hospitalization insurance, medical, dental or legal program,
agreement or arrangement.
"Business" means the business of designing, sourcing,
marketing, distributing and selling (but, for avoidance of
doubt, not manufacturing), at retail, wholesale and by direct
marketing and internet marketing, ceramic dinnerware and
related household products, and licensing designs therefor to
and from third parties, as such business has been conducted
by Parent, Investco and Outlet through the Closing.
"Business Day" means any day except Saturday, Sunday or
any day on which banks are authorized or required by Law to
close in York, Pennsylvania.
"Business Intellectual Property" means, collectively,
the Owned I.P. Rights, the Licensed I.P. Rights, the
Technology, the Domain Names, the Software, all Trademarks
not otherwise included in the Owned I.P. Rights and all
Copyrights not otherwise included in the Owned I.P. Rights.
"Buyer Indemnified Parties" means Buyer and its
Affiliates, Lifetime and its Affiliates, and their respective
stockholders, agents, representatives, successors and
assigns.
"Buyers' Knowledge" means all facts actually known, or
with reasonable investigation would have been known, by those
individuals listed on Schedule 1.1(g) on the date hereof
"Code" means the Internal Revenue Code of 1986, as
amended.
"Contract" means any written or oral agreement, lease
(including all real and personal property leases), mortgage
policy, plan, instrument, contract, note, power of attorney,
insurance policy covenant, guaranty arrangement, escrow
account, commitment or other instrument.
"Conveyance Documents" means, interchangeably and
collectively as the context requires, the Bills of Sale, the
Assignment and Assumption Agreements, the Assignments and
Assumption of Leases, the Assignment of Trademarks, the
Assignment of Copyrights, the Assignments of Domain Names and
all other documents executed and delivered by any Seller and
any Buyer at the Closing for the purpose of evidencing the
transfer of any Assets to any Buyer or the assumption of any
Assumed Liabilities by any Buyer.
"Copyrights" means the copyrights listed on Schedule
5.11(a)(i) and all other copyrights owned by any Seller.
"Damages" means, as the context requires, Buyer Losses
or Seller Losses.
"DC East" means the distribution facility owned by
Parent that is located at 415 Zarfoss Road, West Manchester
Twp., PA.
"DC Leases" means, collectively, (a) a mutually agreed
upon written lease agreement between Parent and Buyers for
the lease of DC East to Buyers and (b) a mutually agreed upon
written lease agreement between Seller Holding Company and
Buyers for the lease of DC West to Buyers.
"DC West" means the distribution facility owned by
Seller Holding Company that is located at 515 Zarfoss Road,
West Manchester Twp., PA.
"Designated Store" means a Store listed on Schedule
1.1(a).
"Dollars" or "$" means United States Dollars.
"Domain Names" means the internet domain names of
Sellers listed on Schedule 5.11(a)(i).
"Employee" means all individuals shown on a Seller's
payroll and personnel records as employed by such Seller in
connection with the operation of the Business (including
those who are actively employed or on leave, disability or
other absence from employment).
"Environmental Clean-up Site" means any location which
is listed or proposed for listing on the National Priorities
List, the Comprehensive Environmental Response, Compensation
and Liability Information System, or on any similar state
list of sites requiring investigation or cleanup, or which is
the subject of any pending or threatened action, suit,
proceeding or investigation related to or arising from a
Release of a Hazardous Material or any alleged violation of
any Environmental Law
"Environmental Laws" means all applicable Laws relating
to pollution or protection of the environment or, to the
extent related to exposure to Hazardous Materials, human
health and safety, including Laws relating to Releases or
threatened Releases of Hazardous Materials into the indoor or
outdoor environment (including ambient air, surface water,
groundwater, land, surface and subsurface strata), worker
health or safety, or the manufacture, processing,
distribution, use, treatment, storage, release, transport or
handling of Hazardous Materials, record keeping,
notification, disclosure and reporting requirements
respecting Hazardous Materials, the protection of endangered
or threatened species of fish, wildlife or plants, and the
management or protection of natural resources.
"Environmental Permits" means all Licenses required to
be obtained under any Environmental Law in connection with
the Sites or the Business as conducted at the Sites.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Final Net Working Capital" means the Net Working
Capital set forth on the Final Statement.
"Financial Statements" means the Annual Financial
Statements and the Interim Financial Statements.
"Flemington Store" means the Store located at 50 Mine
Street in Flemington, New Jersey.
"Flemington Lease" means a mutually agreed upon written
lease agreement between Outlet and Retail Sub for the lease
to Retail Sub of the Flemington Store.
"GAAP" means United States generally accepted accounting
principles as in effect on any applicable date, consistently
applied.
"Governmental Entity" means any federal, state or local
or foreign government or any court, administrative,
arbitrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign.
"Hazardous Materials" means all substances defined as
"Hazardous Substances," "Oils," "Pollutants" or
"Contaminants" in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. 300.5, or toxic mold,
asbestos or asbestos-containing materials, petroleum,
polychlorinated biphenyls, lead-containing materials, radon,
urea formaldehyde or any other substances, chemicals,
materials or wastes that are regulated by, or for which
liability could be imposed under, any Environmental Law.
"Indemnified Party" means any party entitled to
indemnification pursuant to Section 11.1 or 11.2.
"Indemnifying Party" means any party required to
indemnify a Indemnified Party pursuant to Section 11.1 or
11.2.
"Interim Financial Statements" means the unaudited
balance sheet and the related unaudited statements of income
and cash flows of the Business as of and for the month ended
March 26, 2005.
"Key Store" means a Store listed on Schedule 1.1(c).
"Laws" means all applicable federal, state, local or
foreign laws (including common law), codes, statutes,
ordinances, orders, judgments, arbitration awards, decrees,
administrative or judicial promulgations, injunctions,
determinations, approvals, rules, regulations, permits,
certificates, licenses and authorizations of, and agreements
with, all Governmental Entities with jurisdiction.
"Leased Real Property" means the real property leased by
Sellers pursuant to the Real Property Leases, together with
all fixtures, improvements and appurtenances thereon (which,
for avoidance of doubt, shall not include DC East, DC West or
the Flemington Store).
"Legal Dispute" means any action, suit or proceeding
between or among the Parties and/or their Affiliates arising
in connection with any disagreement, dispute, controversy or
claim arising out of or relating to this Agreement, any
Conveyance Document, the Buyer Closing Certificate, or the
Seller Closing Certificate, or any of the transactions
contemplated hereby or thereby.
"Licenses" means all notifications, licenses, permits
(including environmental, construction and operation
permits), governmental franchises, registrations,
certificates, approvals, exemptions, classifications,
registrations and other similar documents, rights and
authorizations issued by any Governmental Entity, other than
any Patents, Copyrights and Trademarks.
"Liens" means all mortgages, liens, pledges, security
interests, charges, claims, restrictions, leases, possessory
rights, options, rights of first refusal, covenants,
easements, title and survey matters and any other encumbrance
of any kind or character.
"Manufacturing Business" means the business of
manufacturing ceramic dinnerware and related household
products.
"Material Adverse Effect" means (a) with respect to the
Business, any event, change or effect that has occurred (when
taken together with all other events, changes or effects that
have occurred) that is, or is reasonably likely to be,
materially adverse to the financial condition or results of
operations of the Business and (b) with respect to a Party,
any event, change or effect that has occurred that (when
taken together with all other events, changes or effects that
have occurred) is likely to prevent or materially delay the
performance of a Party under this Agreement or the
transactions contemplated hereby; provided that in each case
a Material Adverse Effect will not be deemed to include (1)
events, changes, effects, conditions or trends in economic,
business or financial conditions generally affecting the
ceramic dinnerware industry in the United States, (2) events,
changes or effects resulting from general economic, business,
political or financial conditions in the United States
(including changes in interest levels or prices of
securities), (3) changes in GAAP, regulatory accounting
principles or Laws applicable to the Business or such Party,
as applicable, (4) changes, effects or events arising from
national or international political or social conditions,
including the engagement by the United States in hostilities,
whether or not pursuant to the declaration of a national
emergency or war, or the occurrence of any military or
terrorist attack, (5) changes, effects or events resulting,
directly or indirectly, from the announcement of the
Acquisition or (6) changes, effects or events arising from
actions taken or omitted by a Party either as required by or
as contemplated in this Agreement or with the prior consent
of the other Parties.
"Net Working Capital" has the meaning provided on
Schedule 1.1(d).
"Neutral Auditor" means a person who shall be, or shall
have been, an audit partner in a nationally recognized
independent accounting firm having experience with the
tabletop market and industry, and who is not affiliated with,
or retained by, either Buyer or any Seller, and who shall be
appointed by agreement of Buyers and Parent.
"NLRB" means the United States National Labor Relations
Board.
"Patents" means patents, patent applications,
continuations, continuations in part, reexaminations and
reissues owned by any Seller (whether utility, design or
otherwise).
"Permitted Liens" means: (a) liens imposed by Law for
Taxes, assessments or charges or claims by Governmental
Entities that are not yet due or are being properly
contested, which contest tolls collection of such taxes and
the lien thereof and provided that reasonably acceptable
reserves are being maintained; (b) carriers', warehousemen's,
mechanics', materialmen's, repairmen's, landlords' and other
like liens imposed by Law or contract, arising in the
ordinary course of business and securing obligations that are
not due and payable; (c), solely with respect to personal
property, pledges and deposits made in the ordinary course of
business in compliance with workers' compensation,
unemployment insurance and other social security Laws or
regulations; (d), solely with respect to personal property,
deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety, indemnity and appeal
bonds, performance and return-of-money and fiduciary bonds
and other obligations of a like nature, in each case in the
ordinary course of business; (e) easements, zoning
restrictions, rights-of-way, licenses, covenants, conditions,
minor defects, encroachments or irregularities in title and
similar encumbrances on or affecting the Leased Real Property
that do not secure any monetary obligations and do not and
will not materially interfere with the ordinary conduct of
the Business as conducted or to be conducted by Buyers at the
affected Leased Real Property; (f) provided such restriction
or encumbrance will not unreasonably interfere with the
conduct of the Business by Buyer at the affected Leased Real
Property, any restriction or encumbrance that the interest or
title of any lessor or sublessor under any Real Property
Lease may be subject to, but only if such Real Property Lease
for the Leased Real Property is subordinate thereto by its
terms; and (g) those Liens set forth on Schedule 1.1(e).
"Person" means an individual, a sole proprietorship, a
partnership, a corporation, an association, an institution, a
joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization, or a
Governmental Entity or any other legal entity.
"Product Supply Agreement" means a written purchase
order from a Buyer for Four Million One Hundred Thousand
Dollars ($4,100,000) of products to be manufactured by
Manufacturing, dated as of a date prior to the Closing Date,
as accepted by Parent.
"Release" means any release, spill, emission, leaking,
leaching, injecting, escaping, disposing, pumping, emptying,
dumping, deposit or discharge of a Hazardous Material.
"SEC' means the United States Securities and Exchange
Commission.
"Seller Benefit Plan" means with respect to any Seller,
each Benefit Plan that is currently or in the past was
sponsored or maintained or required to be sponsored or
maintained by such Seller or to which such Seller makes or
has in the past made, or has or has had in the past or may
have in the future an obligation to make, contributions
providing for employee benefits or for the remuneration,
direct or indirect, of the employees, former employees,
officers, contingent workers or leased employees of the
business or the dependents of any of them.
"Seller Holding Company" means Susquehanna Pfaltzgraff
Co., a corporation organized under the laws of the State of
Delaware, of which Parent is a wholly-owned Subsidiary.
"Seller Indemnified Parties" means Parent, InvestCo,
Outlet, each of their respective Affiliates, and the
respective stockholders, agents, representatives, successors
and assigns of any of the foregoing.
"Seller Inventory" means the finished goods inventory of
Parent, Manufacturing and Outlet.
"Seller Receivables" means the accounts receivable of
Sellers relating exclusively to the Business.
"Seller Subsidiaries" means InvestCo and Outlet.
"Sellers' Knowledge" means all facts actually known, or
with reasonable investigation would have been known, by those
individuals listed on Schedule 1.1(f) on the date hereof.
"Site" means the Flemington Store, DC East and DC West.
"Store" means a Pfaltzgraff retail store, the Real
Property Lease for which is acquired hereunder.
"Store Closing Costs" means, with respect to a Store,
all (a) payments required to be made to the applicable lessor
or any lender of such lessor in connection with the
termination of the Real Property Lease therefor, and (b)
expenses actually incurred to return the physical structure
of the Store to the condition required by the terms of the
Real Property Lease therefor.
"Taxes" means all taxes, assessments, charges, duties,
fees, levies or other governmental charges (including
interest, penalties or additions associated therewith),
including income, franchise, capital stock, real property,
personal property, tangible, withholding, employment,
payroll, social security, unemployment compensation,
disability, transfer, sales, use, excise, gross receipts,
value-added and all other taxes of any kind imposed by any
Governmental Entity, whether disputed or not, and any
charges, interest or penalties imposed or that may be imposed
thereon by any Governmental Entity.
"Tax Return" means any return, declaration, report,
claim for refund, or information return or statement relating
to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"Trademarks" means the trade marks, trade names, service
marks and logos listed on Schedule 5.11(a)(i) and all other
trade marks, trade names, service marks and logos owned by
any Seller.
"Transition Services Agreement" means a mutually agreed
upon written Transition Services Agreement to be entered into
by and among Parent and Buyer as of the Closing Date.
1.2 Other Definitions
In addition to the terms defined in Section 1.1, certain
other terms are defined elsewhere in this Agreement, and,
whenever such terms are used in this Agreement, they shall
have their respective defined meanings, unless the context
expressly or by necessary implication otherwise requires.
The definitions of terms of general applicability are set
forth in the sections listed below.
Term Section
Acquisition Recitals
Agreement Preamble
Assets 2.2
Assignment and Assumption Agreements 4.2(a)(ii)
Assignment of Copyrights 4.2(a)(v)
Assignment of Trademarks 4.2(a)(iv)
Assignments and Assumption of Leases 4.2(a)(iii)
Assignments of Domain Names 4.2(a)(x)
Assumed Contracts 2.2(g)
Assumed Liabilities 2.4
Auditor Costs 3.6(e)
Bills of Sale 4.2(a)(i)
Borrowing Contracts 5.10(a)(iv)
Buyer Preamble
Buyer Closing Certificate 4.2(b)(vii)
Buyer Licenses 9.8
Buyer Losses 11.1
Candidate Employees 7.3(a)
Claim Notice 11.3
Claimant 13.10(a)
Claims Period 11.5
Closing 4.1
Closing Statement 3.6(b)
Closing Date 4.1
Closing Statement Dispute Notice 3.6(c)
Closing Statement Disputed Matters 3.6(c)
CMP 13.10(a)
COBRA 8.3(f)
Confidentiality Agreement 7.4
Covered Stores 3.7(b)
Design Licenses 5.11(e)
Excluded Assets 2.3
Excluded Liabilities 2.5
Final Statement 3.6(f)
Indemnity Cap 11.6(a)
InvestCo Preamble
Holdback 3.2(b)
Licensed I.P. Rights 5.11(a)(ii)
Lifetime Preamble
Manufacturing Preamble
Mediation Notice 13.10(a)
New Parent 7.1(f)
Outlet Preamble
Owned I.P. Rights 5.11(a)(i)
Parent Preamble
Parties Preamble
Party Preamble
Per-Store Holdback 3.2(b)
Personal Property Leases 2.2(d)
Purchase Price 3.1
Real Property Leases 2.2(e)
Respondent 13.10(a)
Seller Preamble
Sellers Preamble
Seller Closing Certificate 4.2(a)(vi)
Seller Losses 11.2
Seller Real Property Lease
Consent Certificate 9.6
Seller Stationery 7.1(d)
Software 5.11(c)
Store Closing List 3.7(a)
Technology 5.11(d)
Third Party Action 11.4(a)
Third Party Action Notice 11.4(a)
Threshold Amount 11.6(c)
Transferred Employees 7.3(a)
WARN Act 8.3(e)
WARN Liabilities 8.3(e)
1.3 Construction.
Unless the context of this Agreement otherwise clearly
requires, (a) references to the plural include the singular,
and references to the singular include the plural,
(b) references to any gender include the other genders,
(c) the words "include," "includes" and "including" do not
limit the preceding terms or words and shall be deemed to be
followed by the words "without limitation", (d) the terms
"hereof", "herein", "hereunder", "hereto" and similar terms
in this Agreement refer to this Agreement as a whole and not
to any particular provision of this Agreement, (e) the terms
"day" and "days," if not capitalized, mean and refer to
calendar day(s) and (f) the terms "year" and "years" mean and
refer to calendar year(s). Unless otherwise set forth
herein, references in this Agreement to any document,
instrument or agreement (including this Agreement)
(A) includes and incorporates all exhibits, schedules and
other attachments thereto, (B) includes all documents,
instruments or agreements issued or executed in replacement
thereof and (C) means such document, instrument or agreement,
or replacement or predecessor thereto, as amended, modified
or supplemented from time to time in accordance with its
terms and in effect at any given time. All Article, Section,
Exhibit and Schedule references herein are to Articles,
Sections, Exhibits and Schedules of this Agreement, unless
otherwise specified.
ARTICLE 2: PURCHASE AND SALE OF ASSETS
2.1 Agreement to Purchase and Sell.
(a) Subject to the terms, conditions and other
provisions of this Agreement, at the Closing and except as
otherwise specifically provided in this Article 2, Sellers
will grant, sell, assign, transfer and deliver to Buyers, and
Buyers will purchase and acquire from Sellers, all right,
title and interest of Sellers in and to all of the Assets (as
hereinafter defined), free and clear of all Liens except for
Permitted Liens, and Buyers will assume the Assumed
Liabilities.
(b) Notwithstanding anything herein to the contrary,
(i) the particular Assets being purchased and the particular
Assumed Liabilities being assumed by each Buyer shall be set
forth with reasonable specificity at the Closing in the
Conveyance Documents; (ii) if, in the case of any particular
Asset, no Buyer is identified in the Conveyance Documents as
the purchaser of such Asset, Acquisition Sub shall be deemed
to be the purchaser of such Asset; and (iii) if, in the case
of any particular Assumed Liability, no Buyer is identified
in the Conveyance Documents as assuming such Assumed
Liability, Acquisition Sub shall be deemed to assume such
Assumed Liability.
