Exhibit 2(i)
ASSET PURCHASE AGREEMENT
between
The LandOak Company, LLC
Seller
and
▇▇▇▇ ▇▇▇, Inc.
Buyer
DATED: January 1, 2001
TABLE OF CONTENTS
Page
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ARTICLE I
TRANSFER OF PURCHASED ASSETS AND RELATED MATTERS...................... 1
1.1 Purchased Assets................................................. 1
1.2 Excluded Assets.................................................. 2
1.3 Assignment of Contracts.......................................... 3
1.4 Passage of Title and Risk of Loss................................ 3
ARTICLE II
ASSUMPTION OF CERTAIN LIABILITIES..................................... 3
2.1 Assumed Obligations.............................................. 3
2.2 Excluded Obligations............................................. 4
ARTICLE III
PURCHASE PRICE........................................................ 5
3.1 Purchase Price................................................... 5
3.2 Allocation....................................................... 6
3.3 Additional Obligations........................................... 6
ARTICLE IV
CLOSING............................................................... 6
4.1 Closing Date..................................................... 6
4.2 Simultaneous Actions............................................. 6
4.3 Deliveries by Seller............................................. 6
4.4 Deliveries by Buyer.............................................. 8
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER.............................. 8
5.1 Organizational Matters........................................... 9
5.2 Authority........................................................ 9
5.3 Noncontravention................................................. 9
5.4 Financial Statements............................................. 9
5.5 Absence of Undisclosed Liabilities............................... 10
5.6 Absence of Changes............................................... 10
5.7 Title to Assets.................................................. 12
5.8 Real Property - Leased........................................... 12
5.9 Personal Property - Owned........................................ 13
5.10 Personal Property - Leased....................................... 13
5.11 Agreements....................................................... 13
5.12 Litigation....................................................... 15
5.13 Compliance; Governmental Authorization........................... 15
(i)
5.14 Labor Relations; Employees....................................... 16
5.15 Employee Benefit Plans........................................... 16
5.16 Related Party Transactions....................................... 17
5.17 Intellectual Property............................................ 17
5.18 Insurance........................................................ 17
5.19 Accounts and Notes Receivable.................................... 18
5.20 Inventories...................................................... 18
5.21 Tax Matters...................................................... 18
5.22 Shares........................................................... 19
5.23 Brokers.......................................................... 19
5.24 Disclosure....................................................... 19
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER............................... 19
6.1 Organizational Matters........................................... 20
6.2 Authority........................................................ 20
6.3 Noncontravention................................................. 20
6.4 Brokers.......................................................... 20
ARTICLE VII
COVENANTS OF SELLER................................................... 20
7.1 Conduct of Business Until Closing................................ 20
7.2 Access to Properties and Records................................. 22
7.3 Advice of Changes................................................ 22
7.4 Conduct.......................................................... 23
7.5 Approvals........................................................ 23
7.6 Further Assurances............................................... 23
7.7 Name Change...................................................... 23
7.8 Restrictions on Shares........................................... 23
7.9 Uncollected Receivables.......................................... 23
ARTICLE VIII
COVENANTS OF BUYER.................................................... 24
8.1 Confidentiality; Return of Documents............................. 24
8.2 Access to Records................................................ 24
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BUYER.................................... 24
9.1 Authorization.................................................... 24
9.2 Accuracy of Representations and Warranties....................... 24
9.3 Performance of Agreements........................................ 24
9.4 Legislation...................................................... 25
9.5 Financial Standards.............................................. 25
9.6 Due Diligence.................................................... 25
9.7 Financing........................................................ 25
(ii)
9.8 Personal Guaranties.............................................. 25
9.9 Release of Liens, Claims......................................... 25
9.10 Assets of MidSouth Sign Company, LLC............................. 25
ARTICLE X
CONDITIONS TO OBLIGATIONS OF SELLER................................... 25
10.1 Authorization.................................................... 26
10.2 Accuracy of Representations and Warranties....................... 26
10.3 Performance of Agreements........................................ 26
10.4 Legislation...................................................... 26
ARTICLE XI
TERMINATION........................................................... 26
11.1 Termination...................................................... 26
11.2 Effect........................................................... 27
ARTICLE XII
INDEMNIFICATION....................................................... 27
12.1 Survival......................................................... 27
12.2 Indemnification.................................................. 27
12.3 Third Party Claims............................................... 29
12.4 Remedies Cumulative.............................................. 30
12.5 Recoveries....................................................... 30
ARTICLE XIII
MISCELLANEOUS......................................................... 30
13.1 Expenses; Transfer Taxes......................................... 30
13.2 Parties in Interest.............................................. 30
13.3 Entire Agreement; Amendments..................................... 30
13.4 Headings......................................................... 31
13.5 Notices.......................................................... 31
13.6 Publicity........................................................ 32
13.7 Counterparts..................................................... 32
13.8 Governing Law.................................................... 32
13.9 Waivers.......................................................... 32
13.10 Defined Terms.................................................... 32
13.11 Construction..................................................... 32
13.12 Attorneys Fees................................................... 32
13.13 Arbitration...................................................... 32
(iii)
DEFINITIONS
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Section
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"Act"............................................................ 5.22
"Assumed Obligations"............................................ 2.1
"Balance Sheet".................................................. 5.4
"Balance Sheet Date"............................................. 5.4
"Buyer".......................................................... Introduction
"Closing"........................................................ 4.1
"Closing Date"................................................... 4.1
"COBRA".......................................................... 5.15(b)
"Encumbrances"................................................... 5.7(a)
"ERISA".......................................................... 5.15(a)
"Excluded Assets"................................................ 1.2
"Excluded Obligations"........................................... 2.2
"Financial Statements"........................................... 5.4
"GAAP"........................................................... 9.5
"Hazardous Substance"............................................ 5.14(d)
"Indemnified Party".............................................. 12.3
"Indemnifying Party"............................................. 12.3
"Intellectual Property".......................................... 1.1(g)
"Purchased Assets"............................................... 1.1
"Purchased Business"............................................. Introduction
"Returns"........................................................ 5.21(a)
"Seller"......................................................... Introduction
"Shares"......................................................... 3.1
"Taxes".......................................................... 5.21
"▇▇▇▇"........................................................... 3.1
(iv)
INDEX TO EXHIBITS
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Section and Exhibit Description
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4.3(b) ▇▇▇▇ of Sale
4.3(d) Opinion of Seller's Counsel
4.3(f) Noncompetition Agreements
4.3(g) Investment Letter
4.4(c) Assumption Agreement
4.4(d) Opinion of Buyer's Counsel
INDEX TO SCHEDULES
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Section and Schedule Description
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1.1(d) Leases, Orders
1.1(g) Intellectual Property
1.1(j) Governmental Licenses
1.1(k) Securities or Stock
3.2 Allocation
5.1 Organization Matters
5.4 Financial Statements
5.5 Absence of Undisclosed Liabilities
5.6 Absence of Changes
5.7 Title to Assets
5.8 Real Property - Leased
5.9 Personal Property - Owned
5.10 Personal Property - Leased
5.11 Agreements
5.12 Litigation
5.13 Governmental Licenses
(v)
5.14 Labor Relations; Employees
5.16 Related Party Transactions
5.18 Insurance
5.19 Accounts and Notes Receivable
5.20 Inventories
5.21 Tax Matters
(vi)
This ASSET PURCHASE AGREEMENT is entered into as of January 1, 2001,
between ▇▇▇▇ ▇▇▇, Inc., a Tennessee corporation ("Buyer"), and The LandOak
Company, LLC, a Tennessee limited liability company ("Seller").
WHEREAS, Seller is engaged primarily in the automobile rental and leasing
business, but also is expanding into equipment leasing (such business being
called the "Purchased Business"); and
WHEREAS, the parties desire that Seller transfer, convey and assign to
Buyer substantially all of the assets, properties and rights of the Purchased
Business as a going concern; and that Buyer purchase and acquire the same,
subject to the assumption by Buyer of certain liabilities and obligations of
Seller, upon the terms set forth below;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I
TRANSFER OF PURCHASED ASSETS AND RELATED MATTERS
1.1 Purchased Assets. On the terms and subject to the conditions of this
Agreement, at the Closing (as defined in Article IV hereof), Seller shall
transfer, convey and assign to Buyer, and Buyer shall purchase and acquire from
Seller, all of the assets, properties and rights of Seller, wherever located,
real, personal and mixed, tangible and intangible, as the same shall exist
immediately prior to the Closing (except for those assets set forth in Section
1.2 hereof), including, but not limited to, the following:
(a) all machinery, equipment, vehicles, furniture, fixtures, office
equipment and supplies and other items of tangible personal property and
all warranties relating thereto;
(b) all inventories, including but not limited to, vehicles, supplies
and parts;
(c) all prepaid expenses, advances, escrows and deposits of Seller,
the benefit of which will accrue to Buyer, except for those that
specifically relate to Excluded Assets (as defined in Section 1.2) or
Excluded Obligations (as defined in Section 2.2);
(d) all rights of Seller under all contracts, licenses, leases
(including rights to leasehold improvements), permits, commitments,
purchase orders, sales orders and other agreements which are described on
Schedule 1.1(d) attached hereto;
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(e) all cash (including, without limitation, bank accounts, ▇▇▇▇▇
cash and escrow and other accounts) and accounts and notes receivable;
(f) all rights of Seller in and to insurance and indemnity claims
relating to the Purchased Business, the Purchased Assets (as defined in
Section 1.1) or the Assumed Obligations (as defined in Section 2.1);
(g) all trade names, fictitious or assumed names, service marks,
service ▇▇▇▇ applications, trademarks, trademark applications, copyrights,
copyright applications, patterns, inventions, trade secrets, logos,
slogans, proprietary processes and formulae, license agreements, research
and development projects and reports, market reports, product or customer
surveys, and all other proprietary, technical and other information and
intellectual property rights, whether patentable or unpatentable
(collectively, the "Intellectual Property"), and the goodwill associated
therewith, including, but not limited to, those described on Schedule
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1.1(g) attached hereto;
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(h) all records and files, including, but not limited to, property
records, maintenance records, engineering records, purchasing and sales
records, correspondence with suppliers and customers (both actual and
prospective), personnel and payroll records, accounting records, mailing
lists, customer and vendor lists and records, sales aids, and computer
programs, records, files and related software;
(i) all stationery, purchase orders, forms, invoices, labels,
shipping material, catalogs, brochures, art work, photographs, advertising
materials, merchandising and display materials;
(j) to the extent transferable, all governmental licenses, permits,
authorizations and approvals, which are described on Schedule 1.1(j)
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attached hereto; and
(k) all shares of stock or other securities owned by Seller which
relate to the Purchased Business, which are described on Schedule 1.1(k)
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attached hereto.
