ASSET PURCHASE AGREEMENT

 

 

                                                                      EXIBIT 2.2

 

 

                            ASSET PURCHASE AGREEMENT

 

                                  by and among

 

                           Ronco Marketing Corporation

                              a Delaware corporation

 

                                on the one hand,

 

                                       and

 

                              RONCO INVENTIONS, LLC

                     a California limited liability company

 

                              POPEIL INVENTIONS, INC.

                              a Nevada corporation

 

                              RP PRODUCTIONS, INC.

                              a Nevada corporation

 

                                RMP FAMILY TRUST,

                          an Illinois Irrevocable Trust,

 

                                       and

 

                                RONALD M. POPEIL

 

                                on the other hand

 

 

                                December 10, 2004

 

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                             ASSET PURCHASE AGREEMENT

 

 

      THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered into

as of this 10th day of December, 2004 by and among Ronco Marketing Corporation,

a Delaware corporation ("Purchaser"), Ronco Inventions, LLC, a California

limited liability company ("Ronco"), Popeil Inventions, Inc., a Nevada

corporation ("Popeil Inc."), RP Productions, Inc., a Nevada corporation ("RP"),

RMP Family Trust, an Illinois Irrevocable Trust, Gina Wallman and Martin Lescht

as co-Trustees (the "Shareholder"), and Ronald M. Popeil ("R. Popeil"). In this

Agreement, Ronco, Popeil Inc., RP, R. Popeil are individually referred to as a

"Seller" and collectively as "Sellers."

 

                              W I T N E S S E T H:

 

      WHEREAS, Ronco, Popeil Inc. and RP are engaged in the business of

manufacturing, distributing and marketing various consumer products (the

"Business");

 

      WHEREAS, the Shareholder owns, directly or indirectly, all of the issued

and outstanding equity interests of Ronco, Popeil Inc., and RP; and

 

      WHEREAS, Purchaser desires to purchase, and Sellers desire to sell to

Purchaser, substantially all assets related to the Business and owned by

Sellers, and Sellers desire to assign and delegate to Purchaser, and Purchaser

is willing to assume, substantially all liabilities and obligations associated

with the Business, in each case to the extent and only as provided in this

Agreement.

 

      NOW, THEREFORE, in consideration of the mutual covenants and agreements

set forth in this Agreement, and for other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, the Parties hereto

agree as follows:

 

                                A G R E E M E N T

 

                                    ARTICLE 1

 

                           SALE OF ASSETS AND CLOSING

 

      1.1 Included Assets. On the terms and subject to the conditions set forth

in this Agreement, Sellers shall sell, transfer, convey, assign and deliver to

Purchaser, and Purchaser shall purchase and pay for, at the Closing, free and

clear of all Liens (other than for any Liens arising from this Agreement or any

of the Operative Agreements), all of Sellers' right, title and interest in, to

and under the assets and properties used or held for use in connection with the

Business (as conducted as of the date hereof) that are hereinafter described

(collectively, the "Included Assets"):

 

            (A) Tangible Personal Property. The furniture, fixtures, equipment,

      molds, tooling, and other tangible personal property (other than the

      Inventory) listed or described in Schedule 1.1(A);

 

 

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            (B) Personal Property Leases. The leases or subleases of tangible

      personal property listed in Schedule 1.1(B), together with any options to

      extend and renew said leases and/or purchase the underlying property (the

      "Personal Property Leases");

 

            (C) Business Contracts. All Contracts (other than the Real Property

      Leases, the Personal Property Leases and the Accounts Receivable) listed

      on Schedule 1.1(C);

 

            (D) Intellectual Property. All Intellectual Property (including such

      Sellers' goodwill therein), all customer and supplier lists, and all

      rights (including, without limitation, pertaining to legal judgments),

      privileges, claims, credits, rights of set-off, rights of indemnification,

      hold harmless agreements, covenant not to be prosecuted, all covenants and

      warranties (express or implied), causes of action and options, in each

      case currently or previously used or held for use in the Business and

      related to the Included Products, including, without limitation, the

      Intellectual Property listed or described on Schedule 1.1(D),

      (collectively, the "Acquired Intellectual Property");

 

            (E) Licenses. All Licenses in effect as of the date hereof that are

      used or held in connection with the Business and listed in Schedule

      1.1(E), in each case to the extent such Licenses are transferable;

 

            (F) Books and Records. All of the Books and Records. To the extent

      any of the Books and Records are items susceptible to duplication and are

      required by Legal Rules to be retained by Sellers, such Sellers may

      deliver photostatic copies or other reproductions thereof;

 

            (G) URLs. The URLs ronco.com, ronco.tv, shop.ronco.com, and any

      other URLs currently or previously used in the Business and related to the

      Included Products;

 

            (H) Accounts Receivable. All trade accounts receivable and all

      notes, bonds and other evidences of Indebtedness of and rights to receive

      payments arising out of sales occurring in the conduct of the Business,

      including any rights of any Seller with respect to any third party

      collection procedures or any other actions or proceedings which have been

      commenced in connection therewith (the "Accounts Receivable");

 

             (I) Real Property Leases. The leases and subleases of real property

      described in Schedule 1.1(I) as to which any Seller is the lessee,

      sublessee, lessor or sublessor, together with any options to purchase the

      underlying property and leasehold improvements thereon, and in each case

      all other rights, subleases, licenses, permits, deposits and profits

      appurtenant to or related to such leases and subleases (the "Real Property

      Leases");

 

            (J) Inventory. All inventories of raw materials, work-in-process,

      finished goods, office and other supplies, parts, packaging materials and

 

 

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      other accessories related thereto which are held at, or are in transit

      from or to, the locations at which the Business is conducted, or located

      at customers' premises on consignment, in each case, which are used or

      held for use in the conduct of the Business and related to the Included

      Products and including with respect to any of the foregoing purchased

      subject to any conditional sales or title retention agreement in favor of

      any other Person, together with all rights of any Seller against suppliers

      of such inventories (the "Inventory");

 

             (K) Prepaid Expenses. All prepaid expenses related to the Business

      that are identified in Schedule 1.1(K);

 

            (L) Security Deposits. All security deposits deposited by or on

      behalf of any of Ronco, Popeil Inc. and/or RP, including any such security

      deposits deposited by or on behalf of any of Ronco, Popeil Inc. and/or RP

      as lessee or sublessee under the Real Property Leases; and

 

            (M) Credit Card Reserve Accounts. All credit card reserve accounts

      for each of Ronco, Popeil Inc. and RP as of the Closing, including the

      cash therein as of such date.

 

      1.2 Excluded Assets. Notwithstanding any contrary provision hereof, all

assets, rights and properties of Sellers not specifically referred to or

described in Section 1.1 above or the Schedules referred to therein are excluded

from the Included Assets and will be retained by Sellers, including, but not

limited to, tangible assets located at the Beverly Hills, California, Bel Air,

California and Carpenteria, California offices of the Business and those assets,

rights and properties listed or described in Schedule 1.2 (collectively, the

"Excluded Assets").

 

      1.3 Liabilities.

 

            (A) Assumed Liabilities. Subject to Sections 1.3(B) and 8.2, at the

      Closing, Purchaser shall assume and agree to pay, perform and discharge,

      when due, any and all of the obligations and liabilities of Sellers, or

      any of them, set forth on Schedule 1.3(A) (the "Assumed Liabilities").

 

             (B) Retained Liabilities. Purchaser is not assuming, and shall not

      be deemed to have assumed, and the Assumed Liabilities do not include any

      liability or obligation of Sellers, or any of them, not identified or

      described on Schedule 1.3(A) and, except as provided in Section 1.6(I),

      any liability or obligation for Taxes whether or not accrued, assessed or

      currently due and payable, including, without limitation, any Taxes (i) of

      the Sellers, whether or not they relate to the Business, (ii) arising from

      the operation of the Business or the ownership of the Included Assets for

      any Tax period (or portion thereof) ending on or prior to the Closing Date

      or (iii) arising out of the consummation of the transactions contemplated

      hereby, other than sales or use or like Taxes (which shall be borne by

      Purchaser as and to the extent provided in Section 1.6(I)). Hereinafter,

      all such liabilities and obligations to be retained by Sellers pursuant to

 

 

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      the immediately preceding sentence are referred to as the "Retained

      Liabilities". For purposes of this Section 1.3(B), all real property

      Taxes, personal property Taxes and similar ad valorem obligations levied

      with respect to the Included Assets for a Tax period that includes (but

      does not end on) the Closing Date shall be apportioned between Sellers and

      the Purchaser based upon the number of days of such period included in the

      Tax period before (and including) the Closing Date and the number of days

      of such Tax period after the Closing Date.

 

      1.4 Deposit. Concurrently with the date hereof, Purchaser will deliver to

and deposit with the Escrow Agent the sum of One Hundred Thousand Dollars

($100,000) (the "Deposit"). The Deposit will be held pursuant to the terms and

conditions of this Agreement and the Escrow Agreement. If Purchaser elects to

terminate this Agreement before the Closing pursuant to any of Sections 9.1(B),

(E), (H) or (J), Purchaser and the Sellers' Designee shall, promptly after such

termination by Purchaser (unless such Sellers were previously entitled to

receive the Deposit pursuant to Section 9.1(F) and the immediately succeeding

sentence of this Section 1.4), execute and deliver to the Escrow Agent joint

written instructions directing the Escrow Agent to release the Deposit to

Purchaser (and Purchaser shall be entitled to retain the Deposit). If Sellers

elect to terminate this Agreement pursuant to any subsection of Section 9 other

than subsections (B), (E), (H) or (J) thereof, Purchaser shall join with the

Sellers' Designee in promptly executing joint written instructions directing the

Escrow Agent to release the Deposit to Sellers (and Sellers shall be entitled to

retain the Deposit).

