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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 earliest event reported): MARCH 8, 2006
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
(Former Name or Former Address, if Changed Since Last Report) N/A
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On March 8, 2005, Lifetime Brands, Inc. (the "Company") announced that it had
signed an agreement to acquire the business and certain assets of Syratech
Corporation ("Syratech"), a major designer, importer and manufacturer of a
diverse portfolio of tabletop, home decor and picture frame products. Syratech's
sales for 2005 were approximately $138 million.
Founded in 1986, Syratech owns many key brands in home fashion, including
Wallace Silversmiths(R), Towle Silversmiths(R), International Silver Company(R),
Melannco International(R) and Elements(R). In addition, Syratech licenses the
Cuisinart(R) brand for tabletop products and recently secured the license for
Kenneth Cole Reaction Home(R). Syratech's products are broadly distributed
through better department stores, specialty stores, big box retailers warehouse
clubs, and catalogs.
Assuming that the transaction closes in April, the Company expects the Syratech
business to contribute approximately $100 million in revenues in 2006 and to be
nominally profitable for the year. The transaction is subject to customary
closing conditions and adjustments. The terms and conditions of the agreement
are set forth in the Asset Purchase Agreement filed as exhibit 99.1 to this Form
8-K.
The information herein contains certain forward-looking statements including
statements concerning the Company's future prospects. These statements involve
risks and uncertainties, including risks relating to general economic conditions
and risks relating to the Company's operations, such as the risk of loss of
major customers and risks relating to changes in demand for the Company's
products, as detailed from time to time in the Company's filings with the
Securities and Exchange Commission.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Asset Purchase Agreement dated as of March 8, 2006 among
Syratech Corporation, Wallace International de P.R., Inc., Chi
International, Inc. and Syratech (H.K.) Limited, as the
sellers, and Syratech Acquisition Corporation as the
purchaser, and Lifetime Brands, 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 Brands, Inc.
By: /s/ Robert McNally
------------------------------------
Robert McNally
Vice President of Finance and
Chief Financial Officer
Date: March 8, 2006
EXHIBIT 7.16
SYRATECH CORPORATION
VERA WANG ASSETS
DECEMBER 31, 2005
Inventory 2,830,175
Inventory in transit 205,348
----------
3,035,523
Cost of Vera Wang store displays 749,703
----------
Accumulated depreciation (749,703)
-----------
Cost of Puerto Rico tooling 17,889
Accumulated depreciation (8,944)
-------------
8,945
New York showroom furniture 38,121
Accumulated depreciation (38,121)
-----------
_
-----------
-----------
Total 3,044,468
===========
Flatware and giftware products utilizing the VEW trademarks that incorporates
the name Vera Wang ("Vera Wang Products"). Vera Wang product inventory, its
molds and tooling to manufacture Vera Wang Products and all related Vera Wang
fixtures, furniture, store displays and other decor that are presently in its
customers stores and Syratech showrooms along with other related assets
(together, "Vera Wang Assets").
EXHIBIT 7.17
REGISTRATION RIGHTS
Capitalized terms not defined within the text of this Exhibit 7.17 are defined
in the Asset Purchase Agreement to which this Exhibit is attached.
Shelf Registration.
On or prior to date (the "Filing Date") that is the tenth (10th) Business Day
after the later to occur of (i) the Closing and (ii) the date on which Lifetime
files its annual report on Form 10-K with the SEC for the fiscal year ended
December 31, 2005, Lifetime shall prepare and file with the SEC a "Shelf"
registration statement (the "Registration Statement") covering the resale by the
Sellers (or each selling stockholder, to the extent any Consideration Shares
have been transferred by the Sellers to any of their stockholders) of all of the
Consideration Shares for an offering to be made on a continuous basis pursuant
to Rule 415. For purposes of the Registration Rights hereunder, the term
"Seller" shall include any stockholder of any of the initial Sellers to whom
such Seller has transferred Consideration Shares in accordance with paragraph
1(c) hereof. The Registration Statement shall be on Form S-3 (except if Lifetime
is not then eligible to register for resale the Consideration Shares on Form
S-3, in which case such registration shall be on another appropriate form as may
be reasonably determined by Lifetime and to which the Sellers may reasonably
consent) and shall contain (except if otherwise directed by the Sellers or the
other selling stockholders, as applicable) substantially the "Plan of
Distribution" set forth in Paragraph 6 of this Exhibit 7.17.
Lifetime shall use its commercially reasonable efforts to cause the Registration
Statement to be declared effective by the SEC as promptly as practicable after
the filing thereof, but in any event prior to the 60th day after the filing
thereof, and shall use its reasonable best efforts to keep the Registration
Statement continuously effective under the Securities Act until the second
anniversary of the Effective Date or such earlier date when either (i) all of
the Consideration Shares have been sold by one or more of the Sellers to Persons
other than stockholders of the initial Sellers or (ii) all Consideration Shares
owned by each Seller may be sold pursuant to Rule 144(k) (the "Effectiveness
Period"). Lifetime shall notify each Seller in writing promptly after receiving
notification from the SEC that the Registration Statement has been declared
effective. Anything to the contrary notwithstanding, prior to recognizing any
transfer of Consideration Shares to a stockholder of an initial Seller, Lifetime
may first require the transferee to execute and deliver a purchaser
questionnaire in form and substance reasonably acceptable to Lifetime, and (if
such transfer occurs prior to May 18, 2006) a lock-up agreement in form and
substance reasonably acceptable to Lifetime's underwriter from its public
offering during November 2005.
Registration Procedures.
Not less than five days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), Lifetime shall furnish to Weil Gotshal & Manges LLP, as counsel for
the Sellers ("Seller Counsel"), copies of all such documents proposed to be
filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the reasonable review of such
Seller Counsel with respect to matters pertaining directly to the descriptions
of the Sellers contained therein and the plan of distribution described therein.
Lifetime shall not file a Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Sellers holding a majority of the
Consideration Shares shall reasonably object on the basis of the matters
referred to in the preceding sentence, which objection, if any, shall be
communicated in writing to Lifetime by the Seller Counsel.
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Lifetime shall prepare and file with the SEC such amendments, including
post-effective amendments, to the Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep the Registration Statement
continuously effective as to the applicable Consideration Shares for the
Effectiveness Period; and shall cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424. Lifetime shall respond as promptly as
reasonably possible to any comments received from the SEC with respect to the
Registration Statement or any amendment thereto; and shall comply in all
material respects with the provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Consideration Shares covered by the
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the Sellers thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.
Lifetime shall notify the Seller Counsel as promptly as reasonably practicable
of any of the following events: (i) the SEC notifies Lifetime whether there will
be a "review" of the Registration Statement; (ii) the Registration Statement or
any post-effective amendment is declared effective; (iii) the SEC or any other
federal or state governmental authority requests any amendment or supplement to
the Registration Statement or Prospectus or requests additional information
related thereto; (iv) the SEC issues any stop order suspending the effectiveness
of the Registration Statement or initiates any Proceedings for that purpose; (v)
Lifetime receives notice of any suspension of the qualification or exemption
from qualification of any Consideration Shares for sale in any jurisdiction, or
the initiation or threat of any Proceeding for such purpose; or (vi) the
financial statements included in the Registration Statement become ineligible
for inclusion therein or any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference is untrue in any material respect or any revision to a Registration
Statement, Prospectus or other document is required so that it will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Lifetime shall use its reasonable efforts to avoid the issuance of or, if
issued, obtain the withdrawal of any order suspending the effectiveness of the
Registration Statement, or any suspension of the qualification (or exemption
from qualification) of any of the Consideration Shares for sale in any
jurisdiction, at the earliest practicable moment.
Lifetime shall furnish, or forward by e-mail (which may be done by forwarding a
link to the applicable document on the SEC's "edgar" database), to each Seller
and the Seller Counsel, without charge, at least one copy of the Registration
Statement and each amendment thereto, and a copy of each Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto, as promptly as practicable after the filing of such
documents with the SEC. Lifetime hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the Sellers in connection
with the offering and sale of the Consideration Shares covered by such
Prospectus and any amendment or supplement thereto.
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Lifetime shall, in the time and manner required by the principal exchange or
market for Lifetime's commons stock, prepare and file with such exchange or
market an additional shares listing application covering all of the
Consideration Shares; (ii) take all steps necessary to cause such Consideration
Shares to be approved for listing on such exchange or market as soon as
practicable thereafter; (iii) provide to the Sellers evidence of such listing;
and (iv) maintain the listing of such Consideration Shares on such exchange or
market.
Lifetime shall use its best efforts to register or qualify or cooperate with the
Sellers and each applicable Seller Counsel in connection with the registration
or qualification (or exemption from such registration or qualification) of such
Consideration Shares for offer and sale under the securities or blue sky laws of
such jurisdictions within the United States as any Seller requests in writing,
to keep each such registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Consideration Shares covered by a Registration Statement; provided, however,
that Lifetime shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in securities in
any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise subject.
Lifetime shall cooperate with the Sellers to facilitate the timely preparation
and delivery of certificates representing Consideration Shares to be delivered
to a transferee pursuant to the Registration Statement, which certificates shall
be free, to the extent permitted by applicable law, of all restrictive legends,
and to enable such Consideration Shares to be in such denominations and
registered in such names as any such Sellers may request.
If Sellers holding a majority of the Consideration Shares select underwriters
for the offering, Lifetime shall enter into and perform its obligations
hereunder pursuant to an underwriting agreement, in usual and customary form
reasonably acceptable to Lifetime, including, without limitation, by providing
customary legal opinions, comfort letters and indemnification and contribution
obligations; provided, however, that no such agreement shall obligate Lifetime
to pay any amount not otherwise contemplated by this Exhibit 7.17, including
compensation or expenses of the underwriters.
Registration Expenses. Lifetime shall pay all fees and expenses incident to the
performance of or compliance with this Exhibit 7.17 by Lifetime, including
without limitation (a) all registration and filing fees and expenses, including
without limitation those related to filings with the SEC, the principal exchange
or market and in connection with applicable state securities or Blue Sky laws,
(b) printing expenses (including without limitation expenses of printing
certificates for Consideration Shares and of printing prospectuses requested by
the Sellers), (c) messenger, telephone and delivery expenses incurred by
Lifetime, and (d) fees and expenses of all other Persons retained by Lifetime in
connection with the consummation of the transactions contemplated by this
Exhibit 7.17. In all events, the Sellers shall be solely responsible for paying
all brokerage fees, underwriter commissions and expenses or similar compensation
relating to their sale of Consideration Shares and any income taxes resulting
from any such sale of Consideration Shares.
Indemnification.
Indemnification by Lifetime. Lifetime shall indemnify and hold harmless each
Seller, the officers, directors, partners, members, agents, brokers (including
brokers who offer and sell Consideration Shares, investment advisors and
employees of each of them, each Person who controls any such Seller (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, partners, members, agents and employees of each
such controlling Person, to the fullest extent permitted by applicable law, from
and against any and all Losses, as incurred, arising out of or relating to any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that (i) such untrue statements, alleged untrue
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statements, omissions or alleged omissions are based solely upon information
regarding such Seller furnished in writing to Lifetime by such Seller expressly
for use therein, or to the extent that such information relates to such Seller
or such Seller's proposed method of distribution of Consideration Shares and was
reviewed and expressly approved in writing by such Seller expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (ii) the use by such Seller of an outdated or
defective Prospectus after Lifetime has notified such Seller in writing that the
Prospectus is outdated or defective. Lifetime shall notify the Sellers promptly
of the institution, threat or assertion of any Legal Proceeding of which
Lifetime is aware in connection with the transactions contemplated by this
Exhibit 7.17.
Indemnification by Sellers. Each Seller shall, severally and not jointly,
indemnify and hold harmless Lifetime, its directors, officers, agents and
employees, each Person who controls Lifetime (within the meaning of Section 15
of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest extent
permitted by applicable law, from and against all Losses (as determined by a
court of competent jurisdiction) arising solely out of any untrue statement of a
material fact contained in the Registration Statement, any Prospectus, or any
form of prospectus, or in any amendment or supplement thereto, or arising solely
out of any omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading to the extent, but only to the extent, that
such untrue statement or omission is contained in any information so furnished
in writing by such Seller to Lifetime specifically for inclusion in the
Registration Statement or such Prospectus or to the extent that (i) such untrue
statements or omissions are based solely upon information regarding such Seller
furnished in writing to Lifetime by such Seller expressly for use therein, or to
the extent that such information relates to such Seller or such Seller's
proposed method of distribution of Consideration Shares and was reviewed and
expressly approved in writing by such Seller expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (ii) the use by such Seller of an outdated or
defective Prospectus after Lifetime has notified such Seller in writing that the
Prospectus is outdated or defective. In no event shall the liability of any
Seller hereunder be greater in amount than the dollar amount of the net proceeds
received by such Seller upon the sale of the Consideration Shares giving rise to
such indemnification obligation.
Conduct of Indemnification Proceedings. If any Legal Proceeding shall be brought
or asserted against any Person entitled to indemnity hereunder (an "Indemnified
Party"), such Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the "Indemnifying Party") in writing, and the Indemnifying
Party shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all fees and
expenses incurred in connection with defense thereof; provided, that the failure
of any Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Exhibit 7.17, except
(and only) to the extent that it shall be determined by a court of competent
jurisdiction that such failure shall have proximately and materially adversely
prejudiced the Indemnifying Party's ability to defend such Legal Proceeding.
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An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (i) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (ii) the Indemnifying Party shall have failed promptly to assume
the defense of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Proceeding; or (iii) the named parties to any
such Legal Proceeding (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party, and such Indemnified Party shall
have been advised by counsel that a conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and such counsel shall be at the expense of the Indemnifying
Party). The Indemnifying Party shall not be liable for any settlement of any
such Legal Proceeding effected without its written consent, which consent shall
not be unreasonably withheld. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
Legal Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Legal Proceeding.
All fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing to
defend such Proceeding in a manner not inconsistent with this Paragraph 4) shall
be paid to the Indemnified Party, as incurred, within 30 days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).
Contribution. If a claim for indemnification under Paragraph 4(a) or (b) is
unavailable to an Indemnified Party (by reasons other than the specified
exclusions to indemnification), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Paragraph 4(c), any reasonable attorneys' or
other reasonable fees or expenses incurred by such party in connection with any
Legal Proceeding to the extent such party would have been indemnified for such
fees or expenses if the indemnification provided for in this Paragraph 4 was
available to such party in accordance with its terms.
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The parties hereto agree that it would not be just and equitable if contribution
pursuant to Paragraph 4(f) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of Paragraph 4(f), no Seller shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Seller from the sale of the Consideration
Shares subject to the Proceeding exceeds the amount of any damages that such
Seller has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
Dispositions. Each Seller agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection
with sales of Consideration Shares pursuant to the Registration Statement. Each
Seller further agrees that, upon receipt of a notice from Lifetime of the
occurrence of any event of the kind described in items (v), (vi) or (vii) of
Paragraph 2(c) hereof, such Seller will discontinue disposition of such
Consideration Shares under the Registration Statement until such Seller's
receipt of a supplemented Prospectus and/or amended Registration Statement, as
applicable, from Lifetime, or until it is advised in writing by Lifetime that
the use of the applicable Prospectus may be resumed, and, in either case, has
received a copy of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus or Registration
Statement. Lifetime may provide appropriate stop orders to enforce the
provisions of this paragraph.
Plan of Distribution. Language substantially to the following effect shall be
included in each prospectus contained within the Registration Statement:
Each Selling Stockholder may, from time to time, sell any
or all of its shares of Common Stock on the principal exchange or
market for our Common Stock or in private transactions. These
sales may be at fixed or negotiated prices. A Selling Stockholder
may use any one or more of the following methods when selling
shares: ordinary brokerage transactions and transactions in which
the broker-dealer solicits purchasers; block trades in which the
broker-dealer will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to
facilitate the transaction; purchases by a broker-dealer as
principal and resale by the broker-dealer for its account; an
exchange distribution in accordance with the rules of the
applicable exchange; privately negotiated transactions;
settlement of short sales entered into after the effective date
of the registration statement of which this prospectus is a part;
broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
a combination of any such methods of sale; through the writing or
settlement of options or other hedging transactions, whether
through an options exchange or otherwise; or any other method
permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule
144 under the Securities Act of 1933, as amended (the "Securities
Act "), if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange
for other brokers-dealers to participate in sales. Broker-dealers
may receive commissions or discounts from the Selling
Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this
Prospectus, in the case of an agency transaction not in excess of
a customary brokerage commission in compliance with NASDR Rule
2440; and in the case of a principal transaction a markup or
markdown in compliance with NASDR IM-2440.
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In connection with the sale of the Common Stock or
interests therein, the Selling Stockholders may enter into
hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the
shares in the course of hedging the positions they assume. The
Selling Stockholders may also sell shares short and deliver these
securities to close out their short positions, or loan or pledge
the shares to broker-dealers that in turn may sell these
securities. The Selling Stockholders may also enter into option
or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities
which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which
shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to
reflect such transaction).
The Selling Stockholders and any broker-dealers or agents
that are involved in selling the shares may be deemed to be
"underwriters" within the meaning of the Securities Act in
connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
Each Selling Stockholder has informed us that it does not have
any written or oral agreement or understanding, directly or
indirectly, with any person to distribute the shares. In no event
shall any broker-dealer receive fees, commissions and markups
which, in the aggregate, would exceed eight percent (8%).
We are required to pay certain fees and expenses incurred
by us incident to the registration of the shares. We have has
agreed to indemnify the Selling Stockholdera against certain
losses, claims, damages and liabilities, including liabilities
under the Securities Act.
Because Selling Stockholders may be deemed to be
"underwriters" within the meaning of the Securities Act, they
will be subject to the prospectus delivery requirements of the
Securities Act. In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this
prospectus. Each Selling Stockholder has advised us that they
have not entered into any written or oral agreements,
understandings or arrangements with any underwriter or
broker-dealer regarding the sale of the resale shares. There is
no underwriter or coordinating broker acting in connection with
the proposed sale of the resale shares by the Selling
Stockholders.
We agreed to keep this prospectus effective for two years,
or until such earlier date on which the shares may be resold by
the Selling Stockholders without registration and without regard
to any volume limitations by reason of Rule 144(e) under the
Securities Act or any other rule of similar effect. The shares
will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In
addition, in certain states, the shares may not be sold unless
they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable rules and regulations under the Exchange
Act, any person engaged in the distribution of the resale shares
may not simultaneously engage in market making activities with
respect to the shares for the applicable restricted period, as
defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be
subject to applicable provisions of the Exchange Act and the
rules and regulations thereunder, including Regulation M, which
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may limit the timing of purchases and sales of shares by the
Selling Stockholders or any other person. We will make copies of
this prospectus available to the Selling Stockholders and have
informed them of the need to deliver a copy of this prospectus to
each purchaser at or prior to the time of the sale.
AGREEMENT TO TERMS. AS A CONDITION TO INCLUSION IN THE REGISTRATION STATEMENT OF
ANY CONSIDERATION SHARES OF A SELLER, SUCH SELLER SHALL DULY COMPLETE, EXECUTE
AND DELIVER TO LIFETIME A COPY OF THE NOTICE AND QUESTIONNAIRE ATTACHED HERETO
AS ANNEX A.
ANNEX A
LIFETIME BRANDS, INC.
SELLER NOTICE AND QUESTIONNAIRE
The undersigned beneficial owner of shares (the "Consideration Shares") of
common stock, par value $.01 per share (the "Common Stock"), of Lifetime Brands,
Inc., a Delaware corporation (the "Purchaser"), understands that Lifetime has
filed or intends to file with the Securities and Exchange SEC (the "SEC") a
registration statement on Form S-3 (the "Registration Statement") for the
registration and resale under Rule 415 of the Securities Act of 1933, as amended
(the "Securities Act"), of the Consideration Shares, in accordance with the
terms set forth on Exhibit 7.17 to the Asset Purchase Agreement, dated as of
February __, 2006 (the "Asset Purchase Agreement"), among Syratech Corporation,
Lifetime, the Sellers named therein and ___________, as Stockholder
Representative. A copy of the Asset Purchase Agreement, including Exhibit 7.17,
is available from Lifetime upon request at the address set forth below. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in Exhibit 7.7.
Certain legal consequences arise from being named as a selling stockholder in
the Registration Statement and the related prospectus. Accordingly, holders and
beneficial owners of Consideration Shares are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling stockholder in the Registration Statement and the related
prospectus.
NOTICE
The undersigned beneficial owner (the "Seller") of Consideration Shares hereby
elects to include the Consideration Shares owned by it and listed below in Item
3 (unless otherwise specified under such Item 3) in the Registration Statement.
The undersigned hereby provides the following information to Lifetime and
represents and warrants that such information is accurate:
QUESTIONNAIRE
Full Legal Name of Seller
FULL LEGAL NAME OF REGISTERED SELLER (IF NOT THE SAME AS (A) ABOVE) THROUGH
WHICH CONSIDERATION SHARES LISTED IN ITEM 3 BELOW ARE HELD:
FULL LEGAL NAME OF NATURAL CONTROL PERSON (WHICH MEANS A NATURAL PERSON WHO
DIRECTLY OR INDIRECTLY ALONE OR WITH OTHERS HAS POWER TO VOTE OR DISPOSE OF THE
SECURITIES COVERED BY THE QUESTIONNAIRE):
ADDRESS FOR NOTICES TO SELLER:
Telephone:
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Fax:
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Contact Person:
------------------------------------------------------------
BENEFICIAL OWNERSHIP OF CONSIDERATION SHARES:
TYPE AND PRINCIPAL AMOUNT OF CONSIDERATION SHARES BENEFICIALLY OWNED:
BROKER-DEALER STATUS:
ARE YOU A BROKER-DEALER?
Yes [ ] No [ ]
IF "YES" TO SECTION 4(A), DID YOU RECEIVE YOUR CONSIDERATION SHARES AS
COMPENSATION FOR INVESTMENT BANKING SERVICES TO LIFETIME.
Yes [ ] No [ ]
Note: If no, the SEC's staff has indicated that you should be
identified as an underwriter in the Registration Statement.
ARE YOU AN AFFILIATE OF A BROKER-DEALER?
Yes [ ] No [ ]
IF YOU ARE AN AFFILIATE OF A BROKER-DEALER, DO YOU CERTIFY THAT YOU BOUGHT THE
CONSIDERATION SHARES IN THE ORDINARY COURSE OF BUSINESS, AND AT THE TIME OF THE
PURCHASE OF THE CONSIDERATION SHARES TO BE RESOLD, YOU HAD NO AGREEMENTS OR
UNDERSTANDINGS, DIRECTLY OR INDIRECTLY, WITH ANY PERSON TO DISTRIBUTE THE
CONSIDERATION SHARES?
Yes [ ] No [ ]
Note: If no, the SEC's staff has indicated that you should be identified as an
underwriter in the Registration Statement.
BENEFICIAL OWNERSHIP OF OTHER SECURITIES OF LIFETIME OWNED BY THE SELLER.
Except as set forth below in this Item 5, the undersigned is not the
beneficial or registered owner of any securities of Lifetime other than the
Consideration Shares listed above in Item 3.
TYPE AND AMOUNT OF OTHER SECURITIES BENEFICIALLY OWNED BY THE SELLER:
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RELATIONSHIPS WITH LIFETIME:
Note: If no, the SEC's staff has indicated that you should be identified as an
underwriter in the Registration Statement. ----
BENEFICIAL OWNERSHIP OF OTHER SECURITIES OF LIFETIME OWNED BY THE SELLER.
------------------------------------------------------------------------
Except as set forth below in this Item 5, the undersigned is not the beneficial
or registered owner of any securities of Lifetime other than the Consideration
Shares listed above in Item 3.
TYPE AND AMOUNT OF OTHER SECURITIES BENEFICIALLY OWNED BY THE SELLER:
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RELATIONSHIPS WITH LIFETIME:
Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with Lifetime (or its predecessors or
affiliates) during the past three years.
State any exceptions here:
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DEFINITIONS.
[Filing Date] shall have the meaning described in paragraph 1(a).
[SEC] shall have the meaning described in paragraph 1(a).
[Required Effectiveness Date] shall have the meaning described in
paragraph 1(b).
[Losses] shall have the meaning described in paragraph 4(a).
88
The undersigned agrees to promptly notify Lifetime of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof at any time while the Registration Statement remains effective. By
signing below, the undersigned (i) confirms its agreement to the terms and
conditions set forth in Exhibit 7.17 of the Stock Purchase Agreement and (ii)
consents to the disclosure of the information contained herein in its answers to
Items 1 through 6 and the inclusion of such information in the Registration
Statement and the related prospectus and any amendments or supplements thereto.
The undersigned understands that such information will be relied upon by
Lifetime in connection with the preparation or amendment of the Registration
Statement and the related prospectus.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent. Dated:
Beneficial Owner:
By:
-----------------------------------------
Name:
Title:
PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO: TIMOTHY I. KAHLER, ESQ., TROUTMAN
SANDERS LLP, THE CHRYSLER BUILDING, 405 LEXINGTON AVENUE, NEW YORK, NEW YORK
10174; FAX: 212-704-5948.
EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
AMONG
SYRATECH CORPORATION,
WALLACE INTERNATIONAL de P.R., INC.,
CHI INTERNATIONAL, INC.
and
SYRATECH (H.K.) LIMITED
as the Sellers
AND
SYRATECH ACQUISITION CORPORATION
as the Purchaser
and
LIFETIME BRANDS, INC.
Dated as of March 8, 2006
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.........................................................1
1.1 Certain Definitions..........................................1
1.2 Terms Defined Elsewhere in this Agreement...................10
1.3 Other Definitional and Interpretive Matters.................12
1.4 Interpretation..............................................12
ARTICLE II PURCHASE AND SALE OF ASSETS.................................13
2.1 Purchase and Sale...........................................13
2.2 Excluded Assets.............................................14
2.3 Nonassignable Assets........................................14
2.4 Assumption of Assumed Liabilities...........................15
2.5 Excluded Liabilities........................................18
2.6 Transition Services.........................................19
ARTICLE III PURCHASE PRICE AND PURCHASE PRICE ADJUSTMENT................19
3.1 Purchase Price..............................................19
3.2 Allocation of Purchase Price; Withholding Taxes.............21
3.3 Adjustment of Purchase Price................................21
3.4 Preliminary Working Capital Estimate;
Pre-Closing Certificate...................................21
3.5 Determination of Closing Net Working Capital................22
3.6 Payment of Purchase Price Adjustment........................25
3.7 Inventory Count.............................................25
3.8 Escrow......................................................25
ARTICLE IV CLOSING AND TERMINATION.....................................28
4.1 Closing Date................................................28
4.2 Deliveries by the Sellers...................................28
4.3 Deliveries by the Purchaser.................................29
4.4 Termination of Agreement....................................30
4.5 Termination Fee.............................................31
4.6 Termination Date; Extension.................................32
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SELLERS...............32
5.1 Organization and Good Standing..............................32
5.2 Subsidiaries................................................33
5.3 Authorization of Agreement..................................33
5.4 Conflicts; Permits; Consents of Third Parties...............34
5.5 Capitalization..............................................34
5.6 Financial Statements, Etc...................................35
5.7 No Undisclosed Liabilities..................................36
5.8 Accounts Receivable.........................................36
5.9 Inventory...................................................37
5.10 Absence of Certain Changes or Events........................37
5.11 Taxes.......................................................39
i
TABLE OF CONTENTS
(CONTINUED)
PAGE
5.12 Real Property...............................................40
5.13 Tangible Personal Property..................................42
5.14 Intellectual Property.......................................42
5.15 Material Contracts..........................................43
5.16 Acquired Assets.............................................45
5.17 Employee Benefits...........................................45
5.18 Employees...................................................48
5.19 Litigation..................................................48
5.20 Compliance with Laws; Permits...............................49
5.21 Environmental Matters.......................................49
5.22 Insurance...................................................50
5.23 Affiliated Transactions.....................................50
5.24 Accounts; Lockboxes; Safe Deposit Boxes.....................50
5.25 Seller Disclosure...........................................51
5.26 Financial Advisors..........................................51
5.27 Certain Payments............................................51
5.28 Product Warranties..........................................51
5.29 Suppliers, Distributors and Customers.......................52
5.30 No Defective or Unsafe Products.............................52
5.31 Compliance with the Plan....................................52
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
AND LIFETIME............................................52
6.1 Organization and Good Standing..............................53
6.2 Authorization of Agreement..................................53
6.3 Conflicts; Permits, Consents of Third Parties...............53
6.4 Litigation..................................................53
6.5 SEC Reports of Lifetime.....................................54
6.6 Consideration Shares........................................54
6.7 Available Financing.........................................54
ARTICLE VII COVENANTS...................................................54
7.1 Access to Information.......................................54
7.2 Conduct of the Business Pending the Closing.................55
7.3 Regulatory Approvals........................................56
7.4 Consents and Permits........................................56
7.5 Further Assurances..........................................57
7.6 Confidentiality.............................................57
7.7 Publicity...................................................58
7.8 No Shop; No Transfer of Equity Interests....................58
7.9 Notifications...............................................60
7.10 Supplementation and Amendment of Schedules..................60
7.11 Releases....................................................61
7.12 Tax Returns; Taxes..........................................61
ii
TABLE OF CONTENTS
(CONTINUED)
PAGE
7.13 No Solicitation of Employees, Suppliers or Customers........61
7.14 Letters of Credit, Collateral, Etc..........................61
7.15 Cooperation by the Sellers..................................61
7.16 Registration of Consideration Shares........................62
7.17 Possible Acquisition of Stock of Subsidiary.................62
7.18 Accounts Receivable Received by a Party.....................62
7.19 Delivery of Inventory.......................................62
7.20 Bulk Sales Law..............................................62
7.21 Lifetime Guaranty...........................................62
7.22 Winding Up Expenses.........................................63
ARTICLE VIII EMPLOYEES...................................................63
8.1 Continuing Employees........................................63
8.2 Employment Benefits.........................................64
8.3 Employee Severance..........................................64
8.4 Alternate Procedure.........................................65
ARTICLE IX CONDITIONS TO CLOSING.......................................66
9.1 Conditions Precedent to Obligations of the Purchaser........66
9.2 Conditions Precedent to Obligations of the Sellers..........67
9.3 Conditions Precedent to Obligations of the Purchaser
and the Sellers.................68
9.4 Frustration of Closing Conditions...........................68
ARTICLE X TAXES.......................................................68
10.1 Preparation of Tax Returns..................................69
10.2 Allocation of Taxes for Straddle Periods....................69
10.3 Contests and Cooperation....................................69
10.4 Transfer Taxes..............................................69
10.5 Successors....................................................
10.6 Tax Treatment of Indemnity Payments.........................69
10.7 Survival....................................................70
ARTICLE XI SELLER REPRESENTATIVE.......................................71
11.1 The Seller Representative...................................71
ARTICLE XII SURVIVAL OF REPRESENTATIONS AND WARRANTIES: INDEMNIFICATION.......72
12.1 Limited Survival of Representations and Warranties..........72
12.2 Indemnification by the Sellers................................
12.3 Indemnification by the Purchaser............................73
12.4 Limitations on Indemnification..............................73
12.5 Indemnification Notices; Third Party Claims.................74
ARTICLE XIII MISCELLANEOUS...............................................76
13.1 Expenses....................................................76
13.2 Submission to Jurisdiction; Consent to Service of Process...76
13.3 Waiver of Right to Trial by Jury............................77
iii
TABLE OF CONTENTS
(CONTINUED)
PAGE
13.4 Entire Agreement; Amendments and Waivers....................77
13.5 Governing Law...............................................77
13.6 Notices.....................................................77
13.7 Severability................................................78
13.8 Binding Effect; Assignment..................................78
13.9 Non-Recourse................................................79
13.10 Remedies....................................................79
13.11 Counterparts................................................79
iv
TABLE OF CONTENTS
(CONTINUED)
Schedules
Schedule 1.1(a) Knowledge of the Sellers
Schedule 1.1(b) Knowledge of the Purchaser and Lifetime
Schedule 2.1(viii) Leases with Respect to Tangible Personal Property
Schedule 2.1(ix) Purchased Contracts
Schedule 2.2(viii) Deposits
Schedule 2.2(x) Non-Purchased Contracts
Schedule 2.2(xi) Other Excluded Assets
Schedule 2.3(a) Nonassignable Assets
Schedule 2.4(ii) Liabilities of the Sellers Arising Under Purchased
Contracts With Respect to
Periods After the Closing
Schedule 2.4(iv) Other Assumed Liabilities
Schedule 2.6 Transitional Services
Schedule 5.1 Qualification to Do Business
Schedule 5.2 Subsidiaries
Schedule 5.4 Conflicts; Permits; Consents of Third Parties
Schedule 5.5(a) Capitalization
Schedule 5.5(b) Contracts Regarding Disposition of Shares of the Sellers
Schedule 5.6(a) Audited 2004 Financial Statements
Schedule 5.6(b) Unaudited Year-End Financial Statements
Schedule5.7 No Undisclosed Liabilities
Schedule 5.8 Accounts Receivable
Schedule 5.9(a) Inventory
Schedule 5.9(b) Inventory on Consignment
Schedule 5.9(c) Current Backlog of Inventory
Schedule 5.10 Absence of Certain Changes
Schedule 5.10(vii) Corporate Reorganizations
Schedule 5.11 Taxes
Schedule 5.12(a) Owned Real Property
Schedule 5.12(b) Leased Real Property
Schedule 5.12(d) Rental Payments of Leased Real Property
Schedule 5.12(e) Utility Service Providers for Leased Real Property
Schedule 5.12(f) Services Performed on Leased Real Property
Schedule 5.12(p) Real Property Broker Contracts
Schedule 5.13(a) Furniture and Fixtures
Schedule 5.13(b) Company Vehicles
Schedule 5.13(c) Leases of Tangible Personal Property
Schedule 5.14 Sellers Intellectual Property
Schedule 5.14(d) Intellectual Property Exceptions
Schedule 5.14(e) Claims Against Sellers Intellectual Property
Schedule 5.14(f) Third Party Rights to Sellers Intellectual Property
Schedule 5.15(a) Material Contracts
Schedule 5.15(b) Material Contract Defaults
Schedule 5.15(c) Consents Required Under Material Contracts
Schedule 5.16 Assets
Schedule 5.17(a) Employee Benefits
Schedule 5.17(b) Employee Benefit Plans Qualified Under Section 401(a) of
the Code
Schedule 5.17(c) Exceptions to Maintenance of Seller Employee Benefit
Plans
Schedule 5.17(f) Exceptions to Seller Employee Benefit Plans
Schedule 5.17(g) New and Amended Syratech Employee Benefit Plans
Schedule 5.17(h) Employee Benefit Plan Legal Actions
Schedule 5.17(i) Acceleration of Employee Payments
Schedule 5.18(b) Work Stoppages; Unfair Labor Practice Complaints
Schedule 5.18(c) Employees
Schedule 5.18(d) Labor and Collective Bargaining Agreements
Schedule 5.18(e) Policies
Schedule 5.19 Litigation
Schedule 5.20(a) Compliance with Laws
Schedule 5.20(c) Permits
Schedule 5.21 Environmental Matters
Schedule 5.22 Insurance
Schedule 5.22(d) Summary of Losses
Schedule 5.22(e) Self-Insured Policies
Schedule 5.23 Affiliated Transactions
Schedule 5.24 Accounts; Lockboxes; Safe Deposit Boxes
Schedule 5.25 Syratech Disclosure
Schedule 5.26 Sellers Financial Advisors
Schedule 5.28 Product Warranties
Schedule 5.29 Suppliers; Distributors and Customers
Schedule 5.30 Unsafe Products - Recalls
Schedule 5.31(c) Obligations under the Plan
Schedule 6.3 Conflicts; Permits, Consents of Third Parties
Schedule 7.14(a) Letters of Credit
Schedule 9.1(e) Required Consents
Schedule 9.1(j) Employees to Enter Into Employment Agreements
Exhibits
Exhibit 7.16 Vera Wang Assets
Exhibit 7.17 Registration Rights
47
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of March 8, 2006 (this "Agreement"), by and
among Syratech Corporation, a Delaware corporation ("Syratech"), Wallace
International de P.R., Inc., a Delaware corporation ("Wallace"), Syratech (H.K.)