For convenience of reference, the assets, properties and rights to be
transferred, conveyed and assigned to Buyer hereunder, exclusive of the Excluded
Assets, are herein collectively called "Purchased Assets."
1.2 Excluded Assets. Anything contained in Section 1.1 hereof to the
contrary notwithstanding, there are expressly excluded from the assets,
properties and rights to be transferred, conveyed and assigned to Buyer
hereunder the following:
(a) the consideration delivered by Buyer to Seller pursuant to this
Agreement; and
(b) Seller's minute books and other records having exclusively to do
with the organization of Seller.
For convenience of reference, the assets, properties and rights which are not to
be transferred, conveyed and assigned to Buyer hereunder are herein collectively
called "Excluded Assets."
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1.3 Assignment of Contracts. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement or attempted
agreement to transfer, sublease or assign any contract, license, lease, sales
order, purchase order, commitment or other agreement or any claim or right or
any benefit arising thereunder or resulting therefrom or any permit or operating
authority if an attempted transfer, sublease or assignment thereof, without the
consent of any other party thereto, would constitute a breach thereof or in any
way adversely affect the rights of Buyer or Seller thereunder. Seller will use
its best efforts to obtain the consent of such other party to the assignment or
transfer thereof to Buyer in all cases in which such consent is required for
assignment or transfer. If such consent is not obtained, Seller will cooperate
with Buyer in any arrangements necessary or desirable to provide for Buyer the
benefits thereunder, including, without limitation, enforcement for the benefit
of Buyer of any and all rights of Seller against the other party thereto arising
out of the cancellation by such other party or otherwise. Nothing contained in
this Section 1.3 will affect the liability, if any, of Seller pursuant to this
Agreement for failing to disclose the need for such consent or approval or any
termination rights of Buyer hereunder if consent is not obtained.
1.4 Passage of Title and Risk of Loss. Legal and equitable title and risk
of loss with respect to the Purchased Assets will not pass to Buyer until such
assets are transferred at the Closing.
ARTICLE II
ASSUMPTION OF CERTAIN LIABILITIES
2.1 Assumed Obligations. At the closing, Buyer will assume the following
liabilities and obligations, and only the following liabilities and obligations,
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of Seller:
(a) Master Promissory Note dated November 30, 1998 as extended and
modified July 30, 2000, in favor of SunTrust Bank, successor-in-interest by
merger to SunTrust Bank, East Tennessee, N.A. provided that the principal
owed under such note together with the underlying Subnotes and accrued,
unpaid, interest thereon does not exceed $5,100,000;
(b) Commercial Variable Rate Promissory Note dated May 1, 2000 in
favor of SunTrust Bank provided that the principal owed under such note,
together with accrued, but unpaid, interest thereon does not exceed
$713,000;
(c) Promissory Note dated August 17, 1999 in favor of BankFirst
provided that the principal owed under such note together with accrued, but
unpaid, interest thereon does not exceed $304,000;
(d) those liabilities and obligations arising after the Closing under
those contracts, licenses, leases, permits, commitments, purchase orders,
sales orders and other agreements set forth on Schedule 1.1(d), effectively
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assigned and transferred to Buyer pursuant to Section 1.1(d) hereof; and
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(e) obligations within the categories listed below to the extent that
the total of all such obligations which were incurred by Seller in the
ordinary course of business prior to the Closing and do not exceed the
amounts listed opposite the category (any excess to be an Excluded
Obligation unless otherwise expressly agreed by Buyer):
Amount Assumed
Category of Obligation Not to Exceed
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Trade Accounts Payable $250,000
Customer Deposits $ 65,000
Accrued Payroll $ 35,000
Accrued/Payable Payroll Taxes $ 27,000
Accrued Vacation $ 15,000
Legal, Accounting, Professional Fees
of Seller Relating to Sale to Buyer $ 35,000
Sales/Surcharge Taxes Payable $ 28,000
Accrued Property Taxes $ 50,000
Accrued Interest Expense $ 46,000
Miscellaneous Other Expenses $ 20,000
For convenience of reference, the liabilities and obligations being assumed by
Buyer as stated above are herein collectively called the "Assumed Obligations."
2.2 Excluded Obligations. Any other provision of this Agreement to the
contrary notwithstanding, Buyer will not assume any liability or obligation of
Seller or the Purchased Business not included in the Assumed Obligations or
exceeding any limit for Assumed Obligations, including, but not limited to, the
following:
(a) any liabilities and obligations of Seller for Federal, state,
territorial, local and foreign taxes, including, without limitation,
franchise, income, personal, real property, sales, use, unemployment, gross
receipts, excise, payroll, withholding or other taxes, except for such
taxes as are specifically assumed in Section 2.1(e) and which totals do not
exceed the limits stated therein;
(b) any claims, demands, liabilities or obligations of any nature
whatsoever which are not included in Assumed Obligations and are within the
limits set forth therein and which arose or were incurred at or before the
Closing, or which are based on events occurring or conditions existing at
or before the Closing, or which are based on services performed by Seller
at or before the Closing, or which relate to goods or products of Seller
shipped or delivered at or before the Closing or goods or products of
Seller in transit prior to or at the Closing and delivered after the
Closing, (1) notwithstanding that the claim, demand, liability or
obligation arises or becomes manifest after the Closing and (2) regardless
of whether or not
4
set forth or otherwise disclosed on any Schedule attached hereto (whether
or not required to be so set forth or disclosed);
(c) any actions, suits, claims, investigations or legal,
administrative or arbitration proceedings pending or threatened against
Seller or the Purchased Business as of the date of Closing or arising out
of or related to Seller or the Purchased Business for matters which
occurred prior to the Closing;
(d) any liabilities and obligations of Seller (which are not
specifically assumed hereunder) for amounts owed to any owner or creditor
of Seller or any person affiliated therewith, in such person's capacity as
an owner or creditor (including, without limitation, notes to investors
totaling $24,334,746, notes to owners in the amounts of $150,000, $244,174,
$75,000 and $122,000 and accrued interest on all of such obligations);
(e) any liabilities and obligations of Seller existing at the Closing
with respect to accrued holiday, vacation and severance pay relating to
employees of Seller or the Purchased Business which exceed the limits set
forth above as part of the Assumed Obligations;
(f) any liabilities or obligations for payments due or required to be
made under any pension, retirement, savings or other compensation plan
maintained by Seller or any other entity;
(g) any liabilities and obligations of Seller under this Agreement or
with respect to or arising out of the transactions contemplated hereby,
except for the $35,000 of legal, accounting and professional fees included
in Section 2.1(e) as an Assumed Obligation;
(h) any liabilities and obligations relating to the Excluded Assets;
and
(i) any other liabilities and obligations of Seller not being
specifically assumed by Buyer pursuant to Section 2.1 above.
For convenience of reference, the liabilities and obligations of Seller not
being assumed by Buyer as aforesaid are collectively called the "Excluded
Obligations." Seller shall take any and all actions which may be necessary to
prevent any person, firm or governmental authority from having recourse against
the Purchased Business, any of the Purchased Assets or against Buyer with
respect to any Excluded Obligations and shall discharge all Excluded Obligations
when they become due and payable.
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. The aggregate consideration to be paid to Seller for
the Purchased Assets shall be the assumption of the Assumed Obligations and the
issuance of 8,000,000 restricted Common Shares (the "Shares") of ▇▇▇▇
Technology, Inc. ("▇▇▇▇"), the sole shareholder of Buyer
5
(subject to certain restrictions on transfer or distribution more fully
described in Section 7.8). Buyer shall issue the Shares to Seller and to LandOak
Capital, LLC as directed by Seller.
3.2 Allocation. The total purchase price (the value of the Shares and the
amount of the Assumed Obligations) will be allocated as set forth on Schedule
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3.2. However, the allocation set forth on Schedule 3.2 may be revised by Buyer
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based upon the results of the audit that Buyer intends to have performed of
Seller's business after the Closing. The parties will use such allocation in
reporting the transaction for Federal and state tax purposes.
3.3 Additional Obligations. (a) In addition to the Assumed Obligation,
Buyer agrees to assume up to $50,000 in the aggregate of additional obligations
of Seller which arose prior to the Closing provided that such obligations are
not owed to any owner of Seller or other related party of Seller and provided
that such obligations arose in the ordinary course of the Purchased Business.
(b) If after Buyer has assumed or paid $50,000 in the aggregate of
additional obligations of Seller which are not part of the Assumed Obligations,
additional obligations arise and are not satisfied by Seller (including, without
limitation, additional obligation incurred as a result of failure to obtain
consents to assignments as required herein), Buyer, at its option, may pay or
assume such obligations and reduce the Purchase Price as provided below or
exercise its remedies under this Agreement.
(c) If Buyer pays or assumes obligations in excess of an additional
$50,000 as provided in Section 3.3(b) above, the number of Shares shall be
reduced as follows: for each $1 of additional obligations assumed or paid by
Buyer, $1 in value of the Shares shall be returned to ▇▇▇▇. The Shares shall
have an assumed value of $0.21 which was the price at which shares of stock of
▇▇▇▇ traded on the electronic bulletin board on December 29, 2000, the trade on
the day closest to the Closing Date. In calculating the number of Shares to be
returned, all fractional shares shall be rounded down to the nearest whole
number.