2.2 Assets.
Except as otherwise expressly set forth in Section 2.3,
the term "Assets" shall mean and shall consist of all the
assets, properties and rights of Sellers used, or held for
use, primarily in the Business as of the Closing, including:
(a) all rights in the Business Intellectual Property
relating to the Business;
(b) all furnishings, furniture, supplies, tools,
machinery and equipment and other personal property and fixed
assets that are owned by Sellers and are used in the
Business, other than the Excluded Assets, including the items
set forth on Schedule 2.2(b);
(c) the Contracts set forth on Schedule 2.2(c);
(d) the leases of personal property set forth on
Schedule 2.2(d) (the "Personal Property Leases");
(e) the leases of real property set forth on Schedule
2.2(e) (the "Real Property Leases");
(f) the Design Licenses;
(g) any Contract made or entered into after the date
hereof by Seller with respect to the Business in the ordinary
course of business consistent with past practice not in
violation of this Agreement (the Contracts described in
clauses (c), (d), (e), (f) and (g) being hereinafter referred
to as the "Assumed Contracts");
(h) all Seller Receivables;
(i) all prepaid expenses, advances, credits and
deposits of Sellers;
(j) all Seller Inventory;
(k) all goodwill of the Business; and
(l) a copy of all books of account and other financial
records, files, documents, instruments, books and records
relating principally to the Business.
2.3 Excluded Assets.
Notwithstanding anything to the contrary set forth in
this Agreement, the Assets will not include the following
assets, properties and rights of the Sellers (collectively,
the "Excluded Assets"):
(a) all ownership and other rights with respect to
Seller Benefit Plans;
(b) all Licenses;
(c) the charter documents of each Seller and the minute
books, stock ledgers, tax returns, books of account and other
constituent records relating to the organization, maintenance
and existence of each Seller as a corporation;
(d) the rights that accrue to each Seller under this
Agreement and any other agreements between any Seller and
Buyer to be delivered pursuant to this Agreement;
(e) all insurance policies of Sellers;
(f) all cash and cash equivalents of Sellers;
(g) all rights arising from or related to the
litigation listed on Schedule 2.3(g);
(h) the assets listed on Schedule 2.3(h);
(i) all rights in or to any and all real property,
subject to the DC Leases and the Flemington Lease;
(j) all rights in or to any assets used exclusively in
the Manufacturing Business; and
(k) historical archives and historical items relating
to the Business that are neither used in nor useful in the
conduct of the Business as currently conducted by Sellers.
2.4 Assumption of Assumed Liabilities.
Subject to Section 2.1(b), in connection with the
purchase by Buyers of the Assets, at the Closing, effective
as of the Closing, Buyers shall assume and thereafter pay,
perform and discharge solely the following debts, obligations
and liabilities relating to the Business and the Assets, and
no others (collectively, the "Assumed Liabilities"):
(a) subject to Section 3.7 and 2.5(h), all debts,
liabilities and obligations of Sellers under the Assumed
Contracts to be paid, performed or discharged by Sellers
after the Closing;
(b) all debts, liabilities and obligations attributable
to or arising out of the ownership or operation of any Assets
or the Business after the Closing; and
(c) the debts, obligations and liabilities set forth on
Schedule 2.4(b).
2.5 Excluded Liabilities.
Anything herein to the contrary notwithstanding, the
Assumed Liabilities will not include, and in no event will
Buyer assume, agree to pay, discharge or satisfy any debt,
liability or obligation under this Agreement or otherwise
have any responsibility for, any debt, liability or
obligation of Sellers of any kind, whether known, unknown,
contingent or otherwise other than those expressly set forth
in Section 2.4 (collectively, the "Excluded Liabilities").
Without limiting the generality of the foregoing, the term
"Excluded Liabilities" shall expressly include all debts,
liabilities or obligations of Sellers of any kind:
(a) for any Taxes of any Seller or any affiliate of
such Seller, including any sales, use or similar taxes that
any Seller or any affiliate of any Seller is required to
collect or remit to any taxing authority, but not including
any transfer taxes payable in accordance with Section 7.6;
(b) pertaining to any Excluded Asset;
(c) relating to, resulting from, or arising out of, any
non-Business operation of Sellers or any former operation of
the Business that has been discontinued or disposed of prior
to the Closing;
(d) pursuant to the Borrowing Contracts;
(e) arising out of or related to (i) any Benefit Plan,
(ii) any employee of any Seller or former employee who is not
a Transferred Employee, and (iii) any Transferred Employee to
the extent attributable to events or circumstances occurring
or existing on or prior to the Closing.
(f) under the Assumed Contracts arising prior to the
Closing;
(g) except as explicitly provided in Section 2.4,
attributable to or arising out of the ownership or operations
of any Assets or the Business prior to the Closing; and
(h) arising under or relating to Environmental Laws or
Hazardous Materials relating to the operation of the Business
by Sellers prior to the Closing.
ARTICLE 3: PURCHASE PRICE AND METHOD OF PAYMENT
3.1 Purchase Price.
The aggregate amount to be paid for the Assets (the
"Purchase Price") will be Thirty-Four Million Dollars
($34,000,000), subject to adjustment pursuant to Section 3.6.
In addition to the foregoing payment, as consideration for
the grant, sale, assignment, transfer and delivery of the
Assets, Buyers shall assume and discharge the Assumed
Liabilities.
3.2 Payment of Purchase Price; Holdback.
(a) On the Closing Date, Buyer shall pay the Purchase
Price, less the Holdback, if any, to Parent by wire transfer
of immediately available funds in accordance with
instructions to be provided to Buyers by Parent. Buyers
shall retain the Holdback for distribution in accordance with
Sections 3.2(c) and (d).
(b) The "Per-Store Holdback" shall be Three Hundred
Thousand Dollars ($300,000). The "Holdback" shall be an
amount equal to (i) the Per-Store Holdback, multiplied by
(ii) the number of Key Stores, if any, for which all consents
necessary to assign the Real Property Lease therefor to
Buyers have not been obtained on or before the Closing Date.
(c) For each Key Store for which (i) all consents
necessary to assign the Real Property Lease for such Key
Store to Buyers are obtained after the Closing Date but prior
to the date on which such Real Property Lease expires or is
terminated by the applicable lessor in accordance with the
terms thereof, and (ii) such Real Property Lease is assigned
to Buyers hereunder, Buyers shall promptly pay an amount
equal to the Per-Store Holdback from the Holdback to Parent
by wire transfer of immediately available funds in accordance
with instructions to be provided to Buyers by Parent.
(d) For each Key Store for which all consents necessary
to assign the Real Property Lease for such Key Store to
Buyers are not obtained prior to the date on which such Real
Property Lease expires or is terminated by the applicable
lessor in accordance with the terms thereof, an amount equal
to the Per-Store Holdback shall be deducted from the Holdback
and shall immediately revert to Buyers, and no Seller shall
be entitled to be paid such Per-Store Holdback.
3.3 Allocation of Certain Items.
With respect to certain expenses incurred with respect
to the Assets in the operation of the Business, the following
allocations will be made between Buyers and Sellers at
Closing by appropriate cash payments of the applicable
amounts from Buyers to Sellers and/or from Sellers to Buyers,
as the case may be:
(a) Rent. Monthly rent and any additional rent or
charges (including common area maintenance charges) with
respect to the Leased Real Property will be apportioned
between Buyers and Sellers based on the number of days in the
lease month before and after the Closing Date.
(b) Taxes. Ad valorem property taxes for the 2005
calendar year will be apportioned between Buyers and Sellers
based upon the number of days in the taxable period before
and after the Closing Date and the amounts set forth in the
current tax bills. If current tax bills are not available at
the time of Closing, such taxes initially shall be prorated
on the basis of tax bills for the prior calendar year. Once
current tax bills for the 2005 calendar year become
available, the Parties shall promptly adjust the prorations
in accordance with such current tax bills.
(c) Utilities. Utilities (including telephone,
electricity, gas, garbage and waste removal), water and sewer
charges will be apportioned based upon the number of days
occurring before and after the Closing Date during the
billing period for each such charge, and Sellers shall be
credited with any deposits transferred to the account of
Buyers; provided, however, that at Buyers' election any one
or more of such utility accounts shall be closed as of the
Closing Date, in which event Sellers shall be liable and
responsible for all charges for service through the Closing
Date and shall be entitled to all deposits theretofore made
by Sellers with respect to such utility, and Buyers shall be
responsible for reopening and reinstituting such service in
Buyers' name and shall be responsible for any fees, charges,
and deposits required in connection with such new account.
If current utility bills are not available at the time of
Closing, such utilities initially shall be prorated on the
basis of utility bills for the prior month, and Buyer and
Parent shall mutually agree on a reconciliation of such
proration to the actual utility bills promptly after such
bills become available after the Closing.
(d) All payments required under this Section 3.3 shall
be made within ten (10) Business Days after a written
statement therefor, accompanied by supporting documentation,
has been submitted by Sellers to Buyers, or vice versa.
(e) This Section 3.3 shall survive the Closing.
3.4 Payments.
All payments required under this Article 3 shall be made
in Dollars in cash by the wire transfer of immediately
available funds to such bank account(s) as shall be
reasonably designated at least three (3) Business Days prior
to the applicable payment date in writing by the
recipient(s).
3.5 Tax Allocation.
Lifetime shall prepare and deliver, within sixty (60)
days after the Final Statement has been finally determined in
accordance with Section 3.6, a proposed allocation
(consistent with the provisions of Section 1060 of the Code)
among the Assets (as determined for purposes of Section 1060)
provided by Buyers. If Sellers disagree with such
allocation, then Sellers shall, within thirty (30) days
following receipt of such allocation from Lifetime, provide
Lifetime with a written notice disputing the proposed
allocation. If Sellers deliver a Closing Statement Dispute
Notice to Lifetime, Sellers shall include with such notice a
proposed allocation of the Purchase Price and any other
capitalized costs or amounts among the Assets, and Buyers and
Lifetime shall resolve any disagreement with respect to such
proposed allocation under the procedures set forth in Section
3.6(d). If Sellers disagree with Lifetime's proposed
allocation and do not provide a Closing Statement Dispute
Notice, Sellers and Lifetime shall resolve such disagreement
under the procedures set forth in Section 3.6(d). Once a
proposed allocation has become final or been resolved
pursuant to the proceeding provisions, the Parties agree that
(a) they shall, and, in the case of Sellers, shall cause
Seller Holding Company to, take no position for Tax purposes,
including on an Internal Revenue Service Form 8594,
inconsistent with such allocation, except as may be required
to reflect any adjustments to the Purchase Price as provided
for herein; and (b) Lifetime shall prepare and file Internal
Revenue Service Forms 8594 reflecting such allocation (for
avoidance of doubt, Lifetime shall prepare and file a
separate Internal Revenue Service Form 8594 for each Seller).
All costs and expenses of the Neutral Auditor in connection
with this Section 3.5 shall be borne one-half by Buyers and
one-half by Parent.
3.6 Working Capital Adjustment.
(a) On dates to be selected by Parent (of which Parent
shall provide prior notice to Lifetime), which shall be prior
to the Closing Date, Sellers shall take a physical inventory
of the Seller Inventory. In connection therewith, Sellers
shall permit Buyers to reasonably observe such physical
inventory. Sellers shall conduct such physical inventory at
a time and in a manner so as to not interfere with Sellers'
operation of the Business.
(b) On or before the thirtieth (30th) day following the
Closing Date, Parent shall prepare and deliver to Buyer (i) a
statement, as of 11:59 p.m. on the day before the Closing
Date (the "Closing Statement"), which shall reflect Net
Working Capital (using the value of the Seller Inventory as
determined in accordance with Section 3.6(a)) and (ii) a
balance sheet of the Business as of the Closing Date setting
forth the assets being purchased and the liabilities being
assumed by Buyers hereunder, in the case of each of the
foregoing clauses (i) and (ii), as determined in accordance
with GAAP and by applying the same accounting principles,
policies and practices that were used in preparing the
balance sheet included in the Annual Financial Statements.
For avoidance of doubt, the Parties acknowledge and agree
that for the purpose of computing Net Working Capital and any
Closing Statement Disputed Matters, Sellers' LIFO reserve
shall be equal to the LIFO reserve set forth on the Interim
Financial Statements.
(c) If Buyers determine that there are any inaccuracies
in the Closing Statement, Buyers shall deliver to Parent a
written notice (a "Closing Statement Dispute Notice") setting
forth such alleged inaccuracies (the "Closing Statement
Disputed Matters") no later than 5:00 p.m., York,
Pennsylvania time on the thirtieth (30th) day after receipt
of the Closing Statement from Parent. If Buyers do not
deliver a Closing Statement Dispute Notice to Parent by such
date and time, Buyers shall be deemed to have accepted the
Closing Statement as prepared by Parent.
(d) Buyers and Parent shall endeavor in good faith to
resolve the Closing Statement Disputed Matters by mutual
agreement. If, within thirty (30) Business Days after Buyers
deliver a Closing Statement Dispute Notice to Parent:
(i) Buyers and Parent are able to reach a mutually
satisfactory resolution of the Closing
Statement Disputed Matters, then the Closing
Statement shall be revised to reflect such
resolution, and such Closing Statement will be
final, binding and conclusive (but only with
respect to those Closing Statement Disputed
Matters as to which Buyers and Parent have
reached such a mutually satisfactory
resolution); or
(ii) Buyers and Parent are unable to reach a
mutually satisfactory resolution of the
Closing Statement Disputed Matters, then
Buyers and Parent shall promptly submit any
remaining Closing Statement Disputed Matters
to a Neutral Auditor. Buyers and Parent shall
supply to the Neutral Auditor only such
supporting documentation and information as
the Neutral Auditor may request. The Neutral
Auditor will deliver to Buyers and Parent a
written determination (such determination to
include a work sheet setting forth all
material calculations used in arriving at such
determination and to be based solely on the
information provided to the Neutral Auditor by
Buyers and Parent) of the Closing Statement
Disputed Matters within thirty (30) days of
receipt of such disputed items.
(e) All decisions of the Neutral Auditor shall be final
and nonappealable, and the Closing Statement shall be
revised, if necessary, to reflect the determination of the
Auditor. All costs and expenses of the Neutral Auditor (the
"Auditor Costs") shall be borne one-half by Buyers and one-
half by Parent.
(f) The final Closing Statement, as such has been
agreed upon by Buyers and Parent, or as such has been
determined by the Neutral Auditor pursuant hereto, as the
case may be, will constitute the "Final Statement".
(g) If (i) the Final Net Working Capital is less than
the Benchmark Working Capital, Parent shall pay the amount of
such deficiency to Buyers within ten (10) Business Days after
the Final Statement is determined; or (ii) the Final Net
Working Capital exceeds the Benchmark Working Capital, Buyers
shall pay the amount of such excess to Parent within ten (10)
Business Days after the Final Statement is determined.
3.7 Non-Continuing Stores.
(a) Buyers shall deliver a written notice (the "Store
Closing List") to Parent prior to November 30, 2005 setting
forth a list of the Stores that Buyers desire to close, if
any.
(b) The Store Closing Costs arising from the closing of
the Stores (x) closed on or before the Closing Date with
Lifetime's consent, (y) closed after the Closing Date but
prior to the date the Store Closing List is delivered to
Parent and (z) set forth on the Store Closing List
(collectively, the "Covered Stores") shall be paid as
follows:
(i) Parent shall pay the first Two Million Five
Hundred Thousand Dollars ($2,500,000) of such
Store Closing Costs;
(ii) if the aggregate amount of such Store Closing
Costs exceeds Two Million Five Hundred
Thousand Dollars ($2,500,000), Buyers shall
then pay the Store Closing Costs in excess
thereof, up to a total excess amount of Two
Million Five Hundred Thousand Dollars
($2,500,000); and
(iii) if the aggregate amount of such Store
Closing Costs exceeds Five Million Dollars
($5,000,000), Buyers and Parent shall each pay
one-half of the Store Closing Costs in excess
of Five Million Dollars ($5,000,000).
(c) No Seller shall be responsible for any Store
Closing Costs arising from the closing of any Store that is
not a Covered Store.
3.8 Certain Payments Related to Assumed Contracts.
If any amount is required to be paid to a third Person
under any Assumed Contract (other than a Real Property Lease)
on account of any consent required for the assignment of such
Assumed Contract to Buyer, Buyers shall pay such amount to
such third Person, or if such amount is paid by a Seller with
the Acquisition Sub's prior written consent, then Buyers
shall promptly reimburse such Seller for the full amount of
the payment.
ARTICLE 4: THE CLOSING
4.1 Closing.
The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place as soon as
reasonably practicable, but in any event no later than the
fifth (5th) Business Day, following the day upon which all of
the conditions to Closing have been satisfied or waived
(other than those conditions which by their terms cannot be
satisfied until the Closing but subject to the satisfaction
of such conditions) or such other date as is mutually agreed
upon in writing by the Parties (the "Closing Date"). The
Closing shall take place at the offices of Venable LLP in
Baltimore, Maryland. Solely for financial and accounting
purposes, the Closing shall be deemed to have occurred as of
12:01 a.m. York, Pennsylvania time on the Closing Date.
