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Exhibit 10(a)
ASSET PURCHASE AGREEMENT
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BETWEEN
▇▇▇▇▇▇ PRODUCTS, INC.,
THE ▇▇▇▇▇▇ PRODUCTS COMPANY, LTD.,
NORTH SHORE PLASTICS, INC.
AND
RED CREEK, INC.,
AS SELLERS,
AND
▇▇▇▇▇ INDUSTRIES, INC.,
AS PURCHASER
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DATED AS OF JULY 1, 1999
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TABLE OF CONTENTS
Page
1.0 CERTAIN DEFINITIONS.............................................. 1
2.0 TRANSFER OF ASSETS AND PROPERTIES................................ 2
2.1 Purchased Assets....................................... 2
2.2 Instruments of Transfer................................ 4
3.0 CONSIDERATION AND TERMS.......................................... 4
3.1 Consideration for Purchased Assets..................... 4
3.2 Payment of Consideration............................... 8
3.3 Allocation of Purchase Price........................... 9
3.4 Grossed-up Tax Payments................................ 9
4.0 ASSUMPTION OF LIABILITIES; CONSENTS.............................. 15
4.1 General Limitation on Assumption of Liabilities........ 15
4.2 Assumed Liabilities and Obligations.................... 15
5.0 CLOSING.......................................................... 15
5.1 Time; Location......................................... 15
5.2 Documents.............................................. 15
5.3 Actions By Purchaser................................... 16
6.0 REPRESENTATIONS AND WARRANTIES OF SELLER......................... 16
6.1 Organization, Good Standing, Power..................... 16
6.2 Authorization of Agreement and Enforceability.......... 17
6.3 Effect of Agreement.................................... 17
6.4 Restrictions; Burdensome Agreements.................... 17
6.5 Government and Other Consents.......................... 17
6.6 Financial Statements................................... 17
6.7 Debts, Obligations and Liabilities..................... 18
6.8 Absence of Certain Changes or Events................... 18
6.9 Taxes.................................................. 19
6.10 Title to Properties; Absence of Liens and Encumbrances. 19
6.11 Real Property.......................................... 20
6.12 Machinery and Equipment................................. 20
6.13 Proprietary Rights...................................... 20
6.14 Permits, Licenses....................................... 21
6.15 Compliance with the Law................................. 21
6.16 Litigation.............................................. 21
6.17 Purchase and Sale Obligations........................... 21
6.18 Labor Matters........................................... 21
6.19 Employee Benefits....................................... 22
6.20 Environmental Compliance................................ 22
6.21 Securities.............................................. 23
6.22 Illegal Payments........................................ 23
6.23 Interest in Business.................................... 23
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6.24 Brokers, Finders, Counsel and Agents.................... 23
6.25 Products Liability...................................... 23
6.26 Year 2000 Compliance . ................................. 24
6.27 Software Licenses...................................... 24
7.0 REPRESENTATIONS AND WARRANTIES OF PURCHASER....................... 24
7.1 Organization, Good Standing, Power...................... 24
7.2 Authorization of Agreement and Enforceability........... 24
7.3 Effect of Agreement; Consents........................... 25
7.4 Litigation.............................................. 25
7.5 Information on Purchaser............................... 25
8.0 COVENANTS OF SELLER; CONDITIONS PRECEDENT TO
OBLIGATIONS OF PURCHASER.......................................... 25
8.1 Pre-Closing Affirmative Covenants...................... 25
8.2 Pre-Closing Restrictive Covenants...................... 26
8.3 Pre-Closing Conditions................................. 27
9.0 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER................. 29
9.1 Accuracy of Representations and Warranties.............. 29
9.2 Performance of Agreement................................ 29
9.3 Purchaser's Certificate and Legal Opinion .............. 29
9.4 Secretary's Certificate................................. 29
9.5 Injunction and HSR Approval............................. 29