Limited, a Hong Kong corporation ("Limited"), and CHI International, Inc., a
Maryland corporation ("CHI International" and, together with Syratech, Wallace
and Limited, the "Sellers") on the one hand, and Syratech Acquisition
Corporation, a Delaware corporation (the "Purchaser") and Lifetime Brands, Inc.,
a Delaware corporation ("Lifetime"), on the other hand.
W I T N E S S E T H:
WHEREAS, the Sellers design, license, manufacture, import, market
and sell, at wholesale (for ultimate sale to consumers through various channels
including department stores, high end specialty stores, jewelers, mass merchants
and discounters) and by direct marketing and internet marketing, a variety of
high quality branded products for the home, including: (i) tabletop products:
including sterling silver flatware, stainless steel flatware, silver plated
hollowware, dinnerware, glassware, crystal, giftware and alternative metal
products; (ii) frames: including photo albums, picture frames and photo storage
products; and (iii) home decor products: including lighting, giftware, ceramics,
holiday items, decorative glassware, wall and garden products (the "Business").
WHEREAS, the Purchaser desires to purchase from the Sellers, and
the Sellers desire to sell to the Purchaser, certain of the Sellers' assets and
properties in connection with or relating to the operation of the Business,
excluding certain assets expressly referred to below, in consideration for the
payment of cash and shares of the Purchaser's Common Stock (as herein defined)
and the assumption of the liabilities expressly referred to below, on the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
DEFINITIONS
Certain Definitions.
For purposes of this Agreement, the following terms shall have the meanings
specified in this Section 0:
"Accounting Firm" means the certified public accounting firm of
PricewaterhouseCoopers LLP.
"Affiliate" means, with respect to any Person, any director, officer,
stockholder or other Person that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with the
specified Person. For purposes hereof, the term "control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through ownership of voting securities, by
contract or otherwise.
"Average Lifetime Share Price" means the amount equal to one-fifth (1/5th) of
the sum of the Weighted Average Closing Prices on each of the Five Trading Days.
"Business Combination" means, with respect to any Person, (i) the acquisition of
more than fifty (50) percent of the outstanding shares of common stock or any
other voting securities of Syratech, (ii) a merger, consolidation, business
combination, reorganization, share exchange, sale of assets, recapitalization,
liquidation, dissolution or similar transaction, or a series of any such
transactions, that would result in any Person acquiring assets of Syratech
representing more than fifty (50) percent or more of the consolidated assets,
revenues or earnings of the Syratech, (iii) any other transaction that would
result in any Person acquiring assets of Syratech representing more than fifty
(50) percent or more of the consolidated assets, revenues or earnings of the
Syratech, immediately prior to such transaction (whether by purchase of assets,
acquisition of stock or otherwise) or (iv) any combination of the foregoing;
provided, however, that a Business Combination shall not be deemed to have
occurred as a result of the sale of inventory in the Ordinary Course of
Business.
"Business Day" means any day of the year on which national banking institutions
in New York are open to the public for conducting business and are not required
or authorized to close.
"CapitalSource Facility" means that certain Revolving Credit and Security
Agreement, dated as of June 3, 2005, among Syratech, certain Subsidiaries
thereof named therein and CapitalSource Finance LLC.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means that certain Confidentiality Agreement between
Syratech and the Purchaser, dated October 4, 2005.
"Contract" means any written contract, agreement, indenture, note, bond,
mortgage, understanding, arrangement or other binding instrument, obligation or
commitment of any kind.
"Convertible Senior Notes" means the Convertible Senior Notes Due 2010 issued
pursuant to the Indenture, dated June 2, 2005, between Syratech, as issuer, each
of Wallace International DE P.R., Inc. and CHI International, Inc. and Syratech
(H. K.) Ltd., as subsidiary guarantors, and U.S. Bank National Association, as
trustee.
"Copyrights" means all registered copyrights and applications, unregistered
copyrights and copyrightable works.
"Determination Time" means 12:00:01a.m. on the Closing Date.
"Domain Names" means any and all internet domain names.
"Employees" means all individuals, whether or not actively at work, who are a
party to an employment agreement with any of the Sellers, or who are employed by
any of the Sellers in connection with the Business.
"Environmental Law" means all applicable statutes, regulations, rules, policies,
guidances, ordinances, codes, common law, licenses, permits, orders, approvals,
authorizations, of all Governmental Bodies and all judicial and administrative
and regulatory writs, injunctions, decrees, judgments and orders relating to:
(i) occupational health or safety; (ii) the protection of human health or the
environment (including without limitation ambient air, surface water, ground
water, land surface or subsurface strata); (iii) Environmental Releases or
threatened Environmental Releases of Hazardous Materials or otherwise relating
to the manufacture, processing, distribution, use treatment, storage, disposal,
transport or handling of Hazardous Materials; or (iv) exposure of Persons to
Hazardous Materials. Environmental Laws include but
2
are not limited to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. ss. 9601 et seq.; the Federal Insecticide,
Fungicide, and Rodenticide Act, 7 U.S.C. ss. 136 et seq.; the Solid Waste
Disposal Act as amended by the Resource Conservation and Recovery Act, 42 U.S.C.
ss. 6901 et seq.; the Emergency Planning and Community Right to Know Act, 42
U.S.C. ss. 11001 et seq.; the Occupational Safety and Health Act, 29 U.S.C. ss.
651 et seq.; the Oil Pollution Act, 33 U.S.C. ss. 2701 et seq., 42 U.S.C. ss.
6901 et. seq.; the Hazardous Materials Transportation Act, 49 U.S.C. ss. 5101 et
seq.; the Federal Water Pollution Control Act, 33 U.S.C. ss. 1251 et seq.; the
Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking Water Act, 42
U.S.C. ss. 300f et seq.; and the Toxic Substances Control Act, 15 U.S.C. ss.ss.
2601 et seq., and the corresponding implementing regulations, in each case as
amended, as of the Closing.
"Environmental Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, abandonment, pouring,
emitting, emptying, dumping, allowing to escape or migrate, or leach into or
through the indoor or outdoor environment (including ambient air, surface water,
ground water, land surface, subsurface strata, soil and sediments, or within any
building, structure, facility or fixture), or into or out of any property of any
Hazardous Material, including the abandonment or discarding of Hazardous
Material in barrels, drums or other containers.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.
"Escrow Fund" means the Working Capital Escrow Fund and the Indemnity Escrow
Fund, collectively.
"Five Trading Days" means the last five days on which the Lifetime Common Stock
trades on the Nasdaq National Market (or, if applicable, the principal exchange
or market on which the Lifetime Common Stock then trades) immediately prior to
the third trading day before the Closing.
"Furniture and Equipment" means all furniture, fixtures (including any point of
sale displays located in or in the property of third parties), floor samples,
sales and promotional products and materials, tradeshow booths, signage,
literature and brochures, furnishings, equipment, vehicles, leasehold
improvements, supplies, tools, machinery and equipment, tooling, dies, molds,
forms, jigs, computer equipment, software and other data processing hardware and
other tangible personal property or fixed assets of a similar nature which are
owned or used by the Sellers in the conduct of the Business, including all
artwork, desks, chairs, tables, Hardware, copiers, telephone lines and numbers,
telecopy machines and other telecommunication equipment, cubicles, office
supplies and miscellaneous office furnishings.
"GAAP" means generally accepted accounting principles in the United States of
America consistently applied, as the same are in effect from time to time.
"Governmental Body" means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether foreign, federal, state, or
local, or any agency, board, commission, department, instrumentality or
authority thereof, including any court.
"Hardware" means any and all computer and computer-related hardware, including,
but not limited to, computers, file servers, facsimile servers, scanners, color
printers, laser printers and networks.
"Hazardous Material" means any substance that is defined as a "solid waste,"
"hazardous waste," "hazardous substance," "hazardous material," "pollutant,"
"contaminant" or similar term under any Environmental Law; or that is regulated
by any Governmental Body because it is toxic,
3
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous, and for the avoidance of doubt Hazardous
Material shall include any substance that contains gasoline, diesel fuel, fuel
oil, petroleum hydrocarbons, polychlorinated biphenyls, asbestos, or urea
formaldehyde.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
"Incentive Plan" has the meaning ascribed to such term in the Plan.
"Indebtedness" of any Person means, without duplication, (i) the principal of,
premium and accrued interest in respect of (A) indebtedness of such Person for
money borrowed, however evidenced, and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for which such Person or its
subsidiaries is responsible or liable; (ii) all obligations of such Person or
its subsidiaries issued or assumed as the deferred purchase price of any asset,
service or property, all conditional sale obligations of such Person or its
subsidiaries and all obligations of such Person or its subsidiaries under any
title retention agreement; (iii) all obligations of such Person or its
subsidiaries under leases required to be capitalized in accordance with GAAP;
(iv) all obligations of such Person or its subsidiaries for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar credit
transaction; (v) all obligations of such Person or its subsidiaries under any
interest rate protection, foreign currency exchange, or other interest or
exchange rate swap or hedging agreement or arrangement; (vi) all obligations of
such Person or its subsidiaries to reimburse or compensate any other Person
respecting any provisional or other temporary credit in advance of collection
for deposits of any checks, instruments or other documents made by the
referenced Person or any of its Affiliates; (vii) all obligations of the type
referred to in clauses (i) through (vi) of any Persons for the payment of which
such Person is responsible or liable, directly or indirectly, as obligor,
guarantor, surety or otherwise, including guarantees of such obligations; and
(viii) all obligations of the type referred to in clauses (i) through (vii) of
other Persons secured by any Lien on any property or asset of such Person or its
subsidiaries (whether or not such obligation is assumed by such Person).
"Intellectual Property Licenses" means (i) any grant to a third Person of any
rights to any of the Sellers Intellectual Property owned by or licensed to any
of the Sellers, and (ii) any grant to any of the Sellers of any rights to a
third Person's intellectual property which is necessary to exercise the rights
associated with any of the Sellers Intellectual Property which is not owned by
any of the Sellers.
"Intercompany Arrangements" means any liability or obligation arising from or
related to any intercompany liabilities owed by or charged to the Business, or
any owner thereof, by any Seller or any of its Affiliates, including without
limitation, management fees, corporate overhead charges or accruals, or any
contract or arrangement in respect of any intercompany transaction between any
of the Sellers on the one hand, and any Seller or Affiliate of any Seller on the
other hand, whether or not such transaction relates to any contribution to
capital, loan, the provision of goods or services, tax sharing arrangements,
payment arrangements, intercompany advances, charges or balances or the like.
"Inventory" means all inventory of any of the Sellers used in connection with
the Business, wherever located including, without limitation, all goods intended
for sale, work in process, raw materials and supplies, packaging, inventory in
transit or otherwise owned by any of the Sellers but in the possession of third
parties, including inventory located at Syratech's warehouse in Mira Loma,
California, Puerto Rico and in East Boston, Massachusetts, and shall include,
without limitation, all items of Inventory set forth on Schedule 5.9(a) hereto.
"IRS" means the Internal Revenue Service, or any successor agency.
4
"Knowledge" means in any instance herein that refers to the "Knowledge" or
"knowledge" of a party, or any reference to any matter of which a party hereto
is "aware" of any matter, or words of similar effect or meaning, the actual
knowledge that a party would have after reasonable due inquiry with respect to
the event or circumstance in question. For purposes of any of the Sellers,
"Knowledge" shall include the actual knowledge of the individuals identified on
Schedule 0(a) after reasonable due inquiry by them with respect to the event or
circumstance in question. For purposes of the Purchaser and Lifetime,
"Knowledge" shall include the actual knowledge of the individuals identified on
Schedule 0(b) after reasonable due inquiry by them with respect to the event or
circumstance in question.
"Law" means any statute, code, ordinance, rule, regulation, law, judgment, order
decree, permit, concession, grant, franchise, license, agreement, directive,
guideline, policy, requirement, or other governmental restriction, or any
similar form of decision of or determination by, or any interpretation or
administration of any of the foregoing by, any Governmental Body whether now or
hereafter in effect.
"Legal Proceeding" means any judicial, administrative or arbitral actions,
suits, proceedings (public or private) or claims or any proceedings by or before
a Governmental Body.
"Liability" means any debt, liability, obligation claim or cause of action of
any kind or nature whatsoever (whether direct or indirect, known or unknown,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated,
special, consequential or punitive or other, due or to become due), and
including all costs and expenses relating thereto (including court costs and
attorneys' fees and disbursements and other legal or litigation costs or
expenses reasonably incurred in connection with any claim of or dispute over any
other Liability).
"Lien" means any lien, encumbrance, pledge, mortgage, deed of trust, security
interest, UCC-1 financing statement, claim, lease, sublease, charge, claim,
levy, option, right of first refusal, warrant, tenancy, restriction, easement,
servitude, proxy, voting trust or agreement, transfer restriction under any
shareholder or similar agreement or encumbrance.
"Losses" means all losses, claims, damages, penalties, assessments, demands,
suits, judgments, obligations, diminution of value, liabilities, payments,
fines, costs and expenses (including reasonable attorneys' fees) of any kind,
net of amounts recovered under any insurance policy in respect thereof.
"Net Working Capital" means:
(i) the sum of receivables (less any allowances for
doubtful accounts and other applicable reserves),
Inventory (less any reductions for obsolescence and
shrinkage and other applicable reserves), deposits
(subject to Section 7.14) and prepaid expenses, in
each case, to the extent included in the Acquired
Assets, and (to the extent not otherwise included in
the foregoing) those same asset categories that are
part of the Vera Wang Assets (notwithstanding the
fact that the Vera Wang Assets are Excluded Assets
under Section 2.2 hereof), less
(ii) the sum of accounts payable, accrued payables,
accrued expenses (including without limitation all
accrued employment related expenses such as salaries,
wages, vacation, severance and other benefits and
payroll Taxes), Taxes (subject to Section 2.5(vi)
hereof), deferred revenue for QVC sales, and any
other liability or
5
obligation, in each case to the extent included as
part of the Assumed Liabilities;
all determined in accordance with GAAP; provided,
however, that Net Working Capital shall not include
any cash or cash equivalents.
"Option" with respect to any Person, means any security, right (including,
without limitation, any preemptive right, conversion right, stock appreciation
right, exercise right, redemption right or repurchase right), subscription,
warrant, option, "phantom" stock right or other Contract that directly or
indirectly gives or provides for the right to (i) purchase or otherwise receive
or be issued any shares of capital stock (or other equity securities or
beneficial or other interests) of such Person or any security of any kind
convertible into or exchangeable or exercisable for any shares of capital stock
(or other equity securities or beneficial or other interests) of such Person or
(ii) receive any benefits or rights similar to any rights enjoyed by or accruing
to the holder of shares of capital stock (or other equity securities or
beneficial or other interests) of such Person, including any rights to
participate in the equity, income or election of directors or officers (or
persons of a similar capacity) of such Person.
"Order" means any order, injunction, judgment, decree, ruling, writ, settlement,
assessment or arbitration award with or of a Governmental Body.
"Ordinary Course of Business" means for each of the Sellers, the operation of
the Business in the ordinary and usual course consistent with past custom and
practice, including both day-to-day and seasonal operations and including, in
particular, without any changes in its accounting practices.
"Patents" means patents, patent applications (including any divisionals,
continuations, continuations-in-part, revisions substitutions, extensions,
reexaminations or reissues thereof, whether or not patents are issued on any
such applications and whether or not any such applications are modified,
withdrawn, or resubmitted) and invention disclosures.
"Permits" means any approvals, registrations, notifications, franchises,
authorizations, consents, licenses, permits or certificates of a Governmental
Body.
"Permitted Exceptions" means (i) statutory Liens for current Taxes, assessments
or other governmental charges not yet delinquent or the amount or validity of
which is being contested in good faith by appropriate proceedings for which an
adequate reserve is established therefor in the books of the Sellers to the
extent required by GAAP; (ii) any mechanics', carriers', workers', repairers'
and similar Liens arising or incurred in the Ordinary Course of Business; (iii)
any zoning, entitlement and other land use and environmental regulations by any
Governmental Body; provided, that such regulations have not been violated; (iv)
Liens securing debt as disclosed in the Unaudited Year-End Financial Statements
which are scheduled to be prepaid, and Liens which are to be removed either
prior to the Closing at the Sellers' expense, or at the Closing in accordance
with Section 3.1(i)(A); (v) title of a lessor under a capital or operating lease
which is disclosed on Schedule 5.12(b) hereto; and (vi) such other minor
imperfections in title, charges, easements, restrictions and encumbrances, which
are not, individually or in the aggregate, material on the Business and do not
adversely affect the value of the property subject to such Lien or the use of
such property in the Ordinary Course of Business and, in the case of the Owned
Real Property, do not interfere with or diminish good, marketable and insurable
title required by Section 5.12(b) hereto.
"Person" means any individual, corporation, limited liability company,
partnership, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.
6
"Plan" means the Debtors' First Amended Joint Plan of Reorganization of Syratech
Corporation, effective June 3, 2005, as filed with the United States Bankruptcy
Court for the District of Massachusetts (Eastern Division).
"Post-Closing Tax Period" shall mean any taxable period ending after the Closing
Date (and in the case of a Straddle Period including only the portion of such
taxable period beginning on the day after the Closing Date).
"Pre-Closing Tax Period" shall mean any taxable period ending on or before the
Closing Date (and in the case of a Straddle Period including only the portion of
such taxable period ending on and including the Closing Date).
"Products" means any and all products developed, manufactured, licensed,
designed, marketed or sold by any of the Sellers with respect to the Business, a
list of which is attached as Schedule 5.9(a) hereto.
"Properties" of any Person means all properties, assets, claims, rights
(including without limitation rights under Contracts) and entitlements of every
kind, nature, character and description (whether real, personal or mixed,
whether tangible or intangible, whether absolute, accrued, contingent, fixed or
otherwise and wherever situated), including the goodwill related thereto, owned,
operated, leased or licensed by such Person, including without limitation, cash,
cash equivalents, accounts and notes receivable, chattel paper, documents,
instruments, general intangibles, real estate, equipment, inventory, goods and
Intellectual Property.
"Purchaser Material Adverse Effect" means (i) a change in (or effect on) the
condition (financial or otherwise), Properties, business or prospects, which
change (or effect) is materially adverse to the financial condition, Properties,
Liabilities, rights, obligations, operations, business or prospects of the
Purchaser; provided, however, that "Purchaser Material Adverse Effect" shall not
include any change or effect due solely to general economic conditions; or (ii)
a material adverse effect on the ability of the Purchaser to consummate any of
the transactions contemplated hereby.
"Rauch Discontinued Operations Liabilities" means the environmental insurance
and indemnification obligations of Syratech pursuant to the stock purchase
agreement dated April 12, 2004 between Syratech and Rauch Acquisition
Corporation and Rauch Industries Inc., as reflected in the Unaudited Year-End
Financial Statements.
"Records" means books, records, files, documents and other miscellaneous
archival property and information relating solely or primarily to the Business,
including (i) any and all corporate data backups regarding Inventory, sourcing
detail, employee data, sales, market information, and customers and (ii) any and
all marketing images and collateral, historical photos, advertising and other
sales information or materials regarding the Business, including all customer
and supplier lists, telephone numbers and listings, mailing lists, catalogs,
brochures and handbooks.
"Remedial Action" means all actions of any kind to (i) clean up, remove, treat
or in any other way address the presence of any Hazardous Material, or an
Environmental Release or threatened Environmental Release of any Hazardous
Material; (ii) perform pre-remedial studies and investigations or post-remedial
monitoring and care; or (iii) to correct or investigate a condition of
noncompliance with Environmental Laws, including the following: (a) monitoring,
investigation, cleanup, containment, remediation, removal, mitigation, response
or restoration work; (b) obtaining any permits, consents, approvals or
authorizations of any Governmental Body necessary to conduct any such work; (c)
preparing and implementing any plans or studies for such work; (d) obtaining a
written notice from a Governmental Body with jurisdiction under applicable
Environmental Laws that no material additional work is required by such
Governmental Body; or (e) any response to, or preparation for, any
investigation, inquiry, order,
7
hearing or other proceeding by or before any Governmental Body with respect to
any such Environmental Release or threatened Environmental Release or presence
of Hazardous Material..
"Representative" means, with respect to any Person, any of such Person's
investment bankers, financial advisors, attorneys, accountants or other agents
or representatives or Persons retained by or acting for or on behalf of such
Person.
"Sellers Intellectual Property" means, collectively, all Trademarks, Copyrights,
Patents, Software, Domain Names, material Technology, styles, designs, design
libraries, product development plans, research and development plans, URLs,
secure socket layer certificates, keywords or equivalents, Internet web sites,
and all other material technology, intellectual property, know-how, trade
secrets and confidential or proprietary information owned or used by any of the
Sellers and relating to Business.
"Sellers Material Adverse Effect" means (i) a material adverse effect on the
Business, on the Acquired Assets taken as a whole, or on the results of
operations, Properties, condition, prospects, or financial condition of the
Sellers taken as a whole, or (ii) a material adverse effect on the ability of
the Sellers to consummate the Acquisition Transactions or perform their other
material obligations under this Agreement, other than an effect resulting from
an Excluded Matter. For the purposes of the foregoing, "Excluded Matter" means
any one or more of the following: (i) the effect of any change in the United
States or foreign economies or securities or financial markets in general; (ii)
the effect of any change that generally affects the tabletop, picture frame or
home decor markets; (iii) the effect of any change arising after the date hereof
in connection with earthquakes, hostilities, acts of war, sabotage or terrorism
or military actions or any escalation or material worsening of any such
hostilities, acts of war, sabotage or terrorism or military actions existing or
underway as of the date hereof; (iv) the effect of any changes in applicable
Laws or accounting rules; or (v) the effect of any action taken by the Purchaser
or its Affiliates with respect to the transactions contemplated hereby or with
respect to any of the Sellers, including their respective Employees, or any
effect resulting from the public announcement of this Agreement, compliance with
terms of this Agreement or the consummation of the Acquisition Transactions;
provided, however, that notwithstanding the foregoing, including those events
described in items (i) through (v) above, any event, circumstance, condition,
change or effect described in this definition that, individually or in the
aggregate, causes or would reasonably be likely to cause a diminution in value
of the Properties of any of the Sellers in an amount of $1,500,000 shall in all
cases constitute a "Sellers Material Adverse Effect"; and provided further,
however, that a reduction in Net Working Capital shall not in and of itself
necessarily constitute a Sellers Material Adverse Effect.
"Software" means any and all (i) computer programs, including any and all
software, implementations of algorithms, models and methodologies, whether in
source code or object code (but excluding any "off-the-shelf" pre-packaged
computer programs or software), (ii) databases and compilations, including any
and all data and collections of data, whether machine readable or otherwise,
(iii) descriptions, flow-charts and other work product used to design, plan,
organize and develop any of the foregoing, and (iv) all documents including user
manuals and other training documentation related to any of the foregoing other
than "off-the-shelf" or otherwise commercially available software.
"Special Deferred Compensation Liabilities" means the retirement benefits
payable to each of Alan Kanter, Faye Florence and Mel Levine, pursuant to the
employment agreements between each of those persons and Syratech, as reflected
in the Unaudited Year-End Financial Statements.
8
"Straddle Period" shall mean any taxable period that begins on or before and
ends after the Closing Date.
"Subsidiary" of a person means any other Person of which a majority of the
outstanding voting securities or other voting equity interests are owned,
directly or indirectly, by such Person.
"Tangible Personal Property" means all tangible property, other than land and
buildings. and includes without limitation, Furniture and Fixtures, leasehold
improvements with respect to any Leased Real Property, and Vehicles.
"Taxes" means (i) all federal, state, local, provincial or foreign taxes,
charges fees, levies or other assessments, including, without limitation, all
net income, gross receipts, gross income, capital, sales, use, ad valorem, value
added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, environmental, stamp, occupation, property and estimated taxes, and
(ii) all interest, penalties, fines, additions to tax or additional amounts
imposed by any taxing or other Governmental Body in connection with any item
described in clause (i), and (iii) all liability for the payment of any amounts
described in clause (i) or (ii) as the result of being a member of an
affiliated, consolidated, combined or unitary group.
"Tax Return" means all returns, declarations, reports, estimates, information
returns and statements, including any consolidated, or combined or unitary
return filed or required to be filed with any federal, state, local or foreign
Governmental Body in respect of any Taxes, including any schedule or attachment
thereto, and including any amendment thereto.
"Technology" means, collectively, all recipes, designs, formulae, algorithms,
procedures, methods, techniques, ideas, know-how, Software, research and
development, technical data, programs, subroutines, tools, materials,
specifications, processes, inventions (whether patentable or unpatentable and
whether or not reduced to practice), apparatus, creations, improvements, works
of authorship and other similar materials, and all product development plans,
prototypes, samples, recordings, graphs, drawings, reports, analyses, and other
writings, and other tangible embodiments of the foregoing, in any form whether
or not specifically listed herein, and all related technology, that are used in,
incorporated in, embodied in, displayed by or relate to, or are used or useful
in the design, development, manufacture, production, reproduction, maintenance
or modification of, any of the foregoing.
"Trademarks" means trademarks and service marks, trade dress rights, trade
names, service names, brand names, designs, corporate names, logos, likenesses
and other symbols of origin or general intangibles of like nature, whether
registered or unregistered together with the goodwill associated therewith.
"Vehicles" means all transportation vehicles registered to, owned or leased by
the Sellers, including without limitation, cars, trucks, tractors, trailers,
busses, vans, forklifts, warehouse and distribution vehicles, movable generators
and tanks, railcars, aircraft, and rolling stock, wherever located.
"Vera Wang Assets" means those items of inventory that have been purchased or
manufactured by or for Syratech or the other Sellers solely to be marketed and
sold pursuant to the Vera Wang License, and all fixtures, tooling, dies, molds
and forms which are unique to, and utilized solely for, products to be marketed
and sold pursuant to the Vera Wang License. A list of Vera Wang Assets as of
December 31, 2005 is attached to the Agreement as Exhibit 7.16.
"Vera Wang License" means that certain license agreement between Syratech and
W.E.V Ltd. dated as of April 16, 2003 pursuant to which Syratech has the right
to use certain "Vera Wang"
9
trademarks in connection with the marketing and sale of flatware and silver
giftware as more particularly described therein.
"WARN Act" means the Worker Adjustment and Retraining Notification Act of 1988,
as amended.
"Weighted Average Closing Price" means, for each of the Five Trading Days, the
amount determined by multiplying (A) the closing price on such day for one share
of Lifetime Common Stock on the Nasdaq National Market (or, if other, the
principal exchange or market on which the Lifetime Common Stock then trades) by
(B) a fraction, of which the numerator is the volume of shares of Lifetime
Common Stock traded on such market or exchange on that day and the denominator
is the volume of shares of Lifetime Common Stock traded on such market or
exchange on all five of the Five Trading Days.
Terms Defined Elsewhere in this Agreement. For purposes of this Agreement, the
following terms have meanings set forth in the sections indicated:
Term Section
---- -------
2004 Audited Financial Statements 5.6(a)
2005 Audited Financial Statements 9.1(f)
Accounts Payable 5.7
Accounts Receivable 5.8
Acquired Assets 2.1
Acquisition Transactions 2.4
Agreement Preamble
Alternative Transaction 7.8(d)
Assumed Liabilities 2.4
Balance Sheet Date 5.7
Bill of Sale 4.2(i)
Board Recommendation 7.8(d)
Broker 5.26
Business Recitals
CHI International Preamble
Closing 4.1
Closing Cash Increase 3.6(i)
Closing Cash Payment 3.1(i)
Closing Date 4.1
Closing Date Working Capital Calculation 3.5(a)
Closing Net Working Capital 3.5(a)
COBRA 5.17(f)
Confidential Information 7.6(b)
Consideration Shares 3.1(ii)
Continuing Employees 8.1(b)
DGCL 7.4(a)
Dispute Notice 3.5(b)
Employees 5.18(c)
Employee Benefit Plans 5.17(a)
ERISA Affiliate 5.17(a)
Escrow Agent 3.8(a)
Escrow Agreement 3.8(a)
Excluded Assets 2.2
10
Term Section
---- -------
Excluded Liabilities 2.5
Final Closing Date Balance Sheet 3.3
Final Closing Net Working Capital 3.3
Financial Statements 5.6(b)
Guaranty 7.21
Indemnification Claim 12.5(b)
Indemnification Notice 12.5(a)
indemnified person 12.5(b)
indemnifying party 12.5(b)
Indemnity Escrow Fund 3.8(b)
Indemnity Holdback Shares 3.1(ii)(B)
Inventory Count 3.7
Leased Real Property 5.12(b)
Lifetime Preamble
Lifetime Common Stock 3.1(ii)
Limited Preamble
Liquidating Trust 13.8(a)
Material Contracts 5.15(a)
Negative Net Working Capital 3.3
No-Shop Period 7.8(a)
Nonassignable Assets 2.3(a)
Noteholder Conversion Consent 7.4(a)
Owned Real Property 5.12(a)
Party 10.3
PBGC 5.17(d)
Personnel 5.10(xvi)
Plans 5.17(a)
Positive Net Working Capital 3.3
Pre-Closing Certificate 3.4(a)
Preliminary Working Capital Estimate 3.4(b)
Purchase Price 3.1
Purchased Contracts 2.1(ix)
Purchaser Preamble
Purchaser Documents 6.2
Purchaser Indemnitee 12.2
Real Property Lease 5.12(b)
Real Property Leases 5.12(b)
Review Period 3.5(b)
SEC 6.5
SEC Reports 6.5
Seller Documents 5.3
Seller Employee Benefit Plan 5.17(b)
Seller Indemnitee 12.3
Seller Representative 11.1(a)
Sellers Preamble
Stockholder Approval 7.4(a)
Superior Proposal 7.8(c)
Syratech Preamble
11
Term Section
---- -------
Takeover Proposal 7.8(c)
Tax Proceedings 10.3
Termination Fee 4.5(a)
Termination Date 4.6
Transfer Taxes 10.4
Transitional Services 2.6
Transitional Services Agreement 2.6
Unaudited Year-End Financial Statements 5.6(a)(ii)
Wallace Preamble
Working Capital Escrow Cash 3.1(i)(B)
Working Capital Escrow Fund 3.8(b)
Working Capital Holdback Shares 3.1(ii)(A)
Other Definitional and Interpretive Matters. Unless otherwise expressly
provided, for purposes of this Agreement, the following rules of interpretation
shall apply:
Calculation of Time Periods. When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
this Agreement, the date that is the reference date in calculating such period
shall be excluded. If the last day of such period is a non-Business Day, the
period in question shall end on the next succeeding Business Day.