4.2 Closing Deliveries.
At the Closing:
(a) Sellers shall deliver (executed as applicable) to
Buyers:
(i) Bills of Sale substantially in the form of
Exhibit 4.2(a)(i), transferring to the
applicable Buyer all of each Seller's right,
title and interest in and to such Seller's
Assets in accordance with Section 2.1(b)
(other than any Real Property Leases, Personal
Property Leases, Copyrights and Trademarks)
(collectively, the "Bills of Sale");
(ii) Assignment and Assumption Agreements
substantially in the form of Exhibit
4.2(a)(ii), with respect to each Seller's
liabilities included in the Assumed
Liabilities (collectively, the "Assignment and
Assumption Agreements");
(iii) Assignments and Assumption of Leases
substantially in the form of Exhibit
4.2(a)(iii), with respect to the Personal
Property Leases and Real Property Leases
(collectively, the "Assignments and Assumption
of Leases") (which Assignments and Assumption
of Lease shall provide (x) an indemnity of
Buyers from Parent for all liabilities under
the applicable Personal Property Lease or Real
Property Lease arising on or prior to the
Closing, and (y) an indemnity of Sellers from
Buyers and Lifetime for all liabilities under
the applicable Personal Property Lease or Real
Property Lease arising after the Closing);
(iv) an Assignment of Trademarks substantially in
the form of Exhibit 4.2(a)(iv) (the
"Assignment of Trademarks");
(v) an Assignment of Copyrights substantially in
the form of Exhibit 4.2(a)(v) (the "Assignment
of Copyrights");
(vi) a certificate of an authorized officer of
Parent as to the Sellers' compliance with the
conditions set forth in Section 9.1 and 9.2
(the "Seller Closing Certificate");
(vii) the Transition Services Agreement;
(viii) the Product Supply Agreement;
(ix) each of the DC Leases and the Flemington Lease
duly executed;
(x) Assignments of Domain Names substantially in
the form of Exhibit 4.2(a)(x) (the
"Assignments of Domain Names");
(xi) the Seller Real Property Consent Certificate;
and
(xii) such other documents as are required
under this Agreement or reasonably requested
by Buyers.
(b) Buyers shall deliver (executed as applicable) to
Sellers:
(i) the Purchase Price, less the Holdback, if any;
(ii) the Bills of Sale;
(iii) the Assignment and Assumption Agreements;
(iv) the Assignments and Assumption of Leases;
(v) the Assignment of Trademarks;
(vi) the Assignment of Copyrights;
(vii) a certificate of an authorized officer of
Lifetime as to Lifetime's and each Buyer's
compliance with the conditions set forth in
Section 10.1 and 10.2 (the "Buyer Closing
Certificate");
(viii) the Transition Services Agreement;
(ix) the Product Supply Agreement;
(x) each of the DC Leases and the Flemington
Lease;
(xi) all documents reasonably necessary to cause
the registration of the Domain Names to be
transferred to Buyer; and
(xii) such other documents as are required
under this Agreement or reasonably requested
by Sellers.
4.3 Nonassignability of Contracts.
(a) Notwithstanding anything to the contrary contained
in this Agreement, to the extent that the grant, sale,
assignment, transfer or delivery to Buyers, of any Contract
that would be an Assumed Contract, or any claim or right or
any benefit arising thereunder or resulting therefrom would
require any authorizations, approvals, consents or waivers of
a Governmental Entity or other third party, and such
authorizations, approvals, consents or waivers shall not have
been obtained prior to the Closing, the Closing shall
proceed, without the grant, sale, assignment, transfer or
delivery of such Contract, and this Agreement shall not
constitute a grant, sale, assignment, transfer or delivery of
such Contract or an attempt thereof.
(b) If the Closing proceeds without the grant, sale,
transfer, assignment or delivery of any Contract that would
be an Assumed Contract, then following the Closing, the
parties shall use their commercially reasonable efforts, and
cooperate with each other, to obtain promptly such
authorizations, approvals, consents or waivers. Pending such
authorization, approval, consent or waiver, Sellers shall use
commercially reasonable efforts, and the Parties shall
cooperate with each other in any mutually agreeable,
reasonable and lawful arrangements designed to provide to
Buyers all of the benefits of use of such Contract and to
Sellers the benefits, including any indemnities, that Sellers
would have obtained had the Contract been conveyed to Buyers
at the Closing.
(c) To the extent that the applicable Buyer is provided
all of the material benefits pursuant to this Section 4.3 of
any Contract, the applicable Buyer shall perform for the
benefit of the other Persons that are parties thereto all of
the obligations of Sellers thereunder and any related
liabilities that, but for the lack of an authorization,
approval, consent or waiver to assign such liabilities to
such Buyer, would be Assumed Liabilities.
(d) Once authorization, approval, consent or waiver for
the grant, sale, assignment, transfer or delivery of any such
Contract not granted, sold, assigned, transferred or
delivered at the Closing is obtained, such Contract shall be
deemed to have been granted, assigned, transferred and
delivered to the applicable Buyer at no additional cost to
such Buyer. To the extent that any such Contract cannot be
transferred or the material benefits of any such Contract
cannot be provided to the applicable Buyer following the
Closing pursuant to this Section 4.3, then the applicable
Buyer and Seller shall enter into such arrangements
(including subleasing, sublicensing or subcontracting) to
provide to the Parties the material economic (taking into
account Tax costs and benefits) and operational equivalent,
of obtaining such authorization, approval, consent or waiver,
and also to provide for the performance by Buyer of the
obligations thereunder. Sellers shall hold in trust for, and
pay to the applicable Buyer promptly upon receipt thereof,
all income, proceeds and other monies received by any Seller
in connection with its use of any Contract (net of any Taxes
and any other costs imposed upon such Seller) in connection
with the arrangements under this Section 4.3.
ARTICLE 5: REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, hereby represent and
warrant to each Buyer and Lifetime as follows:
5.1 Organization.
Each Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state in
which it is incorporated, and each Seller has full corporate
power and authority to carry on the Business to the extent it
is now being conducted by such Seller. Each Seller is duly
qualified or licensed to do business and is in good standing
in each jurisdiction in which the failure to so qualify or
become licensed would have a Material Adverse Effect with
respect to the Business. Parent has furnished or made
available to Buyer true and complete copies of each Seller's
articles of incorporation and bylaws, each as amended to
date. In each case, such organizational documents are in
full force and effect, and no Seller is in violation of any
provision of its articles of incorporation or bylaws.
5.2 Authority; Non-Contravention.
Each Seller has the right, power and capacity to execute
and deliver this Agreement and any other agreement entered
into in connection with this Agreement and to perform its
obligations under this Agreement and any other agreement
entered into in connection with this Agreement to which it is
a party and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this
Agreement and any other agreement entered into in connection
with this Agreement by any Seller and the performance by
Sellers of their respective obligations hereunder and
thereunder and the consummation of the transactions provided
for herein and therein have been duly and validly authorized
and approved by all necessary corporate action. This
Agreement has been, and any other agreement entered into in
connection with this Agreement will be as of the Closing
Date, duly executed and delivered by each Seller and do or
will, as the case may be, constitute the valid and binding
agreements of each Seller, enforceable against each Seller in
accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the enforceability of creditors'
rights generally, general equitable principles and the
discretion of courts in granting equitable remedies. Subject
to receipt of the consents and approvals described in
Schedule 5.3, neither the execution and delivery of this
Agreement by Sellers nor the consummation of the transactions
contemplated hereby does or would, after the giving of notice
or the lapse of time or both, (i) conflict with, result in a
breach of, constitute a default under, or violate the
articles of incorporation or the bylaws of any Seller, (ii)
conflict with, result in a breach of, constitute a default
under, or violate any Law applicable to any Seller, (iii)
conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the
right to accelerate, amend, modify, cancel or refuse to
perform under, or require any notice under any Contract or
other arrangement, including any express or implied warranty,
to which any Seller is a party or by which it is bound or to
which any of its assets is subject, or (iv) result in the
creation of, or give any party the right to create, any Lien,
other than Permitted Liens, or other rights upon any right,
property or Asset of any Seller.
5.3 No Consents.
Except as otherwise set forth on Schedule 5.3, no
material permit, consent, approval, novation, authorization
or other order of or filing with any Governmental Entity or
any other Person is required in connection with the
execution, delivery and consummation of this Agreement and
any other agreement entered into in connection with this
Agreement and the actions of Sellers contemplated hereby.
5.4 Tax Matters.
All Taxes of Sellers not otherwise assumed by Buyer
under this Agreement have been or will be paid by Sellers and
will not result in the imposition of any Lien on any of the
Assets.
5.5 Financial Statements; Accounts Receivable; Inventory.
(a) A copy of the Financial Statements is attached as
Schedule 5.5(a). Each of the balance sheets included in such
Financial Statements (including the related notes and
schedules) fairly presents in all material respects the
financial position of Sellers as of the date of such balance
sheet, and each of the statements of income and cash flows
included in such Financial Statements (including any related
notes and schedules) fairly presents in all material respects
the results of operations and changes in cash flows, as the
case may be, of the Business for the periods set forth
therein, in each case in accordance with GAAP (except for the
omission of footnotes and, in the case of the Interim
Financial Statements, normal year-end adjustments). Since
December 31, 2004, there has been no material change in any
of the accounting policies, practices or procedures of the
Business.
(b) The Seller Receivables reflected on the Interim
Financial Statements represent bona fide claims of a Seller
against debtors for sales of products, performance of
services or other charges arising on or before the date
hereof. The reserves relating to the Seller Receivables that
are set forth on the Interim Financial Statements are
adequate and calculated consistent with past practice.
Subject to such reserves, none of the Seller Receivables are
subject to any defense or right of setoff.
(c) No Seller is in possession of any inventory not
owned by such Seller, except for goods a Seller has agreed to
sell but has not yet shipped Schedule 5.5(c) sets forth a
true and complete list of all inventory to which any Seller
has taken title, but not taken physical delivery. The LIFO
reserve that is set forth on the Interim Financial Statements
is adequate and calculated consistent with past practice.
(d) Except as set forth on Schedule 5.5(d), all
products included in any Seller Inventory (i) are free from
manufacturing and design defects, (ii) contain adequate
consumer warnings and instructions, and (iii) to Sellers'
Knowledge, do not contain any materials or chemicals that
would require consumer warnings under the Safe Drinking and
Toxic Enforcement Act of 1986 of the State of California
(also known as Proposition 65).
5.6 Absence of Undisclosed Liabilities.
All liabilities and obligations relating to any of the
Sellers, any of the Assets or the Business, whether accrued,
absolute, contingent or otherwise, and whether known or
unknown, that are required under GAAP to be reflected or
reserved against in the Financial Statements or disclosed in
the accompanying notes thereto are so reflected, reserved
against or disclosed, except for liabilities or obligations
(a) incurred after March 31, 2004 in the ordinary course of
business consistent with past practice, (b) under this
Agreement or in connection with the transactions contemplated
hereby, and (c) which would not have a Material Adverse
Effect with respect to the Business.
5.7 Legal Proceedings.
Except as set forth in Schedule 5.7, there are no suits,
actions, claims, arbitration proceedings or investigations
pending or, to Sellers' Knowledge, threatened against,
relating to or involving any of the Sellers, any of the
Assets or the Business. There are no actual or, to Sellers'
Knowledge, threatened actions, suits, claims, arbitration
proceedings or investigations which present a claim to
restrain or prohibit the transactions contemplated herein.
There are no judgments, orders, injunctions, decrees,
stipulations or awards (whether rendered by a court,
administrative agency, or by arbitration, pursuant to a
grievance or other procedure) against or relating to the
Assets or the Business before any Governmental Entity, which
if determined adversely, are reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on any
of the Sellers, any of the Assets or the Business.
5.8 Compliance with Laws; Licenses.
(a) Except as set forth on Schedule 5.8(a), the
Sellers, the Assets and the Business are in compliance with
all Laws, except where the failure to so comply would not
have a Material Adverse Effect with respect to the Business,
and has obtained and maintained all Licenses applicable to
the conduct of the Business, except where the failure to do
so would not have a Material Adverse Effect with respect to
the Business. No Seller has received notification that has
not lapsed, been withdrawn or abandoned by any Governmental
Entity (i) asserting a material violation by the Business of
any such Law, (ii) threatening to revoke any material License
of the Business, or (iii) materially restricting or in any
material way limiting the operations of the Business.
(b) Schedule 5.8(b) lists all Licenses held by any
Seller and required for the operation of the Business.
5.9 Title to Assets.
Sellers are the sole and exclusive legal and equitable
owners of all right, title and interest in, and have good and
marketable title to, possess valid rights under a license to,
or a valid leasehold interest in, all of the Assets (real,
personal and fixed, tangible and intangible), free and clear
of any and all Liens, other than Permitted Liens. Sellers'
interest in each Real Property Lease is subject to no Liens,
other than Permitted Liens.
5.10 Contracts.
(a) Schedule 5.10(a) lists the following Contracts
relating to the Business, to which, as of the date hereof,
any Seller is a party:
(i) each Contract (or group of related Contracts)
relating to the Business for the lease of
personal property to or from any Person
providing for lease payments in excess of
Fifty Thousand Dollars ($50,000) per annum or
in excess of Fifty Thousand Dollars ($50,000)
in the aggregate;
(ii) each Contract (or group of related Contracts)
relating to the Business for the purchase of
supplies, or other personal property, or for
the furnishing or receipt of services, the
performance of which (A) will extend over a
period of more than two (2) years or (B)
involves consideration in excess of Fifty
Thousand Dollars ($50,000) per annum or in
excess of Fifty Thousand Dollars ($50,000) in
the aggregate;
(iii) each Contract relating to the Business
concerning a partnership or joint venture
involving a share of profits, losses, costs or
liabilities by a Seller with any other Person;
(iv) each Contract (or group of related Contracts)
relating to the Business under which a Seller
has created, incurred, assumed or guaranteed
any indebtedness for borrowed money, or any
capitalized lease obligation, or under which
it has granted a Lien on any of the Assets,
including any letter of credit established by
a Seller for the benefit of any of Sellers'
suppliers (the Contracts described in this
Section 5.10(a)(iv) being herein called the
"Borrowing Contracts");
(v) each Contract relating to the Business binding
a Seller with respect to non-solicitation or
non-competition;
(vi) each Contract relating to the Business under
which a Seller has agreed to sell Seller
Inventory to a customer of the Business for
consideration in excess of Fifty Thousand
Dollars ($50,000);
(vii) each Contract pursuant to which a Seller
has agreed to sell any of its assets to a
third Person (A) outside the ordinary course
of the Business, (B) within one (1) year prior
to the Closing Date, and (C) for consideration
in excess of Fifty Thousand Dollars ($50,000);
(viii) each Contract relating to the Business in
which a Seller has made product warranties
other than in the ordinary course of the
Business;
(ix) each written individual employment Contract
between any Employee and any Seller;
(x) each Contract relating to the Business between
a distributor or sales agent and any Seller;
(xi) each other Contract (or group of related
Contracts) relating to the Business that is
not terminable at will by a Seller prior to or
after the Closing without prior notice and/or
without payment of any amount or other
penalty, pursuant to which a Seller is or may
become subject to any obligation or any
liability in excess of Fifty Thousand Dollars
($50,000), or the performance of which
involves consideration in excess of Fifty
Thousand Dollars ($50,000).
(b) Parent has made a complete copy of each Contract
listed on Schedule 5.10(a) available to Buyers. With respect
to each such Contract: (i) each such Contract is in full
force and effect and a binding obligation of a Seller,
enforceable in accordance with its terms with respect to such
Seller, and to Sellers' Knowledge, the other party or parties
thereto, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting
the enforceability of creditors' rights generally, general
equitable principles and the discretion of courts in granting
equitable remedies, and (ii) no Seller is in breach or
default and no event has occurred that with notice or lapse
of time would constitute a breach or default by any Seller
or, to Sellers' Knowledge, permit termination, modification
or acceleration by any other party under such Contract, and
to Sellers' Knowledge, no other party is in breach or default
by the other party and no event has occurred that with notice
or lapse of time would constitute a breach or default, or
permit termination, modification or acceleration by a Seller
under such Contract.
(c) Schedule 5.10(c) sets forth, as of the date hereof,
each open purchase order for Seller Inventory, including the
type, volume and dollar amount thereof.
5.11 Intellectual Property.
(a) (i) Schedule 5.11(a)(i) lists all
trademarks, trade names, service marks,
copyrights, and Internet domain names
registered (or for which applications have
been filed) in the name of (or in the case of
applications, submitted by) a Seller (or,
where record title has not been updated,
assigned to a Seller) and relating to the
Business, and all material unregistered
trademarks, trade names, service marks and
copyrights relating to the Business for which
no Seller has submitted an application
(collectively, the "Owned I.P. Rights").
(ii) Schedule 5.11(a)(ii) list all patents,
trademarks, trade names, service marks,
copyrights and applications therefore, and
Internet domain names licensed to a Seller
relating to the Business (collectively, the
"Licensed I.P. Rights").
(iii) No Seller owns any Patents.
(b) The Owned I.P. Rights are owned by Sellers free of
any Liens other than Permitted Liens, are not subject to any
license other than the Design Licenses (defined below), and
are not subject to any other arrangement requiring any
payment to any Person or the obligation to grant rights to
any Person in exchange. To Sellers' Knowledge, the Licensed
I.P. Rights are free and clear of any Liens other than
Permitted Liens, royalties or other obligations. There is no
pending or, to Sellers' Knowledge, threatened proceeding in
which the validity or enforceability of the Owned I.P. Rights
or title thereto is being questioned. To Sellers' Knowledge,
there is no pending or threatened proceeding in which the
validity or enforceability of the Licensed I.P. Rights or
title thereto is being questioned. To Sellers' Knowledge,
none of the Owned I.P. Rights infringe any valid trademarks,
trade names, service marks, copyrights or Internet domain
names of a third Person. The Owned I.P. Rights, together
with the Licensed I.P. Rights, constitute all intellectual
property necessary for the operation of the Business.
(c) Sellers own, or possess valid rights under license
to, all computer software programs that are material to the
conduct of the Business including (i) any and all material
software implementations of algorithms, models and
methodologies, whether in source code (where available) or
object code, (ii) material databases and compilations,
including any and all data and collections of data, whether
machine readable or otherwise, (iii) material descriptions,
flow-charts and other work product used to design, plan,
organize and develop any of the foregoing, (iv) the material
technology supporting any Internet site(s) operated by or on
behalf of Sellers and relating primarily to the Business, (v)
all Worldwide Web addresses and URLs for such Internet
site(s), and (vi) all material documentation, including
training materials, relating to any of the foregoing,
(collectively, the "Software"). Schedule 5.11(c) contains a
complete and accurate list and description of all the
Software (other than computer software generally available to
the public and having a cost of less than $1,000 per unit of
license (e.g., seat, user, server or site)). Except as set
forth on Schedule 5.11(c), there are no infringement suits,
actions or proceedings pending or, to Sellers' Knowledge,
threatened against any Seller with respect to the Software.