 

      1.5 Purchase Price; Allocation. The aggregate purchase price to be paid to

Sellers for the Included Assets (the "Purchase Price") shall equal the sum of

Forty Million Dollars ($40,000,000) (the "Base Purchase Price") plus an amount

equal to the aggregate principal amount of the Notes (as defined below), as such

principal amount may be adjusted pursuant to Section 1.6 below. The Purchase

Price shall be payable as follows:

 

                  (A) Cash Payment. At the Closing, Purchaser shall pay Sellers,

            in cash via wire transfer of immediately available funds to the

            account or accounts of Sellers designated on Schedule 1.5(A), an

            aggregate of Thirty-Nine Million Nine Hundred Thousand Dollars

            ($39,900,000) (the "Purchase Closing Payment"). The Purchase Closing

            Payment will be allocated ratably among the Sellers in accordance

            with Schedule 1.5(A) (which Schedule, not to be inconsistent with

            the Tax allocation set forth on Schedule 1.10, will be provided by

            Sellers to Purchaser not later than three (3) Business Days prior to

            Closing).

 

                  (B) Release of Deposit. Subject to Section 1.4, at the

            Closing, Purchaser and the Sellers' Designee will execute and

            deliver to the Escrow Agent joint written instructions directing the

            Escrow Agent to release the Deposit to the Sellers, which Deposit

            will be distributed by the Escrow Agent among Sellers, via wire

            transfer of immediately available funds, in accordance with Schedule

            1.5(A).

 

                  (C) Delivery of Notes.

 

            (i) Prior, and as a mutual condition, to the Closing, R. Popeil and

      Sellers' Designee, on the one hand, and Purchaser, on the other hand,

 

 

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      shall use good faith efforts to agree in writing upon a reasonable amount

      of cash necessary to be conveyed to Purchaser at the Closing to be used in

      the operation of the Business by Ronco for the first calendar quarter of

      2005 (such amount, the "Included Cash").

 

            (ii) At the Closing, Purchaser will deliver to each Seller listed on

      Schedule 1.5(C) a purchase money promissory note, in substantially the

      form attached as Exhibit C (each, a "Note" and together, the "Notes"), in

      the initial principal amount equal to such Seller's portion (as set forth

      on Schedule 1.5(C) to be provided by Sellers to Purchaser not later than

      three (3) Business Days prior to Closing and which will not be

      inconsistent with the Tax allocation set forth on Schedule 1.10) of the

      sum of:

 

                  (A) Subject to Section 1.6 below, an amount equal to the

            Estimated Combined NCOAV; plus

 

                  (B) The Included Cash; plus

 

                  (C) If the sum of the Estimated Combined NCOAV and the

            Included Cash is less than $15,000,000, the Additional Cash.

 

      The initial aggregate principal amount of the Notes will be subject to

adjustment as provided in Section 1.6 below.

 

                  (D) Not later than ten (10) days prior to the anticipated

            Closing Date, Purchaser and each Seller shall cause their

            appropriate representatives to confer in good faith for the purposes

            of determining, as of the Closing, the Estimated Combined NCOAV,

            which is the sum of (i) the Estimated Ronco NCOAV, (ii) the

            Estimated Popeil Inc. NCOAV and (iii) the Estimated RP NCOAV. Such

            estimates shall be prepared in accordance with the accounting

            methodologies set forth on Schedule 1.5(D). As used in this

            Agreement, "Estimated Ronco NCOAV" means the amount of the Parties'

            good faith estimate of the Ronco Net Current and Other Asset Value

            prepared in accordance with the accounting methodologies reflected

            on Schedule 1.5(D) or, if the Parties cannot agree on such estimate

            prior to 5:00 p.m. California time on the day that is two Business

            Days prior to the anticipated Closing Date, the greater of (a)

            Purchaser's good faith estimate of the Ronco Net Current and Other

            Asset Value and (b) Ronco's good faith estimate of the Ronco Net

            Current and Other Asset Value. As used in this Agreement, "Estimated

            Popeil Inc. NCOAV" means the amount of the Parties' good faith

            estimate of the Popeil Inc. Net Current and Other Asset Value

            prepared in accordance with the accounting methodologies reflected

            on Schedule 1.5(D) or, if the Parties cannot agree on such estimate

            prior to 5:00 p.m. California time on the day that is two Business

 

 

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            Days prior to the anticipated Closing Date, the greater of (a)

            Purchaser's good faith estimate of the Popeil Inc. Net Current and

            Other Asset Value and (b) Popeil Inc.'s good faith estimate of the

            Popeil Inc. Net Current and Other Asset Value. As used in this

            Agreement, "Estimated RP NCOAV" means the amount of the Parties'

            good faith estimate of the RP Net Current and Other Asset Value

            prepared in accordance with the accounting methodologies reflected

            on Schedule 1.5(D) or, if the Parties cannot agree on such estimate

            prior to 5:00 p.m. California time on the day that is two Business

            Days prior to the anticipated Closing Date, the greater of (a)

            Purchaser's good faith estimate of the RP Net Current and Other

            Asset Value and (b) RP's good faith estimate of the RP Net Current

            and Other Asset Value. Notwithstanding anything in the foregoing to

            the contrary, if the Parties expect that the Estimated Combined

            NCOAV plus the Included Cash will exceed $15,000,000 as of the

             Closing, then the Sellers shall, at their discretion, retain such

            Accounts Receivable that they specifically identify to the Purchaser

            in writing prior to the Closing that the Sellers reasonably

            determine is necessary to reduce the sum of the Estimated Combined

            NCOAV plus the Included Cash to $15,000,000. Such selected Accounts

            Receivable shall thereafter be deemed an Excluded Asset and shall

            not be included in the calculation of any of the Estimated Ronco

            NCOAV or the Ronco Net Current and Other Asset Value, the Estimated

            Popeil Inc. NCOAV or the Popeil Inc. Net Current and Other Asset

            Value or the Estimated RP NCOAV or the RP Net Current and Other

            Asset Value (as applicable). In addition, Schedule 1.2 to this

            Agreement shall be deemed amended to include such Accounts

            Receivable and Section 1.1(H) and Schedules 1.6(F), 1.6(G) and

            1.6(H) shall each be deemed amended to exclude such Accounts

            Receivable.

 

                  (E) Purchaser hereby agrees to cooperate with Sellers and

            their Affiliates to modify the structure of the purchase of the

            Included Assets hereunder as may be necessary, as determined in the

            reasonable discretion of Sellers' tax advisor, to minimize the

            income tax consequences to Sellers and their Affiliates of the

            transactions contemplated by this Agreement, except to the extent

            such cooperation is disadvantageous to Purchaser in its good faith

            determination.

 

      1.6 Post Closing Purchase Price Adjustment.

 

                  (A) Promptly after the Closing, Purchaser shall, at its sole

             cost and expense, perform an accounting, in accordance with the

            accounting methodologies reflected on Schedule 1.5(D), to determine,

            as of the Closing, the amount of the (i) Ronco Net Current and Other

            Asset Value, (ii) Popeil Inc. Net Current and Other Asset Value and

            (iii) RP Net Current and Other Asset Value. Not later than

            forty-five (45) days after the Closing, Purchaser will deliver or

            cause to be delivered to the Sellers' Designee, with a copy to each

            of Ronco, Popeil Inc. and RP, a written report (the "Written

            Report") summarizing Purchaser's determination of the (a) Ronco Net

            Current and Other Asset Value, (b) Popeil Inc. Net Current and Other

            Asset Value and (c) RP Net Current and Other Asset Value, together

            with Purchaser's calculation of the (x) Ronco Adjustment Amount, if

            any, (y) Popeil Inc. Adjustment Amount, if any, and (z) RP

            Adjustment Amount, if any, based on Purchaser's determination of the

            (1) Ronco Net Current and Other Asset Value, (2) Popeil Inc. Net

            Current and Other Asset Value and (3) RP Net Current and Other Asset

            Value, respectively, in accordance with this Section 1.6(A)

            (collectively, the "Adjustment Determination"). At all times during

 

 

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            the accounting process, Purchaser will keep the Sellers' Designee

            informed of Purchaser's progress, and representatives of Sellers,

            including the Sellers' Designee, will be afforded a reasonable

            opportunity to observe and to consult with Purchaser and/or

            Purchaser's agents regarding the procedures undertaken by Purchaser

            and the application by Purchaser of the applicable accounting

            methodologies set forth on Schedule 1.5(D).

 

                  (B) If the Ronco Adjustment Amount as initially determined by

             Purchaser is a positive number, then Purchaser shall promptly

            execute and deliver to Ronco a promissory note, in the form attached

            hereto as Exhibit K(1), in the principal amount of the undisputed

            portion of the Ronco Adjustment Amount. If the Popeil Inc.

            Adjustment Amount as initially determined by Purchaser is a positive

            number, then Purchaser shall promptly execute and deliver to Popeil

            Inc. a promissory note, in the form attached as Exhibit K, in the

            principal amount of the undisputed portion of the Popeil Inc.

            Adjustment Amount. If the RP Adjustment Amount as initially

            determined by Purchaser is a positive number, then Purchaser shall

             promptly execute and deliver to RP a promissory note, in the form

            attached as Exhibit K, in the principal amount of the undisputed

            portion of the RP Adjustment Amount. If there are any Objections to

            any of the Ronco Adjustment Amount, Popeil Inc. Adjustment Amount or

            RP Adjustment Amount, and, as a result of the resolution of any

            Objections by agreement pursuant to Section 1.6(D) or by the

            Accounting Arbitrator pursuant to Section 1.6(E) there is a further

            positive adjustment in respect of such adjustment amount beyond the

            undisputed amount, then such amount shall be added to the principal

            amount due to the applicable Seller under the promissory notes

            described in this Section 1.6(B).

 

                  (C) If the Ronco Adjustment Amount as initially determined by

            Purchaser is a negative number, then the undisputed portion of the

            negative Ronco Adjustment Amount shall be deducted from the

            principal amount of the Note issued by Purchaser to Ronco pursuant

            to Section 1.5(C). If the Popeil Inc. Adjustment Amount as initially

            determined by Purchaser is a negative number, then the undisputed

            portion of the negative Popeil Inc. Adjustment Amount shall be

            deducted from the principal amount of the Note issued by Purchaser

            to Popeil Inc. pursuant to Section 1.5(C). If the RP Adjustment

            Amount as initially determined by Purchaser is a negative number,

            then the undisputed portion of the negative RP Adjustment Amount

            shall deducted from the principal amount of the Note issued by

            Purchaser to RP pursuant to Section 1.5(C). If there are any

            Objections to any of the Ronco Adjustment Amount, Popeil Inc.