Dollars. Any reference in this Agreement to $ shall mean U.S. dollars.
Sections/Exhibits/Schedules. All references herein to "Sections" without further
description shall refer to Sections of this Agreement, unless the context
otherwise requires. All Exhibits and Schedules annexed hereto or referred to
herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein. Any matter or item disclosed on one Schedule shall be
deemed to have been disclosed on each other Schedule to the extent that such
disclosure is set forth in sufficient detail so that the relevance of such
disclosure to each other Schedule is manifest or obvious from a reading of the
Schedules as a whole. Any capitalized terms used in any Schedule or Exhibit but
not otherwise defined therein shall be defined as set forth in this Agreement.
Gender and Number. Any reference in this Agreement to gender shall include all
genders, and words imparting the singular number only shall include the plural
and vice versa.
Headings. The provision of a Table of Contents, the division of this Agreement
into Articles, Sections and other subdivisions and the insertion of headings are
for convenience of reference only and shall not affect or be utilized in
construing or interpreting this Agreement. All references in this Agreement to
any "Section" are to the corresponding Section of this Agreement unless
otherwise specified.
Herein. The words such as "herein," "hereinafter," "hereof," and "hereunder"
refer to this Agreement as a whole and not merely to a subdivision in which such
words appear unless the context otherwise requires. Including. The word
"including" or any variation thereof means "including, without limitation" and
shall not be construed to limit any general statement that it follows to the
specific or similar items or matters immediately following it.
Interpretation. The parties hereto have participated jointly in the negotiation
and drafting of this Agreement and, in the event an ambiguity or question of
intent or interpretation arises, this
12
Agreement shall be construed as jointly drafted by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provision of this Agreement.
PURCHASE AND SALE OF ASSETS
Purchase and Sale. Upon the terms and subject to the conditions contained in
this Agreement, at the Closing, the Sellers shall sell, convey, assign, transfer
and deliver to the Purchaser, and the Purchaser shall purchase and accept from
the Sellers, all right, title and interest in and to the following Properties of
the Sellers (collectively, the "Acquired Assets"), free and clear of all Liens,
claims and encumbrances (except for Permitted Exceptions):
all right to conduct the Business (including the exclusive right to sell any and
all of the Products and the exclusive right to sell and manage all of the
Product lines and brand names);
all receivables including Accounts Receivable;
all right, title and interest in and to the real property in Crisfield, Maryland
known as "Carvel Hall", the lease with respect thereto and the buildings,
improvements and furniture and fixtures thereat;
all of the Sellers' worldwide right, title, and interest in, to and under the
Sellers Intellectual Property and all Intellectual Property Licenses;
all Inventory;
all Furniture and Equipment;
the Leases and the Leased Real Property, including any leasehold interest or
other use and occupancy rights and interests, rights of way, and easements with
or in favor or for the benefit of one or more of the Sellers therein, and any
furniture and fixtures related thereto (but not the leasehold interest in the
Owned Real Property);
the Tangible Personal Property and any leases of any Tangible Personal Property
set forth on Schedule 2.1(viii) attached hereto;
the Contracts listed on Schedule 2.1(ix) attached hereto (such Contracts,
excluding any for which consents are not obtained as contemplated in Section
9.1(e) hereof, the "Purchased Contracts");
all prepaid expenses, advances (including prepaid royalties), credits and
deposits (other than the items listed on Schedule 2.2(viii) attached hereto) of
any of the Sellers for or in connection with the Business, and any and all
rights and/or products associated therewith;
copies of any and all Records;
the names of each of the Sellers, including but not limited to "Syratech," and
any and all derivatives and similar names (it being understood and agreed that
the Sellers shall change their names as of the Closing to names that are not
similar to their current names; provided, however, that for a reasonable time
after the Closing (but not longer than 18 months) the Sellers may use check
stock that indicates that the Sellers were formerly known as "Syratech" or, as
applicable, were formerly affiliates of Syratech;
all rights related to any portion of the Acquired Assets, including any express
or implied third party warranties, guarantees, representations, covenants,
indemnities, and other similar contractual rights or claims as to third parties
held by or in favor of any Seller and arising out of,
13
resulting from or relating to the Acquired Assets, including, but not limited
to, any warranties or claims with respect to damaged or defective goods;
all rights to insurance and condemnation proceeds relating to any damage,
destruction, taking or other similar impairment of any of the Business or any of
the Acquired Assets prior to the Closing (provided that the Purchaser
acknowledges that any insurance policy may contain a deductible provision that
could result in less than 100% recovery of any Loss; provided further that the
foregoing acknowledgement shall not limit the Purchaser's right to obtain
indemnity under Article XII hereunder for any amount of Loss not recovered as a
result of such deductible);
all rights to obtain any Permits with respect to the Business (and to the extent
assignable in connection with the Acquisition Transactions, all such assignable
Permits); and
all goodwill related to the foregoing.
The foregoing notwithstanding, the transfer of the Acquired Assets pursuant to
this Agreement shall not include the assumption of any Liability related to the
Acquired Assets unless the Purchaser expressly assumes such Liability pursuant
to Section 2.4 hereof.
Excluded Assets. Anything to the contrary contained in Section 2.1 hereof or
elsewhere in this Agreement notwithstanding, the Acquired Assets do not include,
and the Sellers shall not assign or otherwise transfer to the Purchaser, and the
Purchaser shall not purchase from the Sellers pursuant to this Agreement, the
following Properties (collectively, the "Excluded Assets"):
the Purchase Price hereunder;
all cash and cash equivalents and marketable securities on hand or on deposit;
the Vera Wang Assets;
the Vera Wang License;
all minute books, stock records and corporate seals of any of the Sellers;
the shares of capital stock of any of the Sellers held in treasury;
the shares of capital stock of any subsidiary of any of the Sellers, except as
may be provided in Section 7.17 hereof;
without duplication of any matters set forth in Section 7.14 hereof, those
rights relating to deposits listed on Schedule 2.2(viii) attached hereto;
all insurance policies of the Sellers and all rights thereunder (except to the
extent specified in item (xv) of Section 2.1);
all of the Sellers' Contracts listed on Schedule 2.2(x);
any Tax asset, such as Tax refunds receivable; and
items listed on Schedule 2.2(xii).
Nonassignable Assets.
Schedule 2.3(a) is a true and complete list of all Purchased Contracts,
Governmental Licenses or rights to Acquired Assets which are not assignable or
which provide that the Sellers' attempt to assign or transfer such Purchased
Contract, Governmental License or right to Acquired Asset would result in a
default of a provision of or an invalidation of such Purchased Contract,
Governmental License or right to Acquired Asset, and for which the required
consent or approval has not been obtained prior to the date hereof (excluding
any such item for which consent has
14
been obtained as of the Closing, collectively, the "Nonassignable Assets").
Neither anything in this Agreement nor the consummation of the transactions
contemplated hereby shall be construed as an attempt or agreement to assign any
of the Nonassignable Assets unless and until such consent shall have been
obtained.
To the extent permissible under applicable Law and the terms of the
Nonassignable Assets, each of the Sellers shall hold or shall cause the
Liquidating Trust to hold the legal title and/or all of its rights to the
Nonassignable Assets in trust for the benefit, use and enjoyment of the
Purchaser, its successors, and assigns, and the Purchaser shall be responsible
for all the costs and obligations associated with the benefit, use and enjoyment
of the same. To the extent permissible under applicable Law, each of the
Sellers, or in lieu of the Sellers, the Liquidating Trust, shall: (i) from and
after the Closing Date continue to make all reasonable efforts, to obtain and
secure any and all Consents that may be necessary to effect a valid transfer of
title and/or all of its rights to the Nonassignable Assets to the Purchaser;
(ii) as available from time to time, make or complete such transfers as soon as
possible after the Closing Date; (iii) cooperate with the Purchaser in any other
reasonable arrangement designed to provide for the Purchaser the benefits of and
under any of the Nonassignable Assets; and (iv) do all such things relating to
the Nonassignable Assets as the Purchaser shall reasonably request; provided,
however, that such arrangements for providing the benefits of the Nonassignable
Assets to the Purchaser after the Closing Date shall not require the Sellers (or
the Liquidating Trust) or any of its Affiliates to incur any expenses or
Liabilities or provide any financial accommodation. As of and from the Closing
Date, each of the Sellers authorize the Purchaser, to the extent permitted by
applicable Law and the terms of the Nonassignable Assets, at the Purchaser's
expense, and solely at the Purchaser's election, to perform all the obligations
and receive all the benefits of that Seller or its Affiliates under the
Nonassignable Assets and appoints Purchaser its attorney-in-fact to act in its
name on its behalf or in the name of the applicable Affiliate of that Seller and
on such Affiliate's behalf with respect thereto, and the Purchaser agrees to
indemnify and hold each Seller and its Affiliate, agents, successors and assigns
harmless from and against any and all Liabilities and Losses based upon, arising
out of or relating to Purchaser's performance of, or failure to perform, such
obligations under the Nonassignable Assets, it being understood that the
Purchaser shall have no obligation to undertake or perform or assume any
obligation under any Nonassignable Asset until all necessary consents and
approvals to the assignment thereof to Purchaser have been obtained.
The Sellers shall be responsible for, and shall indemnify and hold the Purchaser
and the Purchaser Indemnitees harmless from and against any Losses incurred in
meeting or attempting to meet any of the Sellers' Liabilities under this Section
2.3.
Assumption of Assumed Liabilities. Upon the terms and subject to all of the
conditions contained herein, at the Closing, upon the consummation of the
transactions contemplated by this Agreement (collectively, the "Acquisition
Transactions") the Purchaser shall assume, and agree to pay, perform and
discharge, only the following Liabilities of the Sellers incurred in connection
with Acquired Assets and the operation of the Business in the Ordinary Course of
Business, and no others (collectively, the "Assumed Liabilities"), such that the
Sellers will incur no liability in connection therewith (without, however,
diminishing any right of the Purchaser Indemnitees to obtain indemnification as
provided pursuant to Article XII hereof), and the Purchaser shall forever
indemnify the Seller Indemnitees with respect to and shall forever hold the
Sellers and Seller Indemnitees harmless from and against all such Assumed
Liabilities (again, without, however, diminishing any right of the Purchaser
Indemnitees to obtain indemnification as provided pursuant to Article XII
hereof), including but not limited to the following:
15
the Liabilities of the Sellers with respect to periods after the Closing under
and in connection with (A) the Leases with respect to the Leased Real Property
and (B) the Owned IP Rights and the Licensed IP Rights;
the Liabilities of the Sellers arising under the Purchased Contracts with
respect to periods after the Closing (other than any Liability set forth on
Schedule 2.4(ii) or arising out of or relating to a breach by the Sellers of
such Purchased Contract that occurred prior to the Closing);
the Liabilities that are attributable to or arising out of the ownership or
operation of any Acquired Assets or the Business with respect to periods after
the Closing;
the Liabilities set forth on Schedule 2.4(iv);
liabilities arising in connection with the Legal Proceedings listed on Schedule
5.19 attached hereto (but not any of the items listed on the continuation
portion of Schedule 5.19 titled "Proof of Claim Status - Unresolved Claims," not
any of the items listed in the "Second Omnibus Objection to Allowance of Claims
attached to Schedule 5.19, or titled "Proof of Claim Status - Unresolved
Claims," or any of the items referred to on the "Order Granting the Reorganized
Debtors' First Omnibus Objection to Allowance of Claims attached to Schedule
5.19) and liabilities arising in connection with any Legal Proceeding arising
after the Closing with respect to an event, fact or circumstance that occurred
or existed prior to the Closing, provided that if the Purchaser is required to
pay any amount in respect of any such Legal Proceeding in excess of the amount,
if any, accrued therefor on the Closing Date Working Capital Calculation, the
Purchaser shall be entitled to reimbursement from the Indemnity Escrow for such
excess amount as a Loss indemnifiable pursuant to Article XII hereof; provided,
further, that nothing in this clause (v) shall preclude the Purchaser from
seeking indemnification for any matter that may constitute a breach of any of
the Sellers' representations and warranties hereunder; and provided further,
that nothing herein (including without limitation this Section 2.4(v)) shall
result in the Purchaser from assuming any Excluded Liability;
any Liabilities related to the Special Deferred Compensation Liabilities;
any accrued employment-related Liabilities with respect to vacation, severance
and other benefits owing as of the Determination Time, all of which obligations
and liabilities shall be reflected in the Closing Date Working Capital
Calculation prepared pursuant to Section 3.5(a) hereof;
the Liabilities arising from or relating to the employment or services of any
employee (i.e., accrued salaries, wages and associated items) with respect to
incomplete pay periods as of the Determination Time, all of which obligations
and liabilities shall be reflected in the Closing Date Working Capital
Calculation prepared pursuant to Section 3.5(a) hereof,
any accrued obligations for matching contributions or other related payable with
respect to any Employee Benefit Plans to the extent reflected as a payable in
the Closing Date Working Capital Calculation prepared pursuant to Section 3.5(a)
hereof; provided, however, that it is acknowledged and agreed by the Sellers
that the Purchaser is not becoming legally obligated under any of the Sellers'
Employee Benefit Plans under this provision or any other provision of this
Agreement, and that the obligation assumed hereby is an obligation by the
Purchaser to pay, on behalf of the Sellers, the matching contribution or other
related payable to the applicable third party plan, trustee or other Person;
any accounts payable (including, for the avoidance of doubt, (i) invoiced
accounts payable and (ii) accrued but uninvoiced accounts payable), and other
accrued expenses owing as of the Determination Time and incurred in the Ordinary
Course of Business;
the portion of the Transfer Taxes payable by the Purchaser under Section 10.3;
and
16
any Tax reflected as a liability on the Final Closing Date Balance Sheet (but
not any Tax referred to in item (vi) of Section 2.5 hereof).
The Purchaser and the Sellers shall use their commercially reasonable efforts to
obtain, or cause to be obtained, any consent or approval required for the
purchase hereunder of any and all Purchased Contracts (without any obligation to
make any payment to the other party to any of such Purchased Contracts).
17
Excluded Liabilities. Notwithstanding anything to the contrary contained in this
Agreement, the Purchaser is only assuming the Liabilities of the Sellers
expressly set forth in Section 2.4. Without limiting the generality of the
foregoing, the Purchaser will not be assuming, and the Sellers shall remain
responsible for and shall promptly pay, perform and discharge, any and all of
the other Liabilities of the Sellers (the "Excluded Liabilities"), such that the
Purchaser will incur no liability in connection therewith, and the Sellers shall
forever indemnify the Purchaser and Purchaser Indemnitees with respect to and
shall forever hold the Purchaser and Purchaser Indemnitees harmless from and
against all such Excluded Liabilities, including but not limited to the
following:
any Liability of any of the Sellers arising from a breach of a representation or
warranty herein on its part or its failure to fully, faithfully and promptly
perform any agreement or covenant on its part contained therein;
any Liability of any of the Sellers to the extent that such Seller shall be
indemnified by an insurer;
any expenses of the Sellers incurred in connection with the transactions
contemplated hereunder;
any Liabilities relating to an Excluded Asset, including without limitation any
liability relating to a Contract of the Sellers that is not included as a
Purchased Contract on Schedule 2.1(ix) hereof (provided, however, that, as
provided in Article VIII hereof, if the Purchaser elects to enter into a new
employment agreement with any person, the Purchaser shall honor the provisions
of such employment agreement);
any Liabilities related to the Rauch Discontinued Operations Liabilities;
any Liability for Taxes attributable to any Seller or imposed on any Seller and
(1) attributable to the operation of the Business prior to the Closing Date, (2)
attributable to the ownership of the Acquired Assets prior to the Closing Date,
or (3) incurred by a Seller as a result of the transactions contemplated hereby,
none of which Taxes described in subclauses (1) through (3) hereof shall be
included in the Closing Date Working Capital Calculation; provided, however,
that (A) Purchaser's portion of the Transfer Taxes under Section 10.3, and (B)
Seller's Taxes arising from compensation paid or payable by the Sellers to their
respective employees on or before the Closing Date, including but not limited to
Taxes of Seller arising by reason of Sections 280G or Section 409A of the Code
shall be deemed Assumed Liabilities and shall be included in the Closing Date
Working Capital Calculation;
any Liability to any holder of any shares of the capital stock or other
securities of any Seller, or any Option to purchase any of the foregoing
(including, but not limited to, the Convertible Senior Notes);
any Liability for Indebtedness;
any Liability arising out of or with respect to the Plan (including any
Liability related to the settlement of any claims under and pursuant to the
Plan), regardless of when occurring;
any Liability relating to, resulting from, or arising out of, any operation of
the Sellers other than the Business or any former operation of the Business that
has been discontinued or disposed of prior to the Closing;
any Liability related to any Intercompany Arrangements; and
except as expressly provided in Section 2.4, attributable to or arising out of
the ownership or operations of the Sellers, any Acquired Assets or the Business
prior to the Closing.
18
Transition Services. At the Closing the parties shall enter into a Transitional
Services Agreement (the "Transitional Services Agreement"), in a form that shall
be mutually agreed to in the good faith of the Purchaser and the Seller
Representative, which shall provide that the Purchaser shall provide information
and clerical, administrative and similar support services to the directors,
officers. professionals and other agents of the Sellers, or as applicable the
Liquidating Trust, in the performance of the transitional services identified in
Schedule 2.6 (the "Transitional Services") hereof from and after the Closing
Date and for a period of up to eighteen (18) months, in each case without charge
to the Sellers (unless any employee of the Purchaser is required to out of the
office for a full day), other than (i) reimbursement for out-of-pocket
expenditures of Purchaser and (ii) indemnification for all Liabilities incurred
by Purchaser to third parties in undertaking or providing the Transitional
Services. The foregoing notwithstanding, it is understood and agreed by the
Sellers that Purchaser shall not, by reason of undertaking or providing the
Transitional Services, assume any Liabilities of Seller, and shall not assume or
undertake any professional responsibility for providing any tax, legal,
bankruptcy or fiduciary services. The provisions of this Section 2.6 shall
survive the Closing to the extent contemplated herein.
PURCHASE PRICE AND PURCHASE PRICE ADJUSTMENT
Purchase Price. In consideration for the sale, assignment, transfer and delivery
of the Acquired Assets by the Sellers to the Purchaser, and upon the terms and
subject to the conditions contained herein, the Purchaser shall pay to the
Sellers the following at the Closing, subject to increase or reduction before
the Closing pursuant to Section 3.3 hereof and after the Closing pursuant to
Sections 3.1 and 3.4 hereof (as so adjusted, the "Purchase Price") in the manner
set forth below:
Thirty-Seven Million Dollars ($37,000,000) in cash (the "Closing Cash Payment"),
of which:
an amount of cash (but in any event not more than Thirty-Seven Million
Dollars ($37,000,000)) sufficient to fully repay all of the
Indebtedness of the Sellers under the CapitalSource Facility, under
any other bank or revolving credit facility and under any other
arrangement pursuant to which a Lien may exist on any of the Acquired
Assets shall be paid by the Purchaser on behalf of the Sellers at the
Closing directly to the holders of such Indebtedness against receipt
by the Sellers and the Purchaser of payoff letters duly executed by
the lenders of such Indebtedness, which payoff letters shall be in
customary form and shall otherwise be reasonably acceptable to the
Purchaser, together with documentation reasonably acceptable to the
Purchaser releasing any Liens securing such Indebtedness;
an amount of cash equal to One Hundred Thousand Dollars ($100,000)
(which is intended to cover the fees and expenses of the Accounting
Firm contemplated under Section 3.5 hereof) shall be paid by the
Purchaser to the Escrow Agent to be held as part of the Working
Capital Escrow Fund under the Escrow Agreement (the "Working Capital
Escrow Cash"); the remainder shall be paid by the Purchaser directly
to the Sellers at the Closing by wire transfer of immediately
available funds; and Twelve Million Five Hundred Thousand Dollars
($12,500,000) in shares (as such shares may be reduced pursuant to the
proviso below, the "Consideration Shares") of the Lifetime's common
stock, par value $0.01 per share (the "Lifetime Common Stock"), of
which, subject to the proviso below:
Four million Dollars ($4,000,000) shall be paid by the Purchaser by
delivery to the Escrow Agent, pursuant to the Escrow Agreement to be
executed and delivered pursuant to Section 3.8 hereof, of a number of
shares (the "Working Capital
19
Holdback Shares") of Lifetime Common Stock equal to the quotient
obtained by dividing Four million Dollars ($4,000,000) by the Average
Purchaser Share Price;
Three Million Dollars ($3,000,000) shall be paid by the Purchaser by
delivery to the Escrow Agent, pursuant to the Escrow Agreement to be
executed and delivered pursuant to Section 2.3 hereof, of a number of
shares (the "Indemnity Holdback Shares") of Lifetime Common Stock
equal to the quotient obtained by dividing Three Million Dollars
($3,000,000) by the Average Purchaser Share Price; and
the remainder, if any, shall be paid by the Purchaser by delivery to
the Seller Representative of a number of shares of Lifetime Common
Stock equal to the quotient obtained by dividing such remainder by the
Average Lifetime Share Price, in such number of certificates in the
names of the Sellers and in such denominations as the Seller
Representative shall designate in writing by written notice to the
Purchaser not fewer than three (3) Business Days before the Closing;
provided, however, that, notwithstanding the foregoing, the Purchaser
may in its sole discretion elect, by written notice to the Seller
Representative, to pay any or all of the Twelve Million Five Hundred
Thousand Dollars ($12,500,000) to be paid pursuant to this Section
3.1(ii) in cash and to the extent cash is so paid, the number of
Consideration Shares shall be proportionately reduced.
20
Allocation of Purchase Price; Withholding Taxes.
The Purchase Price shall be allocated by the Purchaser among the Acquired Assets
in accordance with Section 1060 of the Code (it being understood and agreed that
the Purchaser shall base such allocation on the relative fair market values of
the Acquired Assets as reasonably determined by the Purchaser) and shall be set
forth by the Purchaser in a written notice delivered to the Seller
Representative within 180 days after the Closing; provided, however, that if
there is an adjustment in the Purchase Price pursuant to Section 3.3, an
appropriate corresponding adjustment to the allocation shall be made by the
Purchaser in accordance with Section 1060 of the Code acting in good faith. The
Purchaser and the Sellers shall prepare and file their respective federal, state
and local income Tax returns, together with a copy of Internal Revenue Service
Form 8594, on a basis consistent with the foregoing allocations, and shall not
take any tax reporting position inconsistent therewith.
Anything herein to the contrary notwithstanding, to the extent that the
Purchaser determines that any Governmental Body imposes upon the Purchaser the
obligation to withhold Taxes with respect to any payments made to a Seller
hereunder, the Purchaser is hereby authorized to withhold such Taxes from the
payment to the Sellers and remit such Taxes to the appropriate Governmental
Body. Any such withheld Taxes shall be deemed paid to the Sellers on account of
the Purchase Price.
Adjustment of Purchase Price. The Purchase Price shall be (i) increased by the
amount (such amount, the "Positive Net Working Capital"), if any, by which the
Net Working Capital as shown on (or determined in accordance with) the Closing
Date Working Capital Calculation, as it becomes final and binding on the parties
in accordance with Section 3.5 hereof (the "Final Closing Net Working Capital"
and the "Final Closing Date Working Capital Calculation," respectively), is
greater than $38,000,000 or (as applicable) (ii) decreased by the amount (such
amount, the "Negative Net Working Capital"), if any, by which the Final Closing
Date Balance Sheet is less than $38,000,000.
Preliminary Working Capital Estimate; Pre-Closing Certificate.
Not less than two (2) Business Days and not more than five (5) Business Days
before the Closing Date, the Sellers shall deliver to the Purchaser: (i) a
written calculation in reasonable detail of the amount of the Closing Net
Working Capital (calculated in a manner that is consistent with the manner in
which such amount is to be calculated in accordance with Section 3.5(a) hereof,
and whether positive, negative or zero) that the Sellers expect to be timely
determined in accordance with Section 3.5(a) hereof (the "Preliminary Working
Capital Estimate"); and (ii) a certificate (the "Pre-Closing Certificate"), in
the form attached as Exhibit 3.4(a) attached hereto, signed by the Sellers
stating the amount of the Preliminary Working Capital Estimate and certifying
that such amount is the best estimate thereof by the Sellers and the reasonable,
good faith belief of and forecast by the Sellers, after due consideration and
consultation with the outside accountants of the Sellers, of such Closing Net
Working Capital.
If the certificate of the Sellers as delivered pursuant to Section 3.4(a) hereof
(absent manifest error therein and subject to Section 3.4 hereof, or material
variance in the Inventory included therein from the results of the Inventory
Count (to the extent available prior to the Closing)) shows that the Preliminary
Working Capital Estimate is greater than $38,000,000, then the Purchase Price
shall be increased by seventy-five percent (75%) of the amount by which the
Preliminary Working Capital Estimate is greater than $38,000,000, according to
the certificate of the Sellers, and such increased amount shall be added by the
Purchaser to the cash component of the Purchase Price and shall be paid at the
Closing pursuant to Section 3.1(i) hereof in addition to any amount that would
otherwise be paid by the Purchaser pursuant to such provision, subject to
21
adjustment pending the final determination of Closing Net Working Capital in
accordance with Section 3.5 hereof and the payment thereof in accordance with
Section 3.6 hereof. If the certificate of the Sellers as delivered pursuant to
Section 3.4(a) hereof (absent manifest error therein and subject to Section 3.4
hereof, or material variance in the Inventory included therein from the results
of the Inventory Count (to the extent available prior to the Closing)) shows
that the Preliminary Working Capital Estimate is less than $38,000,000, then the
Purchase Price shall be decreased by the amount by which Preliminary Working
Capital Estimate is less than $38,000,000, according to the certificate of the
Sellers, and such decreased amount shall be reduced by the Purchaser from the
cash component of the Purchase Price and shall be deducted at the Closing
pursuant to Section 3.1(i) hereof from any amount that would otherwise be paid
by the Purchaser pursuant to such provision, subject to adjustment pending the
final determination of Closing Net Working Capital in accordance with Section
3.5 hereof and the payment thereof in accordance with Section 3.6 hereof.
Determination of Closing Net Working Capital.
As promptly as practicable after the Closing Date (but in any event not more
than sixty (60) days thereafter), the Purchaser shall deliver to the Seller
Representative a calculation (which shall be prepared in a manner consistent
with the definition of Net Working Capital herein and otherwise) in reasonable
detail setting forth the Purchaser's calculation of the Net Working Capital that
the Purchaser has acquired by virtue of the acquisition of the Acquired Assets
and the assumption of the Assumed Liabilities of the Determination Time pursuant
to Article II hereof (the "Closing Date Working Capital Calculation") which
shall be prepared in accordance with GAAP applied, to the extent applicable, in
a manner consistent with the manner in which GAAP was applied in the preparation
of the Unaudited Year-End Financial Statements of Syratech referred to in
Section 5.6 hereof (the "Closing Net Working Capital") and, as applicable, the
Positive Net Working Capital or the Negative Net Working Capital (including the
differences, category-by-category, to the extent reasonably practicable).
Promptly after the delivery of the Closing Date Working Capital Calculation (but
in any event, within three (3) Business Days thereafter), the parties shall
direct the Escrow Agent to release, pursuant to the terms of the Escrow
Agreement, to the Seller Representative on behalf of the Sellers such amount, if
any, of the Working Capital Escrow Fund as would not be required to be paid to
the Purchaser according to Section 3.6(iii) hereof based on such Closing Date
Working Capital Calculation, less any amount that the Purchaser estimates, in
its reasonable determination, will be required to pay the Accounting Firm (as
hereinafter defined), if any, pursuant to this Article III; provided that the
Purchaser and the Seller Representative shall direct the Escrow Agent to release
any excess amount deposited in respect of the Accounting Firm. For purposes of
accruals of any items (including without limitation rent, property taxes, or
utilities) of expenses or payables that accrue over time, the Liabilities for
such items shall be determined and included on the Closing Date Working Capital
Calculation on the basis of the relative number of days before the Closing Date
applicable to the item relative to the total number of days applicable to the
item.
The Seller Representative shall have thirty (30) days after delivery to it of
the Closing Date Working Capital Calculation (the "Review Period") to review the
Closing Date Working Capital Calculation. If the Seller Representative does not
agree with the amount of the Closing Net Working Capital and, as applicable, the
Positive Net Working Capital or the Negative Net Working Capital as shown on the
Closing Date Working Capital Calculation, the Seller Representative shall,
within the Review Period, give the Purchaser a written notice (a "Dispute
Notice") setting forth (i) the amount the Sellers believe to be the Closing Net
Working Capital and, as applicable, the Positive Net Working Capital or the
Negative Net Working Capital and showing the differences, category-by-category,
and (ii) a reasonably detailed explanation of the
22
basis of the Sellers' calculation of such amounts. If the Seller Representative
indicates in writing that the Sellers do not object to the Closing Net Working
Capital as shown on the Closing Date Working Capital Calculation, or if the
Seller Representative fails to deliver a Dispute Notice to the Purchaser within
the Review Period, the Closing Net Working Capital and, as applicable, the
Positive Net Working Capital or the Negative Net Working Capital as shown on the
Closing Date Working Capital Calculation shall be deemed to have been accepted
by the Sellers in the form delivered by the Purchaser and shall be final,
conclusive and binding upon the parties for all purposes and not subject to
appeal on any ground and judgment on such amount of Closing Net Working Capital
and, as applicable, the Positive Net Working Capital or the Negative Net Working
Capital, and any resulting obligation of either the Purchaser or the Sellers to
pay the other party any amount pursuant to Section 3.6 hereof may be enforced in
any court having jurisdiction over the subject matter of the controversy.
If a Dispute Notice shall be timely delivered by the Seller Representative to
the Purchaser, the Seller Representative and the Purchaser shall, within thirty
(30) days after such delivery, promptly and in good faith attempt to resolve the
matters set forth therein and agree in writing upon the final amount of the
Closing Net Working Capital and, as applicable, the Positive Net Working Capital
or the Negative Net Working Capital. If the Seller Representative and the
Purchaser are unable to resolve the matters in dispute within that 30-day
resolution period, then the Accounting Firm shall be employed to resolve such
matters as soon as reasonably practicable. Any resolution pursuant to this
Section 3.3(c) and Section 3.3(d) hereof shall be conducted in New York City, or
by telephonic conference call if acceptable to the Accounting Firm. The Seller
Representative, on behalf of the Sellers, and the Purchaser shall each execute
and deliver such retention agreements as the Accounting Firm may reasonably
require in connection with its services pursuant to this Section 3.3.
The Accounting Firm shall be instructed to promptly review the applicable
provisions of this Agreement and shall only consider those items in the
Purchaser's calculation of Closing Net Working Capital and, as applicable, the
Positive Net Working Capital or the Negative Net Working Capital that are
expressly identified as items of dispute in the Dispute Notice (and such matters
that are necessarily connected therewith according to proper accounting rules
and procedures). The Accounting Firm shall, as promptly as practicable, deliver
to the Purchaser and the Seller Representative a report setting forth any
adjustments to such disputed items necessary to make such items conform to the
requirements of this Article III, and setting forth the amounts of the Closing
Net Working Capital and, as applicable, the Positive Net Working Capital or the
Negative Net Working Capital. The determination of the Accounting Firm with
respect to such matters shall be final, conclusive and binding upon the parties
and not subject to appeal on any ground, and judgment on the determination, and
any resulting obligation of either the Purchaser or the Sellers to pay the other
party any amount under Section 3.6, may be enforced in any court having
jurisdiction over the subject matter of the controversy.