(d) Sellers own, or possess valid license rights to,
all material know-how used in the Business, including
operating procedures and business plans (collectively, the
"Technology"). Except as set forth on Schedule 5.11(d),
there are no infringement suits, actions or proceedings
pending or, to Sellers' Knowledge, threatened against any
Seller with respect to the Technology.
(e) Schedule 5.11(e) sets forth a true and complete
list of all agreements in which any Seller has granted rights
to a third Person to use any design included in the Owned
I.P. Rights (the "Design Licenses").
5.12 Employees.
Schedule 5.12 contains a true and complete list of all
of the Employees (whether full-time, part-time or otherwise)
as of the date hereof, specifying their position, annual
salary or hourly wage, 2004 bonus (if any) and current
accrued vacation.
5.13 Labor and Employment Matters.
(a) The Employees are not represented by a labor
organization or group that was either certified by any labor
relations board, including the NLRB, or any other
Governmental Entity, or voluntarily recognized by any Seller
as the exclusive bargaining representative of a unit of
employees, and to Sellers' Knowledge, no Employee is
represented by any other labor union or organization. No
Seller is a party to or has any obligation under any union
contract, or any obligation (other than obligations imposed
by Law) to recognize or deal with any labor union or
organization, and there are no such contracts pertaining to
or which determine the terms or conditions of employment of
any Employee.
(b) To Sellers' Knowledge, (i) no representation
election petition or application for certification has been
filed by the employees of the Business or is pending with the
NLRB or any other Governmental Entity relating to the
Business, and (B) no overt union organizing campaign or other
overt attempt to organize or establish a labor union,
employee organization or labor organization or group
involving employees of the Business is in progress or is
threatened.
(c) No labor dispute, walk out, strike, slowdown, hand
billing, picketing, work stoppage (sympathetic or otherwise),
or other "concerted action" organized by the employees of the
Business is in progress or, to Sellers' Knowledge, has been
threatened.
(d) Except for the severance plans and policies set
forth in Schedule 5.20, all Employees may be terminated at
any time with or without cause and without any severance or
other liability.
(e) Except as set forth on Schedule 5.7 and/or 5.8(a),
each of the Sellers have complied with each, and is not in
violation in any material respect of any, Law relating to
anti-discrimination and equal employment opportunities and
there are, and have been, no material violations of any other
Law respecting the hiring, hours, wages, occupational safety
and health, employment, promotion, termination or benefits of
any Employee or other person.
(f) All personnel of Sellers have been properly
characterized for United States federal income tax purposes
as employees or independent contractors, as applicable.
5.14 Absence of Certain Changes.
Since December 31, 2004, there has not been any change
with respect to the Business that has had a Material Adverse
Effect on the Business.
5.15 Brokers.
Except as indicated on Schedule 5.15, Seller has not
dealt with any broker, finder or agent with respect to this
Agreement or any of the transactions contemplated hereby and
all such fees, commissions or other amounts due to any Person
set forth on Schedule 5.15 shall be for the account of the
Sellers.
5.16 Insurance.
Schedule 5.16 sets forth a correct and complete list of
all current insurance policies and coverages relating to the
Business for which any Seller is an insured party. All such
policies are in full force and effect and all premiums due
and payable in respect thereof have been paid. Schedule 5.16
also sets forth a list of all pending claims with respect to
such policies. No Seller has received a notice of
cancellation of any such policy or of any material changes
that are required in the conduct of the Business as a
condition to the continuation of coverage under, or renewal
of, any such policy. To Sellers' Knowledge, there is no
existing default or event which, with the giving of notice or
lapse of time or both, would constitute a default under any
such policy or entitle any insurer to terminate or cancel any
such policy with respect to the Business. No Seller has any
Knowledge of any threatened termination of any such policy.
5.17 Environmental Matters.
(a) Except as set forth in Schedule 5.17(a) (i) no
Seller has received any notice, notification, demand, request
for information, citation, summons, complaint, order or other
communication regarding any actual or alleged violation of or
liability under any Environmental Law with respect to the
Assets, the Business or any of the Leased Real Property, (ii)
no investigation, claim, suit, proceeding or review arising
under any Environmental Law with respect to any of the Leased
Real Property, the Business or the Assets is pending or
threatened against any Seller, and (iii) no penalty or fine
has been assessed against any Seller with respect to any
matters relating to or arising out of any violation of any
Environmental Law with respect to the Leased Real Property,
the Business or the Assets.
(b) Except as set forth on Schedule 5.17(b), no Seller
has Released any Hazardous Materials at the Leased Real
Property.
(c) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted
by, on behalf of, or which are in the possession of the
Sellers (or any representatives thereof) with respect to any
Leased Real Property which have not been delivered to the
Buyer prior to execution of this Agreement.
(d) The Sellers have obtained and hold, and, to
Sellers' Knowledge, are in compliance with all provisions of,
all Environmental Permits required to be obtained and held by
Sellers in connection with the Sites or the Business as
conducted at the Sites.
(e) To Sellers' Knowledge, while Sellers have owned the
Sites, no Seller has transported or arranged for the
treatment, storage, handling, disposal, or transportation of
any Hazardous Material to any off-Site location from the
Sites which has resulted, or could result, in a liability to
any Seller under Environmental Laws.
(f) No Site is a current, or to Sellers' Knowledge,
proposed, Environmental Clean-up Site.
(g) To Sellers' Knowledge, there are no (i) underground
storage tanks, active or abandoned, (ii) polychlorinated
biphenyl containing equipment, (iii) friable asbestos
containing materials, or (iv) toxic mold at any Site.
(h) This Section 5.17 contains the sole and exclusive
representations and warranties of the Sellers with respect to
any matters arising under any Environmental Law.
5.18 Real Property.
(a) The Real Property Leases and the real property
demised by the DC Leases and the Flemington Lease are the
only real property interests used in connection with or
otherwise necessary to the Business. A Seller is the current
tenant under each Real Property Lease. The Real Property
Leases are subject to no Liens except Permitted Liens.
(b) True and correct copies of the Real Property Leases
(and all modifications and extensions thereof) have been
delivered to Buyers by Sellers.
(b) To Sellers' Knowledge:
(i) a Seller has a valid and subsisting leasehold
estate in and the right to quiet enjoyment to
each parcel of Leased Real Property for the
full term of the applicable Real Property
Lease;
(ii) the Real Property Leases are in full force and
effect and are enforceable in accordance with
their terms; and
(iii) there is not any existing default or
event of default and no circumstance exists,
which, with notice, the passage of time, or
both, could constitute a default under any
Real Property Lease.
(c) A Seller is in possession of the Leased Real
Property.
(d) The full security deposit required under each Real
Property Lease is being held by or on behalf of the lessor
thereunder, and no penalties are accrued and unpaid under any
Real Property Lease.
(e) No landlord or tenant under any Real Property Lease
has exercised any option or right to cancel or terminate such
Real Property Lease or shorten or lengthen the term thereof,
lease additional premises, reduce or relocate the premises
demised by such Real Property Lease or purchase any property.
No Seller is a party to any oral lease of real property.
5.19 Related Party Transactions; Foreign Corrupt Practices
Act.
(a) Except as set forth on Schedule 5.19(a):
(i) no officer or director of any Seller is
currently indebted to any Seller, nor is any
Seller indebted (or committed to make loans or
extend or guarantee credit) to any of such
individuals;
(ii) to Sellers' Knowledge, as of the date hereof,
no officer or director of any Seller has any
direct or indirect ownership interest in any
firm or corporation with which any Seller has
a material business relationship; provided,
however, that the foregoing representation in
this Section 5.19(a)(ii) shall not apply in
cases where an officer or director of a Seller
owns stock in an amount less than 5% of the
outstanding capital stock of a publicly traded
company; and
(iii) (A) there are no agreements related to
the Business among any of the Sellers or among
any Seller and the Seller Holding Company, (B)
no Seller is currently indebted (or committed
to make loans or extend or guarantee credit)
to any other Seller or the Seller Holding
Company, and (C) the Seller Holding Company is
not currently indebted (or committed to make
loans or extend or guarantee credit) to any
Seller.
(b) No Seller has, to obtain or retain any business,
directly or indirectly offered, paid or promised to pay, or
authorized the payment of, any money or other thing of value
in excess of Five Hundred Dollars ($500) to any Person in
violation of the United States Foreign Corrupt Practices Act
then in effect.
5.20 Employee Plans.
Schedule 5.20 lists each Benefit Plan that is sponsored,
maintained or contributed to or required to be contributed to
by any Seller for the benefit of any Employee or former
Employee of any Seller and each Seller Benefit Plan.
5.21 Product Warranty
Schedule 5.21 sets forth the form of Parent's standard
product warranty provided to retail consumers in connection
the sale of Parent's products to such consumers.
5.22 Sufficiency of Assets
Except as set forth on Schedule 5.22, the Assets (i)
except for the Excluded Assets, constitute all of the assets,
tangible and intangible, of any nature whatsoever, which are
used to operate and conduct the Business in the manner
presently operated and conducted by Sellers, and (ii)
correspond to the Financial Statements.
5.23 Disclosure
No representation or warranty or other statement made by
any Seller in this Agreement, the Ancillary Agreements or
otherwise in connection with the transactions contemplated
hereby contains any untrue statement or omits to state a
material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading.
ARTICLE 6: REPRESENTATIONS AND WARRANTIES OF BUYERS AND
LIFETIME
Buyers and Lifetime, jointly and severally, hereby
represent and warrant to each Seller as follows:
6.1 Organization.
(a) Each Buyer is a duly organized and validly existing
corporation, in good standing under the laws of the State of
Delaware and has full corporate power and authority to own
and/or lease all of its properties and assets, and to carry
on its business as now being conducted.
(b) Lifetime is a duly organized and validly existing
corporation, in good standing under the laws of the State of
Delaware and has full corporate power and authority to own
and/or lease all of its properties and assets, and to carry
on its business as now being conducted.
6.2 No Violation.
Subject to receipt of the consents and approvals
described in Schedule 6.6, none of the execution and delivery
of this Agreement by Buyers, the execution and delivery of
this Agreement by Lifetime, or the consummation of the
transactions contemplated hereby does or would, after the
giving of notice or the lapse of time or both, (i) conflict
with, result in a breach of, constitute a default under, or
violate the articles of incorporation or the bylaws of Buyers
or Lifetime, (ii) conflict with, result in a breach of,
constitute a default under, or violate any Law applicable to
Buyers or Lifetime, or (iii) conflict with, result in a
breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, amend, modify, cancel or refuse to perform under,
or require any notice under any Contract or other
arrangement, including any express or implied warranty, to
which Buyers or Lifetime is a party or by which it is bound
or to which any of its assets is subject; except, in the case
of clause (iii) above, for such conflicts that would not
adversely affect the ability of Buyers or Lifetime to
complete its obligations hereunder.
6.3 Enforceable Agreement.
Each of each Buyer and Lifetime has the right, power and
capacity to execute and deliver this Agreement and any other
agreement entered into in connection with this Agreement and
to perform its obligations under this Agreement and any other
agreement entered into in connection with this Agreement to
which it is a party to and to consummate the transactions
contemplated hereby and thereby. The execution and delivery
of this Agreement and any other agreement entered into in
connection with this Agreement by Buyer and the performance
by Buyers of its obligations hereunder and thereunder and the
consummation of the transactions provided for herein and
therein have been duly and validly authorized by all
necessary corporate action on the part of Buyers. The
execution and delivery of this Agreement and any other
agreement entered into in connection with this Agreement by
Lifetime and the performance by Lifetime of its obligations
hereunder and thereunder and the consummation of the
transactions provided for herein and therein have been duly
and validly authorized by all necessary corporate action on
the part of Lifetime. Upon execution and delivery by
Sellers, this Agreement, and each other agreement entered
into in connection with this Agreement will be, as of the
Closing Date, duly executed and delivered by each of each
Buyer and Lifetime, and will be the legal, valid, and binding
agreement of each of each Buyer and Lifetime, enforceable in
accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the enforceability of creditors'
rights generally, general equitable principles and the
discretion of courts in granting equitable remedies.
6.4 No Brokers.
Except as indicated on Schedule 6.4, neither Buyer nor
Lifetime has any liability, directly or indirectly, to pay
any fees, commissions or other amounts to any broker, finder
or agent with respect to this Agreement or any of the
transactions contemplated hereby and all such fees,
commissions or other amounts due to any Person set forth on
Schedule 6.4 shall be for the account of Buyers.
6.5 Litigation and Regulatory Proceedings.
There is no claim, action, suit, proceeding or
governmental investigation pending or, to the knowledge of
Buyers or Lifetime, threatened against Buyers or Lifetime, by
or before any Governmental Entity or by any third party which
challenges the validity of this Agreement or which would be
reasonably likely to adversely affect or restrict the ability
of Buyers or Lifetime to consummate the transactions
contemplated by this Agreement.
6.6 Consents and Approvals.
Except for the approval of the Bank of New York, Inc.
(as Agent for the lenders under Lifetime's credit facility)
and the required regulatory approvals set forth on Schedule
6.6, no consents, approvals, filings or registrations with
any third party or any public body, agency or authority are
required by Buyers or Lifetime in connection with the
consummation of the transactions contemplated by this
Agreement by Lifetime and Buyers.
6.7 Funds.
At the Closing, Buyers will have the funds necessary to
consummate the Acquisition and pay the Purchase Price in
accordance with the terms of this Agreement.
6.8 Independent Review.
Buyers and Lifetime have conducted their own independent
review and analysis of the Business and its condition, cash
flow and prospects, the Assets and the Assumed Liabilities,
and acknowledge that Buyers and Lifetime have been provided
access to the properties, premises and records of Sellers for
this purpose. In entering this Agreement, Buyers and
Lifetime have relied exclusively upon their own investigation
and analysis and the representations and warranties contained
herein, in the Ancillary Agreements, the Seller Real Property
Lease Consent Certificate, and the Seller Closing
Certificate, and therefore Buyers and Lifetime:
(a) acknowledge that they have had the opportunity to
visit Sellers and meet with their officers and other
representatives to discuss the Business and its condition,
cash flow and prospects, the Assets and the Assumed
Liabilities;
(b) acknowledge that they have undertaken such due
diligence (including a review of the assets, liabilities,
books, records and contracts of the Business) as they have
deemed adequate;
(c) agree, to the fullest extent permitted by Law, that
except with respect to the representations and warranties
contained herein, in the Ancillary Agreements, the Seller
Real Property Lease Consent Certificate, and the Seller
Closing Certificate, no Seller nor any of its directors,
officers, employees, Affiliates, agents or representatives
shall have any liability or responsibility whatsoever to
Buyer or Lifetime on any basis (including in contract or
tort, under federal or state securities laws or otherwise)
based upon any information provided or made available, or
statements made, to Buyer or Lifetime prior to the execution
of this Agreement;
(d) represent that, as of the date hereof, to Buyers'
Knowledge, there is no condition or event that constitutes or
may constitute a breach by any Seller of the representations
and warranties set forth in Article 5; and
(e) acknowledge that, except for the representations
and warranties made expressly by Sellers in this Agreement,
the Ancillary Agreements, the Seller Real Property Lease
Consent Certificate, and the Seller Closing Certificate, no
Seller nor any of their directors, officers, employees,
Affiliates, agents or representatives has made any
representation or warranty, either express or implied, as to
the accuracy or completeness of any of the information
provided or made available to Buyer, Lifetime or their
respective agents or representatives prior to the execution
of this Agreement.
ARTICLE 7: COVENANTS OF THE PARTIES
7.1 Further Assurances; Post-Closing Cooperation.
(a) From and after the Closing Date, from time to time
and without further consideration, each Party will execute
and deliver such instruments and take such other commercially
reasonable action reasonably requested by one or more of the
other Parties in order to effect the transactions
contemplated by this Agreement.
(b) Following the Closing, each Party will afford each
other Party, its counsel and its accountants, during normal
business hours, reasonable access to the books, records and
other data relating solely to the Business in its possession
and the right to make copies and extracts therefrom, to the
extent that such access may be reasonably required by the
requesting Party in connection with (i) the preparation of
Tax Returns, (ii) compliance with the requirements of any
Governmental Entity, (iii) any actual or threatened legal
action, or (iv) for any other legitimate or proper business
purpose.
(c) Following the Closing, Buyer will preserve and
maintain all books, records and other data included in the
Assets for such period that Sellers would have been required
to have preserved and maintained such books, records and
other data under applicable Laws, and Sellers shall have
access to such books, records and other data in accordance
with Section 7.1(b).
(d) Buyer hereby grants to Seller Holding Company and
the Susquehanna Pfaltzgraff Foundation and their respective
successors, assigns and Affiliates a non-transferrable, non-
exclusive, royalty-free license, for a period of six (6)
months after the Closing Date or until the Seller Stationery
(as defined below) is exhausted, whichever is shorter, to use
the word "Pfaltzgraff," derivations thereof, and any
Trademark (i) as a part of the legal name and any fictitious
names or other similar trade names of such entities, and (ii)
on stationery, form documents, packaging and other printed
materials of Sellers in existence on the Closing Date (the
"Seller Stationery"). For avoidance of doubt, the Parties
agree that nothing herein, and no rights obtained by Buyer or
Lifetime pursuant hereto, shall limit the right of members of
the Appell family to use the "Pfaltzgraff" name for non-
commercial purposes.
(e) Anything herein to the contrary notwithstanding,
until August 31, 2006, Parent shall (i) maintain a net worth
of at least the amount of the Indemnity Cap, (ii) (A) own,
free and clear of any and all Liens, liquid assets and/or (B)
have entered into and be a party to a valid agreement
enforceable by Parent with an entity affiliated with Parent
pursuant to which such entity will provide to Parent within
three (3) Business Days of a request by Parent liquid assets,
which liquid assets in the aggregate shall be sufficient to
permit Parent to satisfy Sellers' obligations to provide
indemnification under this Agreement.