ARTICLE IV
CLOSING
4.1 Closing Date. The closing for the consummation of the transactions
contemplated by this Agreement (the "Closing") will take place at the offices of
▇▇▇▇, ▇▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, on such date and at such
time, as is set forth in a notice from Buyer to Seller given at least ten days
prior thereto, or on such other date and at such other time or place as Buyer
and Seller may mutually agree. The Closing shall be effective as of January 1,
2001 which shall be the "Closing Date."
4.2 Simultaneous Actions. All actions to be taken and all documents to be
executed and delivered by the parties at the Closing will be deemed to have been
taken and executed simultaneously and no actions will be deemed taken nor any
documents executed or delivered until all have been taken, executed and
delivered.
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4.3 Deliveries by Seller. On or before the Closing, Seller will deliver to
Buyer the following:
(a) Closing Certificate. An accurate certificate, dated the date of
the Closing, of Seller, satisfactory in form and substance to Buyer,
certifying that:
(1) the representations and warranties of Seller contained in this
Agreement are true and accurate on and as of the Closing with the
same force and effect as if made on the date of the Closing;
(2) Seller has performed and complied with all covenants, obligations
and agreements to be performed or complied with by it on or
before the Closing pursuant to this Agreement;
(3) attached thereto are true and complete copies of resolutions
adopted by Seller's board of governors and members approving this
Agreement and the transactions contemplated hereby;
(4) the incumbency and specimen signature of each manager of Seller
executing this Agreement and any other document to be executed by
Seller are as set forth in such certificate; and
(5) Seller is not a foreign person within the meaning of Section 1445
of the Internal Revenue Code of 1986, as amended.
(b) Instruments of Transfer. A duly executed ▇▇▇▇ of sale and general
instrument of assignment in substantially the form of Exhibit 4.3(b)
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attached hereto and such other duly executed endorsements, assignments and
instruments of transfer, conveyance and assignment in form and substance
reasonably satisfactory to Buyer, as are necessary or desirable to effect
the transfers, conveyances and assignments to Buyer referred to in Article
I hereof.
(c) Articles of Amendment. Articles of Amendment to Seller's Articles
of Organization in form suitable for filing, changing Seller's name as
contemplated by Section 7.7 hereof. Articles of Amendment to the Articles
of Organization of LandOak Financial Services, LLC in form suitable for
filing, changing Seller's name as contemplated by Section 7.7 hereof.
Withdrawals of registrations of the assumed names of "LandOak Rental &
Sales" and LandOak Rental & Leasing" in form suitable for filing as
contemplated by Section 7.7 hereof.
(d) Opinion of Counsel. An opinion of counsel for Seller in the form
of Exhibit 4.3(d), dated as of the date of the Closing.
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(e) Consents. Duly executed consents, authorizations, orders or
approvals of any third party (including, without limitation, any
governmental body, lender, lessor, licensor,
7
supplier, customer or other party to any agreement listed on Schedule 5.11
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which are required for the consummation of the transactions contemplated by
this Agreement, each of which shall be in full force and effect on the
Closing.
(f) Noncompetition Agreements. Noncompetition Agreements for Seller,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in the forms attached hereto as Exhibit
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4.3(f)(1) and (2).
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(g) Investment Letter. Investment Letter executed by Seller in the
form attached hereto as Exhibit 4.3(g).
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4.4 Deliveries by Buyer. On or before the Closing (with the exception of
the delivery of the certificate for the Shares which will occur after the
Closing), Buyer will have delivered to Seller the following:
(a) Closing Certificate. An accurate certificate, dated the date of
the Closing, of a duly authorized officer of Buyer, satisfactory in form
and substance to Seller, certifying that:
(1) the representations and warranties of Buyer contained in this
Agreement are true and accurate on and as of the date of the
Closing with the same force and effect as if made on the date of
the Closing;
(2) Buyer has performed and complied with all covenants, obligations
and agreements to be performed or complied with by it on or
before the Closing pursuant to this Agreement;
(3) attached thereto are true and complete copies of resolutions
adopted by Buyer's board of directors approving this Agreement
and the transactions contemplated hereby; and
(4) the incumbency and specimen signature of each officer of Buyer
executing this Agreement and any other document to be executed by
Buyer are as set forth in such certificate.
(b) Shares. The certificate representing the Shares to be issued to
Seller bearing a legend reflecting the restrictions on transfer.
(c) Assumption Agreement. A duly executed instrument of assumption
whereby Buyer shall assume the Assumed Obligations as provided herein,
which instrument of assumption shall be in substantially the form of
Exhibit 4.4(c) attached hereto.
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(d) Opinion of Counsel. An opinion of counsel for Buyer in the form
of Exhibit 4.4(d), dated as of the date of the Closing.
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ARTICLE V
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REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
5.1 Organizational Matters. Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Tennessee. Seller is duly qualified and in good standing to do business in every
jurisdiction in which such qualification is necessary because of the nature of
the property owned, leased or operated by it in connection with the Purchased
Business or the nature of the business conducted by the Purchased Business (each
of which jurisdictions is listed in Schedule 5.1 attached hereto). Seller has
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delivered to Buyer complete and correct copies of its Articles of Organization
and Operating Agreement in each case as amended to the date hereof.
5.2 Authority. Seller has all requisite power and authority to: own, lease
and operate its properties; carry on the Purchased Business as now being
conducted; enter into this Agreement; perform its obligations hereunder; and
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Seller, and the consummation of the
transactions contemplated hereby, have been duly and validly authorized by all
necessary action on the part of Seller. This Agreement has been duly and validly
executed by Seller, and is a valid and binding obligation of Seller, enforceable
in accordance with its terms.
5.3 Noncontravention. Neither the execution, delivery and performance of
this Agreement by Seller, nor the consummation by Seller of the transactions
contemplated hereby nor compliance by Seller with any of the provisions hereof
will:
(a) conflict with or result in a breach of any provision of the
Articles of Organization or Operating Agreement of Seller,
(b) except for those agreements listed on Schedule 5.11 for which it
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has been disclosed that consent is required, cause a default (or give rise
to any right of termination, cancellation, or acceleration) under any of
the terms of any note, bond, lease, mortgage, indenture, license, warranty
or other instrument or agreement to which Seller is a party, or by which
Seller or any of its assets is or may be bound or benefitted, or
(c) violate any law, statute, rule or regulation or order, writ,
judgment, injunction or decree applicable to Seller or any of its
respective assets.
No consent or approval by, or any notification of or filing with, any public
body or authority is required in connection with the execution, delivery and
performance by Seller of this Agreement, or the consummation by Seller of the
transactions contemplated hereby.
5.4 Financial Statements. Schedule 5.4 attached hereto contains true and
------------
complete copies of the unaudited balance sheet (the "Balance Sheet") of Seller
at November 30, 2000 (the "Balance Sheet Date") and the related unaudited
statements of income and cash flow for the period then ended,
9
prepared by Seller (collectively, the "Financial Statements"). Except as
otherwise noted in the Financial Statements, the Financial Statements are
complete and present fairly the financial position of Seller and the results of
its operations as of the dates thereof and for the periods covered thereby.
5.5 Absence of Undisclosed Liabilities. Except as set forth on Schedule
--------
5.5 attached hereto, at the Balance Sheet Date:
---
(a) the Purchased Business had no liabilities or obligations of any
nature (matured or unmatured, fixed or contingent) which were not provided
for or disclosed on the Balance Sheet,
(b) all reserves established by Seller and set forth on the Balance
Sheet were adequate for the purposes indicated therein, and
(c) there were no loss contingencies (as such term is used in
Statement of Financial Accounting Standards No. 5 issued by the Financial
Accounting Standards Board) which were not adequately provided for in the
Balance Sheet.
5.6 Absence of Changes. Since the Balance Sheet Date, except as set forth
on Schedule 5.6 attached hereto, Seller has operated the Purchased Business in
------------
the ordinary course and there has not been:
(a) any adverse change in the condition (financial or otherwise),
assets, liabilities, earnings or business of Seller;
(b) any damage, destruction or loss (whether or not covered by
insurance) adversely affecting any of the Purchased Assets;
(c) any increase in the compensation or benefits of any officer,
director, employee, consultant or agent (including, without limitation, any
increase pursuant to any bonus, pension, profit-sharing or other plan or
commitment), or the entering into of any contract with any officer,
director or employee, or the making of any loan to, or engagement in any
transaction with, any officers or directors of Seller;
(d) any capital expenditure or commitment therefor by Seller in
excess of $1,000 in the aggregate for additions to property, plant or
equipment;
(e) any forward purchase commitments in excess of the requirements
for normal operating inventories or at prices higher than market prices
prevailing at the time the commitment was entered into;
(f) any forward sales commitments other than in the ordinary course
of business consistent with past practices;
10
(g) any change in the manner in which inventory of the Purchased
Business is marketed or any increase in inventory levels in excess of
levels reasonably required for the operation of the Purchased Business, or
any change in the manner in which the Purchased Business extends discounts
or credit to, or accepts returns from, customers or otherwise deals with
its customers;
(h) any write-down or write-up of the value of any inventory of the
Purchased Business or any write-off as uncollectible of any accounts or
notes receivable of the Purchased Business or any portion thereof;
(i) any obligation or liability (whether absolute, accrued, contingent
or otherwise and whether due or to become due) incurred, or any
transaction, contract or commitment entered into, by Seller, other than
items incurred or entered into (as the case may be) in the ordinary course
of business and consistent with the past practice of Seller, each of which
has been properly recorded in Seller's financial records;
(j) any payment, discharge or satisfaction of any claim, encumbrance
or liability by Seller other than in the ordinary course of business
(whether absolute, accrued, contingent or otherwise and whether due or to
become due);
(k) any amendment or termination of any contract, license, lease,
commitment or other agreement to which Seller is a party, except in the
ordinary course of business and consistent with the past practice of
Seller;
(l) any actual or threatened labor trouble, problem or grievance
adversely affecting the Purchased Business or the Purchased Assets;
(m) any license, sale, transfer, pledge, mortgage or other disposition
of any tangible or intangible asset or Intellectual Property of the
Purchased Business except sales of inventory in the ordinary course of
business and consistent with the past practice of Seller;
(n) any cancellation of any debts or claims or any amendment,
termination or waiver of any rights of Seller relating to the Purchased
Assets or the Purchased Business;
(o) any change in the accounting methods or practices followed by
Seller or any change in depreciation or amortization policies or rates
theretofore adopted;
(p) any change in the suppliers, customers or the personnel of Seller
other than such routine changes which occur in the ordinary course of
business and which are consistent with the past practices of Seller, which
changes have not been, individually or in the aggregate, adverse to the
Purchased Business;
(q) any material change in the prices charged or to be charged by
Seller to its customers or by any supplier to Seller;
11
(r) any decrease in the level of maintenance of tangible Purchased
Assets from that level generally in effect prior to the Balance Sheet Date;
(s) any failure to operate the Purchased Business in the ordinary
course of business consistent with past practice, including, but not
limited to, any failure by Seller to make capital expenditures or
investments in the Purchased Business or any failure to pay trade accounts
payable when due; or
(t) any agreement or understanding, whether in writing or otherwise,
for Seller to take any of the actions specified above in items (a) through
(s) above.