            Adjustment Amount or the RP Adjustment Amount, and, as a result of

            the resolution of any Objections by agreement pursuant to Section

            1.6(D) or by the Accounting Arbitrator pursuant to Section 1.6(E)

            there is a further negative adjustment in respect of the disputed

            amount of such adjustment amount, then the principal amount of the

            Note issued by Purchaser to the applicable Seller shall be further

            decreased accordingly. Any decreases in the principal amount of the

            Notes as specified in this Section 1.6(C) shall be treated as being

            effective as of the Closing.

 

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(1)    To bear interest as described in the Addendum to the APA dated December

      10, 2004.

 

 

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                  (D) Within thirty (30) calendar days following receipt of the

             Adjustment Determination (the "Objection Period"), the Sellers'

            Designee shall notify Purchaser in writing of any objections to the

            Adjustment Determination (the "Objections"), setting forth written

            explanations of the Objections and the adjustments that the Sellers'

            Designee believes should be made. Following notice of the

            Objections, Purchaser shall have fifteen (15) calendar days to

            review and respond to the Objections, setting forth written

            explanations in those areas where it disagrees with the Objections,

            and delivering such response to the Sellers' Designee. Purchaser and

            the Sellers' Designee shall then have an additional fifteen (15)

             calendar days at the end of such period to attempt to resolve in

            good faith the Objections and for the Purchaser or Sellers to pay

            any adjustment amounts, if applicable. All written explanations

            delivered by any Party pursuant to this Section 1.6(D) shall be in

            reasonable detail and shall set forth such Party's analysis of the

            calculations, in each case, made in accordance with the accounting

            methodologies reflected on Schedule 1.5(D), of the (i) Ronco Current

            and Other Assets, (ii) Ronco Current and Other Liabilities, (iii)

            Popeil Inc. Current and Other Assets, (iv) Popeil Inc. Current and

            Other Liabilities, (v) RP Current and Other Assets and/or (vi) RP

            Current and Other Liabilities, as applicable.

 

                  (E) If Purchaser and the Sellers' Designee are unable to

            resolve any of their disagreements with respect to the Objections

            within the time periods specified in Section 1.6(D) above, they

            shall refer any unresolved Objections to a nationally recognized

            firm of independent certified public accountants as to which the

            parties mutually agree (the "Accounting Arbitrator") within ten (10)

            days. The Accounting Arbitrator shall determine, only with respect

            to the remaining differences so submitted, whether and to what

            extent the calculations set forth on the Adjustment Determination

            require adjustment. In making its determination, the Accounting

            Arbitrator shall only consider (i) this Agreement and the Schedules

            and Exhibits hereto and (ii) the written explanations previously

            delivered by the Parties to each other pursuant to Section 1.6(D).

            There shall be no oral arguments or ex parte communications with the

            Accounting Arbitrator by any Party regarding the substance of the

            remaining differences submitted to the Accounting Arbitrator. The

            Accounting Arbitrator's determination of the Ronco Current and Other

            Assets, the Ronco Current and Other Liabilities, the Popeil Inc.

            Current and Other Assets, the Popeil Inc. Current and Other

            Liabilities, the RP Current and Other Assets and/or the RP Current

            and Other Liabilities, as applicable, shall be in accordance with

            the applicable accounting methodologies reflected on Schedule

            1.5(D). If Purchaser and Sellers' Designee are unable to agree on an

            Accounting Arbitrator within the time frame specified above, then

            Purchaser and the Sellers' Designee shall each select, within five

            (5) calendar days, a nationally-recognized firm of independent

            certified public accountants and such firms shall jointly select an

            independent Accounting Arbitrator within ten (10) calendar days. If

            one of the parties hereto fails to select a nationally recognized

            firm of independent certified public accountants within the time

            frame above, then the accounting firm so selected by the party who

            did make their selection shall serve as the Accounting Arbitrator.

 

 

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            The Accounting Arbitrator's determination shall be final and binding

            on the Parties. Purchaser and the Sellers' Designee shall use their

            best efforts to cause the Accounting Arbitrator to complete its

            determination within thirty (30) days of its selection, and

            Purchaser and Sellers shall pay any applicable adjustment amounts as

            determined by the Accounting Arbitrator promptly after such

            determination. The fees and expenses of the Accounting Arbitrator

            shall be paid one-half by Purchaser, with the remainder of such fees

            and expenses paid collectively by the applicable Seller or Sellers.

 

                   (F) As used in this Section 1.6, the "Ronco Adjustment Amount"

            (which may be a positive or negative number) shall be equal to the

            Ronco Net Current and Other Asset Value minus the Estimated Ronco

            NCOAV. As used in this Agreement, "Ronco Net Current and Other Asset

            Value" means the amount that is equal to the difference between the

            Ronco Current and Other Assets and the Ronco Current and Other

            Liabilities as of the opening of business on the Closing Date, as

            determined after the Closing pursuant to Section 1.6(A) and/or

            Sections 1.6(D) and/or 1.5(E). The "Ronco Current and Other Assets"

            means those assets of Ronco identified or described under the

            heading "Selected Current and Other Assets" on Schedule 1.6(F) based

            on the accounting methodologies reflected on Schedule 1.5(D). The

            "Ronco Current and Other Liabilities" means those liabilities of

            Ronco identified or described under the heading "Selected Current

            and Other Liabilities" on Schedule 1.6(F) based on the accounting

            methodologies reflected on Schedule 1.5(D).

 

                  (G) As used in this Section 1.6, the "Popeil Inc. Adjustment

            Amount" (which may be a positive or negative number) shall be equal

            to the amount obtained by subtracting the Estimated Popeil Inc.

            NCOAV from the Popeil Inc. Net Current and Other Asset Value. As

             used in this Agreement, "Popeil Inc. Net Current and Other Asset

            Value" means the amount that is equal to the difference between the

            Popeil Inc. Current and Other Assets and the Popeil Inc. Current and

            Other Liabilities as of the opening of business on the Closing Date,

            as determined after the Closing pursuant to Section 1.6(A) and/or

            Sections 1.6(D) and/or 1.6(E). The "Popeil Inc. Current and Other

            Assets" means those assets of Popeil Inc. identified or described

            under the heading "Selected Current and Other Assets" on Schedule

            1.6(G) based on the accounting methodologies reflected on Schedule

            1.5(D). The "Popeil Inc. Current and Other Liabilities" means those

            liabilities of Popeil Inc. identified or described under the heading

            "Selected Current and Other Liabilities" on Schedule 1.6(G) based on

            the accounting methodologies reflected on Schedule 1.5(D).

 

                   (H) As used in this Section 1.6, the "RP Adjustment Amount"

            (which may be a positive or negative number) shall be equal to the

            amount obtained by subtracting the Estimated RP NCOAV from the RP

            Net Current and Other Asset Value. As used in this Agreement, "RP

            Net Current and Other Asset Value" means the amount that is equal to

            the difference between the RP Current and Other Assets and the RP

            Current and Other Liabilities as of the opening of business on the

            Closing Date, as determined after the Closing pursuant to Section

 

 

                                       9

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            1.6(A) and/or Sections 1.6(D) and/or 1.6(E). The "RP Current and

            Other Assets" means those assets of RP identified or described under

            the heading "Selected Current and Other Assets" on Schedule 1.6(H)

            based on the accounting methodologies reflected on Schedule 1.5(D).

            The "RP Current and Other Liabilities" means those liabilities of RP

            identified or described under the heading "Selected Current and

            Other Liabilities" on Schedule 1.6(H) based on the accounting

            methodologies reflected on Schedule 1.5(D).

 

                  (I) Not later than ten (10) calendar days prior to the

            anticipated Closing Date, Purchaser and the Sellers' Representative

            shall (i) mutually calculate in good faith the total estimated sales

            and like Taxes that shall be payable under the laws of any

            jurisdiction by each Seller as a result of such Seller's receipt of

            its ratable share of the Purchase Price and (ii) set forth the

            amounts of such estimated Taxes in an exhibit to this Agreement to

            be attached hereto as Schedule 1.6(I). At the Closing, Purchaser

            shall pay each Seller an amount sufficient to provide Sellers with

            the same net proceeds from the Purchase Price that Sellers would

            have realized from a sale transaction in which Sellers did not have

            to pay such sales or like Tax liability set forth on Schedule 1.6(I)

            (i.e., on a "grossed up" basis). Immediately after the final

            determination of the Combined NCOAV pursuant to this Section 1.6,

            Purchaser and the Sellers' Representative shall mutually calculate

            in good faith any adjustments to such estimated Tax amounts as may

            result from the final determination of the Purchase Price. Not later

            than three (3) calendar days after any such adjustments have been

            calculated, (1) Purchaser shall pay Ronco, Popeil Inc. and/or RP, as

            applicable, an amount in cash equal to the incremental sales or like

            Tax liability calculated to be payable by such Seller (again, on a

            "grossed up" basis) as a result of the final determination of (a)

            the Ronco Net Current and Other Asset Value, (b) the Popeil Inc. Net

            Current and Other Asset Value and (c) the RP Net Current and Other

            Asset Value, as applicable or (2) Ronco, Popeil Inc. and/or RP shall

            repay Purchaser the amount by which the estimated sales or like

             Taxes as set forth on Schedule 1.6(I) may exceed the final

            calculation of estimated sales or like Tax liability based on the

            final determination of (a) the Ronco Net Current and Other Asset

            Value, (b) the Popeil Inc. Net Current and Other Asset Value and (c)

            the RP Net Current and Other Asset Value, as applicable. Each Seller

            shall pay, in a timely manner, to the appropriate taxing authorities

            all amounts received from Purchaser pursuant to this Section 1.6(I).

            If such amounts remitted by any Seller to any taxing authority

            pursuant to this Section 1.6(I) prove to be insufficient, Purchaser

            agrees to pay the amount of any such deficiency (including any

            penalties and interest thereon, and again on a "grossed up" basis)

            to such Seller, immediately upon presentation by such Seller to

            Purchaser of any deficiency notice or similar correspondence

            received by such Seller from any taxing authority asserting such

            deficiency. Conversely, each Seller agrees to promptly refund to

            Purchaser the amount of any refund that may be received by such

            Seller from any taxing authority in respect of any amounts remitted

            to such authority by such Seller pursuant to this Section 1.6(I).