With respect to any dispute and/or resolution pursuant to this Article III
hereof, (A) the Sellers, on the one hand, and the Purchaser, on the other hand,
shall each pay and be responsible for their own respective costs and expenses,
including, without limitation, the fees and expenses of their respective legal,
accounting and other advisors, and (B) the fees and expenses of the Accounting
Firm shall be paid as follows:
If the amount of the Final Closing Net Working Capital is equal to or less than
the amount of the Closing Net Working Capital as set forth in the Closing Date
Working Capital Calculation, then the entire amount of the fees and expenses of
the Accounting Firm shall be payable from the Working Capital Escrow Fund
pursuant to the Escrow Agreement (and the Purchaser shall have the right to so
direct the Escrow Agent).
23
If the Final Closing Net Working Capital is greater than the amount of the
Closing Net Working Capital as set forth in the Closing Date Working Capital
Calculation, then the Working Capital Escrow Fund (it being understood that the
Purchaser shall have the right to so direct the Escrow Agent) and the Purchaser
shall pay the respective percentage of the fees and expenses of the Accounting
Firm as shown in the applicable column set forth below:
-------------------------------------------------------------------------------------------
Percentage of Final Closing Net Working Percentage Paid from Percentage Paid
Capital Compared with Purchaser Amount Working Capital Escrow by Purchaser
Fund
-------------------------------------------------------------------------------------------
More than 100% but not more than 101% 80% 20%
-------------------------------------------------------------------------------------------
More than 101% but not more than 102% 60% 40%
-------------------------------------------------------------------------------------------
More than 102% but not more than 103% 40% 60%
-------------------------------------------------------------------------------------------
More than 103% but not more than 104% 20% 80%
-------------------------------------------------------------------------------------------
More than 104% 0% 100%
-------------------------------------------------------------------------------------------
The foregoing notwithstanding, if after the payment of any Purchase Price
Adjustment pursuant to Section 3.6 hereof, there are insufficient funds
available from the "Percentage Paid from Working Capital Escrow Fund" to pay the
fees and expenses of the Accounting Firm, then such amounts shall be paid by to
the Accounting Firm from the Indemnity Escrow Fund.
24
Payment of Purchase Price Adjustment. Within ten (10) Business Days after the
amounts of the Closing Net Working Capital and, as applicable, the Positive Net
Working Capital or the Negative Net Working Capital become final and binding
upon the parties in accordance with Section 3.5 hereof:
If the amount of the Final Closing Net Working Capital is greater than the
Preliminary Working Capital Estimate and if the Closing Cash Payment pursuant to
Section 3.1 hereof was increased as a result of and in accordance with Section
3.4(b) hereof (the amount of such increase, the "Closing Cash Increase"), then
the Purchaser shall pay the Seller Representative, for the account of the
Sellers, the amount by which the Positive Net Working Capital, as finally
determined, exceeds the amount of the Closing Cash Increase; or (as applicable)
If (A) the amount of the Final Closing Net Working Capital is greater than the
Preliminary Working Capital Estimate and if the Closing Cash Payment pursuant to
Section 3.1 hereof was decreased as a result of and in accordance with Section
3.4(b) hereof, or (B) there was no change or adjustment to the Closing Cash
Payment pursuant to Section 3.1 hereof as a result of and in accordance with
Section 3.4(b), then the Purchaser shall pay the Seller Representative, for the
account of the Sellers, the amount by which the Final Closing Net Working
Capital exceeds the Preliminary Working Capital Estimate; or, (as applicable)
If the amount of the Final Closing Net Working Capital is less than the
Preliminary Working Capital Estimate, then the amount by which the Final Closing
Net Working Capital is less than the Preliminary Working Capital Estimate shall
be paid to the Purchaser from the Working Capital Escrow (and the Indemnity
Escrow, but only to the extent necessary if sufficient funds are otherwise not
available in the Working Capital Escrow) pursuant to the Escrow Agreement (and
the Purchaser shall have the right to so direct the Escrow Agent).
Inventory Count. The Purchaser, if in its sole determination it so elects, may
cause physical counts to be made of the inventory of the Sellers (if such
physical count is before the Closing), or included within the Acquired Assets
(if such physical count is after the Closing), located at any or all of the
facilities of the Business as may be determined by the Purchaser in its sole
determination (the "Inventory Count"), which may, at the Purchaser's option, be
observed by an accounting firm or other representatives selected by the
Purchaser. The Purchaser shall conduct the Inventory Count after the Closing,
unless the Closing takes place after April 30, 2006, in which case the Purchaser
may conduct the Inventory Count before the Closing on such date as near as
practicable to the Closing as may be mutually agreed to by the parties to avoid
unreasonable business disruptions. The Sellers shall cause all appropriate
personnel of the Sellers to cooperate with the Purchaser in connection with the
Inventory Count. The Sellers' representatives shall be entitled to attend and
observe the taking of the Inventory Count. Each party shall bear the cost of its
own personnel and its own accounting firm, to the extent such personnel attend
and participate in the Inventory Count or finalize, summarize or review its
results. If the Inventory Count is not performed as of the business day
immediately prior to the Closing Date, the results of the Inventory Count for
purposes of the Closing Date Working Capital Calculation shall be adjusted to
reflect the Sellers' inventory at the close of business on the day immediately
preceding the Closing Date using actual receipts and shipments.
Escrow.
At the Closing, the Purchaser and the Seller Representative shall enter into an
Escrow Agreement in form and substance reasonably acceptable to the parties
hereto in their good faith (the "Escrow Agreement") with an escrow agent
reasonably acceptable to the Purchaser and the Seller Representative (the
"Escrow Agent"). As provided in Section 3.2(ii)(A) and Section 3.2(ii)(B)
hereof, the Working Capital Holdback Shares and the Indemnity Holdback Shares,
and, as
25
provided in Section 3.1(i)(B) hereof, the Working Capital Escrow Cash, will be
delivered to the Escrow Agent to be held in escrow, and released in accordance
with the terms of the Escrow Agreement.
Concurrently with the Closing, the parties hereto shall deposit with and deliver
to the Escrow Agent all of the Working Capital Escrow Cash, Working Capital
Holdback Shares and Indemnity Holdback Shares, to be held pursuant to terms of
the Escrow Agreement and released only in accordance with the terms of the
Escrow Agreement. The Working Capital Holdback Shares, Working Capital Cash, and
all interest, dividends and other direct or indirect earnings thereon after the
Closing, are collectively hereinafter referred to as the "Working Capital Escrow
Fund." The Indemnity Holdback Shares, and all interest, dividends and other
direct or indirect earnings thereon after the Closing, are collectively
hereinafter referred to as the "Indemnity Escrow Fund."
The Purchaser and the Seller Representative shall direct the Escrow Agent to
release the Working Capital Escrow Fund (and to the extent necessary, the
Indemnity Escrow Fund) in payment of amounts required to be made to the
Purchaser pursuant to Article III and any remainder to the Seller Representative
on behalf of the Sellers promptly thereafter. The Seller Representative, and the
Purchaser, in each case in the circumstances as provided in the Escrow
Agreement, shall have the right to direct the Escrow Agent to sell any shares
held in escrow in customary broker transactions in the principal market or
exchange on which such shares trade.
The Escrow Agreement shall provide that (i) the Working Capital Escrow shall be
available only for payments to be made pursuant to Article III hereof and that
the parties shall direct the Escrow Agent to release the Working Capital Escrow
in payment of amounts required to be made to the Purchaser pursuant to Article
III and any remainder to the Seller Representative promptly thereafter; (ii) the
Indemnity Escrow shall be available only for payments to be made pursuant to
other provisions hereof (including Article XII) but not Article III hereof
except as expressly provided therein. The Purchaser and the Seller
Representative shall direct the Escrow Agent to release the Indemnity Escrow, in
each case to the extent, and only to the extent, in excess of claims made
thereon which have not been paid or otherwise resolved, to the Seller
Representative on behalf of the Sellers promptly at the following times (it
being understood that for purposes of measuring the amounts released according
to the following schedule the value of the shares held in escrow shall be
measured using the same value as at the Closing hereunder): (A) $1,000,000 on
the earlier of (x) the nine-month anniversary of the Closing hereunder or (y)
November 30, 2006, (B) $1,000,000 on the first anniversary of the Closing
hereunder and (C) the remainder on the second anniversary of the Closing
hereunder. The Seller Representative, and the Purchaser, in each case in the
circumstances as provided in the Escrow Agreement, shall have the right to
direct the Escrow Agent to sell any shares held in escrow in customary broker
transactions in the principal market or exchange on which such shares trade.
The parties acknowledge that to the extent any of the Escrow Fund remains held
by the Escrow Agent (and not any portion of which that is released to the
Sellers), the Purchaser shall be treated as the owner of such amount of the
Escrow Fund for Tax purposes and shall be responsible for any Taxes attributable
to income earned in respect such amount of the Escrow Fund. Any cash included in
either the Inventory Escrow Fund or the Indemnity Escrow Fund shall be held in
an interest-bearing account in accordance with the terms of the Escrow Agreement
and the Purchaser will receive from the Escrow Fund on a quarterly basis a
distribution equal to 45% of the interest and dividends earned by the Escrow
Fund in order to reimburse the Purchaser for any Taxes attributable to income
earned in respect of the Escrow Fund as further provided by the Escrow
Agreement. The balance of the interest and dividends earned by the Escrow Fund
shall be added to and become part of the Escrow Fund.
26
CLOSING AND TERMINATION
Closing Date. Subject to the satisfaction of the conditions set forth in
Sections 9.1, 9.2 and 9.3 hereof (or the waiver thereof by the party entitled to
waive each respective condition), the closing of the purchase and sale of the
Acquired Assets provided for in Section 0 hereof (the "Closing") shall take
place at the offices of Troutman Sanders LLP located at The Chrysler Building,
405 Lexington Avenue, New York, New York 10174 (or at such other place as the
parties may designate in writing) at 10:00 a.m. (New York time) on the date that
is not more than five (5) Business Days following the satisfaction or waiver of
the conditions set forth in Article IX (other than conditions that by their
nature are to be satisfied at the Closing, but subject to the satisfaction or
waiver of such conditions), unless another time or date, or both, are agreed to
in writing by the Purchaser and the Seller Representative. The date on which the
Closing shall be held is referred to in this Agreement as the "Closing Date."
The Closing shall be deemed to take place immediately after the Determination
Time.
Deliveries by the Sellers. At the Closing, the Sellers shall deliver to the
Purchaser:
a Bill of Sale, Assignment and Assumption Agreement in form and substance
reasonably acceptable to the parties hereto in their good faith, transferring to
the Purchaser all of the Sellers' right, title and interest in and to the
Acquired Assets (other than any Leased Real Property, the Leases, or the Sellers
Intellectual Property) and under which the Purchaser assumes all of the Sellers'
obligations and liabilities with respect to the Assumed Liabilities
(collectively, the "Bill of Sale"), duly executed by the Sellers;
the assignments of each Lease in form and substance reasonably acceptable to the
parties hereto in their good faith, with respect to each parcel of Leased Real
Property, which such Lease assignment shall provide (A) an indemnity of the
Purchaser and the Purchaser Indemnitees from the Sellers for all Liabilities
under the Leases or Leased Real Property arising on or prior to the Closing
(except to the extent any such Liability is included on the Closing Date Working
Capital Calculation), and (B) an indemnity of the Sellers and the Seller
Indemnitees from the Purchaser for all liabilities under the applicable Leases
or the Leased Real Property arising after the Closing, duly executed by the
applicable Seller;
an Assignment and Assumption Agreement in form and substance reasonably
acceptable to the parties hereto in their good faith, with respect to all
Trademarks with respect to the Business;
an Assignment and Assumption Agreement in form and substance reasonably
acceptable to the parties hereto in their good faith, with respect to all
Copyrights with respect to the Business;
an Assignment and Assumption Agreement in form and substance reasonably
acceptable to the parties hereto in their good faith, with respect to all
Patents with respect to the Business;
an Assignment and Assumption Agreement in form and substance reasonably
acceptable to the parties hereto in their good faith, with respect to all Domain
Names with respect to the Business;
an Assignment and Assumption Agreement in form and substance reasonably
acceptable to the parties hereto in their good faith, with respect to all
Intellectual Property Licenses;
such other deeds or assignments as may be necessary to evidence the transfer of
title of the Acquired Assets to the Purchaser;
a certificate signed by each of the Sellers in form and substance reasonably
acceptable to the parties hereto in their good faith, as required to be
delivered pursuant to Sections 9.1(a) and 9.1(b) hereof;
27
the Escrow Agreement duly executed by the Seller Representative;
a Transition Services Agreement in form and substance reasonably acceptable to
the parties hereto in their good faith, duly executed by each of the Sellers;
a certificate of non-foreign status in the form required by Section 1445 of the
Code, duly executed by each of the Sellers;
any documents required by Section 7.11(b) hereof;
a certificate by the Secretary or Assistant Secretary of each of the Sellers, as
to the incumbency and authority of each Person executing this Agreement and any
document executed and delivered by or on behalf of each of them, and setting
forth and certifying the resolutions or actions of the Board of Directors (or
applicable governing body), shareholders (or applicable equity member) of such
Seller, and of the holders of the Convertible Senior Notes of Syratech,
authorizing or ratifying, as the case may be, and approving the negotiation and
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby;
a legal opinion of Weil, Gotshal & Manges LLP, counsel to the Sellers in form
and substance reasonably acceptable to the parties hereto in their good faith,
covering such matters as are customary in transactions of the type contemplated
hereby, including the due authorization of this Agreement and the transactions
contemplated hereby by Syratech's directors, stockholders and holders
Convertible Senior Notes;
copies of any consents (or waivers in lieu thereof) to the performance by the
Sellers required as provided in Section 9.1(e) hereof;
duly executed payoff letters with respect to the Indebtedness of the Companies,
and releases of related Liens, as described in Section 9.1(i) hereof;
the 2005 Audited Financial Statements as described in Section 9.1(f), together
with a certificate, duly executed by the Chief Financial Officer of Syratech and
the Seller Representative, in form and substance reasonably acceptable to the
parties hereto in their good faith;
a receipt for the Purchase Price, duly executed by the Sellers;
if the Closing occurs prior to May 18, 2006, a lock-up letter pursuant to which
the Sellers agree not to transfer their shares prior to May 18, 2006, in form
reasonably acceptable to the Purchaser's underwriters; and
such other documents, instruments and certificates as the Purchaser may
reasonably request.
Deliveries by the Purchaser. At the Closing, the Purchaser shall deliver to the
Seller Representative (or, where indicated, to the Escrow Agent):
to the Escrow Agent, the amounts of cash referred to in Section 3.1(i), in
immediately available funds;
the Consideration Shares as set forth in Section 3.1(ii) hereof;
the officer's certificates required to be delivered pursuant to Sections
9.2(a)(ii) and 9.2(b)(ii) hereof;
the Escrow Agreement duly executed by the Purchaser;
the Transition Services Agreement, duly executed by the Purchaser;
the Guaranty, duly executed by Lifetime;
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a certificate of the Secretary or Assistant Secretary of the Purchaser and a
certificate of the Secretary or Assistant Secretary of Lifetime certifying the
resolutions of the Board of Directors of the Purchaser and of Lifetime,
respectively, authorizing or ratifying, as the case may be, and approving the
execution and delivery of this Agreement and the transactions contemplated
hereby and the incumbency and signatures of each officer executing this
Agreement and with respect to the Purchaser, the Escrow Agreement;
a legal opinion of Troutman Sanders LLP, counsel to the Purchaser and to
Lifetime, in form and substance reasonably acceptable to the parties hereto in
their good faith;
such documents which are required to effect the obligations of the Purchaser
pursuant to Section 7.14; and
such other documents, instruments and certificates as the Sellers may reasonably
request.
Termination of Agreement.
This Agreement may be terminated prior to the Closing as follows:
by the Purchaser or the Seller Representative, if the Closing shall not have
occurred by the close of business on the Termination Date; provided, however,
that if the Closing shall not have occurred on or before the Termination Date
due to a material breach of any representations, warranties, covenants or
agreements contained in this Agreement by the Purchaser on the one hand, or any
of the Sellers, on the other hand, then such party may not terminate this
Agreement pursuant to this Section 4.4(a)(i); and provided further, however,
that in the event that the Closing does not occur by the Termination Date due to
an event, condition or circumstance as described in Section 9.1(h) hereof, the
Termination Date shall be extended until such event, condition or circumstance
ceases to exist, but not beyond May 31, 2006;
by mutual written consent of the Seller Representative and the Purchaser;
by the Purchaser, (A) if any of the Sellers shall have become the subject of a
case under chapter 7 or 11 or title 11 of the U.S. Code or (B) if any of the
conditions to the obligations of the Purchaser set forth in Section 9.1 or
Section 9.3 shall have become incapable of fulfillment other than as a result of
a breach by the Purchaser of any covenant or agreement on its part contained in
this Agreement, and such condition is not waived by the Purchaser; provided that
if, in the Purchaser's reasonable opinion, actions taken by any of the Sellers
could reasonably be expected to cause such condition to become capable of being
fulfilled, the Purchaser shall give the Seller Representative notice of such
circumstance and a reasonable opportunity to attempt, at the Sellers' sole
expense, to cause such condition to be fulfilled; provided further, that if the
breach has not been cured within twenty (20) Business Days after the giving of
such written notice by the Purchaser, then the Purchaser may terminate this
Agreement;
by the Seller Representative if any condition to the obligations of the Sellers
set forth in Section 9.2 or Section 9.3 shall have become incapable of
fulfillment other than as a result of a breach by any Seller of any covenant or
agreement on its part contained in this Agreement, and such condition is not
waived by the Seller Representative; provided that, if, in the Seller
Representative's reasonable opinion, actions taken by the Purchaser could
reasonably be expected to cause such condition to become capable of being
fulfilled, the Seller Representative shall give the Purchaser notice of such
circumstance and a reasonable opportunity to attempt to cause such condition to
be fulfilled; provided further, that if the breach has not been cured within
twenty (20) Business Days after the giving of such written notice by the Seller
Representative, then the Seller Representative may terminate this Agreement;
29
by the Purchaser, if there shall be a breach by any of the Sellers of any
representation or warranty (without regard to any supplementation or amendment
to the Schedules hereto as provided by Section 7.10), or any covenant or
agreement, of any of the Sellers, as applicable, contained in this Agreement
that would result in a failure of a condition set forth in Section 9.1 or
Section 9.3 hereof and which breach cannot be cured or has not been cured by the
earlier of (i) twenty (20) Business Days after the giving of written notice by
the Purchaser to the Seller Representative of such breach and (ii) the
Termination Date;
by the Purchaser in the event of the occurrence of either of the events
described in clauses (B) or (C) of Section 4.5(a)(iii) hereof;
by the Seller Representative if there shall be a breach by the Purchaser of any
representation or warranty, or any covenant or agreement, of the Purchaser
contained in this Agreement that would result in a failure of a condition set
forth in Section 9.1(n) or Section 9.3 hereof and which breach cannot be cured
or has not been cured by the earlier of (i) twenty (20) Business Days after the
giving of written notice by the Seller Representative to the Purchaser of such
breach and (ii) the Termination Date; and
by the Seller Representative or the Purchaser, if any such party is required to
divest or dispose of any of its assets, properties, divisions or businesses, or
to take any other material action affecting its assets, properties, divisions or
businesses in response to any investigation or inquiry under the HSR Act or any
antitrust or other regulatory Laws.
In the event that either the Purchaser or the Seller Representative seek to and
is entitled to terminate this Agreement pursuant to Section 0(a), written notice
thereof shall forthwith be given to the other party or parties, and this
Agreement shall thereupon terminate, and the Acquisition Transactions shall be
abandoned, without further action by the Purchaser or the Seller Representative.
If this Agreement is terminated as provided herein each party shall redeliver or
destroy all documents, work papers and other material of any other party
relating or containing any Confidential Information of the other party, whether
obtained before or after the execution hereof, to the party furnishing the same.
In the event that this Agreement is validly terminated as provided herein, no
party hereto shall have any liability or further obligation to any other party
relating to the Acquisition Transactions; provided, however, that no such
termination shall relieve any party from liability to any other party for a
prior breach of this Agreement.
Notwithstanding anything in Section 4.4(a) to the contrary, Sections 7.6, 13.1
and Article XII hereof, and paragraph 9 of the Confidentiality Agreement (to the
extent provided in the following sentence) shall survive any termination of this
Agreement. If this Agreement is terminated in accordance with this Section 4.4,
the Purchaser agrees that the prohibition in the Confidentiality Agreement
restricting the Purchaser's ability to solicit any employee of Syratech and its
Affiliates to join the employ of the Purchaser or any if its Affiliates shall be
extended for a period of two (2) years from the date of this Agreement.
Termination Fee.
If this Agreement is terminated and all three of the following three conditions
are satisfied:
The termination is not pursuant to Section 4.4(a)(ii) hereof;
Lifetime and the Purchaser have not breached their obligation (subject to the
conditions of Section 9.1 hereof) to consummate the Closing hereunder;
30
Either: (A) either or both of the Noteholder Conversion Consent and/or the
Stockholder Approval shall not have occurred and, within 18 months after such
termination, Syratech and/or one or more of its Subsidiaries or the holders of a
majority of Syratech's outstanding common stock or the holders of a majority of
Syratech's Convertible Senior Notes shall agree to a Business Combination with
respect to Syratech; (B) (i) a Takeover Proposal shall have been made, (ii) a
consent listed or required to be listed on Schedule 9.1(e) hereof shall not have
been obtained as of the time of the termination of this Agreement, and (iii)
within six months after such termination, Syratech and/or one or more of its
Subsidiaries or the holders of a majority of Syratech's outstanding common stock
or the holders of a majority of Syratech's Convertible Senior Notes shall agree
to a Business Combination with respect to Syratech; (C) the Board of Directors
of Syratech shall have withdrawn or modified the Board Recommendation or failed
to approve this Agreement and the Acquisition Transactions, (D) the Board of
Directors of Syratech shall have recommended, authorized or endorsed any
Takeover Proposal, or (E) the Sellers shall have breached their obligation
(subject to the conditions of Section 9.2 and Section 9.3hereof) to consummate
the Closing hereunder;
then the Sellers shall pay Lifetime $5,000,000 (the "Termination Fee"), as
promptly as practicable but in any event within two (2) Business Days after the
occurrence of the event described in clause (A) or clause (B) of item (iii)
above and within two (2) Business Days after termination of this Agreement in
all other cases. The Termination Fee shall be paid by wire transfer of
immediately available funds to an account designated in writing to the Seller
Representative by Lifetime. For the avoidance of doubt, in no event shall the
Sellers be required to pay more than one Termination Fee hereunder.
Syratech acknowledges that the agreements contained in this Section 4.5 are an
integral part of the transactions contemplated in this Agreement, that the
damages resulting from termination of this Agreement under circumstances where a
Termination Fee is payable are uncertain and incapable of accurate calculation
and that the amounts payable pursuant to Section 4.5 are reasonable forecasts of
the actual damages that may be incurred and constitute liquidated damages and
not a penalty, and that, without the agreement set forth in this Section 4.5,
Lifetime and the Purchaser would not enter into this Agreement; accordingly, if
the Sellers fails to promptly pay the Termination Fee, and, in order to obtain
such payment Lifetime commences a Legal Proceeding that results in a judgment
against any or all of the Sellers for the Termination Fee, the Sellers shall pay
to Lifetime its costs and expenses (including reasonable attorneys' fees and
expenses) in connection with such Legal Proceeding.
Termination Date; Extension. The "Termination Date" shall be April 30, 2006,
unless extended as provided in the next following sentence. At any time prior to
the termination of this Agreement in accordance with Section 4.4 hereof, (i)
Lifetime may in its sole discretion extend the Termination Date until May 31,
2006 and (ii) Lifetime and the Seller Representative may jointly extend the
Termination Date until June 15, 2006.
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS
Each Seller hereby jointly and severally represents and warrants to the
Purchaser and to Lifetime:
Organization and Good Standing. Each Seller is a corporation or company, as
applicable, duly organized, validly existing and in good standing under the Laws
of the jurisdiction in which it was incorporated or formed and has all requisite
power and authority to own, lease, use and operate the Properties (including any
Acquired Assets) that it purports to own, lease, use and
31
operate and to carry on the Business as now conducted and perform all of its
obligations under the Material Contracts to which it is a party. The respective
jurisdictions in which each Seller is licensed or qualified to conduct business
as a foreign company are listed on Schedule 5.1 attached hereto. Each Seller is
duly qualified and in good standing under the laws of each jurisdiction in which
it owns or leases real property and each jurisdiction in which the conduct of
the Business or the ownership of its Properties requires such qualification or
authorization except where such failure to be so qualified would not have a
Seller Material Adverse Effect. The Sellers have delivered to the Purchaser true
and complete copies of (i) the Certificate of Incorporation, Articles of
Incorporation, or comparable organizational documents, as applicable, and all
amendments thereto, of each Seller, certified by the Secretary of State, or
comparable official, of its State, or country, as applicable, of incorporation
as of a date reasonably acceptable to the Purchaser; and (ii) the Bylaws of each
Seller, as in effect, certified as of the date hereof as true and correct by the
Secretary or Assistant Secretary of such Seller, all of which instruments remain
in full force and effect, unchanged since their respective dates of
certification.
Subsidiaries. Other than the companies identified on Schedule 5.2 attached
hereto, no Seller has any direct or indirect Subsidiaries and there are no
corporations, partnerships, joint ventures, associations or other entities in
which any Seller owns, of record or beneficially, any direct or indirect equity
or other interest or any rights (contingent or otherwise) to acquire the same.
No Seller (i) is a member of (nor is any part of its business conducted through)
any partnership or limited liability company, (ii) is a participant in, or
conducts any aspect of the Business through, any joint venture or similar
arrangement.
Authorization of Agreement. Each of the Sellers has all requisite power and
authority and legal capacity to execute and deliver this Agreement and, subject
to Syratech obtaining the Noteholder Conversion Consent and the conversion of
the Convertible Senior Notes as provided by Section 9.3(c) and subject to the
Stockholder Approval, each other agreement, instrument, certificate or document
required by this Agreement to be executed or delivered by it in connection with
the consummation of the Acquisition Transactions and the other transactions
contemplated of it hereby and thereby (collectively, the "Seller Documents"), to
perform its obligations hereunder and thereunder and to consummate the
Acquisition Transactions and each other transaction contemplated of it hereby
and thereby. The execution and delivery of this Agreement and the Seller
Documents, subject to Syratech obtaining the Noteholder Conversion Consent and
the conversion of the Convertible Senior Notes as provided by Section 9.3(c) and
subject to the Stockholder Approval, and the consummation of the Acquisition
Transactions and each other transaction contemplated of each of the Sellers
hereby and thereby have been duly authorized or approved by all requisite action
on the part of each of the Sellers, including (i) the approval of the Board of
Directors of Syratech of this Agreement and the Acquisition Transactions and the
recommendation by the Board of Directors of Syratech to the holders of the
Convertible Senior Notes of the Noteholder Conversion Consent and the
recommendation by the Board of Directors of Syratech to the Common Stockholders
of the Stockholder Approval (alone or in connection with the dissolution and
winding up of Syratech) and (ii) the approval of the board of directors (or
comparable governing body) of each of the other Sellers of this Agreement and
the Acquisition Transactions and (iii) the approval of Syratech as the sole
shareholder (or holder of other equity) of each of the other Sellers of this
Agreement and the Acquisition Transactions. The Sellers have, or prior to the
Closing will have, delivered to the Purchaser true, correct and complete copies
of each such approval or authorization. This Agreement has been, and the Seller
Documents will be at or prior to the Closing, duly and validly executed and
delivered by each of the Sellers and (assuming the due authorization, execution
and delivery by the Purchaser and any other parties thereto other than the
Sellers) this Agreement constitutes, and the Seller Documents
32
when so executed and delivered will constitute, legal, valid and binding
obligations of the Sellers, enforceable against each of them it in accordance
with the terms thereof, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity); provided, however, that nothing in the foregoing shall in any way
diminish, impair or in any way limit the representations and warranties given by
Syratech in Section 5.31.
Conflicts; Permits; Consents of Third Parties. Except for compliance with the
requirements as set forth on Schedule 5.4 attached hereto, none of the execution
and delivery by any Seller of this Agreement or any of the Seller Documents, the
consummation of the transactions contemplated of it hereby or thereby, or
compliance by any of the Sellers with any of the provisions hereof or thereof
will (with or without notice or lapse of time, or both) conflict with,
contravene, or result in any violation of or default under, or give rise to a
right of termination, acceleration or cancellation under, or give any Person the
right to modify the terms, conditions or provisions or excuse the performance
under, or result in the creation of any Liens pursuant to, (i) the Certificate
of Incorporation and By-Laws or comparable organizational documents of each of
the Sellers, each as amended to date; (ii) the Plan; (iii) any Material
Contract, Real Property Lease, lease of any personal property, Intellectual
Property License, or Permit to which any of the Sellers is a party or by which
any of the Properties of any of the Sellers are bound; (iv) any Order of any
Governmental Body applicable to any of the Sellers or by which any of the
Properties of any of the Sellers are bound or are subject to as of the date
hereof; or (v) any applicable Law. Subject to the conversion of the Convertible
Senior Notes as provided by Section 9.3(c) and to the approval of Syratech's
stockholders as provided by Section 9.3(c) and except as set forth on Schedule
5.4, no consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental Body
is required on the part of any of the Sellers in connection with the execution
and delivery of this Agreement or the Seller Documents, the compliance by any of
the Sellers with any of the provisions hereof or thereof, the consummation of
the Acquisition Transactions or the taking by any of the Sellers of any action
contemplated of it hereby or thereby.
Capitalization.
The authorized capital stock of each of the Sellers is set forth on Schedule 5.5
attached hereto. The shares of Common Stock of each of the Sellers that are
issued and outstanding are also set forth on Schedule 5.5, and as of the date
hereof, all of such outstanding shares of Common Stock of each of the Sellers,
and any and all outstanding Options (including, but not limited to, the
Convertible Senior Notes) to acquire, directly or indirectly, any shares of
Common Stock of any of the Sellers, are held by the parties and in the amounts
indicated on Schedule 5.5(a) attached hereto. All of the outstanding equity
securities and other securities of each Seller are owned of record and
beneficially by one or more of the Sellers, free and clear of all Liens. All of
the issued and outstanding shares of Common Stock of Syratech were duly
authorized for issuance and are validly issued, fully paid and non-assessable,
were not issued in violation of any preemptive rights created by statute, the
certificate of incorporation or comparable organizational documents, or by-laws
or other governing documents, as applicable, of any Seller or any Contract, are
not subject to any preemptive right and have been issued in compliance with all
applicable Laws, including all federal and state corporate and securities Laws.
No Person has claimed, or has any reasonable basis for claiming, any remedy or
recourse against any Seller under applicable securities Laws. No legend (other
than one referring to the Stockholder Agreement or
33
transferability under the securities Laws) or other reference to any purported
Lien appears upon any certificate representing equity securities of any Seller.
Except for the Convertible Senior Notes, the New Warrants A and the New Warrants
B, there is no existing Option to which any Seller is a party requiring the
issuance of any shares of capital stock or equity of any of the Sellers, and at
the time of the Closing there will be no Options to which any of the Sellers is
a party requiring the issuance of any shares of capital stock or equity of any
of the Sellers. Except as described on Schedule 5.5(b) attached hereto, none of
the Sellers is a party to any voting trust or other Contract with respect to the
voting, redemption, sale, transfer or other disposition of any shares of its
capital stock or other equity interests therein.
The stock and equity records and minute books of the Sellers that have been made
available to the Purchaser fully reflect all minutes of meetings, resolutions
and other material actions and proceedings of the Sellers' stockholders and
boards of directors and all material actions of committees thereof, all
issuances, transfers and redemptions of such entity's capital stock or limited
liability company interests, as applicable, and contain true, correct and
complete copies of such entity's certificate of incorporation or comparable
organizational documents and by-laws or other governing documents, as
applicable, and all amendments thereto, in each case through the date hereof.
Financial Statements, Etc.
Schedule 5.6(a) attached hereto contains true and complete copies of the
consolidated audited balance sheet of Syratech and its Subsidiaries, as of
December 31, 2004 and the related audited consolidated statements of income and
changes in stockholders' equity and cash flows for the year then ended,
including all notes prepared in connection therewith (the "2004 Audited
Financial Statements").