(f) The Parties agree that, prior to the first (1st)
anniversary of the Closing Date, Parent may transfer all or
part of its assets to an entity controlled by a majority of
the same Persons that control Seller Holding Company on the
date hereof (the "New Parent") if, prior to the date of such
transfer, New Parent delivers to Buyer a written document
executed on behalf of New Parent that (i) notifies Buyer of
the anticipated effective date of such transfer; (ii)
certifies that the assets to be transferred to New Parent in
such transfer are sufficient to satisfy Sellers'
indemnification obligations hereunder, if the assets being
transferred to New Parent are not all of the assets of
Parent; and (iii) sets forth New Parent's agreement to assume
all of Sellers' obligations under this Agreement, effective
as of the effective time of such transfer.
7.2 Conduct of Business.
Except with the prior written consent of Lifetime (which
consent shall not be unreasonably withheld or delayed) or
except as otherwise expressly permitted pursuant to this
Agreement, from the date hereof and through the Closing, with
respect to the Business:
(a) Sellers shall:
(i) maintain their corporate existence and carry
on the Business in the ordinary course in
substantially the same manner as heretofore
conducted and in any event in accordance with
all applicable Laws;
(ii) use commercially reasonable efforts to
preserve intact its business organization;
(iii) use commercially reasonable efforts to
keep available the services of its Employees;
(iv) use commercially reasonable efforts to
preserve its current relationships with
customers, suppliers, and other Persons with
whom it has business relations with respect to
the Business;
(v) operate and maintain the Leased Real Property
in the ordinary course of business;
(vi) perform all covenants and obligations under
each Real Property Lease, License and
Permitted Lien;
(vii) promptly give Buyer a copy of each notice
received or sent under a Real Property Lease;
and
(viii) maintain their books and records in
accordance with past practices.
(b) Sellers shall not:
(i) sell, transfer or otherwise dispose of any
Asset, other than the sale of Assets (other
than Real Property Leases) in the ordinary
course of business;
(ii) create, incur or assume any indebtedness
secured by any Asset, other than indebtedness
that will be satisfied at or prior to the
Closing;
(iii) grant, create, incur or suffer to exist
any Lien, other than Permitted Liens, on any
Asset (other than Real Property Leases) that
did not exist on the date hereof;
(iv) incur any liability or obligation (absolute,
accrued or contingent) related to the Business
or the Assets, except in the ordinary course
of business consistent with past practice;
(v) increase the rate of compensation of any of
the Employees, or pay or agree to pay any
bonus to, or provide any new employee benefit
or incentive to, any of the Employees, except
for increases, payments, contributions and
bonuses (A) that are regularly scheduled as a
result of the normal progression and
advancement of Employees in the ordinary
course and consistent with past practices, (B)
the amounts of which have been specifically
disclosed to, and approved in advance by,
Buyer, or (C) that are set forth on Schedule
7.2(b)(v);
(vi) enter into or modify (except as may be
required by applicable Law) any pension,
retirement, stock option, stock purchase,
stock appreciation right, savings, profit
sharing, deferred compensation, consulting,
bonus, group insurance or other employee
benefit, incentive or welfare contract, plan
or arrangement, or any trust agreement related
thereto, in respect of any of the Employees,
except in the ordinary course of business
consistent with past practice;
(vii) enter into, modify or amend, cancel, or
waive any right under (A) any Contract
relating to the employment or severance of an
Employee, except in the ordinary course of
business consistent with past practice; or
(B) any Assumed Contract;
(viii) incur any commitments for capital
expenditures relating to the Business in
excess of One Hundred Thousand Dollars
($100,000);
(ix) exercise any right or option under any Real
Property Lease;
(x) adopt or propose any amendment to the
organizational documents of any Seller that
could be expected to delay the consummation of
the transactions contemplated hereby;
(xi) take any action or engage in any transaction
that is material to, or outside the ordinary
course of, the Business;
(xii) make any filings or registrations with
any Governmental Entity, except routine
filings and registrations made in the ordinary
course of the Business consistent with past
practice;
(xiii) be party to any merger, acquisition,
consolidation, recapitalization, liquidation,
dissolution or similar transaction involving
the Business;
(xiv) make any changes in its accounting
methods, principles or practices;
(xv) make any Tax election, change its method of
Tax accounting or settle any claim relating to
Taxes;
(xvi) take any action or omit to do any act
which action or omission will cause it to
breach any obligation contained in this
Agreement or cause any representation or
warranty of Seller not to be true and correct
as of the Closing Date;
(xvii) demolish or materially alter any Leased
Real Property; or
(xviii) agree, whether in writing or otherwise,
to do any of the foregoing.
7.3 Employees.
(a) As soon as practicable after the date hereof,
Sellers shall provide Buyers with a list, as of the date
hereof, Schedule 7.3(a), containing the name, position and
base salary of each Employee, noting whether such Employee is
not actively employed (e.g., Employees on vacation or leave
of absence, including maternity, family and medical leave,
sick, military (whether qualified or otherwise) or short-term
disability leave). With respect to the Employees:
(i) At least five (5) Business Days prior to the
Closing Date, Buyers shall provide Parent with
a list of Employees to whom neither Buyer will
offer employment (the "Declined Employees");
(ii) At least five (5) Business Days prior to the
Closing Date, Buyers shall provide Parent with
a list of Employees to whom a Buyer will offer
employment (the "Definite Employees"), and the
applicable Buyer shall offer employment to
such Definite Employees effective as of the
Closing Date; and
(iii) Employees who are not identified as
either Declined Employees or Definite
Employees are herein called "Transitional
Employees." Either Buyer may offer employment
to such Transitional Employees, if any, as
Buyers, in their sole discretion, shall
determine at any time on or before July 29,
2005 (the "Offer Completion Date"). The
Definite Employees and the Transitional
Employees to whom Buyers make employment
offers prior to the Offer Completion Date are
herein collectively called the "Candidate
Employees".
(iv) As of the Closing Date, the number of salaried
Candidate Employees, including Store managers,
offered employment by Buyers collectively
shall not be less than One Hundred Fifty
(150).
(v) Notwithstanding anything herein to the
contrary, Buyers shall be responsible, and
shall reimburse Sellers, for all costs and
liabilities associated with the employment by
Sellers of the Transitional Employees incurred
by any Seller between the Closing Date and the
Offer Completion Date; provided, however, that
Buyers shall not be responsible for any of the
costs of providing health benefits under the
Seller Benefit Plans to the Transitional
Employees during such period of time.
(vi) Prior to the Closing Date, Sellers shall
provide Buyers and Lifetime reasonable access
to the Employees, and, to the extent permitted
by applicable law, such information regarding
such Employees as is contained in personnel
records, for purposes of permitting Buyers to
determine which Employees to offer to employ.
Each Buyer's offers to the Candidate Employees
shall be on terms and conditions that are, in
the aggregate, no less favorable than those to
which the Candidate Employees are currently
subject, including, without limitation,
salary, incentive compensation, employee
benefit plans and benefit arrangements that,
in the aggregate, are at least comparable to
such employee benefit plans and benefit
arrangements as are currently provided to the
Candidate Employees, but without regard to (A)
defined benefit pension benefits and (B) post-
retirement welfare benefits. Buyers shall
maintain the foregoing comparable benefits for
the Transferred Employees (as defined below)
until the earlier of (X) the date that is one
(1) year after the Closing Date and (Y) the
date on which such Transferred Employee ceases
to be employed by a Buyer or any affiliate,
successor or assignee of a Buyer. Buyer's
offers of employment to Candidate Employees
shall be made as soon as practicable following
the date hereof; provided, however, that all
such offers of employment shall be made no
later than (x) the Closing Date, in the case
of each Definite Employee, and (y) the Offer
Completion Date, in the case of each
Transitional Employee to whom any Buyer makes
an employment offer pursuant to Section
7.3(a)(iii).
(vii) Those Candidate Employees who accept such
offers of employment, and commence employment
with a Buyer effective on or after the Closing
Date (or, if applicable, upon expiration of
any leave or period of absence) shall be
referred to herein as "Transferred Employees."
(b) Without limiting the generality of Section 7.3(a),
each Buyer agrees that (i) such Buyer shall provide the
applicable Transferred Employees and their beneficiaries with
coverage under a "group health plan" (as defined in Section
4980B(g)(2) of the Code); (ii) such Buyer will cause the
benefit plans applicable to the applicable Transferred
Employees to recognize previous service with Sellers for the
purpose of determining eligibility and vesting for succeeding
benefits; (iii) such Buyer will cause its group health plan
to recognize all deductibles and coinsurance payments accrued
by the applicable Transferred Employees prior to the Closing
Date and to waive, to the extent waived under the Seller
Benefit Plans, any preexisting condition limitations for the
Transferred Employees; (iv) for the remainder of the calendar
year in which the Closing occurs and for the succeeding year,
the vacation and holiday plan offered to the Transferred
Employees shall be equal to and be in place of what the
applicable Seller would have provided to such Transferred
Employees had they remained employees of such Seller; and (v)
such Buyer shall maintain for at least one (1) year starting
on the Closing Date the same severance arrangements
applicable to the Transferred Employees that were in effect
immediately before the Closing Date, and Buyer shall pay
severance benefits to Transferred Employees in accordance
with the terms of such severance arrangements.
(c) Buyers assume no liability with respect to, and
receive no right or interest in, any Seller Benefit Plan. At
the close of Business on the effective date of employment
with a Buyer (the "Commencement Date"), each Transferred
Employee shall cease participation in all Seller Benefit
Plans, except with respect to benefits accrued as of, or
claims incurred on or prior to, such date. Sellers shall
provide each Transferred Employee with the following: (i)
full vesting of any award or benefit under any Seller Benefit
Plan where such vesting was otherwise conditioned upon the
future performance of services with Seller, including under
any Benefit Plan that is intended to be tax-qualified under
section 401(a) of the Code and under any related non-
qualified plan; and (ii) payment, prior to the Closing Date,
of any annual bonus award that such Transferred Employee
would have earned under Sellers' bonus program for the fiscal
year in which the Closing Date occurs, assuming maximum
performance was achieved, but prorated to reflect the portion
of the year actually worked for a Seller. Buyers will
provide Sellers with such information as is required
concerning Transferred Employees in order to enable Sellers
to determine whether, and if so, when, a Transferred Employee
will be entitled to any benefits under any Seller Benefit
Plan.
(d) Sellers shall assume and be responsible for claims
for workers compensation or for the type of benefits
described in Section 3(1) of ERISA (whether or not covered by
ERISA) that are incurred by a Transferred Employee and their
beneficiaries and dependents on or prior to such Transferred
Employee's Commencement Date. The applicable Buyer shall be
responsible for disability benefits and workers compensation
benefits for each Transferred Employee employed by such Buyer
for claims incurred after such Transferred Employee's
Commencement Date. For purposes of the foregoing, a
medical/dental claim shall be considered incurred when the
medical services are rendered or medical supplies are
provided, and not when the condition arose; provided that
claims relating to a hospital confinement that commences on
or prior to a Transferred Employee's Commencement Date but
continues thereafter shall be treated as incurred on or prior
to such Commencement Date. A disability or workers
compensation claim shall be considered incurred on or prior
to a Commencement Date if the injury or condition giving rise
to the claim occurs on or prior to such Commencement Date.
(e) The Sellers will not, at any time with the ninety
(90) day period ending on the Closing Date: (i) effectuate a
"plant closing" or "mass layoff" (as such terms are defined
in the Worker Adjustment and Retraining Notification Act (the
"WARN Act")) without complying fully with the notice and
other requirements of the WARN Act; or (ii) effectuate any
similar action without complying fully with any applicable
Law or local Law requiring notice to employees in the event
of a plant closing or layoff. All communications of Sellers
to employees with respect to WARN Act or similar matters will
be subject to approval by Buyers (which approval will not be
unreasonably withheld or delayed). In addition, Sellers
hereby agree to indemnify Lifetime and Buyers and to defend
and hold Lifetime and Buyers harmless from and against any
and all claims, losses, damages, expenses, obligations and
liabilities (including costs of collection, attorney's fees
and other costs of defense) ("WARN Liabilities") which
Lifetime or Buyers may incur in connection with any suit or
claim or violation brought against Lifetime or Buyers under
the WARN Act or any similar Law or local Law, which relates
to any action taken by, or any failure to act by, any Seller.
Each Buyer hereby agrees to indemnify Sellers and to defend
and hold Sellers harmless from and against any and all WARN
Liabilities which Sellers may incur in connection with any
suit or claim or violation brought against any Seller under
the WARN Act or any similar Law, which relates to any action
taken by, or any failure to act by, such Buyer following the
Closing.
(f) Sellers shall be responsible for satisfying any and
all obligations and liabilities under the continuation
coverage provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), and
applicable state Law to provide continuation coverage to or
with respect to all employees or former employees of Sellers
and their beneficiaries as a result of any "qualifying event"
occurring prior to the Closing or as a result of the
transactions contemplated by this Agreement.
(g) Nothing in this Section 7.3, express or implied,
shall confer upon any Transferred Employee, or legal
representative or beneficiary thereof, any rights or
remedies, including any right to employment or continued
employment for any specified period, or compensation or
benefits of any nature or kind whatsoever under this
Agreement. Except as set forth in this Section 7.3, nothing
herein shall be construed to prevent Buyers from terminating
or modifying to any extent or in any respect any benefit plan
that the Buyers may establish or maintain.
(h) Each Buyer will credit each applicable Transferred
Employee with such number of unused vacation days and other
paid time off accrued by such Transferred Employee prior to
the Closing Date in accordance with Sellers' personnel
policies applicable to such Transferred Employees on the date
hereof.
7.4 Access to Operations.
Buyers and Lifetime may, prior to the Closing Date,
directly or through their representatives, review, during
normal business hours and upon reasonable prior notice to
Parent, the premises and books and records of Sellers
relating to the Business to the extent it deems necessary or
advisable to familiarize itself with such premises and other
matters. Any information obtained by Buyer, Lifetime or any
of their representatives pursuant to this Agreement shall be
subject to the provisions of the Confidentiality Agreement
(the "Confidentiality Agreement"), dated February 10, 2005,
by and between Lifetime and Seller Holding Company, which
agreement remains in full force and effect.
7.5 Commercially Reasonable Efforts.
(a) The Parties shall cooperate and use their
respective commercially reasonable efforts to take, or cause
to be taken, all appropriate action, and to make, or cause to
be made, all filings necessary, proper or advisable under
applicable Laws to consummate and make effective the
transactions contemplated by this Agreement, including their
respective commercially reasonable efforts to obtain, prior
to the Closing Date, all consents and approvals of
Governmental Entities as are necessary for consummation of
the transactions contemplated by this Agreement and to
fulfill the conditions to Closing.
(b) Each Party shall have the right to review in
advance and to consult with any other Party, subject to
applicable Laws relating to the exchange of information, with
respect to all material information submitted to any third
party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising
the foregoing right, the Parties agree to act reasonably and
as promptly as practicable. Each Party agrees that it will
consult with the other Parties hereto with respect to the
obtaining of all material consents, registrations, approvals,
permits and authorizations of all third parties and
Governmental Entities necessary or advisable to consummate
the transactions contemplated by this Agreement, and each
Party will keep the other Parties apprised of the status of
material matters relating to completion of the transactions
contemplated hereby.
(c) In the event any claim, action, suit, investigation
or other proceeding by any Governmental Entity or other
Person is commenced that questions the validity or legality
of the transactions contemplated hereby or seeks damages in
connection therewith, the Parties agree to cooperate and use
all commercially reasonable efforts to defend against such
claim, action, suit, investigation or other proceeding and,
if an injunction or other order is issued in any such action,
suit or other proceeding, to use all commercially reasonable
efforts to have such injunction or other order lifted, and to
cooperate reasonably regarding any other impediment to the
consummation of the transactions contemplated hereby.
7.6 Transfer Taxes.
All national, federal, state, provincial or local
transfer taxes in any country, including excise, sales, use,
value added, real property transfer, stamp, documentary,
filing, recordation, notarial and other similar taxes and
fees that may be imposed or assessed as a result of the
transactions contemplated by this Agreement, together with
any interest, additions or penalties with respect thereto and
any interest in respect of such additions or penalties shall
be paid by Buyers. Sellers shall be responsible for
preparing all Tax Returns or other filings in connection with
transfer taxes described in this Section 7.6. Buyers shall
provide Sellers with such cooperation as Sellers may
reasonably request in connection with the preparation,
execution and filing of such Tax Returns or other filings.
7.7 Publicity.
Except as otherwise required by Law as advised by
counsel, none of the Parties shall issue any press release or
make any other public statement, in each case relating to or
connected with or arising out of this Agreement or the
matters contained herein, without obtaining the prior written
approval of Sellers and Buyers to the contents and the manner
of presentation and publication thereof, which approval shall
not be unreasonably withheld or delayed.
7.8 Expenses.
Except as otherwise set forth in this Agreement, the
Parties shall pay all of their own expenses relating to the
transactions contemplated by this Agreement, including, the
fees and expenses of their own agents, representatives,
financial advisors, accountants, appraisers and counsel.
7.9 Bulk Sales.
Sellers and Buyers hereby waive compliance with the
provisions of the "bulk sales" or similar Laws of any
jurisdiction, to the extent applicable to the transactions
contemplated hereby.
7.10 Applications for Buyer Licenses.
As promptly as practicable after the execution of this
Agreement, each of Buyer and Lifetime shall, as applicable,
file with the relevant Governmental Entities all applications
necessary to obtain the Buyer Licenses. Sellers will
cooperate with Buyer and Lifetime as reasonably necessary,
upon Lifetime's request and at Lifetime's expense, in the
preparation and filing of such applications.
7.11 DC Leases and Flemington Lease.
Sellers shall cause the owners of DC East, DC West and
the facility to be demised by the Flemington Lease to execute
and deliver the DC Leases and the Flemington Lease at the
Closing. Seller's shall pay any and all brokerage
commissions and fees and any transfer taxes due and payable
in connection with the same.