5.7 Title to Assets. (a) Seller has good and marketable title to all of
the Purchased Assets, free and clear of all mortgages, liens, pledges, charges,
security interests, rights of way, options, rights of first refusal, conditions,
restrictions or encumbrances of any kind or character, whether or not relating
to the extension of credit or the borrowing of money (collectively,
"Encumbrances"), except for the Encumbrances set forth on Schedule 5.7, and
------------
liens for taxes and governmental charges not yet due and payable.
(b) The Purchased Assets include all assets and properties and all
rights necessary or desirable to permit Buyer to carry on the Purchased Business
as presently conducted by Seller. Seller has complete and unrestricted power and
the unqualified right to sell, convey, assign, transfer and deliver the
Purchased Assets (subject to obtaining any consents or waivers of third parties
disclosed on Schedule 5.11 and required in connection with such sale,
-------------
conveyance, assignment, transfer and delivery of the Purchased Assets or any
part thereof). The instruments of transfer, conveyance and assignment executed
and delivered by Seller to Buyer at the Closing will be valid and binding
obligations of Seller, enforceable in accordance with their respective terms,
sufficient for purposes of recordation and filing where permitted by law,
sufficient to transfer, convey and assign to Buyer all of Seller's interest in
and to the Purchased Assets, the foregoing to constitute good and marketable
title thereto, free and clear of all Encumbrances, except Encumbrances set forth
on Schedule 5.7, and sufficient to vest in Buyer the full right, power and
------------
authority to conduct the Purchased Business as presently conducted.
5.8 Real Property-Leased. Schedule 5.8 attached hereto contains a list
------------
and brief description (including with respect to each lease (i) a statement as
to whether there is any requirement of consent of the lessor to the assignment
and (ii) a statement as to whether the lessee has or has not agreed to
subordinate the leasehold estate to any liens encumbering the property) of the
terms of all real estate leases to which Seller is a party (as lessee or
lessor). True, complete and correct copies (or, in the case of oral leases,
descriptions) of each lease have been furnished to Buyer. Except as described
on Schedule 5.9, each such lease is in full force and effect and constitutes a
------------
legal, valid and binding obligation of the respective parties thereto. All
rents and additional amounts due to date on each such lease have been paid. In
each case, except as described on Schedule 5.9, the lessee is in peaceable
------------
possession under such lease, has a valid leasehold interest therein and is not
in default thereunder and no waiver, indulgence or postponement of the lessee's
obligations thereunder has been granted by the lessor, nor does there exist any
event, condition or occurrence which, with the giving
12
of notice or the lapse of time, or both, would constitute such a default under
any such lease. Except as described on Schedule 5.9, Seller has not violated any
------------
of the terms or conditions under any such lease in any respect which violation
would give rise to the right of the other party thereto to terminate such lease
or ▇▇▇ for damages thereunder. All buildings, structures, appurtenances or real
property leased by Seller (a) are in good operating condition and repair, (b)
are in such condition as to permit surrender by Seller to the lessors on the
date hereof without any cost or expense to Seller for repair or restoration if
such leases were terminated on the date hereof, (c) are adequate and suitable
for the uses for which intended by Seller, and (d) afford adequate rights of
ingress and egress for operation of its business in the ordinary course. To the
best of Seller's knowledge, none of such buildings, structures and
appurtenances, any equipment therein nor the use, operation or maintenance
thereof, violates any restrictive covenant or encroaches on any property owned
by others. To the best of Seller's knowledge, no condemnation proceeding is
pending or threatened which would preclude or impair the use of any such
property by Seller for the uses for which intended by it. To the best of
Seller's knowledge, all of the foregoing conform to applicable Federal, state,
territorial, local and foreign laws and regulations (including applicable
environmental and occupational safety and health laws and regulations and zoning
and building ordinances).
5.9 Personal Property-Owned. Schedule 5.9 attached hereto contains a
------------
summary and brief description of all tangible personal properties and assets
owned by Seller. All such personal property is in good operating condition and
repair, is adequate and suitable for the uses for which intended by Seller in
the ordinary course of the Purchased Business, and there does not exist any
condition which interferes in any material way with the use or economic value
thereof.
5.10 Personal Property-Leased. Schedule 5.10 attached hereto contains a
-------------
list of all leases or other material agreements under which Seller is lessee of
or holds or operates any items of machinery, equipment, motor vehicles, office
furniture, computer software, fixtures or other tangible personal property owned
by any third party. True, complete and correct copies (or, in the case of oral
leases or agreements, descriptions) of such leases and agreements have been
furnished to Buyer. Seller is the owner and holder of all of the leasehold
estates purported to be granted by such leases or agreements and all other
leases or agreements under which it is lessee of or holds or operates any such
items owned by a third party. Each of such leases and agreements is in full
force and effect and constitutes a legal, valid and binding obligation of the
respective parties thereto. There is not under any of such leases any existing
default or event, condition or occurrence which, with the giving of notice or
lapse of time, or both, would constitute a default thereunder. Each of the items
of personal property covered by leases or agreements of Seller is in good
operating condition and repair, is in such condition as to permit surrender
thereof by Seller to the lessors on the date hereof without any cost or expense
for repair or restoration if such leases were terminated on the date hereof, is
suitable for the uses for which intended by Seller in the ordinary course of the
Purchased Business and there does not exist any condition which interferes in
any material way with the use or economic value thereof.
5.11 Agreements. Schedule 5.11 attached hereto sets forth a true, complete
----------
and correct list and brief description (including a statement as to whether
there is any requirement of consent of any party other than Seller to
assignment) of all written or oral contracts, agreements and other instruments
not made in the ordinary course of business to which Seller is a party, or made
in the ordinary course
13
of business and referred to in clauses (a) through (m) of the next sentence of
this Section 5.11. Except as set forth on said Schedule 5.11, Seller is not a
-------------
party to any written or oral, formal or informal,
(a) distributor, dealer, sales, advertising, agency, manufacturer's
representative, franchise or similar contract or any other contract
relating to the distribution of its products or to the payment of any fees
or commissions;
(b) collective bargaining agreement or contract with or commitment to
any labor union;
(c) continuing contract for the future purchase of finished goods,
material, supplies, equipment or services;
(d) contract for the future sale of products and/or services;
(e) contract or commitment for the employment of any officer,
manager, employee or consultant, management contract or any other type of
contract or understanding with any officer, manager, employee or
consultant;
(f) profit-sharing, bonus, stock option, stock purchase, savings and
investment, pension, retirement, deferred compensation, severance or
termination pay, disability, hospitalization, insurance or similar plan or
agreement, formal or informal, providing benefits to any current or former
manager, officer, employee or consultant;
(g) indenture, mortgage, promissory note, loan agreement, guaranty or
other agreement or commitment for the borrowing of money, for a line of
credit or for a leasing transaction of a type required to be capitalized in
accordance with FASB Statement of Financial Accounting Standards No. 13 or
any tax benefit transfer lease;
(h) contract or commitment for charitable contributions;
(i) contract or commitment for capital expenditures in excess of
$2,500 in the aggregate;
(j) contract or commitment for the sale of any assets, properties or
rights other than inventory in the ordinary course of business;
(k) lease or other agreement pursuant to which it is a lessee of or
holds or operates any real property, machinery, equipment, motor vehicles,
office furniture, computer software, fixtures or similar personal property
owned by any third party;
(l) any contract or agreement having a value of or otherwise
involving at least $5,000 (including, without limitation, purchase orders
and sales orders), whether or not in the ordinary course of business; or
14
(m) agreement which restricts Seller from engaging in any aspect of
the Purchased Business anywhere in the world.
Each such agreement, lease, contract, commitment, instrument and obligation is
in full force and effect and constitutes a legal, valid and binding obligation
of Seller and of each other party thereto and is enforceable in accordance with
its terms. Seller has performed all the obligations required to be performed by
it to date and is not in default or alleged to be in default in any respect
under any agreement, lease, contract, commitment, instrument or obligation.
There exists no event, condition or occurrence which, after notice or lapse of
time, or both, would constitute a default by it of any of the foregoing. Seller
is not aware of any default by any other party to any such agreement, lease,
contract, commitment, instrument or obligation. Seller has furnished to Buyer
complete and correct copies of all documents set forth on said Schedule 5.11.