            Notwithstanding the foregoing, the maximum aggregate amount that

            Purchaser shall be obligated to pay Sellers pursuant to this Section

            1.6(I) shall not exceed $10,000.

 

 

                                       10

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      1.7 Payments on the Purchase Money Promissory Notes.

 

                  (A) For so long as any amounts remain outstanding under the

            Notes, Purchaser shall make per unit quality control payments ("QC

            Payments") earned by Sellers for each product as set forth below in

            this Section 1.7; provided, that such QC Payments shall not be

            payable pursuant to this Section 1.7 with respect to any units of

            product manufactured for marketing and sale through retail

            distribution channels, it being understood and agreed that the QC

            Payments to be payable with respect to such units of product are to

            be as provided in the QC Amendment contemplated by Section 7.3(H).

            The QC Payments shall be made to the Sellers' Designee, who shall

            distribute such payments on a pro rata basis as set forth on

             Schedule 1.5(A) to the applicable Sellers for application to amounts

            outstanding under the Notes in accordance with such Notes. The

            Sellers will earn the QC Payments each time a unit of one of the

            products listed below is manufactured by, for, or on behalf of the

            Purchaser or any of its Affiliates. For purposes of determining the

            QC Payments earned pursuant to this Section 1.7, a product will be

            deemed to be manufactured no later than five (5) business days after

            such product is made available for Purchaser or any of Purchaser's

            Affiliates or designees to take immediate possession. Purchaser will

            make all QC Payments hereunder as such QC Payments are earned. All

            QC Payments shall be non-refundable. None of the Sellers shall be

            deemed to have waived, amended, modified or changed any provision of

            this Agreement, or its respective rights hereunder, the Notes or any

             other document or agreement entered into in connection with this

            Agreement, as a result of its acceptance of any of the payments

            called for in this Section 1.7(A), including, but not limited to,

            such Seller's right to dispute the amounts paid under this Section

            1.7(A) in accordance with the provisions of Section 1.7(D).

 

                  (B) Purchaser shall provide the Sellers' Designee, as

            representative for the Sellers, with a quarterly report detailing

            the number of each of the products listed below that are

            manufactured (as such term is used above) during such calendar

            quarter.

 

                  (C) Purchaser shall prepare reasonably accurate, complete and

            detailed records in order to substantiate the amounts payable as set

            forth in Section 1.7(A), and Purchaser shall maintain such records

            for a period of at least three (3) years following the quarterly

            period to which such records relate.

 

                  (D) Purchaser's records that relate to the subject matter of

            this Section 1.7 may be examined once per calendar year in Los

            Angeles, California on reasonable notice and during normal business

            hours by an independent auditor selected by the Sellers' Designee

            and paid for by Sellers. If any such examination reveals that

            Purchaser owes Sellers additional QC Payments, Purchaser shall: (a)

             immediately pay the Sellers' Designee for distribution to Sellers on

            a pro rata basis such delinquent amounts, which payments shall be

 

 

                                       11

<PAGE>

 

            applied by the applicable Sellers against outstanding amounts owed

            to such Sellers under their respective Notes in accordance with such

            Notes; and (b) pay to the Sellers' Designee for distribution to

            Sellers interest on the overdue amounts calculated at a rate equal

            to the lesser of 10% per annum or the maximum rate allowed by

            applicable Legal Rules, which payments shall also be applied against

            outstanding amounts owed to such Sellers under such Notes in

            accordance therewith. Notwithstanding anything herein to the

            contrary, (i) if the actual aggregate amount of QC Payments made by

            Purchaser to Sellers over the entire audited period are less than

            ninety percent (90%) of those amounts owed for the period as

            determined by the independent auditor selected by the Sellers'

            Designee as representative for Sellers, Purchaser shall pay to the

            Sellers' Designee, upon demand therefor, for distribution to Sellers

            on a pro rata basis an amount equal to the costs of the audit and

            (ii) if the actual aggregate amount of QC Payments made by Purchaser

            to Sellers over the entire audited period are at least ninety

            percent (90%) of those amounts owed for the period as determined by

            the independent auditor selected by the Sellers' Designee as

            representative for Sellers, the costs of the audit shall be borne by

            Sellers.

 

 

                                QC Payment Schedule

 

Product manufactured                               QC Payment per unit of product

                                                  manufactured

 

Showtime Rotisserie - Pro Model                    $4.50

 

Showtime Rotisserie - Standard Model               $3.50

 

Showtime Rotisserie - Compact Model                $3.00

 

Pastamaker                                         $2.50

 

Motorized Food Dehydrator                          $2.50

 

Nonmotorized Food Dehydrator                        $1.25

 

Popeil's Pocket Fishermen                          $1.75

 

Cutlery Set (12 pieces or more)                    $1.50

 

Block for Cutlery Set                              $1.75

 

GLH Hair Cosmetic (per GLH regular size can)       $1.50

 

GLH Hair Cosmetic (per GLH small size can)         $ .75

 

Mr. Microphone                                     $1.50

 

Egg Scrambler                                      $1.25

 

Solid Flavor Injector                              $1.00

 

 

                                       12

<PAGE>

 

Liquid Flavor Injector                             $1.50

 

Flatware Set                                       $1.50

 

Scissors                                           $1.00

 

Rotisserie Cookbook                                $ .65

 

Lean Rotisserie Cookbook                           $ .65

 

Marinade Cookbook                                  $ .65

 

Lean Rotisserie Booklet (noninstructional)         $ .65

 

Lean Marinade Booklet (noninstructional)           $ .65

 

Bagel Cutter                                       $1.00

 

Door Saver                                         $1.00

 

Showtime Outdoor Stand                             $ .75

 

Showtime Vinyl Cover                               $ .50

 

Grip Spatula                                       $ .25

 

Flip-It Spatula                                     $ .25

 

Showtime Pro Model Kebob Rods (each)               $ .20

 

Showtime Standard Model Kebob Rods (each)          $ .20

 

Showtime Compact Model Kebob Rods (each)           $ .20

 

Showtime Mini Model Kebob Rods (each)              $ .20

 

Char Rubs (per container)                          $ .15

 

Marinades (per container)                          $ .15

 

Barbecue Sauce (per container)                     $ .15

 

Barbecue Seasonings (per container)                $ .15

 

Sausage Seasonings (per container)                 $ .15

 

Jerky Seasonings (per container)                   $ .15

 

Rib Basket                                         $1.50

 

 

                                       13

<PAGE>

 

Lobster Basket                                     $1.50

 

1.8 Closing. Subject to Article 9 below, the closing of the transactions

contemplated by this Agreement (the "Closing") shall take place at the offices

of O'Melveny & Myers LLP, 610 Newport Center Drive, Newport Beach, California,

or such other location agreed upon by the Parties, at 10:00 a.m. (local time) on

the third Business Day following the satisfaction or waiver of the conditions

set forth in Article 7 or another date mutually agreed upon by the Parties (the

"Closing Date").

 

                  (A) Sellers' Closing Deliveries. The applicable Sellers shall

            take the following actions at the Closing:

 

            (i) Bill of Sale. Sellers shall deliver or cause to be delivered to

      Purchaser the Bill of Sale, duly executed by Sellers.

 

             (ii) Assignment and Assumption Agreement. Sellers shall deliver or

      cause to be delivered to Purchaser the Assignment and Assumption

      Agreement, duly executed by Sellers.

 

            (iii) Product Development Agreement. Sellers shall cause to be

      delivered to Purchaser the Product Development Agreement, duly executed by

      R. Popeil and Alan Backus.

 

            (iv) Consulting Agreements. Sellers shall cause to be delivered to

      Purchaser the Consulting Agreements for R. Popeil and Alan Backus, duly

      executed by each (as applicable).

 

            (v) Trademark Co-Existence Agreement. Sellers shall deliver to

      Purchaser the Trademark Co-Existence Agreement, duly executed by the

      applicable Sellers.

 

             (vi) FIRPTA Certificate. Each Seller shall deliver to Purchaser a

      duly executed certificate in the form specified by Treasury Regulation

      Section 1.1445-2(b)(2).

 

            (vii) Payments. Sellers shall deliver to Purchaser the Included Cash

      and, if any, the Additional Cash.

 

            (viii) Other Reasonably Requested Documents. Sellers shall deliver

      to Purchaser such other documents or instruments as are required pursuant

      to this Agreement or as may be reasonably requested by Purchaser or any

      Person providing financing for Purchaser's payment of the Purchase Closing

      Payment.

 

                  (B) Purchaser's Closing Deliveries. Purchaser shall take the

            following actions at the Closing:

 

             (i) Payments. Purchaser shall pay Sellers the Purchase Closing

      Payment in accordance with the terms of Section 1.5(A).

 

 

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<PAGE>

 

            (ii) Deposit. Subject to Section 1.4, Purchaser shall cause to be

      delivered to Sellers the Deposit in accordance with the terms of Section

      1.5(B).

 

            (iii) Notes. Purchaser shall deliver to each Seller set forth on

      Schedule 1.5(C) such Seller's Note, duly executed by Purchaser.

 

            (iv) Sales Tax. Purchaser shall deliver to each Seller the tax gross

      up payment payable to such Seller pursuant to Section 1.6(I), as set forth

      on Schedule 1.6(I).

 

            (v) Bill of Sale. Purchaser shall deliver or cause to be delivered

       to Sellers the Bill of Sale, duly executed by Purchaser.

 

            (vi) Assignment and Assumption Agreement. Purchaser shall deliver or

      cause to be delivered to Sellers the Assignment and Assumption Agreement,

      duly executed by Purchaser.

 

            (vii) Product Development Agreement. Purchaser shall deliver or

      cause to be delivered to R. Popeil, the Product Development Agreement,

      duly executed by Purchaser. (viii) Consulting Agreements. Purchaser shall

      deliver to each of R. Popeil and Alan Backus their respective Consulting

      Agreements, duly executed by Purchaser.