7.12 Cooperation by Sellers.
Sellers will cooperate with Buyers in connection with
the obligations of Lifetime to file with the SEC the
financial statements and pro forma financial information
required to be included by it in its periodic reports and
other filings (i.e., Forms 8-K, 10-K and 10-Q and
registration statements filed under the Securities Act of
1933) by (i) making available to Buyers and Lifetime the
relevant financial statements and records, documents,
representations and information of Sellers and such of
Sellers' employees as have knowledge thereof as may
reasonably be requested by Buyers and Lifetime;
(ii) instructing the independent accountants of Sellers to
provide at the request of Lifetime, such opinions, consents
and comfort letters with respect to such financial statements
and pro forma financial information that may be required or
reasonably necessary; and (iii) providing to the independent
accountants of Sellers such information, records and
representations as they may request for purposes of the
foregoing. All fees and expenses, including the fees and
expenses of independent accountants, in connection with any
of the foregoing shall be paid by Buyers, or if paid by a
Seller, then Buyers shall promptly reimburse such Seller for
the full amount of the payment.
ARTICLE 8: CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES
The obligations of each Party to this Agreement to
effect the transactions contemplated hereby shall be subject
to the satisfaction on or prior to the Closing Date of the
following conditions, unless waived by each Buyer and by each
Seller:
8.1 Government Approvals.
All approvals of, or declarations or filings with, or
expiration of waiting periods imposed by, any Governmental
Entity necessary for the consummation of the transactions
contemplated by this Agreement shall have been filed,
occurred or been obtained.
8.2 Legal Action.
No temporary restraining order, preliminary injunction
or permanent injunction or other order preventing the
consummation of the transactions contemplated hereby shall
have been issued by any federal or state court and remain in
effect.
ARTICLE 9: CONDITIONS TO THE OBLIGATIONS OF BUYERS AND
LIFETIME
The obligations of Buyers and Lifetime to effect the
transactions contemplated hereby are subject to the
satisfaction on or prior to the Closing Date of the following
conditions, unless waived by Buyers and Lifetime:
9.1 Representations and Warranties of Sellers.
The representations and warranties of Sellers set forth
in this Agreement shall be true and correct in all material
respects (except that those representations and warranties
that are limited by materiality shall be true and correct in
all respects) as of the date of this Agreement and as of the
Closing Date as if made at and as of the Closing Date (except
where such representations or warranties are made expressly
as of a specific date, and then as of such date).
9.2 Performance of Obligations of Sellers.
Sellers shall have performed in all material respects
all obligations required to be performed by each of them
under this Agreement on or prior to the Closing Date.
9.3 Seller Closing Certificate.
An authorized officer of Parent shall have executed and
delivered to Buyer the Seller Closing Certificate.
9.4 Ancillary Agreements
Parent shall have executed and delivered the Transition
Services Agreement and the Product Supply Agreement. Outlet
shall have executed and delivered the Flemington Lease. Each
of Seller Holding Company and Parent shall have executed and
delivered the DC Leases, as applicable. There shall be no
default by lessor under any DC Lease or the Flemington Lease
(whether or not it is executed or delivered by Buyers).
9.5 Corporate Authorization.
Buyer shall have received copies of the board and
stockholder resolutions of each Seller approving this
Agreement and the transactions contemplated hereby, certified
by appropriate officer of each Seller.
9.6 Required Consents.
Sellers shall have notified the lessor under each Real
Property lease of the proposed assignment by the lessee
thereunder to Retail Sub of such Real Property Lease pursuant
to this Agreement and shall have requested such lessor to
consent to such assignment and not less than twenty-five
percent (25%) of all of the lessors of all Real Propety
Leases shall have advised Sellers that such lessors will
consent to such assignment and not more than twenty-five
percent (25%) of all of the lessors under all Real Property
Leases shall have given Sellers any reason to believe that
such lessors will not consent to such assignment and Parent
shall have delivered to Buyers a certificate to such effect
(the "Seller Real Property Lease Consent Certificate"). In
addition, Sellers shall have obtained all consents listed on
Schedule 9.6, which shall be in form and substance reasonably
acceptable to Buyer.
9.7 FIRPTA Certificates.
Each of Parent, Investco and Outlet shall have delivered
to Buyers a certificate in the form attached as Schedule 9.7.
9.8 Licenses.
Buyers or Lifetime, as applicable, shall have applied
for or obtained all material Licenses that (a) are reasonably
necessary for the operation of the Business, and (b) can be
obtained prior to the Closing pursuant to applicable Law
(collectively, the "Buyer Licenses"); and with respect to any
such License for which any Buyer or Lifetime has applied, but
which has not yet been granted as of the Closing, the
Governmental Entity with authority to grant such License
shall not have issued any order or notice stating such
Governmental Entity's intent to deny such application.
9.9 No Actions or Orders.
No claim, action, litigation, arbitration or other
proceeding shall be pending or threatened before any court or
other Governmental Entity or before any other Person, and no
judgment or order thereof shall be in effect that would (i)
prevent consummation of any of the transactions contemplated
by this Agreement or any of the Ancillary Agreements, (ii)
affect adversely the right of Buyers to own the Assets or
(iii) restrain or prohibit Buyers' ownership or operation (or
that of any of their Affiliates) of all or any material
portion of the Business or the Assets, or compel Buyers or
any of their Affiliates to dispose of or hold separate all or
any material portion of the Business or Assets or all or any
material portion of the business and assets of Buyers and
their Affiliates. No Law shall have been enacted or shall be
deemed applicable to the transactions contemplated by this
Agreement or any of the Ancillary Agreements which has any of
the effects set forth in the foregoing clauses (i) through
(iii).
9.10 Purchase Order Update.
Sellers shall have delivered to Lifetime a revised
version of Schedule 5.10(c), updated as of the date that is
two (2) Business Days prior to the Closing Date.
9.11 No Liens.
Buyer shall have received evidence in form and substance
satisfactory to Buyer that all Liens other than Permitted
Liens with respect to the Assets have been released.
ARTICLE 10: CONDITIONS TO THE OBLIGATIONS OF SELLERS
The obligations of Sellers to effect the transactions
contemplated hereby are subject to the satisfaction on or
prior to the Closing Date of the following conditions, unless
waived by all Sellers:
10.1 Representations and Warranties of Buyer and Lifetime.
The representations and warranties of Buyer and Lifetime
set forth in this Agreement shall be true and correct in all
material respects (except that those representations and
warranties that are limited by materiality shall be true and
correct in all respects) as of the date of this Agreement and
as of the Closing Date as if made at and as of the Closing
Date (except where such representations or warranties are
made expressly as of a specific date and then as of such
date).
10.2 Performance of Obligations of Buyer and Lifetime.
Each of Buyer and Lifetime shall have performed in all
material respects all obligations required to be performed by
it under this Agreement on or prior to the Closing Date.
10.3 Buyer Closing Certificate.
An authorized officer of Buyer and an authorized officer
of Lifetime shall have executed and delivered to Sellers the
Buyer Closing Certificate.
10.4 Ancillary Agreements.
Buyer shall have executed and delivered the Transition
Services Agreement, the Product Supply Agreement, the DC
Leases and the Flemington Lease.
10.5 Corporate Authorization.
Parent shall have received copies of the resolutions of
each Buyer and of Lifetime approving this Agreement and the
transactions contemplated hereby, certified by appropriate
officers of Buyers and Lifetime, as applicable.
ARTICLE 11: INDEMNIFICATION
11.1 Indemnification Obligations of Sellers
Each Seller shall jointly and severally indemnify,
defend and hold harmless the Buyer Indemnified Parties from,
against and in respect of any and all claims, liabilities,
obligations, losses, costs, expenses, penalties, fines,
judgments and damages (at equity or law), whenever arising or
incurred (including reasonable attorneys' fees and expenses)
arising out of or relating to:
(a) any breach or inaccuracy of any representation or
warranty made by Sellers in this Agreement or any Conveyance
Document, or by Parent in the Seller Closing Certificate or
the Seller Real Property Lease Consent Certificate;
(b) any breach of any covenant, agreement or
undertaking made by any Seller in this Agreement or any
Conveyance Document; and
(c) the Excluded Liabilities.
The claims, liabilities, obligations, losses, costs,
expenses, penalties, fines, judgments and damages of the
Buyer Indemnified Parties described in this Section 11.1 as
to which the Buyer Indemnified Parties are entitled to
indemnification are hereinafter collectively referred to as
"Buyer Losses."
11.2 Indemnification Obligations of Buyer.
Each of each Buyer and Lifetime will jointly and
severally indemnify, defend and hold harmless the Seller
Indemnified Parties from, against and in respect of any and
all claims, liabilities, obligations, losses, costs,
expenses, penalties, fines, judgments and damages (at equity
or law), whenever arising or incurred (including reasonable
attorneys' fees and expenses) arising out of or relating to:
(a) the Assumed Liabilities;
(b) any breach or inaccuracy of any representation or
warranty made by any Buyer or Lifetime in this Agreement or
any Conveyance Document, or by Lifetime in the Buyer Closing
Certificate;
(c) any breach of any covenant, agreement or
undertaking made by any Buyer or Lifetime in this Agreement
or any Conveyance Document; and
(d) any obligations or liabilities arising from and
after the Closing Date as a result of the operations and
activities of the Business conducted by any Buyer (or any of
their Affiliates) from and after the Closing Date.
The claims, liabilities, obligations, losses, costs,
expenses, penalties, fines, judgments and damages of the
Seller Indemnified Parties described in this Section 11.2 as
to which the Seller Indemnified Parties are entitled to
indemnification are hereinafter collectively referred to as
"Seller Losses."
11.3 Notice of Claims.
The Indemnified Party shall notify Parent or Buyer, as
the case may be, in writing promptly after becoming aware of
any Damages which an Indemnified Party shall have determined
has given rise to a claim by such Indemnified Party for
indemnification under this Article 11. Such written notice
(a "Claim Notice") shall include an estimate of the Damages,
if known, the method of computation thereof and a reference
to the specific provisions of this Agreement in respect of
which indemnification is sought. As soon as practicable
after the date of such Claim Notice, the Indemnified Party
shall provide the Indemnifying Party or his or her agents
access to all requested books and records in the possession
or control of the Indemnified Party which the Indemnifying
Party reasonably determines to be related to such claim. If
the Indemnifying Party expressly notifies the Indemnified
Party that it does not dispute the claim or the estimated
amount of Damages described in such Claim Notice, the
estimated Damages in the amount specified in the Indemnified
Party's Claim Notice will be conclusively deemed a liability
of the Indemnifying Party and the Indemnifying Party shall
pay the amount of such Damages to the Indemnified Party.
Otherwise, the dispute shall be resolved, and the amount, if
any, of Damages payable by the Indemnifying Party to the
Indemnified Party shall be determined, in accordance with
Section 13.10 below. The provisions of this Section 11.3 do
not apply to Third Party Actions.
11.4 Procedure for Third Party Claims.
(a) If any third Person shall commence an action,
claim, proceeding, arbitration or suit against any
Indemnified Party with respect to any matter (a "Third Party
Action") which may give rise to a claim for indemnification
under this Article 11, then the Indemnified Party shall
notify Parent or Buyer, as the case may be, in writing
promptly after becoming aware of such Third Party Action
(such notice being hereinafter called a "Third Party Action
Notice"), which notice shall include a description (in
reasonable detail) of the Third Party Action, an estimate of
the Damages, if known, the method of computation thereof and
a reference to the specific provisions of this Agreement in
respect of which indemnification is sought. The Indemnifying
Party will have twenty (20) days from receipt of such Third
Party Action Notice to determine whether or not (i) the
Indemnifying Party will, at its sole cost and expense, defend
against such Third Party Action and/or (ii) the Indemnifying
Party is disputing the claim for indemnity hereunder.
(b) If, by 5:00 p.m., York, Pennsylvania time on the
last day of the twenty (20) day period set forth in Section
4(a), the Indemnifying Party (i) does not respond to the
Third Party Action Notice, (ii) responds to the Third Party
Action Notice, but disputes the claim for indemnity hereunder
and elects not to assume the defense, or (iii) responds to
the Third Party Action Notice and does not dispute the claim
for indemnity but elects not to assume the defense, the
Indemnified Party shall have the right to defend against any
such Third Party Action by appropriate proceedings or to
settle or pay any such Third Party Action for such an amount
as the Indemnified Party shall deem reasonably appropriate
and the Indemnifying Party shall promptly pay all Damages
actually resulting from the final determination of the Third
Party Action in accordance with subparagraph (e) below;
provided that in the case of clause (ii) of this subparagraph
(b), any right of the Indemnified Party to recover from the
Indemnifying Party shall depend on the resolution of the
dispute as to the right of indemnity in accordance with
Section 13.10 hereof.
(c) If the Indemnifying Party disputes the right to
indemnity, but nevertheless elects to defend against any such
Third Party Action or settle or pay any such Third Party
Action, any right of the Indemnified Party to recover from
the Indemnifying Party shall depend on the resolution of the
dispute as to the right of indemnity in accordance with
Section 13.10 hereof.
(d) Notwithstanding anything herein to the contrary, if
the Indemnifying Party notifies the Indemnified Party that it
will defend against or settle any Third Party Action:
(i) such defense or settlement shall be at the
sole cost and expense of the Indemnifying
Party, except for costs and expenses of the
Indemnified Party's counsel, if any, pursuant
to items (v) and (vi) below;
(ii) the Indemnifying Party and its counsel shall
conduct such defense or settlement at all
times in good faith;
(iii) the Indemnifying Party and its counsel
shall, at the reasonable request of the
Indemnified Party, provide periodic updates to
the Indemnified Party in order to keep the
Indemnified Party fully informed as to its
conduct of such defense or settlement, and
shall not compromise or settle such Third
Party Action without the prior written consent
of the Indemnified Party (not to be
unreasonably withheld or delayed) unless such
settlement or compromise does not subject the
Indemnified Party to any monetary liability or
injunction or other equitable relief, and
includes a complete release of the Indemnified
Party from all liability with respect to such
Third Party Action;
(iv) the Indemnified Party shall reasonably
cooperate with the Indemnifying Party,
including making available to the Indemnifying
Party, all relevant witnesses and pertinent
documents and information and appropriate
personnel;
(v) the Indemnified Party may elect to employ its
own counsel and participate in such defense or
settlement at the Indemnified Party's sole
cost and expense, but the control of such
defense and the settlement shall rest with the
Indemnifying Party;
(vi) notwithstanding the Indemnifying Party's
election to defend against or settle the Third
Party Action, the Indemnified Party may, upon
written notice to the Indemnifying Party,
elect to employ its own counsel (who shall be
reasonably acceptable to the Indemnifying
Party) if the Indemnifying Party is also a
Person against whom the Third Party Action is
made and the Indemnified Party has been
advised by counsel that (x) representation of
both parties by the same counsel would be
inappropriate under applicable standards of
professional conduct or (y) the Indemnified
Party has available to it one or more defenses
or counterclaims that are inconsistent with,
different from, or in addition to one or more
of those that may be available to the
Indemnifying Party with respect to such Third
Party Action; and
(vii) in no event shall the Indemnified Party
consent to the entry of any judgment or enter
into any settlement with respect to such Third
Party Action without the prior written consent
of the Indemnifying Party (which consent shall
not be unreasonably withheld or delayed).
(e) Subject to the other provisions of this Section
11.4, if the Indemnifying Party:
(i) does not respond to a Third Party Action
Notice by 5:00 p.m., York, Pennsylvania time
on the last day of the twenty (20) day period
set forth in Section 11.4(a);
(ii) does not elect to defend against any Third
Party Action for which it does not dispute the
Indemnified Party's right to indemnity;
(iii) does not elect to defend against any
Third Party Action for which it disputes the
Indemnified Party's right to indemnity, and
such dispute is resolved, in accordance with
Section 13.10, in a manner affirming the
Indemnified Party's right to indemnity;
(iv) elects to defend against any Third Party
Action for which it does not dispute the
Indemnified Party's right to indemnity
hereunder; or
(v) elects to defend against any Third Party
Action for which it does dispute the right to
indemnity, to the extent the dispute is
resolved in a manner affirming the Indemnified
Party's right to indemnity; then:
the Damages resulting from the settlement or the
final, non-appealable adjudication of such Third Party
Action, or that portion thereof as to which the defense is
unsuccessful, shall promptly be paid by the Indemnifying
Party to the Indemnified Party.
11.5 Claims Period.
The period during which a claim for indemnification may
be asserted under this Agreement by an Indemnified Party (the
"Claims Period") shall begin on the Closing Date and shall
terminate on August 31, 2006; and provided further, that
notwithstanding the foregoing, the Claims Period during which
a claim for indemnification may be asserted with respect to
Section 5.4 shall begin on the Closing Date and shall
terminate thirty (30) days after the expiration of the
statute of limitations applicable thereto. Notwithstanding
the foregoing, if, prior to the close of business on the last
day of the Claims Period, an Indemnifying Party shall have
been properly notified of a claim for indemnity hereunder and
such claim shall not have been finally resolved or disposed
of at such date, such claim shall continue to survive and
shall remain a basis for indemnity hereunder until such claim
is finally resolved or disposed of in accordance with the
terms hereof.
11.6 Limitations.
Notwithstanding anything to the contrary set forth
herein:
(a) the total amount of Damages for which all Sellers
shall be collectively responsible pursuant to claims for
indemnification asserted under Section 11.1(a) shall not
exceed, in the aggregate, Seventeen Million Dollars
($17,000,000) (the "Indemnity Cap");
(b) the total amount of Damages for which all Buyers
and Lifetime shall be collectively responsible pursuant to
claims for indemnification asserted under Section 11.2(b)
shall not exceed, in the aggregate, the Indemnity Cap;
(c) the Buyer Indemnified Parties shall have no right
of indemnification hereunder unless the amount for which
indemnification would otherwise be payable with respect to
Buyer Losses exceeds, in the aggregate, Two Hundred Fifty
Thousand Dollars ($250,000) (the "Threshold Amount") and, in
such event, such right of indemnification shall be only for
Buyer Losses which, in the aggregate, are in excess of the
Threshold Amount; and
(d) the Seller Indemnified Parties shall have no right
of indemnification hereunder unless the amount for which
indemnification would otherwise be payable with respect to
Seller Losses exceeds, in the aggregate, the Threshold Amount
and, in such event, such right of indemnification shall be
only for Seller Losses which, in the aggregate, are in excess
of the Threshold Amount.