-------------
5.12 Litigation. Except as set forth on Schedule 5.12 attached hereto,
-------------
there are no (a) audits, inspections, actions, suits, claims, investigations or
legal or administrative or arbitration proceedings pending or threatened against
Seller, whether at law or in equity, whether civil or criminal in nature or
whether before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, nor, to the best knowledge of Seller, does any basis exist therefor or
(b) judgments, decrees, injunctions or orders of any court, governmental
department, commission, agency, instrumentality or arbitrator against Seller.
Seller has made available to Buyer all documents and correspondence relating to
matters referred to in Schedule 5.12.
-------------
5.13 Compliance; Governmental Authorization. (a) Seller has complied with
all Federal, state, territorial, local or foreign laws, ordinances, regulations
or orders applicable to the Purchased Business or the Purchased Assets,
including, by way of description, and not limitation, matters relating to the
environment, anti-competitive practices, discrimination, employment, health and
safety, customs duties and requirements, and foreign practices. Seller has all
governmental licenses and permits necessary in the conduct of the Purchased
Business as presently conducted, which licenses and permits are in full force
and effect, and to Seller's knowledge, no violations are outstanding or uncured
with respect to any such licenses or permits and no proceeding is pending or
threatened to revoke or limit any of them.
(b) Schedule 1.1(j) attached hereto contains a true, correct and
---------------
complete list of all of the aforesaid governmental licenses and permits,
consents, orders, decrees and other compliance agreements under which Seller is
operating or bound. Seller has furnished to Buyer true, complete and correct
copies thereof. Except as set forth in said Schedule 1.1(j), none of such
---------------
licenses, consents and permits will be affected in any respect by the
transactions contemplated hereby, and Seller has the right to transfer each of
such licenses, consents and permits to Buyer.
(c) Seller has furnished to Buyer copies of all reports of inspections
of the Purchased Business during the five years preceding the date hereof under
OSHA, U.S. EPA, and under all other applicable Federal, state and local health
and safety or environmental laws and regulations. The deficiencies, if any,
noted on such reports have been corrected.
15
(d) As used in this Agreement, "Hazardous Substance" shall mean and
include all hazardous or toxic substances, wastes or materials, any pollutants
or contaminants (including, without limitation, all oil and petroleum of any
kind and in any form, asbestos and raw materials which include hazardous
constituents), or any other similar substances, or materials which are included
under or regulated by any local, state or Federal law, rule or regulation
pertaining to environmental regulation, contamination, clean-up or disclosure,
including, without limitation, the Clean Air Act, the Federal Water Pollution
Control Act, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986,
the Resource Conservation and Recovery Act of 1976, the Toxic Substances Control
Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Occupational
Safety and Health Act, the Emergency Planning and Community Right-to-Know Act of
1986, and all comparable state or local laws, orders and regulations, as any of
the foregoing has heretofore been or is hereafter amended.
(e) Except as disclosed on Schedule 5.14, Seller has no knowledge of the
-------------
presence, storage, disposition, generation, treatment, release or discharge of
any Hazardous Substance on, under or about the Purchased Assets or the land and
buildings, which are the subject of the leases to be executed in connection with
this transaction or on and in which the Purchased Business currently conducts
its operations.
5.14 Labor Relations; Employees. Seller enjoys a satisfactory employer-
employee relationship with all of its employees, taken as a whole. Seller is in
compliance with all Federal, state, territorial, local and foreign laws and
regulations respecting labor, employment and employment practices, terms and
conditions of employment and wages and hours. There is no unfair labor practice
complaint against Seller pending before the National Labor Relations Board or
any state, local or foreign agency. Except as set forth on Schedule 5.14 hereto:
-------------
there is no labor strike, dispute, slowdown, stoppage or organizational effort
actually pending or threatened involving the Purchased Business; no
representation question exists respecting the employees of the Purchased
Business; and no collective bargaining agreement presently covers any employees
of the Purchased Business, nor is any currently being negotiated by Seller on
behalf of the Purchased Business. Schedule 5.14 attached hereto lists all
-------------
employees of the Purchased Business, their current salary and benefits.
5.15 Employee Benefit Plans. (a) Seller maintains no "employee pension
benefit" plans (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), "employee welfare benefit" plans
(as defined in Section 3(1) of ERISA) or any other qualified or non-qualified
plans, programs or letters of commitment promising current or future benefits or
deferred compensation.
(b) There are no material violations of the health care continuation
coverage requirements of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA") with respect to employees of the Purchased Business
or any qualified beneficiaries of such employees. With respect to any violation
that may have occurred on or prior to the Closing, Seller's indemnity in Section
12.1(a) hereof in favor of Buyer shall also include lost tax deductions that may
be incurred by Buyer, any potential income inclusion that may be incurred by
Buyer and
16
Buyer's employees, any excise tax that Buyer may incur as a sanction for
Seller's COBRA violations, and any civil and/or criminal penalties imposed under
ERISA for Seller's COBRA violations.
5.16 Related Party Transactions. Except for compensation to regular
employees of Seller or as disclosed on Schedule 5.16, no current or former
-------------
manager, officer, employee or owner or any immediate family member of any such
person (defined as a person's spouse, parents, children, siblings, mothers and
fathers-in-law, sons and daughters-in-law, and brothers and sisters-in-law) is
presently, or during the last three fiscal years has been:
(a) a party to any transaction with Seller (including, but not
limited to, any contract, agreement or other arrangement providing for the
furnishing of services by, or rental of real or personal property from, or
otherwise requiring payments to, any such manager, officer, employee, owner
or immediate family member);
(b) the direct or indirect owner of an interest in any corporation,
firm, association or business organization which is or was a competitor,
supplier or customer of Seller; or
(c) a recipient of income from any source other than Seller which
relates to the business of, or should properly accrue to, Seller.
5.17 Intellectual Property. Set forth on Schedule 1.1(g) is a true
---------------
and complete description of:
(a) all Intellectual Property rights owned by Seller or used in
connection with the Purchased Business;
(b) all agreements by which Seller licenses any Intellectual
Property, whether as licensor or licensee;
(c) all claims, if any, pending or threatened to the effect that
(1) the present or past operations of Seller infringe or conflict the
alleged rights of others in any Intellectual Property; or (2) any
Intellectual property of the Seller is invalid or unenforceable; and
(d) any outstanding orders, decrees, judgments, stipulations,
claims or settlements relating to any Intellectual Property rights of
Seller.
Seller owns or possesses adequate licenses or other rights to use all
Intellectual Property necessary to conduct the Purchased Business as now
operated. Seller is not aware of any infringement, misappropriation or other
misuse being made by any other party of Seller's Intellectual Property. Subject
to Seller's obtaining the consents set forth on Schedule 5.11 hereof, no
-------------
contract, agreement or understanding between Seller and any party exists which
would impede or prevent assignment to Buyer of the right, title and interest of
Seller in and to the Intellectual Property.
17
5.18 Insurance. Schedule 5.18 attached hereto contains a list of all
-------------
policies of liability, theft, fidelity, life, fire, product liability, worker's
compensation, health and other forms of insurance held by Seller (specifying the
insurer, amount of coverage, type of insurance, policy number and any pending
claims thereunder). Seller has not, during the last three fiscal years, been
denied or had revoked or rescinded any policy of insurance.
5.19 Accounts and Notes Receivable. Schedule 5.19 contains a true aged
-------------
list of unpaid accounts and notes receivable owing to Seller from third parties
as of the Balance Sheet Date. All such unpaid accounts and notes receivable
owing to Seller from third parties at the date hereof constitute, and at the
Closing Date will constitute, valid and enforceable claims arising in bona fide
---- ----
transactions in the ordinary course of business. Except as set forth in said
Schedule 5.19, there is (a) no account or note debtor who has refused or
-------------
threatened to refuse to pay its obligations or who has or threatened to set-off
such obligations for any reason, (b) no account or note debtor who is to
Seller's knowledge insolvent or bankrupt and (c) no account or note receivable
pledged to any third party. The reserves and allowances provided for on the
Balance Sheet have been established on the basis of historical experience in
accordance with generally accepted accounting principles consistently applied.
5.20 Inventories. The inventories of Seller (a) shall be valued in
accordance with Schedule 5.20 attached hereto; (b) are and, at the Closing will
-------------
be, of a quantity which is reasonable in the circumstances of the Purchased
Business; and (c) are, and at the Closing will be, of a quality which is salable
at regular prices or useable in the ordinary course of the Purchased Business.
5.21 Tax Matters. For purposes of this Agreement, "Taxes" means all
taxes, charges, fees, levies or other assessments of whatever kind or nature,
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, estimated, severance, stamp, occupancy or property
taxes, customs duties, fees, assessments or charges of any kind whatsoever
(together with any interest and any penalties, additions to tax or additional
amounts) imposed by any taxing authority (domestic or foreign) upon or payable
by Seller. For purposes of this Section 5.21, the term "Seller" shall include
each other corporation with which Seller files consolidated or combined income
tax returns or reports. Except as noted in Schedule 5.21:
-------------
(a) Seller has filed, within the time and in the manner prescribed
by law, all returns, declarations, reports, estimates, information returns
and statements (collectively,"Returns") required to be filed under federal,
state, local or any foreign laws by Seller, and all such Returns are true
and complete in all material respects.
(b) Seller, within the time and in the manner prescribed by law, has
paid (and until the Closing Date will pay) all Taxes that are due and
payable.
(c) Seller has established (and through the Closing Date will
establish) on its books and records reserves that are adequate for the
payment of all Taxes not yet due and payable.
18
(d) There are no liens for Taxes upon the assets of Seller except
liens for Taxes not yet delinquent.
(e) No deficiency for any Taxes has been proposed, asserted or
assessed against Seller or any of its assets which has not been resolved
and paid in full. No audits or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes or Returns.
(f) There are no outstanding waivers or comparable consents regarding
the application of the statute of limitations with respect to any Taxes or
Returns that have been given by Seller.
(g) Seller is not a party to any tax-sharing or allocation agreement,
nor does Seller owe any amount under any tax-sharing or allocation
agreement.