 

            (ix) Trademark Co-Existence Agreement. Purchaser shall deliver or

      cause to be delivered to the applicable Sellers the Trademark Co-Existence

      Agreement, duly executed by Purchaser.

 

            (x) Letter of Credit. Purchaser shall deliver or cause to be

      delivered to Sellers the Letter of Credit.

 

            (xi) Other Reasonably Requested Documents. Purchaser shall deliver

      or cause to be delivered to Sellers such other documents or instruments as

      are required pursuant to this Agreement or as may be reasonably requested

      by Sellers.

 

                  (C) Joint Deliveries. At the Closing, Purchaser and the

             Sellers' Designee shall execute and deliver to the Escrow Agent

            joint written instructions directing the Escrow Agent to deliver to

            the Sellers at the Closing the Deposit, together with any interest

            and earnings thereon.

 

      1.9 Further Assurances; Post-Closing Cooperation. At any time or from time

to time after the Closing, at Purchaser's reasonable request and without further

consideration, Sellers and/or the Shareholder shall execute and deliver to

Purchaser such other instruments of sale, transfer, conveyance, assignment and

confirmation, provide such materials and information and take such other actions

as Purchaser may reasonably deem necessary or desirable in order more

effectively to transfer, convey and assign to Purchaser, and to confirm

Purchaser's title to, all of the Included Assets.

 

 

                                       15

<PAGE>

 

      1.10 Tax Allocation. Exhibit 1.10 sets forth an allocation of the Purchase

Price (and all other capitalized costs) among the Included Assets of each of the

Sellers in accordance with Section 1060 of the Code and the Treasury regulations

thereunder (and any similar provision of state, local or foreign law, as

appropriate), subject to any adjustment to the Purchase Price pursuant to

Section 1.6. Purchaser and each of the Sellers and their respective Affiliates

shall report, act and file Tax Returns (including, without limitation, IRS Form

8594) in all respects and for all purposes consistent with Exhibit 1.10. Neither

Purchaser nor any Sellers shall take any position (whether in audits, Tax

Returns or otherwise) which is inconsistent with such allocation unless required

to do so by applicable Legal Rules.

 

      1.11 Sales and Use Tax. Subject to the provisions of Section 1.6(I),

Purchaser and Sellers will cooperate in preparing and filing use and sales tax

returns relating to, and Purchaser will pay, any and all sales, real estate,

transfer or use tax due with regard to the transactions provided for in this

Article 1, whether levied on Purchaser or Sellers.

 

                                   ARTICLE 2

 

                   REPRESENTATIONS AND WARRANTIES OF SELLERS

 

            Sellers make the representations and warranties set forth in this

Article 2, in each case as of the date of this Agreement. Purchaser hereby

acknowledges and agrees that Sellers are not making any representation or

warranty whatsoever, express or implied, except those representations and

warranties of Sellers expressly set forth in this Agreement.

 

      2.1 Organization. Each Seller that is not an individual (other than Ronco)

is a corporation duly organized, validly existing and in good standing under the

laws of the state of its incorporation. Ronco is a limited liability company

duly organized, validly existing and in good standing under the laws of

California. Each of Popeil Inc. and RP has the corporate power to own its

properties and to carry on the Business as conducted by it as of the date

hereof, and Ronco has the limited liability company power to own its properties

and to carry on the Business as conducted by it as of the date hereof. The

copies of the Certificates of Incorporation, Bylaws and operating agreements of

each Seller heretofore delivered to Purchaser are true, complete and correct and

are in full force and effect. Each of Ronco, Popeil Inc. and RP is duly

authorized to conduct business and is in good standing under the laws of each

jurisdiction where such qualification is required, except where the failure to

be in good standing or qualified would not reasonably be expected to have a

Material Adverse Effect on Ronco, Popeil Inc. or RP taken as a whole.

 

      2.2 Authority; Non-Contravention. This Agreement and the other agreements

contemplated hereby to be executed by each of Sellers pursuant hereto have been

duly executed and delivered by each of Sellers, and constitute valid and binding

obligations of each of Sellers, enforceable in accordance with their respective

terms, subject to the effect of applicable bankruptcy, insolvency,

reorganization, moratorium or similar laws affecting the rights of creditors or

by general equitable principles. Each Seller has the power and authority to

execute and deliver and perform its obligations under this Agreement and the

other agreements contemplated herein to be executed by it. The execution and

delivery by Sellers and the Shareholder of this Agreement do not, and the

performance by Sellers and the Shareholder of their respective obligations under

 

 

                                        16

<PAGE>

 

this Agreement and the consummation of the transactions contemplated hereby will

not (a) conflict with or result in a material violation or breach of any of the

terms, conditions or provisions of the Certificate of Incorporation or Bylaws

(or other comparable corporate charter documents) of any Seller, to the extent

applicable, (b) violate in any material respect any Legal Rules or (c) except as

set forth on Schedule 2.2, conflict with, result in a breach of, constitute a

default under, result in the acceleration of, create in any party the right to

accelerate, terminate, modify, or cancel, or require any notice or consent under

any Material Contract or result in any Lien on any of the Included Assets.

 

      2.3 Title or Right to Included Assets. Each Seller has good and marketable

title to or other right to use all of the Included Assets it shall convey to

Purchaser at the Closing, free of Liens.

 

      2.4 Financial Statements; No Material Adverse Change. .

 

                  (A) Attached as Exhibit H are true, correct and complete

            copies of the following financial statements: audited consolidated

            income statements and statements of cash flow of Ronco, Popeil Inc.

            and RP for the fiscal years ended December 31, 2003, December 31,

            2002, and December 31, 2001, and audited consolidated balance sheets

            of Ronco, Popeil Inc. and RP as of December 31, 2003, December 31,

            2002, and December 31, 2001, together with notes thereto and reports

            of auditors thereon (the "Audited Financial Statements"). The

            Audited Financial Statements: (a) have been prepared in accordance

            with the books of account and records of Ronco, Popeil Inc. and RP

            and (b) have been prepared in accordance with United States

            generally accepted accounting principles ("GAAP") consistently

            applied with prior periods, except as set forth on Schedule 2.4(A).

 

                  (B) Except as set forth on Schedule 2.4(B), since December 31,

            2003, there has not occurred any Material Adverse Change with

            respect to Ronco, Popeil Inc., and RP, taken as a whole, except any

            such change arising from changes in the general state of the

            industries in which such sellers operate, conditions, events or

            circumstances generally affecting the U.S. economy, including as a

            result of acts of war or terrorism, changes in GAAP, changes in law

            or regulations, or changes resulting from the fact that the

            transactions contemplated by this Agreement have been publicly

            disclosed.

 

      2.5 Tax Matters. All tax returns and tax reports required to be filed with

respect to the income, operations, business or assets of Ronco, Popeil Inc.

and/or RP have been timely filed (or appropriate extensions have been obtained,

which extensions are listed on Schedule 2.5) with the appropriate governmental

agencies in all jurisdictions in which such returns and reports are required to

be filed. All of the foregoing, as filed, are true, correct and complete in all

material respects with respect to the income, operations, business or assets of

Ronco, Popeil Inc. and RP, and reflect accurately all liabilities for taxes with

respect to the income, operations, business or assets of Ronco, Popeil Inc. and

RP for the periods to which such returns relate, and all such amounts shown as

owing thereon have either been paid or fully accrued on the books of Ronco,

Popeil Inc. or RP, as applicable.

 

 

                                       17

<PAGE>

 

      2.6 Intellectual Property Rights.

 

                  (A) The execution, delivery and performance of this Agreement

            and the Operative Agreements and the consummation of the

            transactions contemplated hereby and thereby will not breach,

            violate or conflict with any agreement governing any Acquired

            Intellectual Property and will not cause the forfeiture or

            termination or give rise to a right of forfeiture or termination of

            any such Intellectual Property or in any material way impair the

            right of Purchaser or any of its affiliates to use, sell, license or

            dispose of, or bring any action for the post-Closing infringement

            of, any such intellectual property or portion thereof.

 

                  (B) Set forth on Schedule 2.6(B) is a true and complete list

            of all material registrations and material applications for

            registration of all Acquired Intellectual Property.

 

                  (C) Except as set forth on Schedule 2.6(C), to the knowledge

            of Sellers, Sellers either (i) own the entire right, title and

            interest in and to the Acquired Intellectual Property, free and

            clear of any encumbrances, or (ii) have the royalty-free right to

            use the same as and where they are used by Sellers on the Closing

            Date. Except as set forth on Schedule 2.6(C), and except for the

            Excluded Assets, to the knowledge of Sellers, Sellers do not use in

            their conduct of the Business (as such conduct of the Business

            relates to the Included Products) any Intellectual Property other

            than the Acquired Intellectual Property.

 

                  (D) Except as disclosed in Schedule 2.6(D): (i) Sellers have

            not received any written notice of any challenge of any kind to any

            registrations for domain names or copyrights or any filings for

            patent rights and Marks identified as owned by Sellers in Schedule

            2.6(B), whether registered, issued or pending, as the case may be;

            (ii) Sellers have the sole and exclusive right to bring actions for

            infringement or unauthorized use of the Acquired Intellectual

            Property owned by Sellers and, to the knowledge of Sellers, there is

            no basis for any such action; and (iii) Sellers are not in material

             breach of any agreement affecting the Acquired Intellectual

            Property.

 

                  (E) Except as set forth on Schedule 2.6(E), to the knowledge

            of Sellers, (i) no infringement of any Intellectual Property of any

             other Person is occurring in any way from the ownership or use by

            Sellers of the Acquired Intellectual Property; (ii) no claim of

            invalidity of any Intellectual Property identified on Schedule

            2.6(B) has been made against Sellers; and (iii) no proceedings are

            pending or, to the knowledge of Sellers, threatened that challenge

            the validity, ownership or use of any Intellectual Property

            identified on Schedule 2.6(B).

 

      2.7 Litigation. Except as set forth on Schedule 2.7(a), there are no

actions, suits, investigations, claims or proceedings ("Litigation") pending or,

to the knowledge of Sellers, threatened before any court or by or before any

governmental or regulatory authority or arbitrator: (a) affecting any of Ronco,

Popeil Inc. or RP (as plaintiff or defendant) which, individually or in the

aggregate, could reasonably be expected to have a Material Adverse Effect on

 

 

                                       18

<PAGE>

 

Ronco, Popeil Inc. or RP or (b) relating to the transactions contemplated by

this Agreement. Schedule 2.7(a) sets forth a list of any Litigation commenced

against any of Ronco, Popeil Inc. or RP in the last two (2) years.