Schedule 5.6(b) attached hereto contains true and complete copies of the
consolidated unaudited balance sheet of Syratech and it Subsidiaries, as of
December 31, 2005 and the related unaudited consolidated statements of income,
changes in stockholders' equity and cash flows for the year then ended including
the notes prepared in connection therewith (the "Unaudited Year-End Financial
Statements" and together with the 2004 Audited Financial Statements, the
"Financial Statements").
The 2004 Audited Financial Statements (i) are complete and correct in all
material respects, (ii) were prepared in accordance with GAAP, (iii) are
consistent with the books and records of Syratech and its Subsidiaries and (iv)
present fairly in all material respects the consolidated financial condition and
results of operations and cash flows of Syratech and its consolidated
Subsidiaries as of the date and for the period specified therein. The Unaudited
Year-End Financial Statements (i) are complete and correct in all material
respects, (ii) were prepared in the Ordinary Course of Business by the
management of Syratech based on the books and records of Syratech and its
Subsidiaries applying GAAP consistent with the application thereof in the 2004
Audited Financial Statements (subject to the utilization of fresh start
accounting in the Unaudited Year-End Financial Statements, in accordance with
GAAP) and (iii) except for the absence of all the footnotes thereto as would be
required by GAAP, present fairly in all material respects the consolidated
financial condition and results of operations and cash flows of Syratech and its
consolidated Subsidiaries as of the date and for the period specified therein,
subject to normal year-end audit adjustments and certain fresh-start accounting
adjustments.
None of the Sellers has engaged in any material monetary transaction, maintained
any bank account or used any corporate funds except for such monetary
transactions, bank accounts or funds that have been and are reflected in the
books and records of such entity.
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The Acquired Assets include, and the Sellers collectively own, all right, title
and interest in, free and clear of all Liens (except for Permitted Exceptions),
all material interests in real and personal (tangible and intangible) property
necessary to conduct the Business and to carry on the operations of the Sellers
in a manner consistent with past practice (including, without limitation,
Inventory, floor samples, sales and promotional products and materials,
tradeshow booths, signage, literature and brochures, prepaid expenses, real
property and real property leases, fixed assets and fixes assets leases,
vehicles and supplies), except for cash and cash equivalents and except for
Acquired Assets acquired or disposed of since the applicable balance sheet date
in the Ordinary Course of Business. No Properties that are used in the Business
are owned or held by any shareholder or other Affiliate of the Sellers or any
other Person other than the Sellers, other than Properties that are leased or
licensed to the Sellers pursuant to leases or licenses disclosed on Schedule
5.15 hereof.
The books and records of the Sellers are maintained in reasonably good order to
permit the Purchaser, using reasonable diligence, to satisfy its obligation to
prepare and deliver the balance sheet and other materials contemplated by
Section 3.2(a) hereof.
No Undisclosed Liabilities. Except as described on Schedule 5.7 attached hereto,
none of the Sellers has any material liabilities or obligations or commitments
of any nature (whether known or unknown, absolute or contingent, liquidated or
unliquidated, or due or to become due) except for liabilities and obligations
(i) reflected or reserved for on the Unaudited Year-End Financial Statements
(December 31, 2005 being herein referred to as the "Balance Sheet Date") or (ii)
that have arisen since the Balance Sheet Date in the Ordinary Course of Business
(all of which are liabilities similar in type to those on the Unaudited Year-End
Financial Statements). All accounts payable of each of the Sellers that were
reflected in the Unaudited Year-End Financial Statements or that are reflected
in the accounting records of any Seller as of the Closing Date (collectively,
the "Accounts Payable") are a result of bona fide transactions arising in the
Ordinary Course of Business and have been paid or are not yet due and payable,
except for those being contested in good faith by appropriate proceedings in the
Ordinary Course of Business; provided, that any such contested claims are not,
in the aggregate, material.
Accounts Receivable. All accounts receivable of each of the Sellers that were
reflected in the Unaudited Year-End Financial Statements or that are reflected
in the accounting records of any Seller as of the Determination Time
(collectively, the "Accounts Receivable") represented or will represent valid
obligations by third parties owed to the Sellers arising from sales actually
made or services actually performed in the Ordinary Course of Business to or for
(as applicable) Persons other than the Sellers or any of their respective
Affiliates. Unless paid prior to the Closing Date, the Accounts Receivable are
or will be as of the Determination Time current and collectible net of the
respective reserves shown on the Unaudited Year-End Financial Statements or on
the accounting records of the Sellers as of the Determination Time (which
reserves are adequate and calculated in the Ordinary Course of Business and in
compliance with GAAP). Subject to such reserves, each of the Accounts Receivable
either has been or will be collected in the Ordinary Course of Business, in
full, without any set-off. There is no dispute, contest, claim, or right of
set-off, other than returns, disputes, contests, claims, or rights of set-off in
the Ordinary Course of Business, under any Contract with any obligor of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable. The Accounts Receivable are not subject to reduction for returns,
credit losses, marketing and advertising allowances, credits, mark-downs,
reimbursements or costs or the like, other than in the Ordinary Course of
Business and in each case for which adequate reserves are established in the
books, records and Financial Statements of the Sellers in accordance with GAAP.
To the Knowledge of the Sellers, no fact or circumstance exists that would cause
the reserves for disputes, contests, claims, or rights of set-off, returns,
credit losses, marketing and advertising allowances, credits, mark-downs,
reimbursements or costs or the like, bad debt and doubtful accounts set forth in
the Unaudited Year-End Financial Statements to be inadequate in the aggregate.
Inventory.
Schedule 5.9(a) attached hereto contains a complete and accurate list of all
finished-goods Inventory of the Sellers as of December 31, 2005, including the
location of all of such Inventory, and the value (not including reserves) of
such Inventory as shown on the books and records of the respective Seller. All
Inventory of the Sellers is of a quality and quantity usable and salable in the
Ordinary Course of Business, except for obsolete, slow-moving, unmarketable,
returned or rejected materials or items and items of below-standard quality,
including damaged goods, all of which have been written off or written down, or
reserved against, in the Ordinary Course of Business and in compliance with
GAAP, so that such Inventory was or is stated at the lower of cost or market,
determined on a first in, first out method.
Except as set forth on Schedule 5.9(b) attached hereto, no Inventory is held on
consignment by any Seller, as consignor or consignee.
The current backlog (being any sales order, whether verbal or written, entered
into Syratech's ERP System through telesales, written sales order or EDI
transmission) for all accepted and unfulfilled orders for the sale of Inventory
by any Seller as of December 31, 2005 is included on Schedule 5.9(c) attached
hereto. There is no general understanding that merchandise in the hands of any
customer would be returnable to any of the Sellers except as disclosed on
Schedule 5.9(c), and in each case for which adequate reserves are established in
the books, records and Financial Statements of the Sellers. To the Knowledge of
the Sellers, there is no reason why any Seller's future returns practices and
experience would be materially different from its prior practices and
experiences.
Absence of Certain Changes or Events. Since the Balance Sheet Date, except as
disclosed on Schedule 5.10 attached hereto, there has not occurred any event or
circumstance that, either individually or in the aggregate, has had, or could
reasonably be expected to have, a Sellers Material Adverse Effect and, to the
best Knowledge of the Sellers, no fact or condition exists which might cause a
Sellers Material Adverse Effect in the future. Since the Balance Sheet Date, the
Business has been conducted in the Ordinary Course of Business. As amplification
and not limitation of the foregoing, since the Balance Sheet Date, except as set
forth on Schedule 5.10, none of the Sellers has:
created, incurred, assumed or granted, or permitted or allowed any of the
Acquired Assets of such Seller to be subject to any Lien of any kind (other than
Permitted Exceptions), except in the Ordinary Course of Business;
made any change in any method of accounting or accounting practice, principle or
policy, other than such changes required by GAAP including revaluing any of its
Properties or writing off any notes or accounts receivable or Inventory;
except for (A) in the Ordinary Course of Business, or (B) the settlement of
claims under and pursuant to the Plan; amended, terminated, canceled, or
compromised any claims of such Seller, canceled, forgave or discharged any debt
owed to such Seller, or waived any other rights of value to such Seller;
other than as specifically permitted in Section 7.16 hereof, sold, transferred,
leased, subleased, licensed, assigned, or otherwise disposed of any material
Acquired Assets of such Seller or any portion of the Business or any interest
therein, whether real, personal or mixed, other than the sale
35
of Inventory and the disposition of obsolete Tangible Personal Property (which
is either not needed or has been replaced) in the Ordinary Course of Business;
made any capital expenditures or commitment for any capital expenditure in
excess of ten thousand dollars ($10,000) separately, or fifty thousand dollars
($50,000) in the aggregate, except for capital expenditures (A) made for tooling
in the Ordinary Course of Business and (B) directly related to the launch of the
Kenneth Cole line which, taken together, do not exceed $500,000 dollars in the
aggregate;
made any changes in the customary methods of operations of the Business;
except as set forth on Schedule 5.10(vii) attached hereto, merged or
consolidated or effected any capital reorganization with any Person, acquired
control or, except for the purchase of Inventory and supplies in the Ordinary
Course of Business, acquired directly or indirectly, by redemption or otherwise,
any business or Properties or any capital stock or other securities or other
equity interests of any other Person, or took steps incident to or in
furtherance of any such actions whether by entering into an agreement providing
therefor or otherwise;
entered into any employment agreement or became liable for any bonus,
profit-sharing or incentive payment to any of its officers or directors, except
pursuant to existing plans, arrangements or agreements disclosed herein or in a
Schedule hereto, other than ordinary course hiring of employees under at-will
employment arrangements (in the United States) or without written employment
agreements (outside the United States);
committed a breach under, or amended or terminated, any Material Contract or any
Intellectual Property License or other right of such Seller;
incurred any damage, destruction or similar loss, whether or not covered by
insurance, adversely affecting such Seller, the Business or such Seller's assets
or Properties;
other than borrowings under the CapitalSource Facility in the Ordinary Course of
Business, incurred any Indebtedness for borrowed money, obligation or liability
(including any guaranty, indemnity, make-whole agreement for or with respect to
any Indebtedness, obligation or liability of another Person), or made any
commitment to borrow money, or paid, satisfied or discharged any Indebtedness,
obligation or liability prior to the due date or maturity thereof;
effected any change in such Seller's business policies or practices, including
accounting methods, elections with respect to Taxes, conventions, principles or
assumptions or any change in the nature of the business relationships with its
clients, or effected any transaction not in the Ordinary Course of Business;
taken any action that would prevent or reduce its ability to (i) conduct the
Business diligently and in the ordinary course, (ii) preserve intact the
Business and its marketing organization, (iii) retain in its employ all of its
key Employees, and (iv) preserve its relationships and goodwill with its
suppliers, customers, sales representatives, and others having business
relations with it;
amended, cancelled or terminated any Contract to which it is a party or entered
into or become a party to any Material Contract or other contract, license or
other instrument under which the reasonably anticipated costs and expenses will
exceed the reasonably anticipated revenues or which would materially and
adversely affect the Business or the Properties of such Seller;
failed to continue in full force and effect all of its insurance policies, as
described in Schedule 5.22(a);
other than in the Ordinary Course of Business (i) increased the compensation
payable or to become payable by any Seller to any of their respective officers,
employees or agencies
36
(collectively, "Personnel") whose total compensation for services rendered to
such Seller is currently at an annual rate of more than $100,000 (except for
normal periodic increases or increases associated with promotions, in each case,
in the Ordinary Course of Business), (ii) paid any bonus, incentive
compensation, service award or other like benefit granted, made or accrued,
contingently or otherwise, for or to the credit of any of the Personnel (except
under pre-existing Employee Benefits Plans and arrangements as disclosed on
Schedule 5.17(b)), (iii) modified, made or agreed to any employee welfare,
pension, retirement, profit-sharing, insurance or similar payment or arrangement
by a Seller for any Personnel except pursuant to a Seller Employee Benefit Plan
or required by applicable Law or (iv) entered into, modified or agreed to be
bound by any employment, collective bargaining (other than those required by
applicable Law), severance, change in control or similar agreement (except as
disclosed on Schedule 5.17(b));
except as disclosed on Schedule 5.12(b) attached hereto, entered into any new
lease, or any renewal of an existing Real Property Lease, for any space on for
or on behalf of such Seller;
declared, set aside, made or paid any dividend or other distribution in respect
of any shares of capital stock of any Seller;
transferred, issued, sold or disposed of any shares of capital stock or other
securities of any Seller or granted Options to purchase or otherwise acquire
shares of the capital stock or other securities of any Seller;
effected any recapitalization, reclassification or like change in the
capitalization of any Seller;
amended the certificate of incorporation or by-laws or comparable organizational
documents of any Seller;
entered into or made any Contract to do any of the foregoing.
Taxes. Except as set forth on Schedule 5.11 attached hereto:
No deficiencies for any material Taxes have been proposed, asserted or assessed
in writing against the Sellers that are still pending. No requests for waivers
of the time to assess any Taxes of the Sellers have been made that are still
pending. The Federal income Tax Returns of Syratech and the Sellers consolidated
in such returns have not been examined for any year after December 31, 2003.
All material Tax Returns required to be filed by or with respect to the Sellers
or any of their income, properties or operations have been duly filed within the
times and within the manner prescribed by law (taking into account all
extensions of due dates). All such Tax Returns are true, complete and correct in
all material respects and have been prepared in substantial compliance with all
applicable Laws. All material Taxes due and payable by the Sellers have been
paid in full other than to the extent contested in good faith. Since December
31, 2001, no claim has been made in writing by an authority in a jurisdiction
where any of the Sellers does not file Tax Returns that any of the Sellers is or
may be subject to taxation by that jurisdiction.
each of the Sellers has withheld from its employees, customers and any other
applicable payees (and timely paid to the appropriate governmental authority)
proper and accurate amounts for all periods through the date hereof in
compliance with all Tax withholding provisions of applicable federal, state,
local and foreign laws, including, without limitation, income, social security
and employment tax withholding for all types of compensation, back-up
withholding and withholding on payments to non-United States persons.
37
Real Property.
Schedule 5.12(a) attached hereto contains a complete and accurate list of all
real property interests owned by any of the Sellers (the "Owned Real Property").
Attached to Schedule 5.12(a) is a true and correct copy of the deed and other
instruments (as recorded) by which any of the Sellers acquired such Owned Real
Property. Each of the Sellers has good, marketable and insurable title in fee
simple to the Owned Real Property it purports to own (including, but not limited
to, that reflected on the Unaudited Year-End Financial Statements) free and
clear of all Liens, deeds of trust, adverse claims, encumbrances, mortgages,
pledges, charges, assessments, easements, covenants, restrictions, reservations,
defects in title, encroachment, leases, subleases, options, rights of first
refusal, survey defect, limitation or other documents of record and other
burdens, except as specifically set forth on Schedule 5.12(a). For purposes of
this Section, insurable title is deemed to be such title as Lawyers Title
Insurance or any other national reputable title company will approve and insure
at standard rates, subject only to the Permitted Exceptions which do not
interfere with or diminish good, marketable and insurable title.
Schedule 5.12(b) attached hereto sets forth a complete list of all real property
and interests in real property leased by any Seller (as lessor) (the "Leased
Real Property"). The Sellers have made available to the Purchaser true and
complete copies of all Contracts providing for the lease of any Leased Real
Property listed in Schedule 5.12(b) and any and all material ancillary documents
pertaining thereto, and in each case, all amendments and modifications thereto
(individually, a "Real Property Lease" and collectively, the "Real Property
Leases"). Each Real Property Lease is legal, valid, binding, enforceable and in
full force and effect, except as enforceability may be limited by applicable
bankruptcy and insolvency, reorganization, moratorium or similar Laws affecting
the enforcement of creditors' rights generally, and, except as disclosed on
Schedule 5.12(b), such Real Property Lease will not cease to be legal, valid,
binding, enforceable and in full force and effect on terms identical to those
currently in effect as a result of the consummation of the Acquisition
Transactions, nor will the consummation of the Acquisition Transactions
constitute a breach or default under such Real Property Lease or otherwise give
the landlord a right to terminate such Real Property Lease. Except as disclosed
on Schedule 5.12(b), none of the Sellers has received any written notice of any
default or event that with notice or lapse of time, or both, would constitute a
default by any Seller under any of the Real Property Leases.
Each of the Sellers is in possession of and quietly enjoys the Leased Real
Property in which it has an interest. The zoning classification of each parcel
of Leased Real Property permits all of the uses of and operations on each such
parcel of Leased Real Property by the Sellers, and the Sellers possess a valid
and enforceable leasehold interest therein and hold all necessary Permits
relating to such Leased Real Property (including, but not limited to, duly
issued certificates of occupancy, where required) for the use and occupancy of
each parcel of Leased Real Property by the Sellers. There has been no
alteration, improvement or change in use of any Leased Real Property that would
require replacements of or amendments to the existing Permits. To the Knowledge
of the Sellers, there are no condemnation proceedings or eminent domain
proceedings of any kind pending or threatened against any Leased Real Property.
Except as set forth on Schedule 5.12(d) attached hereto, the rental payment set
forth in each Real Property Lease is the actual rent being paid, and there are
no separate agreements or understandings with respect to the same. Each Real
Property Lease is entered into with an unaffiliated third party or on
arm's-length basis. All rent and other charges under each Real Property Lease
due on or before the date of this Agreement and on or before the Closing Date
shall have been paid in full.
38
Each Real Property Lease represents the entire agreement between one or more of
the Sellers, as applicable, and the applicable landlord with respect to the
applicable parcel of Leased Real Property. None of the Sellers has entered into
any assignment, hypothecation or transfer of any Real Property Lease or any
interest therein. None of the Sellers has entered into any sublease of all or
any portion of any parcel of Leased Real Property and no Person (other than a
Seller) has any right or option to occupy any Leased Real Property or any
portion thereof or to terminate any of the rights of any Seller currently
appurtenant to the Leased Real Properties. The commencement date, expiration
date, current fixed rent, current amount of each component of additional rent,
the dates fixed rent and additional rent have been paid through and all renewal
options and renewal option rents for each Real Property Lease as well as the
provider of the water, gas and electricity utility services to each parcel of
Leased Real Property are set forth on Schedule 5.12(e) attached hereto.
Except as set forth on Schedule 5.12(f) attached hereto, there has been no
service, material or other work provided or supplied to any Leased Real Property
that has not been paid for in full. The any Leased Real Properties and their
continued use, occupancy and operation as currently used, occupied or operated
do not violate any applicable Laws.
As of the date hereof, each Leased Real Property, and the building systems and
equipment serving such Leased Real Property, including the plumbing, electrical,
mechanical, heating, ventilating, air conditioning and sprinkler systems, are
operational and none of the Sellers has written any landlord with respect to any
proposed deficiency therein. As of the date hereof, electricity, water, gas and
telephone service to the each Leased Real Property are installed, operating and
have been adequate for the conduct of the Business in the Ordinary Course of
Business.
None of the Sellers has received notice from any insurance company or Board of
Fire Underwriters (or organization exercising functions similar thereto) or from
any owner, lessor, sublessor, or mortgagee requesting the performance of any
work or alteration to any Leased Real Property, and there are no outstanding
requirements or recommendations from any of the foregoing.
Each parcel of Owned Real Property is assessed as one or more separate tax lots
and no part of each such property is part of a tax lot which includes other
property not owned by a Seller.
There is no real property of any kind whatsoever used in the Business as
currently conducted, except for the Owned Real Property and the Leased Real
Property and the Owned Real Property and the Leased Real Property constitutes
all of the real property necessary to conduct the Business as currently
conducted.
No commitments have been or will be made to any Governmental Body or agency, or
to any other organization, group or individual, relating to the Leased Real
Property which would impose an obligation upon the Purchaser or its successors
or assigns to make any contributions or dedication of money or land or to
construct, install or maintain any improvements of a public or private nature.
Except as set forth on Schedule 5.15(c), no consent, notice, waiver, approval,
authorization, license, action, filing or notification of or to any Person
(including any Governmental Authority) is required as to any Seller in
connection with the execution and delivery of this Agreement, or the
consummation of the Acquisition Transactions hereunder.
There has been no material damage to any portion of any Leased Real Property
caused by fire or other casualty that has not been completely repaired or
restored.
39
Except as set forth on Schedule 5.12(p) attached hereto, there are no brokerage
commissions due and payable by any Seller with respect to the Seller Properties
or with respect to any Real Property Leases.
Tangible Personal Property.
Schedule 5.13(a) attached hereto contains a list of all items of Furniture and
Equipment, as of December 31, 2005 owned by any Seller and having a net book
value in excess of $50,000 and, separately, all leases of Furniture or Equipment
by any Seller involving annual payments in excess of $50,000. Syratech has
delivered to the Purchaser true and complete copies of the capital asset ledger
of each of the Sellers. Except as described in Schedule 5.13(a), none of the
Sellers has received any written notice of any default or event that with notice
or lapse of time or both would constitute a default by any Seller under any of
the tangible personal property leases of any Seller. Except as set forth on
Schedule 5.13(a), no Furniture and Equipment is owned by, in the possession of,
or located on the premises of any customer or supplier of any Seller.
Schedule 5.13(b) attached hereto includes all a list of all Vehicles used by any
of the Sellers and the current registration information with respect to each
such Vehicle (except for any current registration information with respect to
forklifts and other Vehicles which are used solely within the confines of Leased
Real Property). Syratech has made available to the Purchaser true and complete
copies of all such Vehicle registrations, as well as all leases and subleases
for Tangible Personal Property (including Vehicles) as to which the Sellers are
required to make payments of $100,000 or more per annum and any and all material
ancillary documents pertaining thereto. Except as set forth in Schedule 5.13(b),
each such Vehicle registration, lease or sublease is legal, valid, binding,
enforceable and in full force and effect, except as enforceability may be
limited by applicable bankruptcy and insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally, and such
registration, lease or sublease will not cease to be legal, valid, binding,
enforceable and in full force and effect on terms identical to those currently
in effect as a result of the consummation of the Acquisition Transactions, nor
will the consummation of the Acquisition Transactions constitute a breach or
default under such lease or sublease or otherwise give the lessor a right to
terminate such lease or sublease. Except as disclosed on Schedule 5.13(b), none
of the Sellers has received any written notice of any default or event that with
notice or lapse of time, or both, would constitute a default by any Seller under
any such registration, lease or sublease.
Except as set forth on Schedule 5.13(c) attached hereto, the rental payment set
forth in each lease or sublease with respect to Tangible Personal Property of
the Sellers is the actual amount being paid thereunder, and there are no
separate agreements or understandings with respect to the same. Each lease or
sublease with respect to the Tangible Personal Property of the Sellers is
entered into with an unaffiliated third party or on arm's-length basis. All
lease payments and other charges under each such lease or sublease due on or
before the date of this Agreement, and on or before the Closing Date shall have
been paid in full.
Intellectual Property.
Schedule 5.14 attached hereto identifies each Trademark, Copyright, Patent,
Software, Domain Name and each other material item of Seller Intellectual
Property. If any item of Seller Intellectual Property is not owned by a Seller,
Schedule 5.14 identifies the Intellectual Property License or other agreement
under which it is used by any Seller.
For each item of Seller Intellectual Property that is registered with or issued
by a U.S. Governmental Body, or for each item of Seller Intellectual Property
that is subject to a pending application for registration or issuance by a U.S.
Governmental Body, Schedule 5.14 identifies the jurisdiction where such item is
so registered or issued, or where such application is pending and the
registration number, patent number, application number or other identifying
designation.
For each item of Seller Intellectual Property that is registered with or issued
by a foreign Governmental Body, or for each item of Seller Intellectual Property
that is subject to a pending application for registration or issuance by a
foreign Governmental Body, Schedule 5.14 identifies
40
the jurisdiction where such item is so registered or issued, or where such
application is pending and the registration number, patent number, application
number or other identifying designation.
All of the registrations for any Seller Intellectual Property owned by any
Seller are currently in compliance in all material respects with the applicable
Laws (including the timely post-registration filing of affidavits of use and
incontestability and renewal applications and payment of any filing, examination
and maintenance fees) and are valid, subsisting and enforceable.
Except as set forth on Schedule 5.14(e) attached hereto, no registered Seller
Intellectual Property owned by any Seller is the subject of any cancellation,
interference, reissue, reexamination or opposition proceeding. Except as
described on Schedule 5.14(e), the Sellers own or have a valid Intellectual
Property License to use all Seller Intellectual Property used by them with
respect to the Business.
Except as described in Schedule 5.14(f) attached hereto, to the Knowledge of the
Sellers, (i) the Seller Intellectual Property is not the subject of any claim of
infringement received by any Seller in writing, (ii) none of the Sellers has
received any written notice of any default or any event that with notice or
lapse of time, or both, would constitute a default under any Intellectual
Property License to which any of the Sellers is a party or by which it is bound,
(iii) no third Person is infringing any Seller Intellectual Property, and (iv)
all former and current employees have executed written agreements that assigned
to any of the Sellers any or all rights to the Seller Intellectual Property that
are necessary for the operation of the Business.
Except as described on Schedule 5.14(g) attached hereto, none of the Sellers has
(i) granted to any Person any exclusive right or license to any of the Seller
Intellectual Property or (ii) granted to any Person any nonexclusive right or
license to any of the Seller Intellectual Property.
The Seller Intellectual Property constitutes all of the intellectual property
necessary to conduct the Business in the Ordinary Course of Business as
conducted as of the date hereof.
Material Contracts.
Schedule 5.15(a) attached hereto sets forth all of the following Contracts to
which any Seller is a party or by which any Seller or any of the Acquired Assets
is bound (collectively, the "Material Contracts"):
Contracts with any Affiliate or current or former stockholder, holder of
Convertible Senior Notes, or director, employee or consultant of any Seller;
Contracts for the sale of any of the Properties, other than the sale of
Inventory and the disposition of obsolete Tangible Personal Property (which is
not needed or has been replaced) in the Ordinary Course of Business or for the
grant to any Person of any preferential rights to purchase any such Properties;
Except for the purchase of Inventory and supplies in the Ordinary Course of
Business, Contracts not yet substantially performed as of the date hereof
relating to the acquisition by any Seller of any operating business, Properties,
or the capital stock of any other Person;
41
Contracts providing for the extension by any Seller of credit to any Person or
Persons in excess of $25,000 individually or in the aggregate (other than normal
credit terms granted to customers and distributors in the Ordinary Course of
Business);
Contracts which involve the expenditure of more than $100,000 per annum or
require performance by any party more than one year from the date hereof;
Contracts that are not terminable by any Seller a party thereto without penalty,
liability or premium on fewer than ninety (90) days' notice;
Real Property Leases, and any other Contracts for the lease, rental or occupancy
of any property, or the license, installment or conditional sale or other
arrangement affecting the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or personal property and, in the case
of personal property, involving base rental payments in excess of $50,000 per
annum;
Intellectual Property Licenses and Contracts for the licensing, endorsement,
participation, royalty or other arrangements with respect to any Seller
Intellectual Property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the nondisclosure of
any Seller Intellectual Property; Joint venture agreements, partnership
agreements, or limited liability company agreements or other Contracts (however
named) involving a sharing of profits, losses, costs or liabilities by any
Seller with any other Person;
Powers of attorney that are currently effective and outstanding;
Any Contract with salaried or non-salaried Employees;
Contracts of any Seller or Affiliate of any Seller containing covenants which in
any way purport to restrict the business activity of any Seller or purport to
limit the freedom of any Seller to engage in any line of business or to compete
with any Person;
Contracts with any Person to sell, distribute or otherwise market any Products
of any Seller and any material variations therefrom in a Contract or other
agreement, including any Contracts with customers, distributors or suppliers for
the rebating of charges, allowances, mark-downs or other similar arrangements,
pursuant to which more than $100,000 has or may by its terms be made;
Contracts pursuant to which any party is required to purchase or sell a stated
portion of its requirements or output from or to another party;
Contracts under which any Seller agrees to indemnify any party against tax
liability with respect to the Business;
Contracts relating to the borrowing of money, other than those not in excess of
$10,000;
Contracts with any Governmental Body including procurement or acquisition
agreements, development agreements, special development or business district
agreements, subsidy or reimbursement agreements, agreements with respect to
governmental loans and/or assistance or payments in lieu of Taxes, industrial
revenue bonds or leases.
Any other Contract material to the Business or the operations of any Seller; and
Amendments, supplements and modifications in writing in respect of any of the
foregoing.
There are no oral arrangements or understandings to which any Seller is a party
which if in writing would be a Material Contract hereunder except as disclosed
on Schedule 5.15 hereof.
Except as set forth on Schedule 5.15(c) attached hereto, each of the Contracts
listed on Schedule 5.15(a): (i) is in full force and effect, (ii) represents the
legal, valid and binding obligations of the
42
Seller(s) a party thereto and is enforceable against such Seller(s) in
accordance with its terms, and (iii) to the Knowledge of the Sellers, represent
the legal, valid and binding obligations of the other parties thereto and are
enforceable against such parties in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy and insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally. Except as described on Schedule 5.15(c), none of
the Sellers has received any written notice of any default or event that with
notice or lapse of time or both would constitute a default by any Seller under
any Material Contract.
Except as specifically noted on Schedule 5.4 or Schedule 5.15(c) attached
hereto, no notice, consent or approval of any party to any Contract is required
in connection with the consummation of the Acquisition Transactions.
Acquired Assets.
Except as disclosed in Schedule 5.16 attached hereto, the Sellers own, lease or
have the legal right to use all the material Properties used in the conduct of
the Business or otherwise owned, leased or used by them and, with respect to
contract rights, are a party to and enjoy the right to the benefits of all
contracts (including all Contracts), agreements and other arrangements used by
them (i) in or relating to the conduct of Business and (ii) as reflected on the
consolidated Unaudited Year-End Financial Statements.
The Sellers have, and at the Closing will have, good and marketable title to the
Acquired Assets, free and clear of all Liens, except for (i) Permitted
Exceptions (including such permitted exceptions as set forth in Schedule
5.12(a)) (ii) inventories sold since the Balance Sheet Date in the Ordinary
Course of Business and (iii) as disclosed in Schedule 5.16. At the Closing, the
Purchaser will obtain good and marketable title to all of the Acquired Assets.
Subject to the applicable reserves in the Unaudited Year End Financial
Statements, each of the Acquired Assets (including each article of Tangible
Personal Property) is in good operating order, condition and repair and in a
good state of maintenance and repair, reasonable wear and tear excepted, and are
suitable for the continued conduct of the Business in the manner conducted since
December 31, 2004 and as proposed to be conducted.
Except as disclosed in Schedule 5.16, the Acquired Assets constitute all such
Properties of every kind other than cash or cash equivalents whatsoever as are
necessary in the conduct of the Business.
Immediately following the Closing, the Purchaser shall have access to all
documents, books, records, agreements and financial data of any sort used by the
Sellers in the conduct of the Business.
Employee Benefits.
Schedule 5.17 attached hereto identifies: (i) all "employee benefit plans," as
defined in Section 3(3) of ERISA, and all other material employee benefit
arrangements or payroll practices, including, where applicable, retirement,
defined contribution, defined benefit, employment, profit-sharing bonus,
individual independent contractor, bonus, retention, change in control
protection, consulting or other compensation agreements, incentive, equity or
equity-based compensation, deferred compensation arrangements, stock option or
stock purchase, severance or termination pay, sick leave, vacation pay, salary
continuation, disability, hospitalization or other medical supplemental
unemployment, medical insurance, life insurance, accident insurance,
post-retirement insurance or other welfare benefit agreements, arrangements,
plans, policies or programs, maintained by any Seller or to which any Seller
contributes or is obligated to
43
contribute for current or former employees, officers, directors, consultants, or
independent contractors of any Seller and (ii) all "employee pension plans," as
defined in Section 3(2) of ERISA, subject to Title IV of ERISA or Section 412 of
the Code, maintained by any Seller and any trade or business (whether or not
incorporated) which are or have in the past six (6) years been under common
control, or which are or have in the past six (6) years been treated as a
"single employer", with any Seller under Section 414(b), (c), (m) or (o) of the
Code ("ERISA Affiliate") or to which any Seller and any ERISA Affiliate in the
past six (6) years contributed or has in the past six (6) years been obligated
to contribute thereunder (the "Plans," together with the arrangements described
in clause (i) above, the "Employee Benefit Plans"). None of the Sellers
contributes or in the past six (6) years has contributed to an Employee Benefit
Plan which is a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA,
and none of the Sellers has and, no ERISA Affiliate has, at any time in the
prior six (6) years, withdrawn from a multiemployer plan in a "complete
withdrawal" or a "partial withdrawal" as defined in Sections 4203 and 4205 of
ERISA, respectively, so as to result in a liability, contingent or otherwise
(including without limitation the obligations pursuant to an agreement entered
into in accordance with Section 4204 of ERISA), of a Seller, nor has any of the
Sellers paid or been obligated to pay withdrawal liability in connection with
any multiemployer plan at any time in the past six (6) years that has not been
satisfied in full.