(h) Seller has complied (and will comply through the Closing) in all
respects with all applicable laws, rules and regulations relating to the
payment and withholding of Taxes and, within the time and in the manner
prescribed by law, has withheld and will withhold from employee wages, and
has paid and will pay over to the proper governmental authorities all
amounts required to be so withheld and paid over under all applicable laws.
5.22 Shares. Seller understands that the Shares have not been registered or
qualified under the Securities Act of 1933, as amended (the "Act"), or under the
securities laws of any state in reliance on exemptions from registration
provided by the Act and the rules and regulations thereunder. The Shares may not
be transferred for twenty-four months after issuance to Seller and Seller's
designee; and the Shares may not be resold or distributed in any event unless
they are registered under applicable securities laws or unless exemptions from
registration or qualifications are available. Buyer is under no obligation to
register the Shares. Seller also understands that the Shares represent a highly
speculative investment and involve a high degree of risk.
5.23 Brokers. Neither Seller, nor any of its officers, directors or
employees, have employed any broker or finder in connection with the
transactions contemplated by this Agreement. Seller shall indemnify, defend and
hold Buyer harmless from any and all claims or losses relating to brokerage
fees, commissions or finder's fees owed or claimed to be owed to any broker or
finder engaged or claimed to be engaged by Seller.
5.24 Disclosure. Neither this Agreement (including the Schedules and
Exhibits attached hereto) nor any other document, certificate or statement
furnished to Buyer by or on behalf of Seller in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
19
Buyer hereby represents and warrants to Seller as follows:
6.1 Organizational Matters. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Tennessee.
6.2 Authority. Buyer has all requisite corporate power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly and validly
executed and delivered by Buyer, and is a valid and binding obligation of Buyer,
enforceable in accordance with its terms.
6.3 Noncontravention. Neither the execution, delivery and performance of
this Agreement by Buyer, nor the consummation by Buyer of the transactions
contemplated hereby, nor compliance by Buyer with any of the provisions hereof
will:
(a) conflict with or result in a breach of any provision of the
Articles of Incorporation or Bylaws of Buyer,
(b) cause a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms of any agreement,
instrument or obligation to which Buyer is a party, or by which any of its
properties or assets may be bound, in each case excluding the Purchased
Assets as to which no representation or warranty is made by Buyer, or
(c) violate any statute, rule or regulation or judgment, order, writ,
injunction or decree of any court, administrative agency or governmental
body, in each case applicable to Buyer or any of its assets.
No filing with, and no permit, authorization, consent or approval of, any public
body or authority is necessary for the consummation by Buyer of the transactions
contemplated by this Agreement, except for disclosure obligations under Federal
and state securities laws.
6.4 Brokers. Neither Buyer nor any of its officers, managers, owners or
employees have employed any broker or finder in connection with the transactions
contemplated by this Agreement. Buyer shall indemnify, defend and hold Seller
harmless from any and all claims or losses relating to brokerage fees,
commissions or finder's fees owed or claimed to be owed to any broker or finder
engaged or claimed to be engaged by Buyer.
ARTICLE VII
COVENANTS OF SELLER
Seller hereby covenants and agrees with Buyer as follows:
20
7.1 Conduct of Business Until Closing. Except as permitted or required
hereby or as Buyer may otherwise consent in writing, between the date hereof and
the Closing:
(a) Seller will:
(1) operate its business only in the usual, regular and ordinary
manner as such business was conducted before the Balance Sheet
Date;
(2) maintain all properties necessary to conduct its business,
whether owned or leased, in substantially the same condition as
they now are, except for (A) damage due to unavoidable casualty;
and (B) reasonable wear and tear which do not materially
adversely affect its operations;
(3) as to any material Purchased Asset damaged before the Closing by
casualty not covered by insurance, at Buyer's option, either (A)
restore it to its condition before such damage; (B) replace it
with another item of similar quality and condition; or (C) reduce
its net book value by the amount of such loss;
(4) maintain its books, records and accounts in the usual, regular
and ordinary manner, on a basis consistent with that used in
prior periods;
(5) comply in all material respect with all laws that apply to the
conduct of its business;
(6) perform all of its material obligations (including paying tax
liabilities) without default;
(7) promptly give Buyer written notice of any damage to Purchased
Assets of more than $5,000;
(8) preserve its business organization intact, and preserve the good
will and business of the customers, suppliers and other persons
having business relations with Seller, and retain the services of
its present employees; and
(9) maintain all of its assets in substantially the same condition as
they now are (subject to reasonable wear and tear), and replace
all items of equipment at time intervals consistent with past
practice.
(b) Seller will not, other than in the ordinary course of business:
(1) convey, transfer, sell, lease or otherwise dispose of any
material Purchased Asset;
(2) acquire any material asset or property;
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(3) incur any material fixed or contingent obligation or enter into
any material agreement, commitment or other transaction or
arrangement; or
(4) change or terminate any of the agreements described in Section
5.11 above; and
(c) Seller will not:
(1) encumber, mortgage or voluntarily subject to lien any of the
Purchased Assets;
(2) increase by more than 5% the compensation payable (or to become
payable) to any employee;
(3) hire any new employee at an annual rate of compensation of
$20,000 or more;
(4) add or increase any employee benefits program;
(5) accelerate any billing of its customers or the collection of its
accounts receivable, delay the payment of its accounts payable or
accrued expenses, or defer expenses;
(6) permit any of its respective officers, managers and owners to,
pursue any discussions or negotiations with anyone other than
Buyer concerning the sale of all or any part of its assets or
membership interests and Seller shall advise Buyer of any
solicitation made to Seller by any third party in respect to any
such discussion or negotiation;
(7) without Buyer's prior written consent, enter into, renew, amend,
modify or adopt any material agreement, commitment, license or
lease, other than vehicle leases entered into in the ordinary
course of business; or
(8) breach or violate or cause any of the representations and
warranties contained in Article IV of this Agreement to be
breached or violated.
7.2 Access to Properties and Records. Seller will give to Buyer and to its
counsel, accountants and other representatives reasonable access during normal
business hours to such of its properties, personnel, books, tax returns,
contracts, commitments and records as relate to the Purchased Business and the
right to make copies thereof. Seller will furnish to Buyer and such
representatives all such additional documents and financial and other
information concerning the Purchased Business as Buyer or its representatives
may from time to time reasonably request and permit Buyer and such
representatives to examine all records and working papers relating to the
preparation, review and audits of the financial statements and tax returns
relating to the Purchased Business.
22
7.3 Advice of Changes. Between the date hereof and the Closing,
Seller will advise Buyer promptly in writing of any fact of which Seller becomes
aware, which, if known at the date hereof, would have been required to be set
forth or disclosed in or pursuant to this Agreement.
7.4 Conduct. Except as permitted or required hereby or as Buyer may
otherwise consent in writing, Seller will not enter into any transaction, take
any action or fail to take any action, which would result in any of the
representations and warranties of Seller contained in this Agreement or in any
Schedule or Exhibit hereto not being true and correct at and as of the time
immediately after such transaction has been entered into or such event has
occurred and on the Closing.
7.5 Approvals. Seller will use its best efforts to obtain in writing
prior to the Closing all approvals, consents and waivers required to be obtained
by Seller in order to effectuate the transactions contemplated hereby, and will
deliver to Buyer copies, reasonably satisfactory in form and substance of such
approvals and consents. Seller will not be required to pay any additional
consideration or enter into any modification in order to obtain such approvals
and consents. Approvals cannot, without the written consent of Buyer, be
obtained at a cost or other adverse consequence to Buyer.
7.6 Further Assurances. Seller will at any time and from time to time
after the Closing, upon the request of Buyer and at the expense of Seller, do,
execute, acknowledge and deliver, and cause to be done, executed, acknowledged
or delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney or assurances as may be required for the better transferring,
assigning, conveying, granting, assuring and confirming to Buyer, or for aiding
and assisting in the collection of or reducing to possession by Buyer, of the
Purchased Assets, or to vest in Buyer good, valid and marketable title to the
Purchased Assets and otherwise to consummate the transactions contemplated by
this Agreement.
7.7 Name Change. Promptly following Closing, Seller will take all
steps and make all filings necessary to change its name and to cause LandOak
Financial Services, LLC to change its name. Seller will also withdraw the
registration of the following assumed names: "LandOak Rental & Sales" and
"LandOak Rental & Leasing."
7.8 Restrictions on Shares. Seller will not transfer or distribute
the Shares except in accordance with applicable securities laws and for at least
twenty-four months after their issuance.
7.9 Uncollected Receivables. After the Closing, Buyer will use its
reasonable efforts, in accordance with Buyer's past business practices, to
collect all accounts and notes receivable of the Purchased Business outstanding
as of the Closing Date. Buyer's reasonable efforts need not include litigation
or the use of any third parties unless Seller so directs Buyer to proceed at
Seller's expense and such expenses are advanced to Buyer by Seller. If the
accounts and notes receivable reflected on the Balance Sheet (less the
applicable reserves in respect thereof shown on the Balance Sheet) are not
collected in full within ninety days after the Closing Date, the uncollected
amounts will be deducted from the $50,000 of additional obligations of Seller
Buyer has agreed to assume under Section 3.3. If less than such amount remains
of the $50,000, the difference, if so elected by Buyer in accordance
23
with Section 3.3(c), will cause a portion of the Shares to be returned to Buyer
as provided and as calculated in such Section. Buyer will take all action and
deliver all instruments necessary to effectively vest in Seller all of the
right, title and interest of Buyer with respect to any uncollected accounts or
notes receivable so purchased by Seller, and Buyer shall promptly remit to
Seller any payments with respect to such receivables thereafter received by
Buyer. When the billing to an accounts receivable debtor includes indebtedness
incurred on or after the Closing Date as well as indebtedness prior to the
Closing Date, payments received will be applied to the indebtedness oldest in
time except where the debtor otherwise indicates the indebtedness for which
payment is being made.