 

      2.8 Conduct of Business. Except as set forth on Schedule 2.8, the Business

is conducted collectively and exclusively through Ronco, Popeil Inc. and RP.

Except as set forth on Schedule 2.8, the Included Assets include all assets used

or held for use by Sellers in the conduct of the Business (as conducted as of

the date hereof) and directly related to the Included Products.

 

      2.9 Employee Matters. All employees of Ronco, Popeil Inc. and RP are

at-will employees, and none of such employees is entitled to severance or like

payments upon the termination of their employment by any of Ronco, Popeil Inc.,

or RP. Schedule 2.9 sets forth a correct and complete list of all employees of

each of Ronco, Popeil Inc. and RP as of the date hereof, specifying their names,

job designations, dates of hire and annual base salaries and/or their hourly

wage rates in effect as of the date hereof. Also set forth on Schedule 2.9 is a

complete and correct list or description of any compensation (other than

salaries or hourly wages) and any employee benefits to which the employees of

Ronco, Popeil Inc. and RP are entitled and any employee benefit plan maintained

or contributed to by any of Ronco, Popeil Inc. or RP for the benefit of such

employees or their dependents.

 

      2.10 Contracts. Schedule 2.10 hereto lists those agreements that are set

forth on Schedule 1.1(C) that are material to the Business of Ronco, Popeil Inc.

and RP (the "Material Assets"). With respect to each Material Contract: (a) the

agreement is legal, valid, binding, enforceable, and in full force and effect

against Ronco, Popeil Inc. and RP, as applicable, and (b) none of Ronco, Popeil

Inc. and/or RP is in material breach or default in any material respect under

the terms of any such agreements to which it is a party.

 

      2.11 No Brokers or Finders. No agent, broker, finder, or investment or

commercial banker, or other Person or firm engaged by or acting on behalf of

Sellers or any of their Affiliates in connection with the negotiation, execution

or performance of this Agreement or the transactions contemplated by this

Agreement, is or will be entitled to receive any brokerage or finder's or

similar fee or other commission from Sellers as a result of this Agreement or

such transactions.

 

      2.12 Accounts Receivable. Except as set forth on Schedule 2.12, the

Accounts Receivable arose from bona fide sales transactions in the ordinary

course of business and, to the knowledge of Sellers, are subject to no valid

defenses, set-offs or counterclaims.

 

      2.13 Licenses. To the knowledge of Sellers, Schedule 1.1(E) lists all

Licenses held by any Seller in connection with the Business.

 

 

                                       19

<PAGE>

 

                                   ARTICLE 3

 

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

      Except as contemplated by this Agreement, Purchaser represents and

warrants to Sellers and the Shareholder as of the date hereof as follows:

 

      3.1 Organization. Each of Purchaser and RIM is a corporation duly

incorporated, validly existing and in good standing under the laws of the State

of Delaware, and has full power and authority to own and/or lease all of its

properties and assets, and, as of and giving effect to the Closing, will have

full power and authority to own and/or lease or license the Included Assets.

 

      3.2 Authority; Non-Contravention. This Agreement and the other agreements

contemplated hereby to be executed by Purchaser pursuant hereto have been duly

executed and delivered by Purchaser, and constitute valid and binding

obligations of Purchaser enforceable against it in accordance with its terms,

except to the extent enforceability may be limited by bankruptcy, insolvency,

reorganization, moratorium or similar laws affecting creditors' rights generally

or by general equitable principles. Purchaser has full power and authority to

execute and deliver and perform its obligations under this Agreement and the

other agreements contemplated herein to be executed by it. The execution and

delivery by Purchaser of this Agreement do not, and the execution and delivery

by Purchaser of the Operative Agreements to which it is a party, the performance

by Purchaser of its obligations under this Agreement and such Operative

Agreements and the consummation of the transactions contemplated hereby and

thereby shall not conflict with or result in a violation or breach of any of the

terms, conditions or provisions of the Certificate of Formation or limited

liability company operating agreement of Purchaser.

 

      3.3 No Undisclosed Liabilities. Prior to the date hereof, Purchaser has

not conducted any business or operations, and except as set forth on Schedule

3.3, Purchaser has no obligations or liabilities of any kind or nature

whatsoever, whether known or unknown, accrued, absolute, contingent or

otherwise, and whether due or to become due.

 

      3.4 Legal Proceedings. There is no Order or Action pending or, to the

knowledge of Purchaser, threatened against or affecting Purchaser or that might

adversely affect Purchaser's ability to perform this Agreement or the

consummation of any of the transactions contemplated hereby.

 

      3.5 No Brokers or Finders. Except as set forth on Schedule 3.5, no agent,

broker, finder, or investment or commercial banker, or other Person or firm

engaged by or acting on behalf of Purchaser or any of its Affiliates in

connection with the negotiation, execution or performance of this Agreement or

the transactions contemplated by this Agreement, is or will be entitled to

receive any brokerage or finder's or similar fee or other commission from

Purchaser as a result of this Agreement or such transactions.

 

      3.6 Financial Resources. As of the date hereof, Purchaser has cash and/or

customary written debt term sheets from certain lenders providing the terms and

conditions upon which these lenders have committed, subject to the terms and

conditions specified therein, to provide debt financing in an aggregate amount

 

 

                                       20

<PAGE>

 

of up to $30 million for purposes of paying a portion of the Purchase Closing

Payment pursuant to this Agreement. Purchaser has provided Sellers with true,

correct and complete (excluding any economic terms between Purchaser and such

lenders) copies of any such term sheets, and any and all amendments or

supplements thereto, for such financing in connection with the transactions

contemplated hereby. No later than concurrently with the execution of this

Agreement, Purchaser has paid all fees required to be paid to such lenders

through the date hereof.

 

                                    ARTICLE 4

 

         COVENANTS OF PURCHASER, SELLERS, THE SHAREHOLDER AND R. POPEIL

 

            During the period from the date of this Agreement and continuing

until the earlier of the termination of this Agreement pursuant to Section 9.1

or the Closing Date, Sellers and the Shareholder agree, jointly and severally

that (except as expressly contemplated by this Agreement or to the extent that

Purchaser shall otherwise consent in writing):

 

      4.1 Ordinary Course. The Shareholder shall and shall cause Ronco, Popeil

Inc. and RP to (i) carry on the Business in the ordinary course, including with

respect to the collection of receivables, payment of payables and all Taxes,

manufacturing activities, advertising activities, sales practices, and research

and development activities, in substantially the same manner as heretofore

conducted, (ii) use commercially reasonable efforts to maintain the Included

Assets in substantially the same condition (except for normal wear and tear)

existing on the date hereof, (iii) use commercially reasonable efforts to

preserve its rights and interests in and to the Included Assets and (iv) use

commercially reasonable efforts to maintain the services of, and good relations

with, their customers and suppliers; provided, however, that nothing in this

Section 4.1 will prohibit the Sellers from transferring, assigning or selling

any of their assets so long as, to the extent such assets are Included Assets,

such sale, transfer or assignment is in compliance with the requirements of

Section 4.3. Without limiting the generality of the foregoing, from the date

hereof through the Closing Date, Seller shall not, without the prior written

consent of Purchaser (which shall not be unreasonably withheld or delayed):

 

                   (A) enter into any material contract or commitment, or amend,

            terminate or fail to renew any Contract, License or permit, or incur

            or agree to incur any liability, except in each case in the ordinary

            course of business consistent with past practices;

 

                  (B) increase compensation payable or to become payable or make

            a bonus payment to or otherwise enter into one or more bonus

            agreements with any employee or agent, except in the ordinary course

            of business;

 

                  (C) create, assume or permit to exist any new and material

            mortgage, pledge or other lien or encumbrance upon any of the

            Included Assets;

 

                  (D) authorize or commit to make any capital expenditures in

            excess of the current budget for capital expenditures for the

            Business;

 

 

                                       21

<PAGE>

 

                  (E) dispose of any property, plant or equipment (other than

            supplies), except in the ordinary course of business with adequate

            replacement thereof consistent with past practices;

 

                  (F) take any action that would cause any of the

            representations and warranties of Sellers stated in this Agreement

            to fail to be true and correct in all material respect as of the

            Closing;

 

                  (G) make any change in any method of accounting or keeping of

            books of account or accounting practices or principles, except as

            required by applicable law or, in the opinion of the independent

            public accountants of Sellers, by GAAP;

 

                  (H) license to any Person the Intellectual Property;

 

                   (I) fail to renew a License or fail to make or supplement any

            application for a License reasonably necessary to the operation of

            the Business;

 

                  (J) materially amend any limited liability company agreement

            or other organizational documents of Sellers; or

 

                  (K) enter into any commitment to do any of the foregoing.

 

      4.2 No Solicitation. In consideration of Purchaser's deposit of the

Deposit with the Escrow Agent pursuant to Section 1.4 hereof and the Escrow

Agreement, during the period from the date hereof until the earlier of the

Closing or the termination of this Agreement, the Shareholder shall not, and no

Seller shall, directly or indirectly, through any officer, director, employee or

agent (including any investment banker, financial advisor, attorney, accountant

or other representative or agent) or otherwise, (a) solicit, initiate or

encourage inquiries or the submission of proposals or offers from any third

party relating to any acquisition or purchase of all or any material portion of

the business, properties or assets of, or any equity interest in, any of Ronco,

Popeil Inc. or RP or any of their respective Affiliates or any merger,

consolidation, business combination or similar transaction (other than with

Purchaser), involving any such Seller or any of its Affiliates (an "Acquisition

Transaction"), or (b) participate in any discussions or negotiations regarding,

or furnish to any other person any confidential information with respect to, or

otherwise cooperate in any way with, or participate in, facilitate or agree to

endorse or encourage, any effort or attempt by any other person to do or seek to

do any of the foregoing. The Shareholder and each Seller shall (a) promptly

advise Purchaser orally and in writing of any such offer and of any inquiries or

proposals of or contacts with third parties for any Acquisition Transaction

involving any of Ronco, Popeil Inc. or RP or any of their respective Affiliates,

and (b) not accept (nor shall any of such Seller's Board of Directors or any

committee thereof recommend) any such proposal or offer.