Except as disclosed on Schedule 5.17(b) attached hereto, (i) each Employee
Benefit Plan that is maintained, contributed to, or required to be contributed
to by a Seller (each a "Seller Employee Benefit Plan") that is intended to be
tax qualified under Section 401(a) of the Code has been determined to be so
qualified and its related trust is exempt from taxation under Section 501(a) of
the Code, and (ii) to the Knowledge of the Sellers, no event has occurred since
the date of the most recent IRS determination letter or application therefor
relating to any such Seller Employee Benefit Plan that would reasonably be
expected to adversely affect the qualification of such plan. Syratech has made
available to the Purchaser a correct and complete copy of the most recent
determination letter received with respect to each such Seller Employee Benefit
Plan or with respect to such plan to which such determination letter has not yet
been received, a correct and complete copy of each pending application for a
determination letter, if any.
Except as disclosed on Schedule 5.17(c) attached hereto, (i) all Seller Employee
Benefit Plans have been administered, in all material respects, in accordance
with their terms and with ERISA, the Code and other applicable Law; and (ii) all
contributions, premiums and benefit payments owing under or in connection with
the Seller Employee Benefit Plans that are required to have been made as of the
date hereof in accordance with the terms of the Seller Employee Benefit Plans
have been timely made or have been reflected on the books and records of the
Sellers.
With respect to each Seller Employee Benefit Plan (excluding any multiemployer
plan as defined in Section 3(37) of ERISA), Syratech has made available to the
Purchaser a current, accurate and complete copy (including any amendments) of:
(i) the plan (or, to the extent no such copy exists, an accurate description)
(ii) any related trust agreement or other funding instrument, including, but not
limited to an annuity contract or insurance contract; (iii) any summary plan
description and any summary of material modifications provided under a Seller
Employee Benefit Plan; (iv)for the three (3) most recent years if applicable (A)
the Form 5500 and attached schedules, (B) audited financial statements, and (C)
actuarial valuation reports; and (v) all documents and correspondence received
from or provided to the IRS (including the most recent determination letter),
the Department of Labor or the Pension Benefit Guaranty Corporation (the
"PBGC").
None of the Sellers nor any ERISA Affiliates have contributed to or maintained
an "employee pension plan" as defined in Section 3(2) of ERISA that is subject
to Title IV of ERISA and Section 412 of the Code within the past six (6) years.
44
Except as disclosed on Schedule 5.17(f) attached hereto, (i) no Seller Employee
Benefit Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of any
Seller for periods extending beyond their retirement or other termination of
service other than (A) coverage mandated by law, and (B) benefits the full cost
of which is borne by the current or former employee (or his beneficiary); (ii)
there are no reserves, assets, surplus or prepaid premiums under any such plan;
and (iii) the Sellers have complied in all material respects with the
requirements of Section 4980B of the Code ("COBRA").
Except as disclosed on Schedule 5.17(g), none of the Sellers has announced any
plan or legally binding commitment to create any additional Seller Employee
Benefit Plans or to materially amend or modify any existing Seller Employee
Benefit Plan except as may be required under the terms of the Seller Employee
Benefit Plans or required by applicable Law.
Except as disclosed on Schedule 5.17(h) attached hereto, with respect to any
Seller Employee Benefit Plan, (i) no actions, suits or claims (other than
routine claims for benefits in the ordinary course) are pending or, to the
Knowledge of the Sellers, threatened with respect to any Seller Employee Benefit
Plan or against any of the Properties of any Seller Employee Benefit Plan, (ii)
no facts or circumstances exist under which any Seller could, reasonably be
expected to incur any liability under ERISA, the Code or otherwise (other than
routine claims for benefits in the ordinary course) under such actions, suits or
claims, (iii) no written communication has been received from the PBGC in
respect of any plan subject to Title IV of ERISA or Section 412 of the Code
concerning the funded status of any such plan or any transfer of assets and
liabilities from any such plan in connection with the Acquisition Transactions,
(iv) to the Knowledge of the Sellers, no administrative investigation, audit or
other administrative proceeding by the Department of Labor, the PBGC, the IRS or
other governmental agencies are pending, to the Knowledge of the Sellers
threatened, or in progress (including, without limitation, any routine requests
for information from the PBGC); and (v) no "prohibited transaction" (as defined
in Section 406 of ERISA or in Section 4975 of the Code) has occurred. None of
the Sellers, and no Subsidiary has knowingly participated in a violation of Part
4 of Title I, Subtitle B of ERISA by any plan fiduciary of any Employee Benefit
Plan or has incurred any civil penalty under Section 502(l) of ERISA which could
reasonably be expected to result in a material liability to any Seller or any
Subsidiary of a Seller.
Except as disclosed on Schedule 5.17(i) attached hereto, no Seller Employee
Benefit Plan exists that, as a result of the execution and delivery by any
Seller of this Agreement or the consummation of the Acquisition Transactions
(whether alone or in connection with any subsequent event(s)), will entitle any
Employee to (i) the payment of any money or other property, (ii) the provision
of any benefits or other rights or (iii) the increase, acceleration or provision
of any payments, benefits or other rights.
Each employee benefit plan which is a nonqualified deferred compensation plan,
within the meaning of Section 409A of the Code, maintained by any of the Sellers
on or after January 1, 2005, has been operated in good faith compliance with the
requirements of Section 409A of the Code (or an available exemption therefrom).
The current Syratech "Severance & Continued Benefit Coverage Determination
Procedures," which was formally adopted as a written policy in January 2006 and
which was amended as of March 2006, has been the policy followed by Syratech
with respect to employee severance since prior to January 1, 2005.
45
Employees.
None of the Sellers is a party to any labor or collective bargaining agreement
or similar agreement with any labor organization, or work rules or practices
agreed to with any labor organization or employee association applicable to
Employees of any Seller.
Except as described in Schedule 5.18(b) attached hereto, there are no (i)
strikes, work stoppages, work slowdowns or lockouts pending or, to the Knowledge
of the Sellers, threatened against or involving any Seller, or (ii) unfair labor
practice charges, grievances or complaints pending or, to the Knowledge of the
Sellers, threatened by or on behalf of any Employee or group of Employees of any
Seller. Syratech is not aware of any employee in any Seller's senior management
who intends to terminate his or her employment relationship with such Seller,
either as a result of the transactions contemplated hereby or otherwise.
Schedule 5.18(c) attached hereto contains a complete list of all Employees of
the Sellers ("Employees") as of as of February 8, 2006 including such Employee's
name, current annual salary, bonus and title.
Except as set forth in Schedule 5.18(d) attached hereto, (i) since December 31,
2002, no labor organization or group of employees of any Seller has made in
writing a pending demand for recognition or certification to represent any group
of employees of any Seller, and (ii) during the past five (5) years there have
been no representation proceedings or petitions seeking a representation
proceeding pending or threatened to be brought or filed with the National Labor
Relations Board or other labor relations tribunal. Syratech has made available
for inspection to the Purchaser or its counsel true and complete copies of any
labor and collective bargaining agreements to which any Seller is party or by
which any of them is otherwise bound.
There are no written employment contracts, severance agreements, retention
agreements or incentive plans with any Employees of any Seller and no written
personnel policies, rules, practices or procedures applicable to any Employees
of any Seller, including, but not limited to, with respect to the vacation and
sick leave policies of such Seller, other than those set forth on Schedule
5.18(e) attached hereto, true and correct copies of which have heretofore been
made available to the Purchaser (except as noted on Schedule 5.18 hereof). Any
United States Employee of any of the Sellers who is not a party to an employment
contract is an employee "at will" pursuant to applicable Law.
Without limitation of Section 5.20 hereof, the Sellers are in compliance in all
material respects with all applicable Laws respecting immigration, employment
and employment practices, and the terms and conditions of employment, including,
without limitation, employment standards, equal employment opportunity, family
and medical leave, wages, hours of work and occupational health and safety, and
are not engaged in any unfair labor practices as defined in the national Labor
Relations Act or any other applicable Law, ordinance or regulation.
The Sellers comply in all material respects with the Fair Labor Standards Act in
the United States and with all comparable requirements under applicable local
Laws in their operations outside the United States.
Litigation. Except as identified on Schedule 5.19 attached hereto and except for
matters identified on Schedule 5.17, there are no Legal Proceedings or
investigations pending or, to the Knowledge of the Sellers, threatened against
any Seller before any Governmental Body and to the Knowledge of the Sellers,
there is no basis for any such Legal Proceeding. Except as set forth on Schedule
5.19, there is no unsatisfied judgment, order or decree or any open injunction
binding upon any Seller. During the three (3) years preceding the date of this
Agreement, none of the Sellers has conducted any material internal investigation
for which it engaged outside
46
counsel concerning any actual or alleged violation of Law or Order of any
Governmental Body on the part of or with respect to any Seller or any of their
respective officers, directors, employees or agents. The amounts included as
accrued liabilities on the Unaudited Year-End Financial Statements with respect
to litigations and legal claims is sufficient to cover all Liabilities that will
be incurred in respect of the foregoing items.
Compliance with Laws; Permits.
Each of the Sellers is in compliance and at all times has been in compliance, in
all material respects, with all Laws and Orders of any Governmental Authority
applicable to the Business. Except as described in Schedule 5.20(a) attached
hereto, none of the Sellers has received any written notice of or been charged
with any material violation of any Law or Order or received written notice
materially restricting or in any material way limiting the operation of the
Business.
No event has occurred or circumstance exists that (with or without notice or
lapse of time) (A) may constitute or result in a material violation by any
Seller of, or a failure on the part of any Seller to be in material compliance
with, any Law or Order or (B) may give rise to any material obligation on the
part of any Seller to undertake, or to bear all or any portion of the cost of,
any Remedial Action of any nature.
Each of the Sellers currently has all material Permits which are required for
the operation of the Business as presently conducted, a list of which is
attached hereto as Schedule 5.20(c). All such Permits are valid and in full
force and effect, and none of the Sellers is in default or violation (and no
event has occurred which, with notice or the lapse of time or both, would
constitute a default or violation) of any term, condition or provision of, or
has received any notice threatening to revoke, any material Permit to which it
is a party.
Environmental Matters. Without limitation of Section 5.20 hereof, except as
described on Schedule 5.21 attached hereto:
the operations of each of the Sellers are in compliance all material respects
with all applicable Environmental Laws and all Permits issued pursuant to
Environmental Laws or otherwise;
each of the Sellers has obtained all appropriate Permits required under all
applicable Environmental Laws necessary to operate the Business and to use any
Hazardous Materials used by it in the operation of the Business;
none of the Sellers is the subject of, or party to, any pending or outstanding
Legal Proceeding, Liability, Order or Contract with any Governmental Body or
other Person respecting (i) Environmental Laws, (ii) Remedial Action or (iii)
any Environmental Release or threatened Environmental Release of a Hazardous
Material and to the Knowledge of the Sellers, none have been threatened;
since December 31, 2002, none of the Sellers has received any written notice
from any Governmental Body or any third party alleging that such Seller may be
in violation of any Environmental Law, or any Permit issued pursuant to
Environmental Law, or may have any liability under any Environmental Law or may
be liable for any Remedial Action;
none of the Sellers nor any Affiliate thereof, nor, to the Knowledge of the
Sellers, no prior owner, operator or lessee of any Leased Real Property has
used, generated, manufactured, treated, stored, disposed of on, under or about
any Leased Real Property, arranged for or permitted the disposal of, transported
to or from or released (and there has been no Environmental Release of) any
Hazardous Material in a manner or location that has given rise to, or that is
reasonably likely to give rise to, Legal Proceedings or Liabilities under
Environmental Laws for Remedial Action, or damages or injuries to Persons,
property or natural resources;
47
to the Knowledge of the Sellers, there are no pending or threatened Legal
Proceedings or investigations related to the Business, or to currently or
previously owned, operated or leased property of any Seller which would
reasonably be expected to result in the imposition of any material Liability or
Remedial Action pursuant to any Environmental Law; and
none of the Sellers is currently engaged or participating in, or contributing
to, any clean-up, investigation or Remedial Action with respect to the Business,
pursuant to any Environmental Law.
Insurance.
Schedule 5.22 attached hereto identifies each policy of fire, liability,
workers' compensation and other forms of insurance maintained by any Seller,
including name of the insurer and the insured, policy number, type of insurance,
coverage limits, deductibles, current premium, expiration dates and any special
conditions applicable thereto, and any pending applications for policies of
insurance and, as applicable, the expiration date thereof. Except as described
in Schedule 5.22, each such policy:
is currently in full force and effect;
is issued by an insurer that is financially sound and reputable; and
are sufficient for compliance with all applicable Laws and Contracts to which
any Seller is a party or by which any of them is bound.
All premiums due with respect to each policy described on Schedule 5.22 have
been paid or accrued and each of the Sellers has performed all of its respective
obligations under each policy to which any Seller is a party or that provides
coverage to any Seller or director thereof. Schedule 5.22 also identifies such
policy of insurance maintained on behalf of any Seller by Affiliates of any
Seller and, as pertinent, the expiration date thereof; and
None of the Sellers has received (i) any refusal of coverage or any notice that
a defense will be afforded with reservation of rights, or (ii) any notice of
cancellation or any other indication that any insurance policy is no longer in
full force or effect or will not be renewed or that the issuer of any policy is
not willing or able to perform its obligations thereunder. The Sellers have
given notice to each insurer of all claims as of the Closing Date that may be
insured thereby.
Schedule 5.22(d) sets forth, by year, for the current policy year prior to the
loss run date specified and each of the two preceding years, a summary of the
loss experience under each policy.
Any risk or liability with respect to which any of the Sellers self-insure is
set forth on Schedule 5.22(e).
Affiliated Transactions. Except as set forth in Schedule 5.23 attached hereto
and except for payments under an individual's compensation arrangements as an
Employee with any Seller, none of the Sellers, holders of Convertible Senior
Notes, officers, directors, associates or agents or other Affiliates of any
Seller or members of their families is a party to any agreement (including any
lease (for real property or otherwise), contract for employment or contract for
the furnishing of services), understanding, indebtedness or proposed
transaction with any Seller or is directly or indirectly interested in any
Material Contract with any Seller. None of the Sellers has guaranteed or
assumed any obligations of their respective officers, directors or other
Affiliates or members of any of their families.
Accounts; Lockboxes; Safe Deposit Boxes.
Schedule 5.24 is a true and complete list of:
48
the names of each bank, savings and loan association, securities or commodities
broker or other financial institution in which any Seller has an account,
including cash contribution accounts, and the names of all Persons authorized to
draw thereon or have access thereto; and
the location of all lockboxes and safe deposit boxes of any Seller; and
the names of all Persons, if any, holding powers of attorney from any Seller and
a summary statement of the terms thereof.
At the time of the Closing, without the prior written consent of the Purchaser,
none of the Sellers shall have any account, lockbox or safe deposit box other
than those listed in Schedule 5.24, nor shall any additional Person have been
authorized, from the date of this Agreement, to draw thereon or have access
thereto or to hold any power of attorney relating to any Seller or from any
Seller. Syratech has not commingled monies or accounts of any Seller with other
monies or accounts of Syratech or relating to their other businesses nor has
Syratech transferred monies or accounts of any Seller other than to an account
of any Seller. At the time of the Closing, all monies and accounts of any Seller
shall be held by, and be accessible only to, the respective Seller.
Seller Disclosure. Except as set forth in Schedule 5.25 attached hereto, to the
Knowledge of the Sellers:
no representation or warranty or statement of any Seller in this Agreement
(including the Schedules hereto) or in any of the Seller Documents or in any
other document furnished, or to be furnished to the Purchaser hereunder or
thereunder contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements or facts herein or therein not
misleading; and
no notice given pursuant to Section 7.9 will contain any untrue statement or
omit to state a material fact necessary to make the statements therein or in
this Agreement not misleading.
Financial Advisors. Except as described on Schedule 5.26 attached hereto, no
Person has acted, directly or indirectly, as a broker, finder, intermediary or
financial advisor for any Seller in connection with the Acquisition
Transactions (any such Person, a "Broker") and no Person is entitled to any fee
or commission or like payment from any party in respect thereof.
Certain Payments. None of the Sellers nor any director, officer, agent, or
employee of any of the Sellers, nor any other Person associated with or acting
for or on behalf of any of the Sellers, has directly or indirectly: (a) made
any contribution, gift, bribe, payoff, rebate, influence payment, kickback, or
other payment to any Person, private or public, regardless of form, whether in
money, property, or services (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of any of the Sellers, or (iv) in violation of any Law, (b)
established or maintained any fund or asset that has not been recorded in the
Books and Records of any of the Sellers.
Product Warranties. Set forth on Schedule 5.28 attached hereto is a general
description of each warranty, guarantee or other similar undertaking with
respect to contractual performance extended by any of the Sellers with respect
to the Products it has manufactured or sold since December 31, 2002. None of
the Sellers makes any other warranties with respect to any of the Products that
any of them manufacture or sell. Except as set forth in Schedule 5.28: (i)
since December 31, 2004, none of the Sellers has received any notice of any
claim based on any such warranty (except claims outstanding as of December 31,
2005, not exceeding $10,000 in the aggregate); and (ii) no Seller knows of, and
has no reasonable grounds to know of, any claim
49
(actual or threatened) based on any warranty with respect to any Product of
which any Seller has received notice.
Suppliers, Distributors and Customers. Schedule 5.29 attached hereto lists, by
dollar volume for the year ending on the Balance Sheet Date, (i) the ten (10)
largest suppliers of the Sellers, (ii) the top ten (10) by volume
manufacturer's representatives of the Sellers, and (iii) the ten (10) largest
direct purchasers of the Sellers' Products. Except as disclosed on Schedule
5.29, since December 31, 2004, no such supplier or distributor or customer of
any Seller has canceled or otherwise terminated, or threatened in writing to
cancel or otherwise terminate, its relationship with such Seller or has, since
December 31, 2004, decreased materially, or threatened in writing to decrease
or limit materially, its services, supplies or materials to such Seller or its
usage or purchase of the services or Products of such Seller, either as a
result of the Acquisition Transactions or otherwise.
No Defective or Unsafe Products. Except as set forth on Schedule 5.30 attached
hereto (i) there are no written statements, citations or decisions by any
Governmental Body stating that any Product sold by any Seller is defective or
unsafe or fails to meet any standards promulgated by any Governmental Body,
(ii) there have been no recalls ordered by any Governmental Body with respect
to any such Product; and (iii) there is no (A) fact relating to any Product of
any Seller that may impose upon such Seller a duty to recall any such Product
or a duty to warn customers of a defect in any such Product, (B) design,
manufacturing or other defect in any such Product, (C) material liability for
warranty claims, returns or servicing with respect to any such Product not
fully reflected on the Unaudited Year-End Financial Statements (D) Proposition
65 (in California) claims for lead-based products.
Compliance with the Plan.
Since June 5, 2005, Syratech and all of its Subsidiaries have been in full
compliance with the terms and requirements of the Plan that is or was applicable
to it, and no event has occurred or circumstance exists that (with or without
notice or lapse of time) may constitute a violation of the Plan, or a failure on
the part of any Seller to comply with the Plan.
None of the Sellers has received, at any time since June 5, 2005, any written
notice or other communication from any Governmental Body or any other Person
regarding any actual, alleged, possible, or potential violation of, or failure
to comply with, any term or provision of the Plan.
There are no executory obligations, payments, escrows, Tax adjustments or other
obligations of any company outstanding under the Plan except as disclosed in
Schedule 5.31(c) attached hereto.
Other than as contemplated by Section 7.4 hereof, no consent is required of any
Governmental Body, creditor, holder of an administrative expense under 11 U.S.C.
ss. 503, or committee of creditors or equity security holders under 11 U.S.C.
ss. 1102 to consummate the Acquisition Transactions.
Since June 5, 2005, there have been no amendments, revisions, changes or
modifications to the Plan.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND LIFETIME
The Purchaser and Lifetime hereby jointly and severally represent and
warrant to each of the Sellers that:
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Organization and Good Standing. Each of the Purchaser and Lifetime is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
Authorization of Agreement. The Purchaser and Lifetime each have full corporate
power and authority to execute and deliver this Agreement and each other
agreement, document, instrument or certificate required by this Agreement to be
executed or delivered by it in connection with the consummation of the
Acquisition Transactions and the other transactions contemplated of it hereby
and thereby (the "Purchaser Documents"), and to consummate the Acquisition
Transactions and the other transactions contemplated of it hereby and other
thereby. The execution, delivery and performance by the Purchaser and Lifetime
of this Agreement and each Purchaser Document to which it is a party have been
duly authorized by all necessary corporate action on behalf of the Purchaser and
Lifetime, as applicable. This Agreement has been, and each Purchaser Document to
which either the Purchaser and/or Lifetime is a party will be at or prior to the
Closing, duly executed and delivered by the Purchaser and/or Lifetime, as
applicable, and (assuming the due authorization, execution and delivery by the
other parties hereto and thereto) this Agreement constitutes, and each Purchaser
Document to which the Purchaser and/or Lifetime is a party when so executed and
delivered will constitute, the legal, valid and binding obligations of the
Purchaser and/or Lifetime, as applicable, enforceable against the Purchaser
and/or Lifetime, as applicable, in accordance with the terms thereof, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
Conflicts; Permits, Consents of Third Parties. Except for compliance with the
requirements as set forth on Schedule 6.3 attached hereto, none of the execution
and delivery by the Purchaser and Lifetime of this Agreement or the Purchaser
Documents to which the Purchaser and/or Lifetime is a party, the consummation of
the transactions contemplated of it hereby or thereby, or the compliance by the
Purchaser and Lifetime with any of the provisions hereof or thereof will
conflict with, or result in any violation of or default under, or give rise to a
right of termination, acceleration or cancellation, or give any Person the right
to modify the terms, conditions or provisions or excuse the performance under
(i) the Certificate of Incorporation and By-Laws of the Purchaser and Lifetime;
(ii) any Contract, lease or Permit to which the Purchaser and Lifetime is a
party or by which the Purchaser and Lifetime or any of their respective
Properties are bound; (iii) any Order of any Governmental Body applicable to the
Purchaser and Lifetime or by which any of the Properties of the Purchaser and
Lifetime respectively are bound; or (iv) any applicable Law. Except as set forth
on Schedule 6.3, no consent, waiver, approval, Order, Permit or authorization
of, or declaration or filing with, or notification to, any Person or
Governmental Body is required on the part of the Purchaser and/or Lifetime in
connection with the execution and delivery of this Agreement or the Purchaser
Documents to which either the Purchaser or Lifetime is a party, the compliance
by the Purchaser and Lifetime, as applicable, with any of the provisions hereof
or thereof, the consummation by it of the transactions or the taking by it of
any other action contemplated hereby or thereby.
Litigation. There are no Legal Proceedings pending or, to the Knowledge of the
Purchaser and Lifetime, threatened against either the Purchaser or Lifetime, or
to which either the Purchaser or Lifetime is otherwise a party before any
Governmental Body, which, if adversely determined, would reasonably be expected
to have a Purchaser Material Adverse Effect. Neither the Purchaser nor Lifetime
is subject to any Order of any Governmental Body except to the extent the same
would not reasonably be expected to have a Purchaser Material Adverse Effect.
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SEC Reports of Lifetime. The most recent annual report of Lifetime on Form 10-K
filed by Lifetime with the Securities and Exchange Commission (the "SEC"), and
each of the quarterly reports on Form 10-Q filed by Lifetime with the SEC since
the filing of such annual report, in each case, including, without limitation,
any financial statements or schedules included or incorporated by reference
therein and any documents filed as exhibits thereto (as any such reports may
have been amended since the time of its filing, collectively, the "SEC
Reports"), complied in all material respects with the requirements of the
Exchange Act applicable thereto, and when filed did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Consideration Shares. Upon consummation of the Acquisition Transactions at the
Closing as contemplated hereby, all of the Consideration Shares to be delivered
to the Sellers (i) will have been duly authorized for issuance and will be
validly issued, fully paid and non-assessable, will not have been issued in
violation of any preemptive rights created by statute, the Certificate of
Incorporation or By-laws of Lifetime or any Contract, will not be subject to any
preemptive right and will have been issued in compliance with all applicable
Laws, including all federal and state corporate and securities Laws and (ii)
will, pending registration of such shares pursuant to the arrangements referred
to in Section 7.17 hereof, bear a customary legend with respect to restrictions
on transferability of such shares due to their status as "restricted shares" for
purposes of applicable securities Laws.
Available Financing. Lifetime has a credit facility with current availability
sufficient to permit Lifetime to borrow any cash needed for the Purchaser to
make the Closing Cash Payment contemplated by Section 3.1(i) hereof, subject
only to approval of the Acquisition Transactions by the syndicate of banks party
thereto. Lifetime shall promptly (and in any event, not later than three (3)
days before Closing) notify the Seller Representative upon receipt of such bank
approval.
COVENANTS
Access to Information.
From the date hereof until the Closing Date, the Purchaser shall be entitled,
through its officers, employees and representatives (including, without
limitation, its legal advisors and accountants), to make such investigation of
the properties, plants and other facilities, businesses and operations of the
Sellers and such examination of the books and records Contracts, Licenses,
corporate and stock transfer records, regulatory filings, certificates of
authority and applications therefore related to the Sellers or relevant to the
Acquisition Transactions, as it reasonably requests in order to permit the
Purchaser to make such inspection and examination of the Business and affairs of
the Sellers as the Purchaser shall require and to make extracts and copies of
such books and records. Any such investigation and examination shall be
conducted during regular business hours upon reasonable advance notice and under
reasonable circumstances and shall be subject to any restrictions under
applicable Law. The Sellers shall provide access to, and cause the officers,
employees, consultants, agents, accountants, attorneys and other representatives
of the Sellers who have any Knowledge or information the Purchaser requires
about the Sellers to cooperate with the Purchaser and the Purchaser's
representatives in connection with such investigation and examination, and the
Purchaser and its representatives shall cooperate with Sellers and their
representatives in conducting their investigation, and use their reasonable
efforts, so as to minimize any disruption to the Business resulting therefrom.
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As soon as practicable, Syratech will deliver to the Purchaser the 2005 Audited
Financial Statements.
Conduct of the Business Pending the Closing.
From the date hereof until the Closing (or the termination of this Agreement in
accordance with Section 4.4), except (1) as required by applicable Law, or (2)
as otherwise expressly contemplated by this Agreement, the Sellers shall conduct
the Business only in the Ordinary Course of Business (including, without
limitation, maintain the level of inventory that Sellers would maintain in the
Ordinary Course of Business) and the Sellers shall not, without the prior
written consent of the Purchaser (which consent shall be in the Purchaser's sole
discretion):
engage in any practice, take any action, fail to take any action or enter into
any transaction which could cause any representation or warranty of the Sellers
to be materially untrue or result in a material breach of any covenant or
agreement made by the Sellers in this Agreement;
take, permit to be taken, or suffer to occur any of the actions set forth in
items (i) through (xxii) of Section 5.10;
declare, set aside, make or pay any dividend or other distribution in respect of
the capital stock of any Seller or repurchase, redeem or otherwise acquire any
outstanding shares of the capital stock or other securities of, or other
ownership interests in, any Seller;
transfer, issue, sell or dispose of any shares of capital stock or other
securities of any Seller or grant options, warrants, calls or other rights to
purchase or otherwise acquire shares of the capital stock or other securities of
any Seller;
effect any recapitalization, reclassification or like change in the
capitalization of any Seller;
amend the certificate of incorporation or by-laws or comparable organizational
documents of any Seller;
(A) except in each case as required by applicable Law from time to time in
effect or by any of the Employee Benefit Plans or plans subject to Title IV of
ERISA or Section 412 of the Code or as required pursuant to a Contract in effect
on the date hereof, (1) materially increase the annual level of compensation of
any Employee, (2) grant any unusual or extraordinary bonus, benefit or other
direct or indirect compensation to any Employee, or (3) materially increase the
coverage or benefits available under any (or create any new) Employee Benefit
Plan, or (B) enter into any employment, deferred compensation, severance,
consulting, non-competition or similar agreement (or amend any such agreement)
to which any Seller is a party or involving an Employee of any Seller;
(A) make or change any election in respect of Taxes that would materially affect
the Acquired Assets after the Closing; (B) enter into any agreement with respect
to Taxes that would be binding on the Purchaser after the Closing; or (C) settle
or compromise any claim, notice, audit report or assessment in respect of Taxes
that would materially affect the Acquired Assets after the Closing; provided,
that (A) through (C) shall not apply to any such action or omission that will
not individually or in the aggregate result in the payment by any Seller at any
time after the Closing of more than $25,000 and, in each case, exclusive of any
such amount of Tax reflected in the Final Closing Net Working Capital;
subject to any Lien any of the Properties (whether tangible or intangible) of
any Seller, except for Permitted Exceptions;
acquire any material Properties or sell, assign, license, transfer, convey,
lease or otherwise dispose of any of the material Properties of any Seller
(except pursuant to Section 7.16 hereof,
53
or pursuant to an existing Contract that has been disclosed to the Purchaser
prior to the date hereof for fair consideration in the Ordinary Course of
Business or for the purpose of disposing of obsolete or worthless assets) or
grant an exclusive license to any of the Intellectual Property Rights;
cancel or compromise any material debt or claim or waive or release any material
right of any Seller;
make any capital expenditures or commitment for any capital expenditure that,
when combined with all such other items since the Balance Sheet Date, do not
exceed ten thousand dollars ($10,000) separately, or fifty thousand dollars
($50,000) in the aggregate, except for capital expenditures (A) made for tooling
in the Ordinary Course of Business and (B) directly related to the launch of the
Kenneth Cole line which, taken together with all such other items since the
Balance Sheet Date, do not exceed $500,000 dollars in the aggregate;
enter into, modify or terminate any labor or collective bargaining agreement of
any Seller or, through negotiation or otherwise, make any commitment or incur
any liability to any labor organization;
prior to the Closing (or the termination of this Agreement in accordance with
Section 4.4), cause or permit any Seller to commence a case under chapter 7 or
11 of Title 11 of the U.S. Code;
permit any Seller to enter into or agree to enter into any merger or
consolidation with any corporation or other entity, or acquire the assets,
business, operations, licenses, debts, obligations or securities of any other
Person;
enter into, modify, amend or terminate any Contract, Intellectual Property
Right, Permit or Real Property Lease of any Seller or, through negotiation or
otherwise, make any commitment to do so; or
agree to do anything prohibited by this Section 7.2.
Regulatory Approvals. If necessary, subject to the terms and conditions hereof,
the Purchaser and each of the Sellers shall make or cause to be made all filings
with any Governmental Body required of each of them or any of their respective
Subsidiaries or Affiliates with respect to the Acquisition Transactions pursuant
to any applicable Law. The Purchaser and each of the Sellers shall use their
best efforts to furnish to each other all information required for any
application or other filing to be made pursuant to any applicable Law in
connection with the Acquisition Transactions. The Purchaser and each of the
Sellers shall promptly inform the other parties hereto of any oral communication
with, and provide copies of written communications with, any Governmental Body
regarding any such filings or any such transaction. No party hereto shall
independently participate in any formal meeting with any Governmental Body in
respect of any such filings, investigation, or other inquiry without giving the
other parties hereto prior notice of the meeting and, to the extent permitted by
such Governmental Body, the opportunity to attend and/or participate. Subject to
applicable Law, the parties hereto will consult and cooperate with one another
in connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any party
hereto relating to proceedings before any Governmental Body.
Consents and Permits.
Subject to the following sentences of this Section 7.4(a), Syratech shall use
its commercially reasonable efforts to obtain as soon as practicable (i) the
consent of sufficient holders of the Convertible Senior Notes to cause the
conversion immediately before the Closing of all the Convertible Senior Notes to
shares of Common Stock of Syratech in accordance with the
54
provisions of the Indenture relating thereto (the "Noteholder Conversion
Consent") and (ii) the approvals of the Acquisition Transactions, alone or in
connection with the dissolution and winding up of Syratech, required by the
General Corporation Law of the State of Delaware (the "DGCL") and, if and to the
extent required, the Certificate of Incorporation and By-Laws of Syratech and
the Stockholders Agreement dated June 2, 2005 among the stockholders of Syratech
(the "Stockholder Approval").
The Purchaser and each of the Sellers shall use its commercially reasonable
efforts to obtain, and to cause the other Sellers to obtain, at the earliest
practicable date and at the sole expense of the Sellers, all consents, approvals
and Permits of, and to give any notices to, any Persons, including any
Governmental Bodies, required to be obtained or given by it in order for it to
consummate the Acquisition Transactions (including the consents, approvals and
notices of the Sellers referred to in Schedule 5.4 and the consents, approvals,
Permits and notices of the Purchaser referred to in Schedule 6.3).