ARTICLE VIII COVENANTS OF BUYER
8.1 Confidentiality; Return of Documents. Unless and until the
transactions contemplated by this Agreement are consummated, Buyer will keep in
confidence all proprietary and financial information of Seller including
information concerning its customers, suppliers, business and know-how, and will
not, except to the extent required by law or to the extent any such information
is otherwise publicly available or received from a third party not affiliated
with Seller, without the prior written consent of Seller, reveal any such
financial or proprietary information to any third party other than affiliates or
representatives of Buyer and potential lenders and other providers of funds each
of whom shall agree to be bound by the same restrictions with respect to
confidentiality imposed on Buyer hereunder. If the transactions contemplated by
this Agreement are not consummated, Buyer will return to Seller, at Seller's
request, all documents supplied to Buyer by Seller pursuant to the provisions of
this Agreement.
8.2 Access to Records. Following the Closing, Buyer will upon request
provide Seller, its accountants and attorneys reasonable access at times to be
designated by Buyer during normal working hours, to the books and records of
Seller which are to be transferred to Buyer pursuant to Section 1.1(h) hereof.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to the
satisfaction, on or before the Closing, of the following conditions, any of
which may be waived by Buyer. The waiver of any of the following conditions in
order to close the transaction will not constitute a waiver or forfeiture of
Buyer's right to indemnification for Seller's failure to fulfill such condition.
9.1 Authorization. All corporate action necessary to authorize the
execution, delivery and performance of this Agreement by Seller, and the
consummation of the transactions contemplated hereby will have been duly and
validly taken by Seller, and Seller will have full power and right to sell the
Purchased Assets as contemplated hereby.
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9.2 Accuracy of Representations and Warranties. The representations
and warranties of Seller contained in this Agreement and in any schedule or
exhibit hereto shall be true and accurate on and as of the Closing, with the
same force and effect as if made on the date of the Closing, except as affected
by transactions contemplated or permitted hereby.
9.3 Performance of Agreements. Seller shall have performed and
complied with all covenants, obligations and agreements to be performed or
complied with by it on or before the Closing pursuant to this Agreement or any
schedule or exhibit hereto, including, but not limited to, each of Seller's
obligations under Section 4.3 and the successful transfer or assignment of all
agreements to be transferred or assigned hereunder.
9.4 Legislation. No Federal, state, territorial, local or foreign
statute, rule or regulation shall have been enacted which prohibits, restricts,
delays or materially adversely affects the consummation of the transactions
contemplated by this Agreement or any of the conditions to the consummation of
such transactions. No temporary restraining order or injunction shall be in
effect restraining the consummation of the transactions contemplated hereby.
9.5 Financial Standards. On the Closing, the value of the Purchased
Assets determined in accordance with generally accepted accounting principles
("GAAP") shall exceed the amount of the Assumed Obligations by at least
$1,200,000. Cash flow of the Purchased Business, defined as earnings before
interest, taxes, amortization and depreciation, during the ninety days
immediately preceding the Closing also determined in accordance with GAAP, shall
be at least $175,000. No material adverse change in financial position or
operations shall have occurred between June 30, 2000 and the Closing.
9.6 Due Diligence. Buyer shall have completed its due diligence
investigation and the results thereof shall be satisfactory to it in its sole
discretion.
9.7 Financing. SunTrust Bank N.A. and BankFirst shall have approved
the transfer of Seller's existing credit facilities with terms similar to or
better than those currently in place for Seller.
9.8 Personal Guaranties. The members of Seller shall continue their
personal guarantees which are currently in place with respect to all financing,
liens and trade payables until such time as the Assumed Obligations have been
paid in full and agree to provide similar guarantees in the event Buyer
refinances obligations for which such members currently have guarantees in
place. Buyer agrees to make a good faith effort to remove the guarantees on
trade payables, but shall not be required to expend money, provide additional
deposits or incur any additional credit restrictions to do so.
9.9 Release of Liens, Claims. Except for those obligations listed on
Schedule 5.5, holders of notes issued by Seller or LandOak Capital, LLC, and
------------
other creditors of Seller shall have released all liens, security interests or
other claims relating to the Purchased Assets, except those relating to the
Assumed Obligations.
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9.10 Assets of MidSouth Sign Company, LLC. Buyer shall acquire the
assets of MidSouth Sign Company, LLC, in accordance with the Asset Purchase
Agreement between Buyer and MidSouth Sign Company, LLC in a transaction which
closes simultaneously with the acquisition hereunder.
ARTICLE X
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the
satisfaction, on or before the Closing, of the following conditions, any of
which may be waived by Seller. The waiver of any of the following conditions in
order to close the transaction will not constitute a waiver or forfeiture of
Seller's right to indemnification for Buyer's failure to fulfill such condition.
10.1 Authorization. All corporate action necessary to authorize the
execution, delivery and performance of this Agreement by Buyer and the
consummation of the transactions contemplated hereby will have been duly and
validly taken by Buyer.
10.2 Accuracy of Representations and Warranties. The representations
and warranties of Buyer contained in this Agreement or in any schedule or
exhibit hereto shall be true and accurate on and as of the Closing, with the
same force and effect as if made on the date of the Closing, except as affected
by transactions contemplated or permitted hereby.
10.3 Performance of Agreements. Buyer shall have performed and
complied with all covenants, obligations and agreements to be performed or
complied with by it on or before the Closing pursuant to this Agreement or any
schedule or exhibit hereto, including, but not limited to, each of Buyer's
obligations under Section 4.4.
10.4 Legislation. No Federal, state, territorial, local or foreign
statute, rule or regulation shall have been enacted which prohibits, restricts,
delays or materially adversely affects the consummation of the transactions
contemplated by this Agreement or any of the conditions to the consummation of
such transactions. No temporary restraining order or injunction shall be in
effect restraining the consummation of the transactions contemplated hereby.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) by Seller or Buyer at any time after March 31, 2001, other
than due to the failure of the party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement;
(b) by Buyer, if there has been a violation or breach by
Seller of any material agreement, representation or warranty of Seller
contained in this Agreement and such violation
26
or breach has not been waived by Buyer, or, with respect to a
violation or breach of an agreement, cured by the deadline provided in
Section 11.1(a) above (or by its nature cannot be cured);
(c) by Seller, if there has been a violation or breach by Buyer
of any material agreement, representation or warranty of Buyer
contained in this Agreement and such violation or breach has not been
waived by Seller or, with respect to a violation or breach of an
agreement, cured by the deadline provided in Section 11.1(a) above (or
by its nature cannot be cured).
In the event of termination of this Agreement and abandonment of the
transactions contemplated hereby pursuant to this Section 11.1, written notice
thereof shall forthwith be given to the other party and this Agreement shall
terminate and the transactions contemplated hereby shall be abandoned, without
further action by any of the parties hereto.
11.2 Effect. If this Agreement is terminated as a result of the
failure of a party to consummate or fulfill a condition which is within the
reasonable control of such party, such party shall continue to be liable
hereunder for any such breach. Section 8.1 will survive termination.
ARTICLE XII
INDEMNIFICATION
12.1 Survival. All representations and warranties contained herein
shall survive the Closing.
12.2 Indemnification. (a) Seller will indemnify, defend and save Buyer
harmless from, against, for and in respect of the following if such claims
together with any other claims covered by Section 3.3(a) exceed the $50,000
total included therein:
(1) any and all liabilities and obligations of Seller or the
Purchased Business (whether absolute, accrued, contingent or otherwise
and whether a contractual, tax or any other type of liability,
obligation or claim) not specifically assumed by Buyer pursuant to
this Agreement and the Assumption Agreement;
(2) any damages, losses, obligations, liabilities, claims,
actions or causes of action sustained or suffered by Buyer and arising
from a breach of any representation or warranty of Seller contained in
or made pursuant to this Agreement (including the Schedules and
Exhibits attached hereto), or in any certificate, instrument or
agreement delivered by Seller pursuant hereto or in connection with
the transactions contemplated hereby;
(3) all fines and penalties and liabilities, including all
foreseeable and unforeseeable consequential damages and any other
damages, costs and losses, including reasonable attorneys' and
consultants' fees, directly or indirectly and in whole or in part
arising out of or attributable to:
27
(i)(A) Hazardous Substances released into or existing on or
prior to the Closing Date in the air, water or beneath or on the surface of
the Purchased Assets or the land and buildings on and in which the
Purchased Business currently conducts its operations or (B) as to those
Hazardous Substances in (A) which migrated or migrate at anytime (whether
before or after the Closing) within or from the Purchased Assets or the
land and buildings on and in which the Purchased Business currently
conducts its operations; or
(ii) Hazardous Substances existing on or prior to the Closing
at or migrating from any other location for which Seller is responsible and
with respect to which any liability is sought to be imposed upon Buyer, its
employees, officers, directors or their respective successors or assigns,
as an alleged successor to Seller or the Purchased Business;
including, without limitation, any natural resource damages and the cost of
any remedial, removal, response, abatement, clean-up, investigative and
monitoring costs and any other related costs and expenses.
(4) all damages, losses, obligations, liabilities, claims, actions or
causes of action sustained or suffered by Buyer as a result of the failure
to obtain any consent or provide any benefit under any contract, license,
lease, sales order, purchase order or other agreement, claim, right, permit
or operating authority contemplated by Section 1.3 hereof;
(5) any damages, losses, obligations, liabilities, claims, actions or
causes of action sustained or suffered by Buyer and arising from a breach
of any covenant or agreement of Seller contained in or made pursuant to
this Agreement; and
(6) all reasonable costs and expenses (including, without limitation,
reasonable attorneys', accountants' and other professional fees and
expenses) incurred by Buyer in connection with any action, suit,
proceeding, demand, investigation, assessment or judgment incident to any
of the matters indemnified against under this Section 12.2(a).