9.6 Compliance with Agreement.............................. 30
10.0 OBLIGATIONS AFTER THE CLOSING DATE................................ 30
10.1 Covenant Not to Disclose................................ 30
10.2 Covenant Not to Interfere............................... 30
10.3 Covenant Not to Compete................................. 30
10.4 Reasonable Restrictions................................ 31
10.5 Name Change............................................ 31
10.6 Transition of Employees................................. 31
10.7 Further Assurances of Seller............................ 32
10.8 Further Assurance of Purchaser.......................... 32
10.9 Release of Seller and Guarantors From Note..............332
11.0 INDEMNIFICATION................................................... 32
11.1 Indemnification by Seller............................... 32
11.2 Indemnification by Purchaser ........................... 33
11.3 Procedures for Indemnification.......................... 34
11.4 Insurance, Mitigation and Related Matters............... 35
11.5 Limitations ............................................ 35
12.0 TERMINATION........................................................36
12.1 Termination..............................................36
12.2 Return of Documents to Seller............................37
12.3 Limitations on Remedies..................................37
13.0 COVENANT OF PRINCIPAL..............................................37
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13.1 Covenant of Principal....................................37
14.0 GENERAL........................................................... 37
14.1 Expenses................................................ 37
14.2 Publicity............................................... 37
14.3 Survival of Representations and Warranties.............. 37
14.4 Binding Effect; Benefits................................ 38
14.5 Notices................................................. 38
14.6 Entire Agreement........................................ 39
14.7 Counterparts............................................ 39
14.8 Headings................................................ 39
14.9 Construction............................................ 39
14.10 Exhibits and Schedules.................................. 39
14.11 Governing Law .......................................... 39
14.12 Cooperation............................................. 39
14.13 Severability............................................ 39
14.14 Successors and Assigns.................................. 39
14.15 Exclusive Remedies..................................... 39
14.16 Passage of Title and Risk of Loss...................... 40
14.17 Dispute Resolution..................................... 40
14.18 Right of Set Off....................................... 41
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LIST OF SCHEDULES AND EXHIBITS
Schedule 2.1 Excluded Assets
Schedule 2.1.1 Leases
Schedule 2.1.3 List of Contracts
Exhibit 3.1.1 Balance Sheet
Schedule 3.1.2 Additional Consideration
Schedule 3.3 Purchase Price Allocation
Schedule 4.1 Permitted Encumbrances
Schedule 4.2 Assumed Liabilities
Schedule 6.3 Violations and Breach
Schedule 6.4 Restrictions on Entering Agreements
Exhibit 6.6 Financial Statements as of December 31, 1998
Schedule 6.6 Exceptions to Balance Sheet and Financial Statements
Schedule 6.7 Debts, Obligations and Liabilities
Schedule 6.8 Absence of Changes
Schedule 6.9 Taxes
Schedule 6.12 Non-Operational Machinery and Equipment
Schedule 6.13 Proprietary Rights
Schedule 6.14 Permits and Licenses
Schedule 6.16 Litigation and Products Liability
Schedule 6.18 Labor Matters
Schedule 6.20 Compliance with Environmental Laws
Schedule 8.1(b) Permitted Exceptions
Exhibit 8.4 Seller's Certificate
Exhibit 9.3 Purchaser's Certificate
Schedule 10.5.1 Assumed Employment Agreements
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is entered into this 1st day
of July, 1999, by and between ▇▇▇▇▇ INDUSTRIES, INC., an Ohio corporation
("Purchaser"), and ▇▇▇▇▇▇ PRODUCTS, INC., an Ohio corporation, THE ▇▇▇▇▇▇
PRODUCTS COMPANY, LTD., an Ohio limited liability company, NORTH SHORE PLASTICS,
INC., an Ohio corporation, and RED CREEK, INC., an Ohio corporation
(collectively "Seller").
R E C I T A L S:
A. Seller is in the business of the design, manufacture, production and
sale of plastic products for the horticulture industry (the "Business") and is
the owner of the assets being purchased hereunder.