Further Assurances. Subject to the terms and conditions hereof, between the date
hereof and the Closing Date, each of the Sellers shall use its commercially
reasonable efforts to take or to cause to be taken all actions and execute and
deliver all such documents, instruments and other papers, as in each case may be
necessary or appropriate, proper or advisable under applicable Laws or
reasonably required in order to cause the fulfillment at the earliest
practicable date of all of the conditions set forth in Section 9.1 and Section
9.3 and to consummate the Acquisition Transactions. Subject to the terms and
conditions hereof, between the date hereof and the Closing Date, the Purchaser
will use its commercially reasonable efforts to take or to cause to be taken all
actions and execute and deliver all such documents, instruments and other
papers, as in each case may be necessary or appropriate to cause the fulfillment
at the earliest practicable date of all of the conditions set forth in Section
9.2 and Section 9.3 and to consummate the Acquisition Transactions. If at any
time after the Closing further action is reasonably necessary to carry out the
purposes of this Agreement or any provision thereof, the proper officers and
directors of the parties hereto shall take all such necessary action. Without
limiting the generality of the foregoing, the Sellers shall cooperate with the
Purchaser in the Purchaser's continued investigation in connection with
Syratech's subsidiaries and the determination whether to acquire the assets or
stock of such subsidiaries, including without limitation by contacting local
taxing authorities. Notwithstanding the foregoing, the Purchaser is not
authorized to contact or have any communication with any taxing authority in a
manner reasonably likely to result in the imposition or incurrence of any Tax by
Syratech (or any of its Affiliates).
Confidentiality.
Between the date of this Agreement and the Closing Date, each party to this
Agreement will, and will cause its respective directors, officers, employees,
agents, and advisors (including attorneys and accountants) and Affiliates to,
maintain in confidence, and not disclose or communicate, directly or indirectly,
to any Person, or use to the detriment of another party (or any of its
Affiliates) or for the benefit of any other Person, any "Confidential
Information" disclosed by another party or an Affiliate thereof in connection
with this Agreement or the Acquisition Transactions.
For purposes of this Section 7.6, "Confidential Information" shall mean any
private or confidential information of a party that is not generally known by or
readily ascertainable by or available to, on a legal or authorized basis, the
general public, whether prepared or provided either before or after the date of
this Agreement, and includes methods of operation, strategies, customers,
customer lists, prices, fees, costs, charges, trade secrets, intellectual
property and know-how, operating procedures and methods of doing business,
Technology, Software, styles,
55
designs, design libraries, product development plans, research and development
plans, trade secrets, inventions, marketing methods, plans, personnel,
suppliers, competitors, markets, economic or financial or other specialized
information or proprietary matters and all notes, analyses, compilations,
studies, summaries and all other material prepared by any party hereto or its
Affiliates (or its, or its Affiliates' representatives) containing or based, in
whole or in part, on any information included in any of the foregoing.
Confidential Information shall not include any information that: (i) is or was
in the public domain at the time of its receipt, or subsequently came into the
public domain through no fault of any party hereto; or (ii) is independently
acquired or developed by any party without violating any obligation of such
party under this Agreement.
Notwithstanding the foregoing, (i) any party may disclose another party's
Confidential Information to the extent such disclosure is required under
applicable Law (including as may be reasonably necessary to obtain the approval
of any Governmental Body to consummate the Acquisition Transactions); (ii)
Syratech may disclose the existence of this Agreement and the proposed terms
hereof to each shareholder and/or holder of Convertible Senior Notes in
connection with Syratech's obtaining such Person's consent to the consummation
of the Acquisition Transactions; provided, that in connection with such
disclosure each such Person is advised of the obligations and restrictions
applicable to it under relevant securities laws; and (ii) the Purchaser may
disclose another party's Confidential Information to its lenders or financial
advisors in connection with its obtaining financing to consummate the
Acquisition Transactions.
The provisions of this Section 7.6 shall survive (including survival of any
termination of this Agreement) for a period equal to two (2) years after the
date of this Agreement. If this Agreement is terminated prior to Closing, then
each party shall return to the relevant disclosing party, as soon as
practicable, all originals and copies of written or recorded information
constituting the Confidential Information of such other Party. If the Closing
occurs, then notwithstanding anything herein to the contrary, the Purchaser
shall not be restricted in any manner whatsoever in its use or disclosure of any
information that constitutes an asset of any Seller. Except as otherwise
provided in Section 4.4(d) hereof, the provisions of this Section 7.6 supersede
the provisions of the Confidentiality Agreement, which is hereby made null and
void.
Publicity. None of the Sellers, on the one hand, nor the Purchaser, on the other
hand, shall issue any press release or public announcement concerning this
Agreement or the Acquisition Transactions without obtaining the prior written
approval of the other (which in the case of the Sellers, may be given by the
Seller Representative), which approval will not be unreasonably withheld or
delayed; provided that any party (or its Affiliates or representatives) may make
a public announcement concerning the existence of this Agreement or the
Acquisition Transactions if in such party's reasonable judgment such public
announcement is required by U.S. federal or foreign securities Laws,
Governmental Body or applicable stock exchange rules; provided, further,
however, that no such public announcement will be made unless the other parties
have been advised of the announcing party's intent to make such public
announcement and the other parties have had a reasonable opportunity to review
the content of such public announcement and discuss such public announcement
with the announcing party.
No Shop; No Transfer of Equity Interests.
Subject to the provisions of Section 7.8(c) hereof, during the period (the
"No-Shop Period") from the date of this Agreement until the Closing, or the
termination of this Agreement as provided by Section 4.4, the Sellers shall not,
and shall not permit any Affiliate of any of the Sellers (or authorize or permit
any of their respective Representatives) to, (i) take any action, directly or
indirectly, to initiate, solicit, encourage (including, without limitation, by
way of furnishing non-
56
public information) or accept any offer or inquiry from any Person or (ii)
subject to the provisions of Section 7.8(c), assist, receive, participate or
negotiate (A) to engage in any Business Combination with any of the Sellers
(other than one involving the disposition of Excluded Assets which in any case
would not interfere with or render less likely the consummation of the Closing
hereunder), (B) to reach any agreement or understanding (whether or not such
agreement or understanding is absolute, revocable, contingent or conditional)
for, or to engage in any discussions or negotiations with respect to, or
otherwise attempt to consummate, any Business Combination with any of the
Sellers, or (C) to furnish or cause to be furnished any information with respect
to any of the Sellers to any Person (other than as contemplated by Section 7.1,
7.3 or 7.8(d) hereof) which any of the Sellers or any such Affiliate or
Representative knows or has reason to believe is in the process of considering
any such Business Combination with any of the Sellers.
Each Seller shall immediately terminate (in writing, with a copy to the
Purchaser) any and all discussions or negotiations of any type restricted by
Section 7.8(a) hereof that is being engaged in on the date of this Agreement.
If, during the No-Shop Period, any of the Sellers receives or becomes aware that
any Seller or Affiliate thereof (or any Representative) has received from any
Person (other than the Purchaser) any offer, inquiry or informational request
that the Sellers are prohibited from pursuing pursuant to Section 7.8(a) hereof
, the Sellers shall promptly advise such Person, by written notice, of the terms
of Section 7.8(a) hereof and shall promptly, orally and in writing, advise the
Purchaser of such offer, inquiry or request and deliver a copy of such notice to
the Purchaser.
During the No-Shop Period, and provided that no Seller nor any Affiliate of any
Seller has been violated the provisions of Section 7.8(a) or Section 7.8(b)
hereof, (i) Syratech and its Representatives may have discussions with any
Person in order to (A) clarify and understand the terms and conditions of any
inquiry or proposal made by such Person and to determine whether such inquiry or
proposal constitutes a Superior Proposal and (B) notify such Person of the
provisions of this Agreement, and (ii) if the Board of Directors of Syratech
receives a Takeover Proposal that the Board of Directors of Syratech in the
exercise of its fiduciary duties determines constitutes a Superior Proposal,
then Syratech may furnish any information with respect to the Sellers to the
Person making such Takeover Proposal and participate in discussions and
negotiations with such Person regarding such Takeover Proposal. For purposes of
this Agreement: (i) a "Takeover Proposal" means any inquiry, proposal or offer
from any Person (other than Purchaser) to effect a Business Combination with the
Sellers, other than the Acquisition Transactions or the dissolution and winding
up of the Sellers contemplated by Section 7.4(a) hereof, and (ii) a "Superior
Proposal" means a Business Combination proposal made by a third party, which the
Board of Directors of Syratech after reasonable opportunity for negotiation
determines in its good faith and reasonable judgment (after consultation with a
financial advisor) to be more favorable to the holders of the Convertible Senior
Notes or Syratech's Common Stockholders than the Acquisition Transactions.
In seeking to obtain the Noteholder Conversion Consent and the Stockholder
Approval, except as expressly permitted by the foregoing provisions of this
Section 7.8, the Board of Directors of Syratech shall not (i)(A) withdraw or
modify, in a manner adverse to the obtaining the Noteholder Conversion Consent
or the Stockholder Approval, the recommendation made by such Board of Directors
that the holders of the Convertible Senior Notes provide the Noteholder
Conversion Consent and that the stockholders of Syratech provide the Stockholder
Approval (the "Board Recommendation") or (B) recommend to the holders of the
Convertible Senior Notes or the stockholders of Syratech any strategic
transaction by Syratech alternative to the Acquisition Transactions (an
"Alternative Transaction"); provided, however, that, subject always to the
57
provisions of Section 7.8(a), Section 7.8(b) and Section 7.8(c) hereof, the
Board of Directors of Syratech may withdraw or modify the Board Recommendation,
or recommend to the holders of the Convertible Senior Notes or the stockholders
of Syratech any Alternative Transaction, if such Board determines in its
business judgment, after consultation with legal counsel, that such action is
necessary in order for the Board of Directors of Syratech to comply with its
fiduciary duties under applicable Law; provided further, that in such event, the
Purchaser shall have five (5) Business Days to notify the Seller Representative
of its intent to match the terms and conditions of such Alternative Transaction
and if the Purchaser so notifies the Seller Representative, then this Agreement
shall be deemed to be modified to conform to such Alternative Transaction and
shall otherwise remain in full force and effect, with no further action required
by the parties.
that, in the event that this Agreement is terminated as a result of such action
by the Board of Directors as described in Section 7.8(d) hereof, then the Seller
shall be required to pay the Termination Fee as provided in Section 4.5 hereof.
Notifications.
Between the date hereof and the Closing Date, each Seller shall promptly notify
the Purchaser in writing if it becomes aware of (i) any fact, circumstance or
condition that causes or constitutes a breach of any of the representations,
warranties and covenants of the Sellers contained in this Agreement, or (ii) the
occurrence after the date of this Agreement of any fact or condition that could
(except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation, warranty or covenant had such representation,
warranty or covenant been made as of the time of occurrence or discovery of such
fact or condition, and (iii) any other material developments affecting the
Business or the Properties, financial condition, operations, results of
operations, customer or supplier relations, Employee relations, projections or
prospects of any of the Sellers. During the same period, the Sellers will
promptly notify the Purchaser of the occurrence of any event that may make the
satisfaction of the conditions in Article IX impossible or unlikely.
Between the date hereof and the Closing Date, the Purchaser shall promptly
notify the Seller Representative in writing if it becomes aware of (i) any fact
or condition that causes or constitutes a breach of any of the representations,
warranties and covenants of the Purchaser contained in this Agreement, or (ii)
the occurrence after the date of this Agreement of any fact or condition that
could (except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty had such representation, warranty
or covenant been made as of the time of occurrence or discovery of such fact or
condition. During the same period, the Purchaser will promptly notify the Seller
Representative of the occurrence of any event that may make the satisfaction of
the conditions in Article IX impossible or unlikely.
Supplementation and Amendment of Schedules. Each Seller may, at its option,
include in the Schedules provided by it pursuant hereto items that are not
material in order to avoid any misunderstanding, and such inclusion, or any
references to dollar amounts, shall not be deemed to be an acknowledgement or
representation that such items are material, to establish any standard of
materiality or to define further the meaning of such terms for purposes of this
Agreement. Until the Closing, each of the Sellers shall have the continuing
obligation promptly to supplement or amend the Schedules it has provided the
Purchaser hereunder with respect to any matter hereafter arising or discovered
after the delivery of the Schedules pursuant to this Agreement necessary in
order to make the Schedules accurate as of the date hereof; provided, however,
that for the purpose of the rights and obligations of the parties hereunder, any
such supplemental or amended Schedule by any Seller shall not be deemed to have
been disclosed unless accepted in writing by the Purchaser; provided, that the
Purchaser shall not unreasonably
58
withhold its consent for the correction of certain errata, typographical errors
or other missing information which is not, in the aggregate, material. Any
supplement or amendment to any Schedule provided by any Seller shall not be
considered to have amended or otherwise changed any representation or warranty
for purpose of determining whether any Seller has breached any of the
representations and warranties in Article V hereof.
Releases. Subject to consummation of the Acquisition Transactions, Syratech
shall satisfy, and shall cause each Seller to satisfy, irrevocably,
unconditionally and completely, as of the Closing Date, any obligation any
Seller has to any Person (regardless of whether a current or former Employee)
under the Incentive Plan (which may be done by obtaining a release of any such
obligations) and shall provide to the Purchaser evidence thereof reasonably
satisfactory to Purchaser.
Tax Returns; Taxes. From the date of this Agreement through the Closing Date,
each Seller shall (i) timely file all Tax Returns required to be filed by such
Seller that would adversely affect the Acquired Assets on a basis consistent
with prior Tax Returns except to the extent otherwise required under applicable
Law, (ii) timely pay all Taxes required to be paid by it in accordance with each
such Tax Return, and (iv) promptly forward to the Purchaser a copy of all
written, non-ordinary course communications received by it from any Taxing
authority that would adversely affect the Acquired Assets.
No Solicitation of Employees, Suppliers or Customers. No Seller shall, and each
Seller shall cause its Representative not to, from and after the Closing Date,
and for a period of two (2) thereafter, directly or indirectly, for itself or on
behalf of any other Person, knowingly offer or solicit the employment,
engagement or retention of any Person who at any time during the preceding
twelve (12)-month period shall have been an employee of a Seller or the
Purchaser, or knowingly solicit any supplier or customer of any Seller or
Purchaser for the purpose of diverting any such supplier or customer from doing
business with any Seller or with the Purchaser in favor of any competitor of any
Seller or the Purchaser.
Letters of Credit, Collateral, Etc. The Sellers have certain letters of credit
outstanding in connection with the operation of their business, a true, correct
and compete list of which is set forth on Schedule 7.14(a) attached hereto. As
of the Closing, the Purchaser shall cause such letters of credit, or the
collateral securing such letters of credit, to be replaced, or shall deliver
back-up letters of credit to the party that has issued the initial outstanding
letter of credit so that the Sellers are released from their obligations to
pledge the collateral represented by such letters of credit. Notwithstanding
anything herein to the contrary, in no event shall Purchaser assume any
liability or obligation with respect to any letters of credit or collateral
securing any letters of credit with respect to any of the Excluded Assets or the
Excluded Liabilities.
Cooperation by the Sellers. Each of the Sellers shall cooperate with the
Purchaser in connection with the obligations of the Purchaser to file with the
SEC the financial statements and pro forma financial information required to be
included by it in the Purchaser's 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, as amended) by:
making available to the Purchaser the relevant financial statements and records,
documents, representations and information of each Seller and each Seller's
employees as have knowledge thereof as may reasonably be requested by the
Purchaser;
instructing the independent accountants of the Party requesting cooperation to
provide 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
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providing to the independent accountants of the Purchaser 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 provisions in this Section
7.15 shall be paid by the Purchaser and not the Sellers.
Registration of Consideration Shares. As promptly as practicable, and in any
event not later than the tenth (10th) Business Day after the later to occur of
(i) the Closing and (ii) the date on which the Purchaser files its annual report
on Form 10-K with the SEC for the fiscal year ended December 31, 2005, the
Purchaser shall file a registration statement with the SEC, on Form S-3 or other
appropriate Form, with respect to the registration of the Consideration Shares
for public sale by the Sellers. The terms and conditions of such registration
shall be as set forth on Exhibit 7.16 attached hereto.
Possible Acquisition of Stock of Subsidiary. The Purchaser may at any time prior
to the Closing hereunder elect, by written notice to the Seller Representative,
to purchase from Syratech all of the outstanding capital stock of any of Seller
other than Syratech, notwithstanding the fact that this Agreement presently
contemplates that the Acquired Assets that are owned by such Seller shall be
sold directly to the Purchaser. If the Purchaser makes the foregoing election,
all of the outstanding capital stock of such Seller shall be deemed to be an
Acquired Asset to be sold and delivered to the Purchaser at the Closing
hereunder. From and after such purchase of the outstanding capital stock of such
Seller, such Seller shall not have any obligation whatsoever to indemnify any of
the Purchaser Indemnitees under this Agreement (including this Article XII) or
any of the Seller Documents, and shall have no obligation whatsoever to any of
the Sellers to make any contribution, cross-indemnify or otherwise participate
in any indemnification obligation of the Sellers hereunder; provided, however,
that this sentence shall not otherwise affect the limitation provided in Section
12.4(d) hereof.
Accounts Receivable Received by a Party. In the event that any of the Sellers
shall receive payment of any of the accounts receivable or any other payment
belonging to the Purchaser after the Closing Date, the same shall be deemed to
have been received by such Seller in trust for the Purchaser, and such Seller
shall immediately deliver all such payments to the Purchaser in the form
received by such Seller.
Delivery of Inventory. Title and all risk of loss of Inventory located at any of
the Leased Real Property on the Closing Date shall pass from the Sellers to the
Purchaser at the Closing. With respect to all Inventory not located at the
Leased Real Property on the Closing Date, upon the Closing, or as soon
thereafter as commercially practicable, the Sellers shall deliver (at the
Sellers' cost) any and all such Inventory to the Purchaser.
Bulk Sales Law. The Sellers shall indemnify the Purchaser for lack of compliance
with any bulk sales law that may be applicable to the transactions contemplated
hereby under Article 6 of the Uniform Commercial Code. Each Party shall
cooperate with the other Party in connection with the obligations of such Party
to file any bulk sales notification under the Tax Law of any applicable state.
Lifetime Guaranty. Lifetime hereby agrees to cause the Purchaser to perform all
of its agreements, covenants and obligations under this Agreement and the other
Purchaser Documents to which the Purchaser is a party. Such guaranty shall be
unconditional and shall be a guaranty of performance and not of collection.
Lifetime's obligations hereunder shall be no greater than the Purchaser, and to
the extent that Purchaser is afforded conditions to its obligations, defenses,
offsets, cure periods, notice periods, remedies and rights under this Agreement,
Lifetime shall be
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entitled to the benefit of the same. With respect to any notification and/or
approval required of the Purchaser under this Agreement, the Sellers may rely on
any such notification and/or approval given or granted by Lifetime to be the
same as if such notification and/or approval were given or granted by the
Purchaser.
Winding Up Expenses. The Purchaser hereby agrees to bear equally with the
Sellers, subject to a cap of $200,000 on the part of the Purchaser, all
reasonable and demonstrable costs and expenses attributable to the corporate
dissolution, foreign withdrawal and other regulatory filings of the Sellers
after the Closing.
EMPLOYEES
Continuing Employees.
The agreements of this Agreement (including this Article VIII) are between the
Purchaser, Lifetime and the Sellers, and are not intended to create or be deemed
to create any third party beneficiary rights in any Employee of any of the
Sellers.
The Purchaser shall offer employment with the Purchaser or its Affiliates to all
of the Employees of the Sellers who are not a party to an employment agreement
with any Seller on the date of this Agreement, with such employment with the
Purchaser or its Affiliates to begin on the Closing Date, with the terms of such
employment to provide for, for a period of not less than one (1) year after the
commencement of such employment (i) at least the same salary, wages, and bonus
opportunities as were provided to such Employee immediately prior to the Closing
and (ii) the Purchaser's, or Lifetime's corporation group, standard employee
benefit plans; provided, however, that with respect to severance obligations,
the provisions of Section 8.3 hereof shall apply. All such Employees accepting
such offer of employment and all such Employees who are a party to a Purchased
Contract are hereinafter referred to as the "Continuing Employees."
To the extent any Seller becomes subject to any Liabilities under the WARN Act
or any comparable state or local Law in connection with the termination of the
employment by the Purchaser or its Affiliates (or any successor thereto) of any
Continuing Employee after the Closing Date, the Purchaser shall be responsible
therefor and shall indemnify each Seller and its directors, officers and
employees against such Liability in accordance with the provisions of Article
XII hereof. Without limiting the effect of the foregoing sentence, the Purchaser
shall be solely responsible for giving any notice to Continuing Employees
required by the WARN Act or any comparable state or local Law to be given after
the Closing Date.
To the extent permitted by Law, as soon as reasonably practicable following the
date hereof, the Sellers shall provide to the Purchaser the necessary employee
data, including personnel and benefit information, maintained with respect to
the Continuing Employees by the Sellers or by its independent contractors, such
as insurance companies and actuaries, in order to facilitate benefits and
payroll transition for the Continuing Employees.
The Purchaser shall offer to enter into a new employment agreement with each
Employee of any of the Sellers who is a party to an employment agreement with a
Seller as of the date of this Agreement (other than the Employees named on
Schedule 9.1(j) hereof, who shall be offered employment agreements to be
negotiated directly by the Purchaser with such Employees); provided, that (i)
the terms of such new employment agreement shall provide the Employee with
substantially the same compensation and medical benefits as are provided under
the Employee's current employment agreement, (ii) the title, position,
responsibilities and authority of the
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Employee shall be appropriate in the context of the employer being a part of
Lifetime's consolidated group of companies, (iii) such new employment agreement
shall contain severance provisions comparable to the current severance
provisions contained in such Employee's employment agreement, and (iv) such new
employment agreement shall not contain any change in control or parachute
payment provision (and the Sellers, and not the Purchaser, shall be responsible
for any such obligations existing in such current employment agreements), and
(v) in no event shall any such Employee be deemed a Continuing Employee
hereunder.
Employment Benefits. In the event that the Purchaser or its Affiliates elects to
have any Continuing Employee receive employee benefits under any employee
benefit plan or arrangement sponsored or maintained by the Purchaser or its
Affiliates, to the extent permitted under such benefit plan, each such
Continuing Employee will be credited for service with the Sellers under such
plan or arrangement for purposes of eligibility and vesting, provided that such
credit does not result in any duplication of benefits. The Purchaser or its
Affiliates shall, to the extent possible under the applicable benefit plans, (i)
waive, or cause its insurance carriers to waive, all limitations as to
pre-existing and at-work conditions, if any, with respect to participation and
coverage requirements applicable to the Continuing Employees under any employee
welfare benefit plan (as defined in Section 3(1) of ERISA) which is made
available to the Continuing Employees and (ii) provide credit to the Continuing
Employees for any co-payments, deductibles and out-of-pocket expenses paid by
such employees under the applicable Employee Benefit Plans during the portion of
the relevant plan year including the Closing Date.
Employee Severance.
With respect to any Continuing Employee who does not have an employment
agreement with the Seller and with respect to any Employee who enters into an
employment agreement with the Purchaser that does not include a severance
provision, the Purchaser will provide, for a period of not less than one (1)
year, such Continuing Employee with severance policies substantially equivalent
to the severance policies of the Sellers in effect and applicable to such
Continuing Employee, or as applicable, such Employee, immediately prior to the
Closing. After such one (1) year period, the Purchaser reserves the right to
modify any such policies in its sole discretion.
Anything in this Agreement to the contrary notwithstanding, the Purchaser will
not be obligated to pay severance to any Continuing Employees (regardless of
whether or not such Continuing Employee is a party to any employment agreement
with any of the Sellers as of the date of the Closing), either before or after
the Closing, if the severance policies of the Sellers with respect to such
Continuing Employee would deem that such Continuing Employee was terminated as a
result of the Acquisition Transactions or the transition to employment from the
Sellers to the Purchaser or any of its Affiliates and entitled to severance
benefits thereunder.
With respect to any Employee with whom the Purchaser enters into a new
employment agreement (including an amendment of an existing employment agreement
that the Purchaser may elect to enter into either prior to or after the
Closing), the Purchaser will honor any severance provisions in such new or
amended employment agreement.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Purchaser or any Affiliate of the Purchaser assume any Liability with
respect to or be obligated to honor any change of control (or "parachute"
payment) obligation under any employment agreement existing on the date of this
Agreement, whether relating to Purchaser's acquisition of the Acquired Assets or
relating to any other transaction of Syratech or any other Seller occurring
either prior to or after the date of this Agreement.
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Alternate Procedure. With respect to the Continuing Employees in the United
States, pursuant to the "Alternate Procedure For Predecessors and Successors"
provided in Section 5 of Revenue Procedure 2004-53, 2004-34 I.R.B. 320: (i)
Sellers and Purchaser shall report on a predecessor/successor basis as set forth
therein, (ii) Sellers will be relieved from filing a Form W-2 with respect to
the Continuing Employees and (iii) Purchaser (or its Affiliate) will undertake
to file (or cause to be filed) a Form W-2 for each Continuing Employee for the
calendar year that includes the Closing Date (including the portion of such year
that such employee was employed by Sellers). Sellers will provide Purchaser (or
its Affiliate) on a timely basis with all payroll and employment-related
information with respect to each Continuing Employee necessary to satisfy these
obligations, including, without limitation, copies of all Forms 941 filed with
respect to employee compensation paid by Syratech in 2006 and with respect to
each such Form 941 a schedule setting forth for each Form 941 all relevant
information to enable Purchaser to complete Schedule D, therefore, including,
without limitation, (i) as to each of the Continuing Employees such employees
name, address, social security number, gross wages, FICA Wages, Medicare Wages,
federal income tax withholding, FICA withholding, Medicare Tax withholding,
state wages, local wages, State Tax withholding state and local tax withholding
and Syratech's share of FICA and Medicare Tax; (ii) a copy of Syratech's
Schedule D (Form 941) or reasonable substitute therefore, to explain the
discrepancies (between the Forms W-2 (Copy A) to be filed by Syratech with
respect to the Employees who are not Continuing Employees and the Forms 941
filed by Syratech for any calendar quarters in 2006 ending on or before the
Closing or during which the Closing shall occur, with respect to the in the
totals of social security wages, Medicare wages and tips, social security tips,
federal income tax withheld, and advance earned income credit (EIC) payments)
and a similar schedule setting forth such information with respect to state and
local wages and withholding; (iii) evidence of remittance of withholding taxes
and employer payroll taxes paid by Syratech in 2006 on account of the Continuing
Employees for the period January 1, 2006 through the Closing; and (iv) all
current Forms W-4 and Forms W-5 that were provided to the predecessor by the
acquired employees and any written notices received from the IRS under Treasury
Regulation ss. 31.3402(f)(2)-1(g)(5), together with equivalent state tax forms.
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CONDITIONS TO CLOSING
Conditions Precedent to Obligations of the Purchaser. The obligation of the
Purchaser to consummate the Acquisition Transactions is subject to the
fulfillment, on or prior to the Closing Date, of each of the following
conditions (any or all of which may be waived by the Purchaser in whole or in
part to the extent permitted by applicable Law); provided; that the Purchaser's
participation in the Closing shall not in any way be deemed to be a waiver of
any claim it may have hereunder for any breach of any representation, warranty,
covenant or agreement contained herein:
The representations and warranties of the Sellers set forth in this Agreement
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, as of the date
hereof and at of the Closing, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct in all material
respects, on and as of such earlier date); and the Purchaser shall have received
a certificate signed by each of the Sellers, dated the Closing Date.
Each of the Sellers shall have performed and complied in all material respects
with all covenants and all other obligations and agreements required in this
Agreement to be performed or complied with by them prior to the Closing Date;
and the Purchaser shall have received a certificate signed by each of the
Sellers, dated the Closing Date, to the foregoing effect in respect of the
covenants, obligations and agreements required in this Agreement to be performed
or complied with by such Seller.
The amount of cash necessary to repay in full all of the Indebtedness of
Syratech as of the Closing, together with all accrued but unpaid interest, and
all premiums, penalties and interest thereon, shall not be more than the sum of
(A) Thirty Seven Million Dollars ($37,000,000) and (B) such additional amount of
cash as the Sellers shall be ready, willing and able to fund, and do fund, as of
the Closing in payment of such Indebtedness.
The Sellers and the Seller Representative shall have delivered, or caused to be
delivered, to the Purchaser all of the items required by Section 0.hereof.
All consents (or waivers in lieu thereof) to the performance by the Sellers of
their obligations under this Agreement and the Acquisition Documents and to the
consummation of the transactions contemplated hereby and thereby without
violating any Law or breaching (or giving rise to a right of any party to
terminate) any Purchased Contract as set forth on Schedule 9.1(e) attached
hereto: (i) shall have been obtained at the Sellers' sole expense, (ii) shall be
in form and substance reasonably satisfactory to the Purchaser, (iii) shall not
be subject to the satisfaction of any condition that has not been satisfied or
waived and (iv) shall be in full force and effect.
The Purchaser shall have received from Syratech the consolidated audited balance
sheet of Syratech and its consolidated Subsidiaries, as of December 31, 2005 and
the related audited consolidated statements of income and changes in
stockholders' equity and cash flows for the year then ended, including all the
notes prepared in connection therewith, together with the report thereon by
Vitale, Caturano & Company, certified public accountants (the "2005 Audited
Financial Statements").
No event or events shall have occurred between the date hereof and the Closing
Date that, individually or in the aggregate, have, or are reasonably likely to
have, a Sellers Material Adverse
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Effect on the Business or any of the Sellers or any of the Acquired Assets,
businesses, operations, financial condition or prospects.
None of the following shall have occurred: (i) trading in the Lifetime Common
Stock shall have been suspended by the SEC or the Nasdaq National Market or
trading in securities generally on the New York Stock Exchange or the Nasdaq
National Market shall have been suspended or limited or minimum prices shall
have been established on such Exchange or the Nasdaq National Market; (ii) a
banking moratorium shall have been declared either by Federal or New York State
authorities; or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other calamity or crisis or terrorist event which shall have had, in the
judgment of the Purchaser, a material adverse impact on the securities markets
or the economy in general.
The Sellers shall have delivered to the Purchaser duly executed payoff letters
in customary form, which shall be reasonably acceptable to the Purchaser, that
all Indebtedness of Syratech and its Subsidiaries (including any Indebtedness of
Syratech or its Subsidiaries that is not shown on the balance sheets of such
entities or that is not otherwise reflected in the books and records thereof)
shall have been fully paid, and documentation reasonably acceptable to the
Purchaser releasing any Liens securing such Indebtedness.
The Purchaser shall have entered into written employment agreements with the
individuals named on Schedule 9.1(j) hereof, and the form and substance of such
employment agreements shall be on terms and conditions satisfactory to the
Purchaser, and the Purchaser shall have no reasonable basis to believe that any
party to any such employment agreement does not intend to honor his obligations
thereunder after the Closing.
The Purchaser shall have available sufficient cash from its financing sources to
pay the cash portion of the Purchase Price in accordance with Section 2.5, any
adjustment to the Purchase Price in accordance with Section 3.4, and any other
amounts necessary for the Purchaser to consummate the Acquisition Transactions.
Without limiting any of the foregoing, there shall not have occurred any
material damage, destruction, fire, flood, hurricane, tornado, explosion or
similar event affecting any Leased Real Property which shall render such Leased
Real Property inoperable or unusable.
Conditions Precedent to Obligations of the Sellers. The obligations of the
Sellers to consummate the Acquisition Transactions are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions (any or all of which may be waived by the Sellers in whole or in part
to the extent permitted by applicable Law); provided, that each Sellers'
participation in the Closing shall not in any way be deemed to be a waiver of a
claim it may have hereunder for a breach of any representation, warranty,
covenant or agreement contained herein:
The representations and warranties of the Purchaser and Lifetime, as applicable,
set forth in this Agreement qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct in all material
respects, as of the date hereof and as of the Closing Date as though made on the
Closing Date, except to the extent such representations and warranties relate to
an earlier date (in which case such representations and warranties qualified as
to materiality shall be true and correct, and those not so qualified shall be
true and correct in all material respects, on and as of such earlier date), and
the Seller Representative shall have received, for the benefit of the Sellers, a
certificate signed by an authorized officer of the Purchaser, dated the Closing
Date, to the foregoing effect.
The Purchaser and Lifetime, as applicable, shall have performed and complied in
all material respects with all covenants and all other obligations and
agreements required by this Agreement
65
to be performed or complied with by the Purchaser or Lifetime, as applicable, on
or prior to the Closing Date, and the Seller Representative shall have received,
for the benefit of the Sellers, a certificate signed by an authorized officer of
the Purchaser and of Lifetime, as applicable, dated the Closing Date, to the
foregoing effect.