No claim, demand, suit or cause of action will be brought against Seller under
or pursuant to this Section 12.2(a) with respect to an alleged breach of any
representation or warranty unless Buyer gives Seller written notice, with
reasonable specificity, of the existence of any such claim, demand, suit or
cause of action under this Agreement. Upon the giving of such written notice as
aforesaid, Buyer will have the right, in addition to all other remedies
available to it, to commence legal proceedings for the enforcement of its rights
under this Agreement.
(b) Buyer will indemnify, defend and save Seller harmless from,
against, for and in respect of the following:
(1) any liabilities or obligations of Seller assumed by
Buyer pursuant to this Agreement and the Assumption Agreement;
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(2) any damages, losses, obligations, liabilities, claims,
actions or causes of action sustained or suffered by Seller and arising
from a breach of any representation or warranty of Buyer contained in or
made pursuant to this Agreement or in any certificate, instrument or
agreement delivered by it pursuant hereto or in connection with the
transactions contemplated hereby; and
(3) any damages, losses, obligations, liabilities, claims,
actions or causes of action sustained or suffered by Seller and arising
from a breach of any covenant or agreement of Buyer contained in or made
pursuant to this Agreement; and
(4) all reasonable costs and expenses (including, without
limitation, reasonable attorneys', accountants' and other professional fees
and expenses) incurred by Seller in connection with any action, suit,
proceeding, demand, investigation assessment or judgment incident to any of
the matters indemnified against under this Section 12.2(b).
No claim, demand, suit or cause of action will be brought against Buyer under or
pursuant to this Section 12.2(b) with respect to an alleged breach of
representation or warranty unless Seller gives Buyer written notice, with
reasonable specificity, of the existence of any such claim, demand, suit or
cause of action under this Agreement. Upon the giving of such written notice as
aforesaid, Seller will have the right to commence legal proceedings for the
enforcement of any of its rights under this Agreement.
12.3 Third Party Claims. With respect to claims resulting from assertion
of liability by third parties, the obligations and liabilities of the party
responsible for indemnification (the "Indemnifying Party") hereunder with
respect to indemnification claims by the party entitled to indemnification (the
"Indemnified Party") will be subject to the following terms and conditions:
(a) The Indemnified Party will give prompt written notice to the
Indemnifying Party of any assertion of liability by a third party which
might give rise to a claim by the Indemnified Party against the
Indemnifying Party based on the indemnity agreements contained in Section
12.2 hereof, stating the nature and basis of said assertion and the amount
thereof, to the extent known.
(b) If any action, suit or proceeding is brought against the
Indemnified Party, with respect to which the Indemnifying Party may have
liability under the indemnity agreement contained in Section 12.2 hereof,
the action, suit or proceeding will, upon the written agreement of the
Indemnifying Party that it is obligated to indemnify under the indemnity
agreement contained in Section 12.2 hereof, be defended (including all
proceedings on appeal or for review which counsel for the defendant shall
deem appropriate) by the Indemnifying Party. The Indemnified Party will
have the right to employ its own counsel in any such case, but the fees and
expenses of such counsel will be at the expense of such Indemnified Party
unless (1) the employment of such counsel is authorized by the Indemnifying
Party in connection with the defense of such action, suit or proceeding,
(2) the Indemnifying Party does not agree, promptly after the notice to it
provided in subsection (a)
29
above, that it is obligated to indemnify under the indemnity agreement
contained in Section 12.2 hereof or (3) such Indemnified Party reasonably
concludes that such action, suit or proceeding involves to a significant
extent matters beyond the scope of the indemnity agreement contained in
Section 12.2 hereof, or that there may be defenses available to it which
are different from or additional to those available to the Indemnifying
Party, in any of which events the Indemnifying Party will not have the
right to direct the defense of such action, suit or proceeding on behalf of
the Indemnified Party and that portion of such fees and expenses reasonably
related to matters covered by the indemnity agreement contained in Section
12.2 hereof will be borne by the Indemnifying Party. The Indemnified Party
will be kept fully informed of such action, suit or proceeding at all
stages thereof whether or not it is so represented. The Indemnifying Party
will make available to the Indemnified Party and its attorneys and
accountants all books and records of the Indemnifying Party relating to
such proceedings or litigation and the parties hereto agree to render to
each other such assistance as they may reasonably require of each other in
order to ensure the proper and adequate defense of any such action, suit or
proceeding.
(c) The Indemnifying Party will not make any settlement of any
claims without the written consent of the Indemnified Party.
12.4 Remedies Cumulative. The remedies provided for in this Article XII
are cumulative and will not preclude assertion by the Indemnified Party of any
other rights or the seeking of any other remedies against the Indemnifying
Party.
12.5 Recoveries. In the event an Indemnified Party subsequently receives
payment (including, without limitation, proceeds of insurance and payments on
accounts receivable) with respect to a matter for which it has been indemnified
by the Indemnifying Party, the Indemnified Party will promptly pay the amount of
such payment up to the indemnification received, to the Indemnifying Party.
ARTICLE XIII
MISCELLANEOUS
13.1 Expenses; Transfer Taxes. All fees, costs and expenses, including,
without limitation, legal and accounting fees and expenses, incurred by Seller
in connection with, relating to or arising out of the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby in excess of the $35,000 of legal, accounting and
professional fees agreed to be assumed by Buyer under Section 2.1(e), will be
borne by Seller. All fees and expenses incurred by Buyer in connection with this
Agreement will be borne by Buyer. All sales taxes and all registration,
recording or transfer taxes which may be payable in connection with the
transactions contemplated by this Agreement will be borne by Seller. All
personal property taxes will be pro rated with Seller responsible for taxes
relating to the period up to the Closing Date and Buyer responsible for taxes
relating to the period including and after the Closing Date.
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13.2 Parties in Interest. This Agreement is not assignable by either Buyer
or Seller without the prior written consent of the other, except that without
relieving Buyer of any of its obligations under this Agreement, Buyer may assign
this Agreement to any affiliate of Buyer. Subject to the foregoing, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the respective successors, heirs, legal representatives and assigns of the
parties hereto. This Agreement constitutes an agreement among the parties hereto
and none of the agreements, covenants, representations or warranties contained
herein is for the benefit of any third party not a party to this Agreement.
13.3 Entire Agreement; Amendments. This Agreement (including the Schedules
and Exhibits attached hereto) contains the entire understanding of the parties
with respect to its subject matter. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the subject
matter hereof. This Agreement may be amended only by a written instrument duly
executed by the parties, and any condition to a party's obligations hereunder
may only be waived in writing by such party.
13.4 Headings. The article and section headings contained in this
Agreement are for reference purposes only and will not affect in any way the
meaning or interpretation of this Agreement.
13.5 Notices. All notices, claims, certificates, requests, demands and
other communications hereunder will be in writing and shall be deemed given if
delivered personally, if mailed (by registered or certified mail, return receipt
requested and postage prepaid), if sent by reputable overnight courier service
for next business day delivery, or if sent by facsimile transmission, as
follows:
if to Seller: The LandOak Company, LLC
(or its new name)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (865)531-______
with a copy to: Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇, P.C.
2200 Riverview Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇, Jr.
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
31
if to Buyer: ▇▇▇▇ ▇▇▇, Inc.
(or its new name)
▇▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ PLLC
1700 Citizens Plaza
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such
communication will be effective on the date of receipt (or, if received on a
non-business day, on the first business day after the date of receipt).
13.6 Publicity. The parties agree that, except as otherwise required by
law, the issuance of any reports, statements or releases pertaining to this
Agreement or the transactions contemplated hereby will require mutual consent.
13.7 Counterparts. This Agreement may be signed in any number of
counterparts and by different parties in separate counterparts, each of which
will be deemed an original instrument, but all of which together will constitute
one agreement. This Agreement will become effective when one or more
counterparts have been signed by Seller and Buyer, and delivered to Buyer and
Seller, respectively. Any party may deliver an executed copy of this Agreement
(and an executed copy of any documents contemplated by this Agreement) by
facsimile transmission to another party, and such delivery will have the same
force and effect as any other delivery of a manually signed copy of this
Agreement (or such other document).
13.8 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Tennessee.
13.9 Waivers. Any provision of this Agreement may be waived only by a
written instrument executed by the party to be charged with such waiver. The
waiver by any party hereto of a breach of any provision of this Agreement will
not operate or be construed as a waiver of any subsequent breach.
13.10 Defined Terms. Throughout this Agreement various terms have been
defined by being enclosed in quotation marks, usually in parentheses, and used
with their initial letters capitalized. Unless the context otherwise requires,
such defined terms will have their designated
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meaning whenever used in this Agreement or any attached schedules. Unless an
express reference is made to a different document, all references to a Section
or Article shall be understood to refer to the indicated Section or Article of
this Agreement, and all references to a Schedule or Exhibit shall be understood
to refer to the indicated Schedule or Exhibit attached to this Agreement.
13.11 Construction. This Agreement is the result of negotiations between
Seller and Buyer. No provision of this Agreement shall be construed against a
party because of such party's role as the drafter of the provision.
13.12 Attorneys Fees. If there is any litigation or arbitration proceeding
between the parties related to this Agreement or the transactions contemplated
by this Agreement, the prevailing party will be entitled to recover all
reasonable costs and expenses (including, without limitation, reasonable
attorneys', accountants' and other professional fees and expenses).
13.13 Arbitration. If the parties disagree as to any matter governed by
this Agreement or relating to the transactions contemplated by this Agreement,
the parties will promptly consult with one another in an effort to resolve the
disagreement. If such effort is unsuccessful, any controversy or claim arising
out of or relating to this Agreement, or the breach of this Agreement, will be
settled exclusively by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association (subject to the provisions stated
below). Judgment upon the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof. The arbitrators will have the power to
render equitable, as well as other, awards and relief. The arbitrators will have
the power to award reasonable fees and expenses in accordance with Section 13.12
above.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on the date first above written.
Seller: The LandOak Company, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Chief Manager
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Buyer: ▇▇▇▇ ▇▇▇, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: President
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