11.7 Investigations.
No Party shall be entitled to indemnification hereunder
for the breach or inaccuracy of any representation or
warranty if such Party has knowledge of such breach at or
prior to the Closing.
11.8 Offset for Insurance Recoveries and Tax Benefits.
(a) All claims for Buyer Losses or Seller Losses
hereunder shall be made net of any insurance proceeds
actually recovered by the Indemnified Party claiming such
indemnification. Each Indemnified Party shall diligently
pursue and seek to recover any such insurance proceeds
available under insurance policies under the control of such
Indemnified Party.
(b) The amount of any Buyer Losses or Seller Losses
hereunder shall be net of any foreign, federal, or state or
local income Tax benefit actually realized or the then-
present value (based on a discount rate of 5%) of any such
income Tax benefit reasonably expected to be realized by the
Indemnified Party by reason of the facts and circumstances
giving rise to the indemnification.
11.9 Consequential Damages.
Except as provided in Section 11.7 hereof, no event will
any Party be liable hereunder for any special, incidental,
indirect or consequential damages of any kind or nature,
regardless of the form of action through which such damages
are sought. In no event will any Party be liable hereunder
for lost profits resulting from an alleged breach of this
Agreement, even if under applicable Law, such lost profits
would not be considered consequential or special damages.
11.10 Exclusive Remedy.
Except as set forth in Section 7.6 and Section 12.2, and
excluding fraud, the indemnification rights provided in this
Article 11 shall be the exclusive remedy of the Indemnified
Parties and their successors and assigns arising out of or
relating to this Agreement, the Conveyance Documents and the
transactions contemplated hereby and thereby; provided,
however, that the foregoing shall not prohibit any
Indemnified Party from seeking specific performance of its
rights under this Agreement.
11.11 Parent Agency.
Upon the execution of this Agreement by each of the
Seller Subsidiaries, and without any further act of by any of
them, Parent shall be, and hereby is, appointed as agent and
attorney-in-fact for each of the Seller Subsidiaries
effective upon the Closing Date, and each of the Seller
Subsidiaries hereby authorizes Parent to take such action on
behalf of any or all of them as Parent may in its sole
discretion deem appropriate in respect of this Agreement and
the transactions contemplated hereby, and to receive all
notices or documents given or to be given to any of them
pursuant hereto.
11.12 Tax Treatment of Indemnity Payments.
Buyers and Sellers agree to treat, and Sellers agree to
cause Seller Holding Company to treat, to the extent
permitted under applicable law, indemnification payments
hereunder as adjustments to the Purchase Price for tax
purposes.
ARTICLE 12: TERMINATION
12.1 Termination.
This Agreement may be terminated prior to the Closing:
(a) by mutual written consent of Buyers and Sellers;
(b) by Buyers:
(i) if there has been a material breach by a
Seller of any representation or warranty
contained herein or in the due and timely
performance of any covenant or agreement
contained herein and Buyers have notified
Parent of such breach in writing and the
breach has not been cured within twenty (20)
Business Days after the notice of the breach;
or
(ii) if the Closing shall not have occurred on or
before December 31, 2005 by reason of the
failure of any condition precedent under
Section 8.1 or Section 8.2 (unless such
failure was within the control of Buyers); or
(c) by a Seller:
(i) if there has been a material breach by a Buyer
of any representation or warranty contained
herein or in the due and timely performance of
any covenant or agreement contained herein and
Seller has notified Buyers of such breach in
writing and the breach has not been cured
within twenty (20) Business Days after the
notice of the breach; or
(ii) if the Closing shall not have occurred on or
before December 31, 2005 by reason of the
failure of any condition precedent under
Section 8.1 or Section 8.2 (unless such
failure was within the control of a Seller).
12.2 Effect of Termination.
In the event of termination of this Agreement, this
Agreement shall forthwith become void and there shall be no
liability or obligation on the part of the Parties or their
respective officers or directors except for obligations of
Buyer under the Confidentiality Agreement, which shall
survive termination. Notwithstanding the foregoing, nothing
contained herein shall relieve any Party from liability for
any material breach of any covenant, agreement or undertaking
in this Agreement occurring prior to the termination of this
Agreement.
ARTICLE 13: MISCELLANEOUS
13.1 Entire Understanding.
This Agreement (including the Schedules and Exhibits
hereto), the Confidentiality Agreement and the other
agreements and instruments, the execution and delivery of
which are provided for herein, constitute the entire
agreement and understanding of the Parties hereto with
respect to the subject matter hereof, and terminate and
supersede any and all prior correspondence, offering
materials, agreements, arrangements and understandings, oral
or written, among the Parties concerning the subject matter
hereof and thereof.
13.2 Waiver and Amendment.
No waiver, amendment, modification or change of any
provision of this Agreement shall be effective unless and
until made in writing and signed by the Parties. No waiver,
forbearance or failure by any Party of its rights to enforce
any provision of this Agreement shall constitute a waiver or
estoppel of such Party's right to enforce any other provision
of this Agreement or a continuing waiver by such Party of
compliance with any provision.
13.3 Headings.
The headings herein are for convenience only, do not
constitute a part of this Agreement, and shall not be deemed
to limit or affect any of the provisions hereof.
13.4 Counterparts.
This Agreement may be executed by facsimile and in two
or more counterparts, each of which shall be deemed to be
original, but all of which together shall constitute one and
the same instrument.
13.5 Interpretation.
The provisions of this Agreement are intended to be
interpreted and construed in a manner so as to make such
provisions valid, binding and enforceable. In the event that
any provision of this Agreement is determined to be partially
or wholly invalid, illegal or unenforceable, then such
provision shall be deemed to be modified or restricted to the
extent necessary to make such provision valid, binding and
enforceable, or, if such provision cannot be modified or
restricted in a manner so as to make such provision valid,
binding and enforceable, then such provision shall be deemed
to be excised from this Agreement and the validity, binding
effect and enforceability of the remaining provisions of this
Agreement shall not be affected or impaired in any manner.
13.6 Notices.
All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed
to have been delivered and received (a) three (3) business
days after having been mailed in a general or branch post
office and enclosed in a registered or certified post-paid
envelope; or (b) if personally delivered, or if delivered by
overnight mail or courier service, when actually received by
the Party to whom the notice is sent (or upon confirmation of
such receipt received by sending Party); in each case, to the
address of the respective Party stated below or to such other
changed addresses as such Party may have fixed by notice as
provided herein:
If to any Seller: The Pfaltzgraff Co.
140 East Market Street
York, Pennsylvania 17401
United States of America
Fax: +1 (717) 771-1440
Attn: Craig W. Bremer, Esq.
with a copy to: Venable LLP
1800 Mercantile Bank & Trust Building
Two Hopkins Plaza
Baltimore, MD 21201
United States of America
Fax: +1 (410) 244-7742
Attn: Michael J. Baader, Esq.
If to a Buyer or
Lifetime: Lifetime Brands, Inc.
1 Merrick Ave.
Westbury, NY 11590
Fax: (516) 683-6006
Attn: Ronald Shiftan, Vice Chairman
with a copy to: Samuel B. Fortenbaugh III, Esq.
1211 Avenue of the Americas, 27th Floor
New York, NY 10036
Fax: (212) 596-3391
13.7 Assignment; Successors in Interest.
No assignment or transfer by any Party of such Party's
rights and obligations under this Agreement will be made
except with the prior written consent of the other Parties to
this Agreement; provided that Buyers shall, without the
obligation to obtain the prior written consent of any other
Party to this Agreement, be entitled to assign this Agreement
or all or any part of its rights or obligations hereunder to
one (1) or more wholly-owned subsidiaries of a Buyer, but any
such assignment shall not relieve the assigning Buyer of any
of its obligations or duties hereunder. This Agreement will
be binding upon and will inure to the benefit of the Parties
and their successors and permitted assigns, and any reference
to a Party will also be a reference to a successor or
permitted assign.
13.8 Construction.
The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the Parties and
no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement.
13.9 Controlling Law.
This Agreement will be governed by and construed and
enforced in accordance with the internal laws of the
Commonwealth of Pennsylvania without regard to choice of law
principles.
13.10 Dispute Resolution; Jurisdiction; Specific
Performance.
(a) If a dispute arises out of this Agreement or any of
the other agreements and instruments, the execution and
delivery of which are provided for herein, or a breach of any
of the foregoing, and if the dispute cannot be settled
through negotiation, the Parties agree first to try in good
faith to settle the dispute by mediation in York,
Pennsylvania administered by the American Arbitration
Association under its Commercial Mediation Procedures (the
"CMP") before resorting to another dispute resolution
procedure. Promptly upon written notice (a "Mediation
Notice") from one Party (the "Claimant") to the other Party
(the "Respondent") of the Claimant's desire to initiate
mediation, the Claimant and Respondent shall jointly select a
single mediator who shall have the authority to conduct such
mediation. If the Claimant and Respondent are unable to
agree within ten (10) days after delivery of a Mediation
Notice to Respondent, the mediator shall be selected by a
judge sitting on the Court of Common Pleas for York County,
Pennsylvania. Notwithstanding anything in the CMP to the
contrary, the expenses of the mediation shall be borne
equally by the parties to the mediation, provided, however,
that each party shall pay for and bear the cost of its own
experts, evidence and legal counsel.
(b) Each of the Parties hereby irrevocable consents and
agrees that all Legal Disputes that are not resolved through
mediation in accordance with Section 13.10(a) shall be
brought only to the exclusive jurisdiction of the courts of
the Commonwealth of Pennsylvania or the federal courts
located in the Commonwealth of Pennsylvania. The Parties
agree that, after a Legal Dispute is before a court as
specified in this Section 13.10(b) and during the pendency of
such Legal Dispute before such court, all actions, suits or
proceedings with respect to such Legal Dispute or any other
Legal Dispute, including any counterclaim, cross-claim or
interpleader, shall be subject to the exclusive jurisdiction
of such court. Each of the Parties hereby waives, and agrees
not to assert, as a defense in any legal dispute, that such
Party is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in such
court or that such Party's property is exempt or immune from
execution, that the action, suit or proceeding is brought in
an inconvenient forum or that the venue of the action, suit
or proceeding described in this Section 13.10 after the
expiration of any period permitted for appeal and subject to
any stay during appeal shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in
any other manner provided by applicable laws.
(c) The Parties agree that the remedies at law of any
Party for any actual or threatened breach of this Agreement
would be inadequate and that the Parties shall be entitled to
specific performance of this Agreement, including entry of an
ex parte, temporary restraining order in state or federal
court, preliminary and permanent injunctive relief against
activities in violation of any of the covenants in this
Agreement, or both, in addition to any damages and legal
expenses which a Party may be legally entitled to recover.
13.11 No Third Party Beneficiaries.
Except as specifically provided herein, this Agreement
shall not confer any rights of remedies on any Person other
than the Parties and their respective successors and
permitted assigns; provided, however, that the provisions in
Article 11 above concerning indemnification are intended for
the benefit of the Persons specified therein and their
respective legal representatives.
13.12 Lifetime Guarantee of Buyer Obligations.
Lifetime agrees to take all action necessary to cause
Buyers to perform all of their agreements, covenants and
obligations under this Agreement. Lifetime unconditionally
guarantees to Sellers the full and complete performance by
Buyers solely of their pre-Closing and Closing Date
obligations under this Agreement. Lifetime hereby waives
diligence, presentment, demand of performance, filing of any
claim, any right to require any proceeding first against
Buyers, protest, notice and all demands whatsoever in
connection with the performance of its obligations set forth
in this Section 13.12.
The remainder of this page is left blank intentionally.
Signatures follow on next page.
IN WITNESS WHEREOF, the Parties have each executed and
delivered this Asset Purchase Agreement as of the day and
year first above written.
PFZ ACQUISITION CORP.
By:
Name:
Title:
PFZ OUTLET RETAIL, INC.
By:
Name:
Title:
LIFETIME BRANDS, INC.
By:
Name:
Title:
Signatures continue on next page
THE PFALTZGRAFF CO.
By:
Name:
Title:
PFALTZGRAFF INVESTMENT CO.
By:
Name:
Title:
THE PFALTZGRAFF OUTLET CO.
By:
Name:
Title:
THE PFALTZGRAFF MANUFACTURING CO.
By:
Name:
Title:
BILL OF SALE
THIS BILL OF SALE (this "Bill of Sale") is made and entered
into effective as of _________ ___, 2005, by and between
______________________________, a ____________ corporation
("Buyer"), and ______________________________, a ____________
corporation ("Seller").
WHEREAS, Buyer and Seller are parties to that certain Asset
Purchase Agreement (the "Purchase Agreement") made and entered
into as of the 17th day of June, 2005, by and among, (a) on one
hand, THE PFALTZGRAFF CO., a corporation organized under the laws
of the Commonwealth of Pennsylvania, THE PFALTZGRAFF
MANUFACTURING CO., a corporation organized under the laws of the
Commonwealth of Pennsylvania, PFALTZGRAFF INVESTMENT CO., a
corporation organized under the laws of the State of Delaware,
and THE PFALTZGRAFF OUTLET CO., a corporation organized under the
laws of the State of Maryland; and (b) on the other hand,
LIFETIME BRANDS, INC., a corporation organized under the laws of
Delaware, PFZ ACQUISITION CORP., a corporation organized under
the laws of Delaware, and PFZ OUTLET RETAIL, INC., a corporation
organized under the laws of Delaware. All capitalized terms used
and not otherwise defined herein will have the respective
meanings ascribed to such terms in the Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt, adequacy and legal sufficiency of which are hereby
acknowledged, and as contemplated by Section 2.1 of the Purchase
Agreement, Seller hereby sells, transfers, assigns, conveys,
grants and delivers to Buyer, effective as of the Closing (as
defined in the Purchase Agreement), all of Seller's right, title
and interest in and to all of the assets, properties and rights
of Seller used, or held for use primarily in the Business,
including, without limitation, the assets described on Schedule A
annexed hereto and incorporated herein by this reference.
Nothing in this Bill of Sale shall be deemed to supersede,
enlarge or modify any of the provisions of the Purchase
Agreement, all of which survive the execution and delivery of
this Bill of Sale as provided and subject to the limitations set
forth in the Purchase Agreement. If any conflict exists between
the terms of this Bill of Sale and the terms of the Purchase
Agreement, the terms of the Purchase Agreement shall govern and
control.
The Seller agrees that from time to time at the Buyer's
request, the Seller will execute and deliver such further
instruments of conveyance and transfer and take such other
actions as may be reasonably required to carry out the purposes
of this Bill of Sale
This Bill of Sale shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania
without regard to the principles of conflicts of laws thereunder.
This Bill of Sale may be executed in two or more
counterparts, each of which shall be deemed an original, and all
of which shall together constitute one and the same instrument.
The remainder of this page is left blank intentionally.
Signatures follow on next page.
IN WITNESS WHEREOF, Seller and Buyer have executed this Bill
of Sale as of the date first set forth hereinabove.
[SELLER]:
By:
Name:
Title:
Commonwealth of Pennsylvania )
) ss.:
County of York )
On this ______ day of _____________, 2005, before me,
______________________________, personally appeared
_________________, _______________ of _____________, personally
known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same
in his/her authorized capacity and that by his/her signature on
the instrument the person, or the entity upon behalf of which
he/she acted, executed the instrument.
WITNESS my hand and official seal.
__________________________________________
Notary Public
Accepted:
[BUYER]:
By:
Name:
Title:
SCHEDULE A
TO BILL OF SALE
[insert description]
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment")
is made and entered into effective as of _________ ___, 2005, by
and between ______________________________, a ____________
corporation ("Buyer"), and ______________________________, a
____________ corporation ("Seller").
WHEREAS, Buyer and Seller are parties to that certain Asset
Purchase Agreement (the "Purchase Agreement") made and entered
into as of the 17th day of June, 2005, by and among, (a) on one
hand, THE PFALTZGRAFF CO., a corporation organized under the laws
of the Commonwealth of Pennsylvania, THE PFALTZGRAFF
MANUFACTURING CO., a corporation organized under the laws of the
Commonwealth of Pennsylvania, PFALTZGRAFF INVESTMENT CO., a
corporation organized under the laws of the State of Delaware,
and THE PFALTZGRAFF OUTLET CO., a corporation organized under the
laws of the State of Maryland; and (b) on the other hand,
LIFETIME BRANDS, INC., a corporation organized under the laws of
Delaware, PFZ ACQUISITION CORP., a corporation organized under
the laws of Delaware, and PFZ OUTLET RETAIL, INC., a corporation
organized under the laws of Delaware. All capitalized terms used
and not otherwise defined herein will have the respective
meanings ascribed to such terms in the Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt, adequacy and legal sufficiency of which are hereby
acknowledged, and as contemplated by Section 2.1 of the Purchase
Agreement:
1. Effective as of the Closing, Seller hereby assigns,
transfers coveys and delegates to Buyer and Buyer hereby assumes
and agrees to pay, perform, discharge or otherwise satisfy in
accordance with their respective terms, all of the Assumed
Liabilities associated with the Assets conveyed to the Buyer
pursuant to the to that certain Bill of Sale, dated as of the
date hereof, by Seller. Except for the Assumed Liabilities
assumed herein, Buyer does not assume, agree to pay or satisfy or
have any responsibility or obligation whatsoever for any debts,
liabilities or obligations of Seller.
2. Nothing in this Assignment shall be deemed to
supersede, enlarge or modify any of the provisions of the
Purchase Agreement, all of which shall survive the execution and
delivery of this Assignment as provided in, and subject to the
limitations set forth in, the Purchase Agreement. If any
conflict exists between the terms of this Assignment and the
terms of the Purchase Agreement, the terms of the Purchase
Agreement shall govern and control.
This Assignment shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania
without regard to the principles of conflicts of laws thereunder.
This Assignment may be executed in two or more counterparts,
each of which shall be deemed an original, and all of which shall
together constitute one and the same instrument.
The remainder of this page is left blank intentionally.
Signatures follow on next page.
IN WITNESS WHEREOF, Seller and Buyer have executed this
Assignment and Assumption Agreement as of the date first set
forth hereinabove.