The Purchaser shall have delivered, or caused to be delivered, to the Seller
Representative all of the items set forth in Section 0 hereof.
No Purchaser Material Adverse Effect shall have occurred since the date of this
Agreement that might materially impair the performance of obligations and
covenants of the Purchaser in favor of the Sellers.
Conditions Precedent to Obligations of the Purchaser and the Sellers. Subject to
Section 9.4 below, the respective obligations of the Purchaser and the Sellers
to consummate the Acquisition Transactions are subject to the fulfillment, on or
prior to the Closing Date, of each of the following conditions (any or all of
which may be waived by the Purchaser and the Seller Representative in whole or
in part to the extent permitted by applicable Law):
All filings and other actions to or with respect to any Governmental Body
necessary to permit the consummation of the Acquisition Transactions shall have
been made and accepted, and all waiting periods prescribed by applicable Law
shall have expired or been terminated in accordance with applicable Law;
All consents and approvals by any Governmental Body necessary to permit the
consummation of the Acquisition Transactions, shall have been obtained, without
material qualification or condition reasonably found objectionable by a party
hereto, none of which approvals shall have been rescinded in any respect and all
of which shall have remained in full force and effect through the Closing Date;
There must not have been commenced or threatened to be commenced by a Government
Body against any party hereto or any Affiliate of any party hereto, any Legal
Proceeding or proceeding involving an Order of any Governmental Body (i)
involving any challenge to, or seeking damages or other relief in connection
with, any of the Acquisition Transactions, or (ii) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of the
Acquisition Transactions.
The Noteholder Conversion Consent shall have been obtained and be in effect and
a sufficient number of Convertible Senior Notes shall have been converted into
shares of Common Stock in Syratech so that, in accordance with the terms of the
Indenture pertaining to the Convertible Senior Notes, all Convertible Senior
Notes shall be converted into such shares; and the Stockholder Approval shall
have been obtained and be in effect.
The Escrow Agreement shall have been executed prior to the Closing by the Seller
Representative on behalf of the Sellers, and the Purchaser, and shall be in full
force and effect as of the Closing, and shall be in form and substance
reasonably acceptable to the Purchaser and the Seller Representative.
Frustration of Closing Conditions. Neither the Sellers nor the Purchaser may
rely on the failure of any condition set forth in Sections 9.1, 0 or 0, as the
case may be, if such failure was caused by such party's failure to comply with
any provision of this Agreement.
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TAXES
Preparation of Tax Returns. The Sellers shall continue to prepare and timely
file (or shall cause to be prepared and timely filed) all Tax Returns for the
Sellers for all periods. The Sellers shall pay all Taxes on income or profits
arising from the sales contemplated hereunder and all other Taxes of the
Sellers, other than the Purchaser's share of Transfer Taxes. Except to the
extent otherwise required by law, such Returns shall be prepared on a basis
consistent with the past practices of such entities.
Allocation of Taxes for Straddle Periods. For purposes of this Agreement, in the
case of any Taxes that are payable for a Straddle Period, the portion of such
Tax that relates to the Pre-Closing Tax Period shall (i) in the case of any
Taxes other than Taxes based upon or related to income or receipts, be deemed to
be the amount of such Tax for the entire Tax period multiplied by a fraction the
numerator of which is the number of days in the Tax period ending on the Closing
Date and the denominator of which is the number of days in the entire Tax
period, and (ii) in the case of all other Taxes, be deemed equal to the amount
which would by payable as computed on a "closing-of-the-books" basis if the
relevant Tax period ended on the Closing Date. For any such period, the portion
of such Tax that relates to the Post-Closing Tax Period shall be the total
amount of Tax for such period less the amount attributable to the Pre-Closing
Tax Period, as determined under the preceding sentence.
Contests and Cooperation. The Sellers shall have the right to control the
conduct of, and shall have sole discretion in handling, any audit or other
proceeding with respect to any Taxes of the Sellers. The Purchaser, the Sellers
and their respective Affiliates (each a "Party") shall cooperate in both (i) the
preparation of all Tax Returns for any Tax periods for which one Party could
reasonably require the assistance of the other Party in obtaining any necessary
information and (ii) any subsequent audits, claims, contests, litigation or
other proceedings with respect to Taxes of any of the Sellers (collectively,
"Tax Proceedings"). Such cooperation shall include, but not be limited to,
furnishing prior years' Tax Returns or return preparation packages to the extent
related to a Seller illustrating previous reporting practices or containing
historical information relevant to the preparation of such Tax Returns, and
furnishing such other information within such Party's possession requested by
the Party filing such Tax Returns or participating in Tax Proceedings, as is
relevant to the preparation of such Tax Returns or the conduct of such Tax
Proceedings, respectively. Such cooperation and information also shall include
without limitation provision of powers of attorney for the purpose of signing
Tax Returns and defending audits and promptly forwarding copies of appropriate
notices and forms or other communications received from or sent to any
applicable governmental authority which relate to any of the Sellers, and
providing copies of all relevant Tax Returns to the extent related to any of the
Sellers, together with accompanying schedules and related work papers, documents
relating to rulings or other determinations by any governmental authority and
records concerning the ownership and tax basis of property, which the requested
Party may possess. The Parties and their respective affiliates shall make their
respective employees and facilities available on a mutually convenient basis to
explain any documents or information provided hereunder.
Transfer Taxes. All sales, use, transfer, recordation, documentary stamp or
similar Taxes or charges, of any nature whatsoever, applicable to, or resulting
from, the Acquisition Transactions ("Transfer Taxes") shall be equally borne by
the Purchaser and the Sellers.
Successors. For purposes of this Article 0, references to any of the Purchaser
or any Seller shall include the successors thereof.
Tax Treatment of Indemnity Payments. The Purchaser and the Sellers agree that
any indemnification payments made under this Agreement shall be treated as an
adjustment to the Purchase Price for all Tax purposes.
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Survival. The covenants and agreements of the parties contained in this Article
X shall survive the Closing and shall remain in full force and effect until the
expiration of any applicable statute of limitations.
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SELLER REPRESENTATIVE
The Seller Representative.
Each of the Sellers hereby irrevocably designates and appoints Syratech or the
Liquidating Trust as the successor thereto as the case may be, as its, his or
her agent and attorney-in-fact, for and on behalf of each Seller (the "Seller
Representative"), with full power and authority to represent such Seller and
its, his or her successors and assigns with respect to all matters arising under
this Agreement.
Each and every notice, delivery, statement, agreement or other action taken by
the Seller Representative hereunder shall be binding upon each Seller and its,
his or her successors and assigns as if expressly done by, and ratified and
confirmed in writing by, such Seller. The Purchaser shall be entitled to rely
on, and each Seller shall be bound by, each and every notice, delivery,
statement, agreement or other action made by the Seller Representative on behalf
of the Sellers, or any of them, in accordance with this Agreement. Where any
notice, delivery, statement, agreement or other action is required, permitted or
contemplated in this Agreement to be made by the Seller Representative, no such
notice, delivery, statement, agreement or other action shall be effective unless
made in writing and signed by the Seller Representative.
Without limiting the generality of the foregoing, the Seller Representative
shall have full power and authority, in the name of and on behalf of each
Sellers and its, his or her successors and assigns, to (i) interpret all the
terms and provisions of this Agreement, (ii) waive any condition on behalf of
any or all members of the Sellers under Section 9.2 hereof, (iii) dispute or
fail to dispute or expressly agree to any claims of Losses or damages made by
any Purchaser Indemnitee, (iv) assert claims of Losses or damages against any
indemnifying party, (v) negotiate, compromise and settle any dispute (including,
but not limited to, any dispute relating to Losses or damages) that may arise
under this Agreement, (vi) sign any releases or other documents with respect to
any such dispute, (vii) authorize payment or delivery of any part of the Escrow
Fund pursuant to the Escrow Agreement or any other payments to be made with
respect thereto and (viii) take all other actions that are either (A) necessary
or appropriate in the judgment of the Seller Representative for the
accomplishment of the foregoing or (B) specifically mandated by the terms of
this Agreement.
Each notice required to be given to the Sellers pursuant to the Agreement shall
be deemed to have been given to all of the Sellers on the date given to the
Seller Representative.
A decision, act, consent or instruction of the Seller Representative, including
an extension or waiver of this Agreement, as applicable, shall constitute a
decision of the Sellers and shall be final, binding and conclusive upon the
Sellers; the Purchaser may rely upon any such decision, act, consent or
instruction of the Seller Representative as being the decision, act, consent or
instruction of all the Sellers. The Purchaser and the Sellers are hereby
relieved from any Liability to any Person for any acts done by them in
accordance with such decision, act, consent or instruction of the Seller
Representative.
The Sellers shall be solely responsible for the fees and expenses of the Seller
Representative and the Seller Representative shall not seek any payment therefor
from the Purchaser or from the Escrow Fund.
69
SURVIVAL OF REPRESENTATIONS AND WARRANTIES: INDEMNIFICATION
Limited Survival of Representations and Warranties.
Notwithstanding any right of the Purchaser or of Lifetime to fully investigate
the affairs of the Sellers and notwithstanding any Knowledge of facts determined
or determinable by the Purchaser or by Lifetime pursuant to such investigation
or right of investigation, each of the Purchaser and Lifetime shall have the
right to rely fully upon the representations and warranties of the Sellers
contained in this Agreement, the Schedules hereto and in any of the Seller
Documents. Except as provided in the immediately following sentence, all such
representations and warranties shall survive the execution and delivery of this
Agreement and the Closing hereunder and shall thereafter continue in full force
and effect until the second anniversary of the Closing Date, and the liability
of the Sellers in respect of any inaccuracy in any such representation or
warranty shall terminate on the second anniversary of the Closing Date, except
for liability with respect to which an Indemnification Notice shall have been
given in accordance herewith to the Seller representative on or prior to such
date. The foregoing notwithstanding, the obligation of the Sellers to indemnify
pursuant to this Agreement with respect to representations and warranties
contained in Section 5.16(b) hereof (regarding title to Acquired Assets), shall
survive until all liability relating thereto is barred by all applicable
statutes of limitation (including any extensions or waivers thereof).
Notwithstanding any right of the Sellers to fully investigate the affairs of the
Purchaser or of Lifetime and notwithstanding any Knowledge of facts determined
or determinable by the Sellers pursuant to such investigation or right of
investigation, the Sellers have the right to rely fully upon the representations
and warranties of the Purchaser and of Lifetime contained in this Agreement, the
Schedules hereto and in any of the Purchaser Documents. Except as provided in
the immediately following sentence, all such representations and warranties
shall survive the execution and delivery of this Agreement and the Closing
hereunder and shall thereafter continue in full force and effect until the
second anniversary of the Closing Date, and the liability of the Purchaser and
of Lifetime in respect of any inaccuracy in any such representation or warranty
shall terminate on the second anniversary of the Closing Date, except for
liability with respect to which an Indemnification Notice shall have been given
in accordance herewith to the Seller representative on or prior to such date.
The foregoing notwithstanding, the obligation of the Purchaser and of Lifetime
to indemnify pursuant to this Agreement with respect to matters arising from
fraud shall survive the Closing, and the liability of the Purchaser and of
Lifetime in respect of any inaccuracy therein shall continue until all liability
relating thereto is barred by all applicable statutes of limitation (including
any extensions or waivers thereof).
Notwithstanding anything to the contrary in this Agreement, a claim for
indemnification with respect to Section 12.2(ii) and Section 12.3(ii) may be
made at any time after the Closing until barred by all applicable statutes of
limitations (including any extensions or waivers thereof).
Indemnification by the Sellers. Each of the Sellers, jointly and severally,
shall indemnify and defend the Purchaser and Lifetime and each of their
respective officers, directors, employees, shareholders, agents, advisors or
representatives (each, a "Purchaser Indemnitee") from and against, and hold each
Purchaser Indemnitee harmless from and against, any and all Losses that any
Purchaser Indemnitee may suffer or incur based upon, arising out of, relating to
or in connection with any of the following (whether or not in connection with
any third party claim):
any breach of or inaccuracy in any representation or warranty made by any of the
Sellers or the Seller Representative contained in this Agreement or in any of
the Seller Documents or in respect of any claim made by a third party based upon
alleged facts that if true could constitute any such breach or inaccuracy; and
70
any breach of or failure to perform or to comply with any covenant, obligation
or other agreement required to be performed or complied with by any of the
Sellers or the Seller Representative contained in this Agreement or in any of
the Seller Documents.
Indemnification by the Purchaser. The Purchaser and Lifetime, jointly and
severally, shall indemnify and defend the Sellers and each of their agents,
advisors or representatives (each, a "Seller Indemnitee") from and against, and
hold each Seller Indemnitee harmless from and against, any and all Losses that
such Seller Indemnitee may suffer or incur arising from, related to or in
connection with any of the following (whether or not in connection with any
third party claim):
any breach of or inaccuracy in any representation or warranty made by the
Purchaser or Lifetime contained in this Agreement or in any Purchaser Document
or in respect of any claim made by a third party based upon alleged facts that
if true could constitute any such breach or inaccuracy; and
the Purchaser's or Lifetime's breach of or failure to perform or to comply with
any covenant, obligation or other agreement required to be performed or complied
with by the Purchaser or Lifetime, respectively, contained in this Agreement or
in any of the Purchaser Document.
Limitations on Indemnification.
Except in the case of claims for fraudulent conduct, the Purchaser Indemnified
Parties shall not be entitled to indemnity under this Article XII unless and
until the amount of the Losses sustained by all the Purchaser Indemnified
Parties who have given Indemnification Notices as to which they have been
finally determined to be entitled to indemnity hereunder exceed, in the
aggregate, $100,000. If the Purchaser Indemnified Parties incur Losses in excess
of $100,000, they shall be entitled to recover (in accordance with the
provisions of this Section 12.4) all of such Losses, including the first Dollar
thereof. Except in the case of claims for fraudulent conduct, the Seller
Indemnitees shall not be entitled to indemnity under this Article XII unless and
until the amount of the Losses sustained by all Seller Indemnitees who have
given Indemnification Notices as to which they have been finally determined to
be entitled to indemnity hereunder exceed, in the aggregate, $100,000. If the
Seller Indemnitees incur Losses in excess of $100,000, they shall be entitled to
recover (in accordance with the provisions of this Section 12.4) all of such
Losses, including the first Dollar thereof.
Solely for the purposes of determining Losses pursuant to this Section 12.4, any
requirement in a representation or warranty that an event or fact be material or
result in a Seller Material Adverse Effect, or any reference to a "Material"
Contract (as opposed to a Contract), which is a condition to such event or fact
constituting an inaccuracy or breach of such representation or warranty, shall
be ignored and any and all Losses arising out of the inaccuracy or breach of
such representation or warranty shall be taken into account for purposes of
determining the rights of the parties to indemnification pursuant to this
Section 12.4. For the avoidance of doubt, the adjustments of the Purchase Price
under Article III shall not be limited by the foregoing.
Notwithstanding anything to the contrary elsewhere in this Agreement, no party
shall, in any event, be liable to any other Person, by indemnity hereunder or
otherwise, for any consequential, special or punitive damages of such other
Person; provided, however, that the foregoing exclusion of consequential damages
shall not prevent any Purchaser Indemnitee from recovering Losses due to
diminution in value of the Acquired Assets from the value reasonably expected
based on the representations and warranties of Article V hereof.
71
Anything to the contrary in this Agreement (including without limitation
anything in this Article XII) notwithstanding, except as expressly set forth
below in this Section 12.4(d), the Escrow Fund shall be the sole source for the
payment of any liability of the Sellers to the Purchaser or any other Purchaser
Indemnitee under this Agreement (including without limitation under this Article
XII), and then only in accordance with the Escrow Agreement and for that purpose
neither the Purchaser nor any of the other Purchaser Indemnitees shall have any
recourse to any of the other assets of the Sellers, except:
(i) with respect to the matters relating to the Net
Working Capital determination pursuant to Article III
hereof;
(ii) with respect to the obligations of the Sellers to
sell, assign, transfer and deliver the Acquired
Assets pursuant to Section 2.1 hereof;
(iii) in the event of any breach by any of the Sellers of
any of its obligations pursuant to Section 11.1(f)
hereof or any of its obligations pursuant to Section
13.1 hereof; and
(iv) in the event of fraud of any of the Sellers;
provided, however, that any Purchaser Indemnitee may at its option seek to
recover Losses with respect to any matter referred to in the foregoing clauses
(i), (ii), (iii) and (iv) of this Section 12.4(d) from any cash or other
property held in escrow pursuant to the Escrow Agreement. At such time as any
portion of the Escrow Fund may have been released to the Sellers in accordance
with the terms and provisions of this Agreement and the Escrow Agreement, the
Purchaser and the other Purchaser Indemnitees shall have no further recourse
under this Agreement (including without limitation under this Article XII) to
such released portion, except with respect to any of the matters referred to in
the foregoing clauses (i), (ii), (iii) and (iv) of this Section 12.4(d).
Indemnification Notices; Third Party Claims.
The Purchaser or Lifetime, as applicable, on behalf of a Purchaser Indemnified
Party, or the Seller Representative on its own behalf or on behalf of the
Sellers, as the case may be, shall give notice (an "Indemnification Notice") to
the other of any claim of breach of a representation, warranty or covenant
referred to in Section 12.2 or Section 12.3, as applicable, and the Loss it
incurred as a result thereof (which, if not exactly determinable, may be an
estimate), which such Indemnification Notice shall include (i) the facts or
circumstances leading to such Loss and estimate of such Loss, in each case, in
reasonable detail, and (ii) in the case indemnity is sought against a Loss
resulting from any Legal Proceeding asserted by a third party, an
Indemnification Claim (as defined below). Any claim for indemnification
hereunder of which an Indemnification Notice has not been given on or prior to
the second anniversary of the Closing Date will be irrevocably and
unconditionally released and waived, it being agreed that in all cases the
indemnified party shall provide an Indemnification Notice as promptly as
practicable, although failure to provide such notice shall not release the
indemnifying party except to the extent prejudiced as a result of such failure;
provided that with respect to claims involving fraud, an Indemnification Notice
may be given at any time. Except with respect to claims arising from fraud, the
Indemnity Escrow Fund shall be the sole source of funds with respect to any
right of indemnification of a Purchaser Indemnitee pursuant to this Article XII.
In the event that any Legal Proceedings shall be instituted or that any demand
or claim shall be asserted by any third party against a Person in respect of
which indemnity may be sought hereunder by any Person hereunder (an
"Indemnification Claim"), such Person (the "indemnified person") shall promptly
cause written notice of the incurrence by it of a Loss or the assertion of any
such Legal Proceeding, demand or claim of which it has knowledge and which it
believes is covered by indemnity hereunder to be forwarded to the party that it
72
believes is responsible hereunder to provide indemnification hereunder (the
"indemnifying party"). The indemnifying party shall have the right, at its sole
option and expense, to assume the response to and defense of such
Indemnification Claim represented by counsel of its choice, which must be
reasonably satisfactory to the indemnified person, and to defend against,
negotiate, settle or otherwise deal with any Indemnification Claim. If the
indemnifying party elects to defend against, negotiate, settle or otherwise deal
with any Indemnification Claim, it shall within fifteen (15) days of notice of
the claim from the indemnified party (or sooner, if the nature of the
Indemnification Claim so requires) notify the indemnified person of its intent
to do so, and upon giving such notice, the indemnifying party shall diligently
and in good faith defend against, negotiate, settle and or otherwise deal with
such Indemnification Claim consistent with the other provisions of this Section
12.5. Anything in the foregoing to the contrary notwithstanding, to the extent
that the Purchaser has assumed any Liabilities with respect to any Legal
Proceeding against any of the Sellers pursuant to the terms and conditions of
this Agreement, the Purchaser shall have the right to elect to defend against,
negotiate, settle or otherwise deal with such Indemnification Claim. If the
indemnifying party elects not to assume the defense of an Indemnification Claim,
or if the Purchaser has elected to defend against, negotiate, settle or
otherwise deal with any Indemnification Claim with respect to any Liabilities
with respect to Legal Proceedings against any of the Sellers assumed by the
Purchaser pursuant to the terms and conditions of this Agreement, the
indemnified party (or the Sellers, with respect to any defense so elected by the
Purchaser) may at the sole cost and expense of the indemnifying party (or
Sellers) pursuant to the provisions herein defend against, negotiate, settle or
otherwise deal with such Indemnification Claim. If the indemnifying party shall
assume the defense of any Indemnification Claim, or if the Purchaser has elected
to defend against, negotiate, settle or otherwise deal with any Indemnification
Claim with respect to any Liabilities with respect to Legal Proceedings against
any of the Sellers assumed by the Purchaser pursuant to the terms and conditions
of this Agreement, the indemnified person (or the Sellers, as applicable) may
participate, at his, her or its own expense, in the defense of such
Indemnification Claim; provided, however, that such indemnified party (or the
Sellers, as applicable) shall be entitled to participate in any such defense
with separate counsel at the expense of the indemnifying party (or at the
expense of the Sellers, as applicable) if (i) so requested by the indemnifying
party (or the Purchaser) to participate or (ii) in the reasonable opinion of
counsel to the indemnified party (the Sellers) a conflict or potential conflict
exists between the indemnified party (or the Sellers) and the indemnifying party
(or the Purchaser) that would make such separate representation advisable; and
provided, further, that the indemnifying party (or the Purchaser) shall not be
required to pay for more than one such counsel for all indemnified parties (or
Sellers) in connection with any Indemnification Claim arising out of the same
facts and circumstances.
The parties hereto agree to cooperate fully with each other (and any other
indemnified person as a condition to indemnity hereunder must likewise do so) in
connection with the defense, negotiation or settlement of any Indemnification
Claim. Notwithstanding anything in this Article XII to the contrary, neither the
indemnifying party nor the indemnified person shall, without the written consent
of the other, settle or compromise any Indemnification Claim or consent to entry
of any judgment thereon unless (i) such settlement, compromise or consent
includes as an unconditional term thereof the giving by the claimant or
plaintiff of an unqualified release from all liability in respect of the
Indemnification Claim and (ii) the sole relief provided thereunder is money
damages that are paid in full by the indemnifying party. After any final
decision, judgment or award shall have been rendered by a Governmental Body of
competent jurisdiction and the expiration of the time in which to appeal
therefrom, or a settlement shall have been consummated, or the indemnified
person and the indemnifying party shall have arrived at a mutually binding
73
agreement with respect to an Indemnification Claim hereunder, the indemnified
party shall forward to the indemnifying party notice of any sums due and owing
by the indemnifying party pursuant to this Agreement with respect to such
matter.
The Sellers and the Purchaser and Lifetime, respectively, agree that each of
them shall preserve and keep any records in its possession or control and
relating to the Business, and shall make such records and personnel available to
the other, as the other may reasonably request in connection with, among other
things, any insurance claims by, Legal Proceedings or tax audits against or
governmental investigations pertaining to the Business in respect of which the
other has any obligation to indemnify it pursuant to this Section 12.2 or
Section 12.3 as the case may be. If after the sixth anniversary of the Closing
Date, any of the Sellers or the Purchaser or Lifetime wishes to destroy any
records referred to in this paragraph before the time when such indemnification
obligation is finally resolved, such party shall first give sixty (60) days'
prior written notice to the other and the other shall have the right at its
option and expense, upon prior written notice given to such party within such
sixty (60) day period, to take possession of the records within one hundred
twenty (120) days after the date of such notice.
MISCELLANEOUS
Expenses. Except as otherwise provided in this Agreement, the Purchaser shall
bear its own costs and expenses incurred in connection with the negotiation and
execution of this Agreement and each other agreement, document and instrument
contemplated by this Agreement and the consummation of the transactions
contemplate hereby and thereby. Except as otherwise provided in this Agreement,
the Sellers shall bear all costs and expenses incurred by any of them and the
Seller Representative in connection with the negotiation and execution of this
Agreement and each other agreement, document and instrument contemplated by this
Agreement and the consummation of the transactions contemplated hereby and
thereby. By way of illustration, and not limitation, the Sellers shall bear all
costs and expenses of (i) third party consents required hereunder, (ii) any
severance, change of control or similar obligation, (iii) all bankruptcy related
settlements of Syratech or any of the Sellers, (iv) any Employee bonus or
payments or obligations related to the Incentive Plan, (v) the Seller
Representative, (vi) any professional advisors (including financial, legal and
accounting) advisors of any of the Sellers and (vi) all Transfer Taxes.
Submission to Jurisdiction; Consent to Service of Process.
The parties hereto hereby irrevocably submit to the exclusive jurisdiction of
any federal or state court located within the State of New York over any dispute
arising out of or relating to this Agreement or any of the Acquisition
Transactions and each party hereby irrevocably agrees that all claims in respect
of such dispute or any suit, action or proceeding related thereto may be heard
and determined in such courts. The parties hereby irrevocably waive, to the
fullest extent permitted by applicable Law, any objection which they may now or
hereafter have to the laying of venue of any such dispute brought in such court
or any defense of inconvenient forum for the maintenance of such dispute. Each
of the parties hereto agrees that a judgment in any such dispute may be enforced
in other jurisdictions by suit on the judgment or in any other manner provided
by Law.
Each of the parties hereto hereby consents to process being served by any party
to this Agreement in any suit, action or proceeding by delivery of a copy
thereof in accordance with the provisions of Section 13.6.
74
Waiver of Right to Trial by Jury. Each party to this Agreement waives any right
to trial by jury in any action, matter or proceeding regarding this Agreement or
any provision hereof.
Entire Agreement; Amendments and Waivers. This Agreement (including the
Schedules and Exhibits hereto) together with the certificates specifically
referred to herein or required to be delivered pursuant to the terms hereof, and
the Confidentiality Agreement represent the entire understanding and agreement
between the parties hereto or thereto with respect to the subject matter hereof.
This Agreement can be amended, supplemented or changed, and any provision hereof
can be waived, only by written instrument making specific reference to this
Agreement signed by the parties hereto. No action taken pursuant to this
Agreement, including without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach. No
failure on the part of any party to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or remedy by such party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy.
Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and
performed in such State without giving effect to the principles, policies or
provisions thereof concerning choice or conflict of laws.
Notices. All notices and other communications under this Agreement shall be in
writing and shall be deemed given (i) when delivered personally by hand (with
written confirmation of receipt), (ii) when sent by facsimile (with written
confirmation of transmission) or (iii) one Business Day following the day sent
by overnight courier (with written confirmation of receipt), in each case at the
following addresses and facsimile numbers (or to such other address or facsimile
number as a party may have specified by notice given to the other party pursuant
to this provision):
If to the Seller Representative, to:
Syratech Corporation
175 McClellan Hwy
E. Boston, MA 02128-9114
Fax: 617-568-8178
Attention: Mr. Greg Hunt
With a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Facsimile: (212) 310-8007
Attention: Robert L. Messineo, Esq.
If to the Purchaser, to:
Syratech Acquisition Corp.
One Merrick Avenue
Westbury, NY 11590
Facsimile: (516) 683-6006
Attention: President
75
With a copy (which shall not constitute notice) to:
Troutman Sanders LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
Facsimile: (516) 683-6006
Attention: Lawrence M. Levinson, Esq. and
Timothy I. Kahler, Esq.
If to the Lifetime, to:
Lifetime Brands, Inc.
One Merrick Avenue
Westbury, NY 11590
Facsimile: (516) 683-6006
Attention: Ronald Shiftan, Vice Chairman and Chief
` Operating Officer
With a copy (which shall not constitute notice) to:
Troutman Sanders LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
Facsimile: (516) 683-6006
Attention: Lawrence M. Levinson, Esq. and
Timothy I. Kahler, Esq.
Severability. If any term or other provision of this Agreement is invalid,
illegal, or incapable of being enforced by any Law or public policy, all other
terms or provisions of this Agreement shall nevertheless remain in full force
and effect so long as the economic or legal substance of the Acquisition
Transactions is not affected in any manner materially adverse to any party. Upon
such determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the Acquisition
Transactions are consummated as originally contemplated to the greatest extent
possible.
Binding Effect; Assignment.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement shall create or be deemed to create any third party beneficiary rights
in any Person or entity not a party to this Agreement except as provided below.
Except as set forth below, no assignment of this Agreement or of any rights or
obligations hereunder may be made by either the Sellers or the Purchaser (by
operation of law or otherwise) without the prior written consent of the other
parties hereto and any attempted assignment without the required consents shall
be void. No assignment of any obligations hereunder shall relieve the parties
76
hereto of any such obligations. Notwithstanding the foregoing, the Purchaser
may, without the consent of any other party hereto, (i) assign its rights under
this Agreement to any Affiliate of the Purchaser or (ii) following the Closing,
to any successor in interest to the Purchaser who acquires all or substantially
all of the Business or (iii) make a collateral assignment of its rights under
this Agreement for the benefit of its lenders, and each of the Sellers agrees to
execute acknowledgments of any collateral assignment(s) pursuant to this Section
13.8 in such forms as the Purchaser or the Purchaser's lender(s) may from time
to time reasonably request; provided that no such assignment or collateral
assignment shall release the Purchaser from any of its obligations hereunder or
shall hinder or delay the consummation of the Acquisition Transactions. Upon any
such permitted assignment, the references in this Agreement to the Purchaser
shall also apply to any such assignee unless the context otherwise requires.
Notwithstanding the foregoing, following Closing each of the Sellers may,
without the consent of any other party hereto, upon its dissolution, assign its
rights and obligations under this Agreement to a liquidating trust established
under a plan of dissolution, liquidation and winding up of the Seller (all such
trusts for the Sellers, collectively, the "Liquidating Trust"); provided, that
such Seller shall provide the Purchaser with a written instrument duly executed
by the applicable Liquidating Trust evidencing such assignment and pursuant to
which such Liquidating Trust agrees to be bound by all of the terms and
conditions of this Agreement applicable to the liquidating Seller; provided
further, that any such assignment shall in no way limit or otherwise restrict
the obligations of such Seller hereunder or benefits to the Purchaser hereunder.
Upon any such permitted assignment, the references in this Agreement to the
Sellers will apply to the Liquidating Trust unless the context otherwise
requires.
Non-Recourse. All representations, warranties and covenants contained herein are
made and undertaken only by the parties hereto and no past, present or future
director, officer, employee, incorporator, member, partner or equity holder of
any party that is not itself a party hereto shall have any liability for any
obligations or liabilities of any party under this Agreement or the Seller
Documents or the Purchaser Documents or any other instrument, certificate or
document to be delivered in connection herewith or for any claim based on, in
respect of, or by reason of, the transactions contemplated hereby and thereby.
Nothing contained herein shall, however, relieve any person of liability for any
act of fraud.
Remedies. In the event of any actual or prospective breach or default by any
party hereto, the other parties shall be entitled to equitable relief, including
remedies in the nature of rescission, injunction and specific performance. All
remedies hereunder are cumulative and not exclusive. Nothing contained herein
and no election of any particular remedy shall be deemed to prohibit or limit
any party from pursuing, or be deemed a waiver of the right to pursue, any other
remedy or relief available now or hereafter existing at Law or in equity
(whether by statute or otherwise) for such actual or prospective breach or
default, including the recovery of damages.
Counterparts. This Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
77
[Signature Page One of Two
to Asset Purchase Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
written above.
SYRATECH CORPORATION
By: /s/ Gregory W. Hunt
-------------------------------------------
Name: Gregory W. Hunt
Title: Co-CEO/CFO
WALLACE INTERNATIONAL DE P.R., INC.
By: /s/ Gregory W. Hunt
-------------------------------------------
Name: Gregory W. Hunt
Title: CEO
SYRATECH (H.K.) LIMITED
By: /s/ Gregory W. Hunt
-------------------------------------------
Name: Gregory W. Hunt
Title: CEO/Director
CHI INTERNATIONAL, INC.
By: /s/ Gregory W. Hunt
-------------------------------------------
Name: Gregory W. Hunt
Title: CEO
78
[Signature Page Two of Two
to Asset Purchase Agreement]
SYRATECH ACQUISITION CORPORATION
By: /s/ Jeffrey Siegel
-------------------------------------------
Name: Jeffrey Siegel
Title: President and Chief Executive
Officer
LIFETIME BRANDS, INC.
By: /s/ Jeffrey Siegel
-------------------------------------------
Name: Jeffrey Siegel
Title: President and Chief Executive
Officer
79
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the undersigned in its capacity as the Seller Representative pursuant to
Article XI hereof, and the undersigned hereby agrees to act in such capacity.
SYRATECH CORPORATION
By: /s/ Gregory W. Hunt
-------------------------------------------
Name: Gregory W. Hunt
Title: CEO/Director
80