 

      4.3 No Acquisitions or Dispositions. In consideration of Purchaser's

deposit of the Deposit with the Escrow Agent pursuant to Section 1.4 hereof and

the Escrow Agreement, none of Ronco, Popeil Inc. or RP shall (a) acquire or

agree to acquire by merging or consolidating with, or by purchasing a

substantial portion of the assets of, or by any other manner, any business or

any corporation, partnership, association or other business organization or

division thereof or (b) otherwise acquire or agree to acquire any assets which

are material, individually or in the aggregate, to such Seller. No Seller shall,

and the Shareholder shall ensure that no Seller shall, lease or otherwise

dispose of any of its assets included among the Included Assets, except for any

 

 

                                       22

<PAGE>

 

current assets included among the Included Assets (which shall not be disposed

of other than in the ordinary course of business); provided, however, that,

subject to the last sentence of Section 11.9, Sellers may sell, transfer, assign

or otherwise dispose of any of the Included Assets prior to the Closing Date to

(A) a trust, partnership or other entity formed primarily for estate or family

planning purposes (such as a family limited partnership) that is solely for the

benefit of R. Popeil, R. Popeil's spouse, one or more of the descendants of R.

Popeil's parents, or one or more of the descendants of R. Popeil's spouse's

parents (irrespective of the age of such descendants), (B) a member of a

Seller's Family Group or (C) to one or more Affiliates of Sellers, if, in the

case of clause (C), Sellers are advised by their tax advisor that such sale,

transfer, assignment or disposal would permit the transactions contemplated

hereby to be effected in a manner advantageous from a Tax perspective to any of

the Sellers and/or the Shareholder, and in each case if (i) such permitted

transferee or assignee becomes a party to this Agreement as a Seller, (ii) such

sale, transfer, assignment or other disposition does not cause any of the

representations and warranties of Sellers stated in this Agreement to fail to be

true and correct in all material respects as of the Closing (adjusting each such

representation and warranty as appropriate to reflect the fact that the term

"Sellers" includes any such permitted transferee or assignee of Sellers) or

impede the transactions contemplated hereby and by the Operative Agreements and

(iii) such sale, transfer, assignment or other disposition is not

disadvantageous to Purchaser in the reasonable, good faith judgment of

Purchaser.

 

      4.4 Access to Information. The Shareholder shall and shall cause each of

Ronco's, Popeil Inc.'s and RP's independent accountants, officers and employees

to afford to Purchaser, and the accountants, counsel and other representatives

of Purchaser and its Affiliates, reasonable access during the period prior to

the earlier of the Closing Date or the termination of this agreement and during

normal business hours to the properties, books, contracts, commitments, records

and management of each such Seller and, to the independent accountants of

Purchaser, to the extent permitted by such Sellers' Accountants, reasonable

access to the records of each such Seller's accountants. During such period, the

Shareholder shall cause each such Seller to use reasonable efforts to furnish

promptly to Purchaser all information concerning the business, properties and

personnel of such Seller as Purchaser may reasonably request.

 

      4.5 Communications. None of the Shareholder nor any Seller shall furnish

any communication to the public generally if the subject matter thereof relates

to Purchaser or to the transactions contemplated by this Agreement without the

prior approval of Purchaser as to the content thereof, which approval shall not

be unreasonably withheld, and subject to each Party's compliance with applicable

law.

 

      4.6 Good Faith. Sellers and the Shareholder shall act in good faith and

use all commercially reasonable efforts to cause to be satisfied all the

conditions precedent to their obligations and those of the other Parties over

which they have control or influence, including obtaining any consents or any

governmental permits required to be obtained by any Seller or the Shareholder to

consummate the transactions contemplated hereby, if any, and complying with any

applicable bulk transfer laws. Subject to the provisions of Article 9, none of

the Shareholder or any Seller shall take any action that would prevent the

performance of this Agreement or the consummation of the transactions

 

 

                                       23

<PAGE>

 

contemplated hereby. Without limiting the foregoing, neither any Seller nor the

Shareholder shall enter into any agreement to do any thing which they are not

permitted to do under this Article 4.

 

      4.7 Financing Support. Sellers and the Shareholder shall use commercially

reasonable efforts to perform such actions as may be reasonably requested by

Purchaser in order for Purchaser to obtain financing for the transactions

contemplated hereby, provided, that no Seller or the Shareholder shall be

required to pay or bear any costs or expenses in connection with such actions.

Without limiting the scope of commercially reasonable efforts that Sellers and

the Shareholder may provide pursuant to this Section 4.7 (but subject to the

provisos in the immediately preceding sentence), Sellers agree to use

commercially reasonable efforts to assist Purchaser to obtain a policy of

insurance covering losses arising from Sellers' breaches of any representations

or warranties hereunder, with such terms and conditions as may be requested or

required by any Person providing financing for the transactions contemplated

hereby and such other terms and conditions as may be desired by Purchaser.

Notwithstanding the foregoing, it shall not be considered commercially

unreasonable for Sellers and/or the Shareholder to decline or fail to agree to

any changes to the terms of this Agreement or any of the Operative Agreements

that may be requested by any Person providing insurance and/or funding for or in

connection with the transactions contemplated hereby.

 

      4.8 Notice of Developments. At all times prior to the Closing Date, (a)

each Seller shall give prompt written notice to Purchaser, and Purchaser shall

give prompt written notice to each Seller, of the occurrence of any event that

causes or is reasonably likely to cause any representation or warranty of such

Party stated in this Agreement to be untrue or inaccurate in any material

respect after the date hereof but on or before the Closing Date and (b)

Purchaser shall give prompt written notice to Sellers, and Sellers shall give

prompt written notice to Purchaser, of any development adversely affecting the

ability of the notifying party to consummate the transactions contemplated by

this Agreement. No such notification provided by any Party pursuant to this

Section 4.8 shall be deemed to amend or supplement the schedules attached hereto

delivered by such Party hereunder or to prevent or cure any misrepresentation or

breach of warranty of such Party or, with respect to such notifications

regarding events reasonably likely to cause any representation or warranty of

such Party to be untrue or inaccurate in all material respect, constitute an

admission by or agreement of such Party that such representation or warranty is

untrue or inaccurate in any material respect.

 

      4.9 QVC Agreement. Prior to the earlier of the Closing Date or the QVC

Date, Purchaser and Sellers shall use commercially reasonable efforts to cause

QVC, Inc. to enter into an amendment to the QVC Agreement contemplated by the

first sentence of Section 7.2(G) hereof and to consent to the assignment of the

QVC Agreement as so amended from Ronco, Inc. to Purchaser or RIM.

 

      4.10 Patent and Trademark Office Communications. Sellers will deliver to

Purchaser a true, correct and complete copy of any and all written

communications between any Seller and the U.S. Patent and Trademark Office

related to any of the Intellectual Property included among the Included Assets

dated on or after the date hereof and through the Closing Date. Deliveries of

such copies shall be effected promptly after the date of the applicable written

communications.

 

 

                                       24

<PAGE>

 

      4.11 QC Amendment. Beginning promptly after the date hereof, Purchaser and

Sellers shall use commercially reasonable efforts to negotiate the QC Amendment

in good faith so that the conditions to Sellers' and Purchaser's obligations to

effect the Closing specified in Section 7.3(H) may be expeditiously satisfied.

 

      4.12 Bulk Transfer Laws. Sellers and Purchaser hereby waive compliance

with any applicable bulk transfer, including, without limitation, the bulk

transfer provisions of the Uniform Commercial Code of any state, or any similar

statute, with respect to the transactions contemplated hereby, provided that

Sellers will, jointly and severally, indemnify and hold harmless Purchaser for

any Losses incurred by Purchaser in connection with any claims by creditors of

Sellers to which such bulk transfer laws apply.

 

                                   ARTICLE 5

 

                             COVENANTS OF PURCHASER

 

            During the period from the date of this Agreement and continuing

until the earlier of termination or the Closing Date, Purchaser agrees that

(except as expressly contemplated by this Agreement or to the extent that

Sellers shall otherwise consent in writing):

 

      5.1 Good Faith; Due Diligence. Purchaser shall act in good faith and use

all commercially reasonable efforts to cause to be satisfied all the conditions

precedent to its obligations and those of the other Parties over which it has

control or influence, including obtaining any consents or any governmental

permits required to be obtained by Purchaser to consummate the transactions

contemplated hereby. Subject to the provisions of Article 9, Purchaser shall not

take any action which would prevent the performance of this Agreement or the

consummation of the transactions contemplated hereby. Without limiting the

foregoing provisions of this Section 5.1, Purchaser shall diligently proceed

with its due diligence review of the Included Assets and the Business and

operations of Sellers with the aim of causing to occur, as expeditiously as

reasonably practicable, the satisfaction of the condition to Purchaser's

obligation to effect the Closing stated in Section 7.2(C).

 

      5.2 Financing Support. Purchaser shall use commercially reasonable efforts

to perform such actions as may be reasonably requested by Purchaser's financing

sources for purposes of obtaining the financing for the transactions

contemplated hereby.

 

      5.3 Letter of Credit. Purchaser shall use commercially reasonable efforts

to obtain and deliver to Sellers the Letter of Credit as contemplated by Section

7.3.

 

 

                                   ARTICLE 6

 

                       CONTINUING COVENANTS AND AGREEMENTS

 

      6.1 Confidentiality. All non-public information disclosed by any Party (or

its representatives), whether before or after the date of this Agreement, in

connection with the transactions contemplated by, or the discussions and

negotiations preceding, this Agreement to any other Party (or its

representatives) shall be kept confidential by such other Party and its

 

 

                                       25

<PAGE>

 

representatives and shall not be used by any such Persons other than as

contemplated by this Agreement, except to the extent that such disclosure is in

connection with any legal proceeding to which the Party desiring to make such

disclosure is a party, or to the extent otherwise required by law, or to the

extent such duty as to confidentiality is waived in writing by the other Party.