[SELLER]:
By:
Name:
Title:
Commonwealth of Pennsylvania )
) ss.:
County of York )
On this ______ day of _____________, 2005, before me,
______________________________, personally appeared
_________________, _______________ of _____________, personally
known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same
in his/her authorized capacity and that by his/her signature on
the instrument the person, or the entity upon behalf of which
he/she acted, executed the instrument.
WITNESS my hand and official seal.
__________________________________________
Notary Public
Accepted:
[BUYER]:
By:
Name:
Title:
SCHEDULE A
TO ASSIGNMENT AND ASSUMPTION AGREEMENT
[insert description]
ASSIGNMENT AND ASSUMPTION OF LEASES
THIS ASSIGNMENT AND ASSUMPTION OF LEASES (this "Assignment")
is made and entered into effective as of _________ ___, 2005, by
and between ______________________________, a ____________
corporation ("Buyer"), and ______________________________, a
____________ corporation ("Seller").
WHEREAS, Buyer and Seller are parties to that certain Asset
Purchase Agreement (the "Purchase Agreement") made and entered
into as of the 17th day of June, 2005, by and among, (a) on one
hand, THE PFALTZGRAFF CO., a corporation organized under the laws
of the Commonwealth of Pennsylvania, THE PFALTZGRAFF
MANUFACTURING CO., a corporation organized under the laws of the
Commonwealth of Pennsylvania, PFALTZGRAFF INVESTMENT CO., a
corporation organized under the laws of the State of Delaware,
and THE PFALTZGRAFF OUTLET CO., a corporation organized under the
laws of the State of Maryland; and (b) on the other hand,
LIFETIME BRANDS, INC., a corporation organized under the laws of
Delaware, PFZ ACQUISITION CORP., a corporation organized under
the laws of Delaware, and PFZ OUTLET RETAIL, INC., a corporation
organized under the laws of Delaware; and
WHEREAS, Seller is a party to those leases described on
Schedule A annexed hereto and incorporated herein by this
reference (the "Transferred Leases").
NOW, THEREFORE, for good and valuable consideration, the
receipt, adequacy and legal sufficiency of which are hereby
acknowledged, and as contemplated by Section 2.1 of the Purchase
Agreement:
1. Seller hereby assigns, transfers and sets over unto
Buyer, effective as of the Effective Time (as defined in the
Purchase Agreement), all of Seller's right, title and interest in
and to (i) the Transferred Leases and (ii) all security deposits
heretofore made by Seller pursuant to the Transferred Leases.
2. Buyer hereby accepts the foregoing assignment and
agrees to perform all of the terms and conditions of the
Transferred Leases to be performed on the part of Seller, and
assumes all of the liabilities and obligations of Seller under
the Transferred Leases arising or accruing at or after the
Effective Time.
This Assignment shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania
without regard to the principles of conflicts of laws thereunder.
This Assignment may be executed in two or more counterparts,
each of which shall be deemed an original, and all of which shall
together constitute one and the same instrument.
Nothing in this Assignment shall be deemed to supersede,
enlarge or modify any of the provisions of the Purchase
Agreement, all of which shall survive the execution and delivery
of this Assignment as provided in, and subject to the limitations
set forth in, the Purchase Agreement. If any conflict exists
between the terms of this Assignment and the terms of the
Purchase Agreement, the terms of the Purchase Agreement shall
govern and control.
IN WITNESS WHEREOF, Seller and Buyer have executed this
Assignment and Assumption of Leases as of the date first set
forth hereinabove.
[SELLER]:
By:
Name:
Title:
Commonwealth of Pennsylvania )
) ss.:
County of York )
On this ______ day of _____________, 2005, before me,
______________________________, personally appeared
_________________, _______________ of _____________, personally
known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same
in his/her authorized capacity and that by his/her signature on
the instrument the person, or the entity upon behalf of which
he/she acted, executed the instrument.
WITNESS my hand and official seal.
__________________________________________
Notary Public
Accepted:
[BUYER]:
By:
Name:
Title:
SCHEDULE A
TO ASSIGNMENT AND ASSUMPTION OF LEASES
[insert description]
ASSIGNMENT OF TRADEMARKS
THIS ASSIGNMENT OF TRADEMARKS (this "Assignment of Trademarks")
is made as of the ______ day of ___________, 2005, THE PFALTZGRAFF
CO., a corporation organized under the laws of the Commonwealth of
Pennsylvania ("Parent"), THE PFALTZGRAFF MANUFACTURING CO., a
corporation organized under the laws of the Commonwealth of
Pennsylvania ("Manufacturing"), PFALTZGRAFF INVESTMENT CO., a
corporation organized under the laws of the State of Delaware
("Investco"), and THE PFALTZGRAFF OUTLET CO., a corporation organized
under the laws of the State of Maryland (together with Parent,
Manufacturing and Investco, collectively the "Assignors"), to PFZ
ACQUISITION CORP., a corporation organized under the laws of the
State of Delaware ("Assignee").
WHEREAS, Assignee and Assignors are parties to an Asset Purchase
Agreement (the "Agreement"), dated as of June 17, 2005, by and among,
on one hand, Assignors, and on the other hand, LIFETIME BRANDS, INC.,
a corporation organized under the laws of Delaware, PFZ OUTLET
RETAIL, INC., a corporation organized under the laws of Delaware, and
Assignee; and
WHEREAS, in accordance with the Agreement, Assignors desire to
transfer and assign to Assignee, and Assignee desires to accept the
transfer and assignment of, all of Assignors' respective worldwide
right, title and interest in and to all of Assignors' Trademarks (as
defined in the Agreement), including without limitation the
Trademarks listed in Schedule A annexed hereto and incorporated
herein by this reference.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and in the Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignors hereby transfer and assign to Assignee, and
Assignee hereby accepts the transfer and assignment of, all of
Assignors' worldwide right, title and interest in, to and under the
Trademarks, , and all rights to sue for past infringement of any
Trademark, the same to be held and enjoyed by the said Assignee, its
successors and assigns from and after the date hereof as fully and
entirely as the same would have been held and enjoyed by the said
Assignors had this Assignment not been made.
Except to the extent that federal law preempts state law with
respect to the matters covered hereby, this Assignment of Trademarks
shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania without regard to the principles of
conflicts of laws thereunder.
This Assignment of Trademarks may be executed in two or more
counterparts, each of which shall be deemed an original, and all of
which shall together constitute one and the same instrument.
Nothing in this Assignment of Trademarks shall be deemed to
supersede, enlarge or modify any of the provisions of the Purchase
Agreement, all of which shall survive the execution and delivery of
this Assignment of Trademarks as provided in, and subject to the
limitations set forth in, the Purchase Agreement. If any conflict
exists between the terms of this Assignment of Trademarks and the
terms of the Purchase Agreement, the terms of the Purchase Agreement
shall govern and control.
The remainder of this page is left blank intentionally. Signatures
follow on next page.
IN WITNESS WHEREOF, each Assignor and the Assignee has caused
its duly authorized officer to execute this Assignment as of date
first set forth hereinabove.
THE PFALTZGRAFF CO.:
By:
Name:
Title:
PFALTZGRAFF INVESTMENT CO.:
By:
Name:
Title:
THE PFALTZGRAFF OUTLET CO.:
By:
Name:
Title:
THE PFALTZGRAFF MANUFACTURING CO.:
By:
Name:
Title:
Commonwealth of Pennsylvania )
) ss.:
County of York )
On this ______ day of _____________, 2005, before me,
______________________________, personally appeared
_________________, _______________ of The Pfaltzgraff Co.,
_________________, _______________ of The Pfaltzgraff Manufacturing
Co., _________________, _______________ of Pfaltzgraff Investment Co.
and _________________, _______________ of The Pfaltzgraff Outlet Co.,
each personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the
same in his/her authorized capacity and that by his/her signature on
the instrument the person, or the entity upon behalf of which he/she
acted, executed the instrument.
WITNESS my hand and official seal.
__________________________________________
Notary Public
Accepted:
PFZ ACQUISITION CORP.:
By:
Name:
Title:
SCHEDULE A
TO ASSIGNMENT OF TRADEMARKS
Registered Trademarks
Trademark U.S. Registration No. Registration Date
Pending Trademark Applications
Trademark U.S. Serial No. Application Date
ASSIGNMENT OF COPYRIGHTS
THIS ASSIGNMENT OF COPYRIGHTS (this "Assignment of Copyrights")
is made as of the ______ day of ___________, 2005, by THE PFALTZGRAFF
CO., a corporation organized under the laws of the Commonwealth of
Pennsylvania ("Parent"), THE PFALTZGRAFF MANUFACTURING CO., a
corporation organized under the laws of the Commonwealth of
Pennsylvania ("Manufacturing"), PFALTZGRAFF INVESTMENT CO., a
corporation organized under the laws of the State of Delaware
("Investco"), and THE PFALTZGRAFF OUTLET CO., a corporation organized
under the laws of the State of Maryland (together with Parent,
Manufacturing and Investco, collectively the "Assignors"), to PFZ
ACQUISITION CORP., a corporation organized under the laws of the
State of Delaware ("Assignee").
WHEREAS, Assignee and Assignors are parties to an Asset Purchase
Agreement (the "Agreement"), dated as of June 17, 2005, by and among,
on one hand, Assignors, and on the other hand, LIFETIME BRANDS, INC.,
a corporation organized under the laws of Delaware, PFZ OUTLET
RETAIL, INC., a corporation organized under the laws of Delaware, and
Assignee; and
WHEREAS, in accordance with the Agreement, Assignors desire to
transfer and assign to Assignee, and Assignee desires to accept the
transfer and assignment of, all of Assignors' respective worldwide
right, title and interest in and to all of Assignors' Copyrights (as
defined in the Agreement), including without limitation the
Copyrights listed in Schedule A annexed hereto and incorporated
herein by this reference.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and in the Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignors hereby transfer and assign to Assignee, and
Assignee hereby accepts the transfer and assignment of, all of
Assignors' worldwide right, title and interest in, to and under the
Copyrights, and all rights to sue for past infringement of any
Copyright, the same to be held and enjoyed by the said Assignee, its
successors and assigns from and after the date hereof as fully and
entirely as the same would have been held and enjoyed by the said
Assignors had this Assignment not been made.
Except to the extent that federal law preempts state law with
respect to the matters covered hereby, this Assignment of Copyrights
shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania without regard to the principles of
conflicts of laws thereunder.
This Assignment of Copyrights may be executed in two or more
counterparts, each of which shall be deemed an original, and all of
which shall together constitute one and the same instrument.
Nothing in this Assignment of Copyrights shall be deemed to
supersede, enlarge or modify any of the provisions of the Purchase
Agreement, all of which shall survive the execution and delivery of
this Assignment of Copyrights as provided in, and subject to the
limitations set forth in, the Purchase Agreement. If any conflict
exists between the terms of this Assignment of Copyrights and the
terms of the Purchase Agreement, the terms of the Purchase Agreement
shall govern and control.
The remainder of this page is left blank intentionally. Signatures
follow on next page.
IN WITNESS WHEREOF, each Assignor and the Assignee has caused
its duly authorized officer to execute this Assignment as of date
first set forth hereinabove.
THE PFALTZGRAFF CO.:
By:
Name:
Title:
PFALTZGRAFF INVESTMENT CO.:
By:
Name:
Title:
THE PFALTZGRAFF OUTLET CO.:
By:
Name:
Title:
THE PFALTZGRAFF MANUFACTURING CO.:
By:
Name:
Title:
Commonwealth of Pennsylvania )
) ss.:
County of York )
On this ______ day of _____________, 2005, before me,
______________________________, personally appeared
_________________, _______________ of The Pfaltzgraff Co.,
_________________, _______________ of The Pfaltzgraff Manufacturing
Co., _________________, _______________ of Pfaltzgraff Investment Co.
and _________________, _______________ of The Pfaltzgraff Outlet Co.,
each personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the
same in his/her authorized capacity and that by his/her signature on
the instrument the person, or the entity upon behalf of which he/she
acted, executed the instrument.
WITNESS my hand and official seal.
__________________________________________
Notary Public
Accepted:
PFZ ACQUISITION CORP.:
By:
Name:
Title:
SCHEDULE A
TO ASSIGNMENT OF COPYRIGHTS
Registered Copyrights
Copyright Author(s) U.S. Registration No. Registration Date
Pending Copyright Applications
Copyright Author(s) Application No. Application Date
ASSIGNMENT OF DOMAIN NAMES
THIS ASSIGNMENT OF DOMAIN NAMES (this "Assignment") is made as
of the ______ day of ___________, 2005, by and between
______________________________, a ____________ corporation
("Assignor"), and ______________________________, a ____________
corporation ("Assignee").
WHEREAS, Assignee and Assignor are parties to that certain Asset
Purchase Agreement (the "Purchase Agreement") made and entered into
as of the 17th day of June, 2005, by and among, (a) on one hand, THE
PFALTZGRAFF CO., a corporation organized under the laws of the
Commonwealth of Pennsylvania, THE PFALTZGRAFF MANUFACTURING CO., a
corporation organized under the laws of the Commonwealth of
Pennsylvania, PFALTZGRAFF INVESTMENT CO., a corporation organized
under the laws of the State of Delaware, and THE PFALTZGRAFF OUTLET
CO., a corporation organized under the laws of the State of Maryland;
and (b) on the other hand, LIFETIME BRANDS, INC., a corporation
organized under the laws of Delaware, PFZ ACQUISITION CORP., a
corporation organized under the laws of Delaware, and PFZ OUTLET
RETAIL, INC., a corporation organized under the laws of Delaware; and
WHEREAS, Assignor is the owner of the registered domain names
listed on Schedule A annexed hereto and incorporated herein by this
reference (the "Domain Names") and the goodwill symbolized thereby.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and in the Purchase Agreement and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged:
1. Assignor hereby transfers and assigns to Assignee, and
Assignee hereby accepts the transfer and assignment of, all of
Assignor's worldwide right, title and interest in and to the Domain
Names, and all rights to sue for past infringement of any Domain
Name, and for the use and benefit of Assignee's successors, assigns
and legal representatives.
2. Assignor hereby agrees and promises that it, as well as its
successors and assigns, will execute and deliver any and all
documents and information that are necessary for the Assignee to
register the aforesaid Domain Names.
3. This Assignment shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without
regard to the principles of conflicts of laws thereunder.
4. This Assignment may be executed in two or more
counterparts, each of which shall be deemed an original, and all of
which shall together constitute one and the same instrument.
5. Nothing in this Assignment shall be deemed to supersede,
enlarge or modify any of the provisions of the Purchase Agreement,
all of which shall survive the execution and delivery of this
Assignment as provided in, and subject to the limitations set forth
in, the Purchase Agreement. If any conflict exists between the terms
of this Assignment and the terms of the Purchase Agreement, the terms
of the Purchase Agreement shall govern and control.
The remainder of this page is left blank intentionally. Signatures
follow on next page.
IN WITNESS WHEREOF, the Assignor and the Assignee have each
caused its duly authorized officer to execute this Assignment as of
date first set forth hereinabove.
[ASSIGNOR]:
By:
Name:
Title:
Commonwealth of Pennsylvania )
) ss.:
County of York )
On this ______ day of _____________, 2005, before me,
______________________________, personally appeared
_________________, _______________ of _____________, personally known
to me (or proved to me on the basis of satisfactory evidence) to be
the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her
authorized capacity and that by his/her signature on the instrument
the person, or the entity upon behalf of which he/she acted, executed
the instrument.
WITNESS my hand and official seal.
__________________________________________
Notary Public
Accepted:
[ASSIGNEE].:
By:
Name:
Title:
SCHEDULE A
TO ASSIGNMENT OF DOMAIN NAMES
[to be listed]
SCHEDULE 1.1(d)
NET WORKING CAPITAL
"Net Working Capital" means the following, as set forth on a
consolidated balance sheet of Parent:
(a) The sum of:
(i) trade accounts receivable, less reserves for
bad debts, returns and allowances,
(ii) Seller Inventory, less a LIFO reserve,
reserves for obsolescence, shrinkage and FIFO
valuation, and a lower of cost or market
adjustment, and
(iii) other current assets;
(b) less:
(i) trade accounts payable, and
(ii) accrued liabilities.
Notwithstanding anything herein to the contrary, Net Working
Capital shall not include any assets or liabilities
associated with the Designated Stores.
SCHEDULE 1.1(f)
SELLERS' KNOWLEDGE
Marsha Everton
Michael Sibol
Craig Bremer
SCHEDULE 1.1(g)
BUYERS' KNOWLEDGE
Ronald Shiftan
Robert McNally
Jeffrey Siegel
SCHEDULE 9.7
CERTIFICATION PROVIDED UNDER
TREASURY REGULATIONS 1.1445-2
Section 1445 of the Internal Revenue Code provides that
a transferee of a U.S. real property interest must withhold
tax if the transferor is a foreign person. For U.S. tax
purposes (including Section 1445), the owner of a
disregarded entity (which has legal title to a U.S. real
property interest under local law) will be the transferor of
the property and not the disregarded entity. To inform the
transferee that withholding of tax is not required upon the
disposition of a U.S. real property interest by [INSERT NAME
OF TRANSFEROR - PARENT, INVESTCO, MANUFACTURING OR OUTLET,
AS APPROPRIATE], the undersigned hereby certifies the
following on behalf of [INSERT NAME OF TRANSFEROR]:
1. [INSERT NAME OF TRANSFEROR] is not a foreign
corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in the Internal Revenue
Code and Income tax Regulations);
2. [INSERT NAME OF TRANSFEROR] is not a disregarded
entity as defined in Treasury Regulations 1.1445-
2(b)(2)(iii);
3. [INSERT NAME OF TRANSFEROR]'s U.S. employer
identification number is ___________; and
4. [INSERT NAME OF TRANSFEROR]'s office address is
_______________________________________________________.
[INSERT NAME OF TRANSFEROR] understands that this
certification may be disclosed to the Internal Revenue
Service by transferee and that any false statement contained
herein could be punished by fine, imprisonment or both.
Under penalties of perjury, I declare that I have
examined this certification and to the best of my knowledge
and belief it is true, correct and complete, and I further
declare that I have authority to sign this document on
behalf of [INSERT NAME OF TRANSFEROR].
___________________
[NAME]
[TITLE]
[DATE]