Subsequent to the termination of this Agreement, upon written request (delivered

pursuant to Section 11.8) of any Seller to Purchaser, or of Purchaser to any

Seller (the requesting party being referred to as the "Requesting Party" and the

recipient of such request being referred to as the "Requested Party"), the

Requested Party shall return all materials that the Requesting Party provided to

the Requested Party and all reproductions, photocopies, duplications, or

likeness of the materials to such Requesting Party within three Business Days

after its receipt of such request.

 

      6.2 Tax Cooperation. After the Closing, Sellers and Purchaser shall, and

shall cause their respective Affiliates to, provide reasonable cooperation in

the preparation of all Tax Returns and shall provide, or cause to be provided,

reasonable access to any records and other information reasonably requested by

such Parties in connection with such preparation as well as access to, and the

cooperation of, their respective accountants. Sellers and Purchaser shall, and

shall cause their respective Affiliates to, provide reasonable cooperation in

connection with any Tax investigation, audit or other proceeding. Any

information obtained pursuant to this Section 6.2 or pursuant to any other

provision of this Agreement providing for the sharing of information or the

review of any Tax Return shall be subject to Section 6.1. For the avoidance of

doubt, Purchaser acknowledges and agrees that after the Closing, Sellers shall

be entitled to retain exclusive ownership and possession of their respective

books and records pertaining to Taxes arising from the operation of the Business

or the ownership of the Included Assets for any Tax period (or portion thereof)

ending on or prior to the Closing Date, subject to Purchaser's right of

reasonable access pursuant to this Section 6.2.

 

      6.3 Further Assurances. Except as otherwise provided in this Agreement,

each of the Parties shall use commercially reasonable efforts to consummate and

make effective as promptly as practicable the transactions contemplated by this

Agreement. If at any time after the Closing any further action is reasonably

necessary or desirable to carry out the purposes of this Agreement and the other

agreements contemplated hereby, including, without limitation, the execution of

additional documents or instruments, the Parties shall take all such reasonably

necessary action to the extent commercially reasonable. Notwithstanding the

foregoing, it shall not be considered commercially unreasonable for Sellers

and/or the Shareholder to decline or fail to agree to any changes to the terms

of this Agreement or the Operative Agreements that may be requested by any

Person providing insurance and/or funding for or in connection with the

transactions contemplated hereby.

 

      6.4 Public Announcements. Subject to Section 6.1, Purchaser and Sellers

shall consult with each other and shall mutually agree (with the agreement of

each Party not to be unreasonably withheld) upon the content and timing of any

press release or other public statements with respect to the transactions

contemplated by this Agreement and shall not issue any such press release or

make any such public statement prior to such consultation and agreement, except

as may be required by applicable law; provided, however, that Purchaser and

Sellers shall give prior notice to the other Party of the content and timing of

 

 

                                       26

<PAGE>

 

any such press release or other public statement required by applicable law,

unless it is impracticable to do so, in which event such notice shall be given

no later than concurrently with the issuance of such press release or making of

such public statement.

 

      6.5 Employee Matters.

 

                  (A) Transferred Employees. Purchaser will offer employment to

            be effective as of the Closing Date to the employees of Ronco,

            Popeil Inc. and RP whose names are listed on Schedule 6.5(A), either

            directly or through a co-employment arrangement with an employee

            leasing company selected by Purchaser, with terms, conditions, wages

            and benefits substantially equivalent to the terms and conditions of

            employment in effect as of the date hereof. Each such employee who

            accepts such offer and becomes an employee of Purchaser after the

            Closing pursuant to this Section 6.5(A) will be referred to as a

            "Transferred Employee".

 

                   (B) Termination of Employment; Health Care Coverage.

            Immediately prior to the Closing, each of Ronco, Popeil Inc. and RP

            will terminate (a) the employment of all employees of Ronco, Popeil

            Inc. and/or RP whose names are listed on Schedule 6.5(B), and (b)

            all employment agreements and other arrangements with such

            employees. As of the Closing, Ronco, Popeil Inc. or RP (as

            appropriate) shall pay to their employees whose names are listed on

            Schedule 6.5(B) any and all liabilities relating to or arising out

            of their employment or termination of employment by Ronco, Popeil

            Inc. and RP, including any payments and benefits due to such

            employees pursuant to accrued wages, salary, bonus, commission or

            other forms of compensation. Purchaser will provide continuation

            health care coverage to all Transferred Employees and their

            qualified beneficiaries who incur a qualifying event after the

            Closing Date in accordance with and to the extent required under the

            continuation health care coverage requirements of Code Section

            4980B, as amended, and Sections 601 through 608 of ERISA ("COBRA").

 

                  (C) Benefits Liabilities. From and after the Closing,

            Purchaser will be solely responsible for all liabilities and

            obligations, arising under, resulting from or relating to

            Purchaser's employment or termination of the Transferred Employees.

 

                  (D) WARN Act. On and after the Closing Date, with respect to

            any terminations by Purchaser after the Closing Date, Purchaser will

            be responsible with respect to the Transferred Employees and their

            beneficiaries for compliance with the WARN Act, including any

            requirement to provide for and discharge any and all notifications,

            benefits, and liabilities to Transferred Employees and any

             Governmental Entity. Purchaser will not take any action after the

            Closing Date that would cause any termination of employment of any

            employees by any of Ronco, Popeil Inc. and RP or any of its

            Affiliates prior to the Closing Date to constitute a "plant closing"

            or "mass layoff" under the WARN Act or any similar state or local

            law or create any liability to Seller or any of its Affiliates for

            employment terminations under applicable Legal Rules. Except for the

            termination by Ronco, Popeil Inc. or RP of their employees as of

 

 

                                       27

<PAGE>

 

            immediately prior to the Closing as contemplated by Section 6.5(B)

            above, none of Ronco, Popeil Inc. or RP shall terminate the

            employment of their employees prior to the Closing to the extent

            such termination(s) would constitute a "plant closing" or "mass

            layoff" under the WARN Act or any similar state or local law or

            create any liability to Purchaser for employment terminations under

            applicable Legal Rules.

 

                  (E) H-1B Nonimmigrant Visas. Purchaser will be responsible for

            all actions and costs associated with transferring the H-1B

            nonimmigrant visa for Zhen Sun from Ronco, Popeil Inc. and/or RP as

            of the date hereof, to Purchaser, including (a) filing, to the

            extent necessary, a Labor Condition Application with the U.S.

            Department of Labor or a Form I-129, Petition for Nonimmigrant

            Worker, with H Supplement, and supporting documentation with the

            Immigration and Naturalization Service and (b) paying any transfer

             fees or associated costs or expenses therewith.

 

                  (F) No Third Party Beneficiary Rights. No provision of this

            Agreement shall create any third party beneficiary rights in any

            Transferred Employee (or beneficiary thereof) or prohibit or prevent

            Purchaser from terminating the employment of any Transferred

            Employee at any time after Closing. No provision of this Agreement

            shall interfere with, restrict or constitute a limitation on

            Purchaser's right to amend, modify or terminate its plans, programs

            or policies regarding wages, benefits and other employment matters

            at any time or from time to time.

 

      6.6 Additional Covenants of Purchaser. Except as may be required pursuant

to applicable Legal Rules, for so long as any amounts remain outstanding under

the Notes, Purchaser shall not, without the prior written consent of Sellers,

which shall not be unreasonably withheld or delayed, (i) sell, license or

otherwise transfer to any Person its rights in or to any of the Included Assets

(except for sales of finished products in the ordinary course of business and

except for pledges of Included Assets to lenders providing financing to

Purchaser) or (ii) cease or materially curtail its manufacturing or marketing of

any of the Included Products. Notwithstanding the foregoing, Purchaser may

transfer those Included Assets set forth on Schedule 6.6(a) to Ronco IP

Management Inc., a Delaware corporation ("RIM"), an Affiliate of Purchaser;

provided, however, that (A) concurrently with such transfer RIM assumes,

pursuant to a writing duly executed by RIM and delivered to Sellers, a portion

of the obligations of Purchaser under the Notes in the amounts set forth on

Schedule 6.6(b) and (B) RIM agrees in a writing duly executed by RIM and

delivered to Sellers to be bound by the provisions of this Agreement as an

additional Purchaser.

 

 

      6.7 Cooperation. The Parties recognize that, in the future, litigation,

administrative proceedings or other proceedings (e.g., audits and

investigations) may arise relating to the Included Assets or the Business and

the conduct thereof which may relate in part, directly or indirectly, to the

period prior to the Closing Date or both to the period prior to the Closing Date

and the period subsequent to the Closing Date. Purchaser agrees that, to the

extent reasonable under the circumstances and at the request of Sellers and/or

the Shareholder, it shall provide Sellers and/or the Shareholder with access to

the Books and Records and other information, records, books and documents in its

 

 

                                       28

<PAGE>

 

possession relating to the Included Assets and the Business to assist Sellers

and/or the Shareholder in connection with any such litigation or proceedings in

which Sellers and/or the Shareholder is or may be involved; provided, however,

that such access shall be provided in a manner designed to minimize disruption

of the normal business activities of Purchaser. Purchaser agrees to maintain the

Books and Records and such other information, records, books or other documents

related to the Included Assets and the Business for at least five (5) years.

 

 

      6.8 Insurance Cooperation. R. Popeil hereby acknowledges and agrees that

the Purchaser may seek to obtain a "key man" insurance policy covering the life

of R. Popeil, a disability policy covering R. Popeil, and/or business

interruption insurance, in each case under which the Purchaser will pay all

costs and receive all benefits. R. Popeil agrees to provide reasonable

cooperation in order to assist Purchaser in its efforts to obtain such

insurance, including, with respect to key man life insurance or disability

insurance, by submitting to any physical examination and providing access to

prospective insurers for underwriting purposes to R. Popeil's medical records,

in each case only to the extent reasonably required in order to obtain such

insurance and subject to Purchaser's obligation to keep strictly confidential

any information that may be learned by Purchaser in connection with such

physical examination of R. Popeil and/or in connection with Purchaser's attempts

to secure such "key man" or disability insurance. At R. Popeil's request, his

personal physician may be in attendance for any such required phy