B. Seller has agreed to sell and assign to Purchaser the assets upon the
terms and conditions contained herein.
C. Purchaser has agreed to purchase from Seller the assets as specified
herein, and to assume all of the obligations and liabilities of Seller.
NOW, THEREFORE, in consideration of the foregoing and of all the mutual
covenants, representations, and warranties contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1.0 CERTAIN DEFINITIONS
As used herein, the following terms will have the following meanings:
1.1 The term "Affiliate" will mean any company or other entity in which
the designated Party now or hereafter owns or otherwise controls, directly or
indirectly, 50% or more of the voting stock or other indicia of equity. For the
purposes of this definition, stock or other indicia of equity owned or
controlled by the designated Party will be deemed to include all stock or other
indicia of equity owned or controlled, directly or indirectly, by any other
company or other legal entity of which the designated Party owns or controls,
directly or indirectly, 50% or more of the voting stock or other indicia of
equity
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1.2 The term "Encumbrance" will mean any right to, or interest in,
property, which subsists in a third-party and which constitutes a claim, lien,
charge or liability attached to and binding upon the property, including, but
not limited to, a mortgage, judgment lien, mechanic's lien, lease, security
interest, easement, right-of-way, and any accrued and unpaid taxes.
1.3 The term "Knowledge" will mean either (a) with respect to natural
Persons, actual knowledge, based upon due inquiry, of a particular fact, or (b)
with respect to Persons that are not individuals, actual knowledge, based upon
due inquiry, of an individual employed by such Person in a senior managerial
capacity and for whom a significant portion of his or her duties relates to
matters as to which the applicable representation or warranty is made hereunder.
"Person" means an individual or an entity which is not an individual.
2.0 TRANSFER OF ASSETS AND PROPERTIES
2.1 PURCHASED ASSETS. Subject to the terms and conditions of this
Agreement, Seller will convey to Purchaser, free and clear of all Encumbrances
whatsoever (except as expressly provided herein), and Purchaser will purchase
from Seller, the Business as a going concern and as presently conducted by the
Seller, and all the assets, properties and rights owned by Seller constituting
the Business, except for the assets listed on Schedule 2.1 hereto (the
"Purchased Assets") as the same will exist on the Closing Date, wherever
located, including without limitation, the following:
2.1.1 REAL PROPERTY LEASES. The leases covering the real property
and buildings used and occupied by the Business are indentified in
Schedule 2.1.1. True and accurate copies of such Leases (which leases are
being assigned by Seller and assumed by Purchaser) are attached on
Schedule 2.1.1. ("Leases"). Seller owns no real property.
2.1.2 EQUIPMENT, MACHINERY AND OTHER TANGIBLE PERSONAL PROPERTY.
All machinery, equipment, tools, tooling, dies, molds, spare parts,
leasehold improvements, maintenance equipment, computer hardware and
software, telephone systems, trucks, tractors, trailers, automobiles,
supplies, office furniture, and office equipment, together with all other
items of personal property, which are owned by the Business, wherever
located.
2.1.3 CONTRACTS RELATING TO THE BUSINESS. All of the interest (to
the extent assignable) of Seller in all contracts, leases of machinery,
equipment and other personal property, manufacturer's representative and
distributor agreements, sale orders, purchase orders, guarantees,
commitments, instruments and all other agreements entered into in the
ordinary course of the operation of the Business.
All contracts, leases of machinery, equipment and other personal
property, manufacturer's representative agreements, sale orders, purchase
orders, guarantees, commitments, instruments and all other agreements
relating to the operation of the Business which provide for the payment by
the Business, or receipt of payments by the Business, in excess of
$100,000 per year, in the case of supply contracts with the Business's
customers, and all other contracts in excess of $50,000 per year are
described on Schedule 2.1.3 by parties, date, term, amount of payment,
type of good, service obligation or commitment.
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2.1.4 CUSTOMER LISTS, SALES AND MARKETING MATERIALS. All customer
lists and other customer records, sales data, catalogs, brochures,
suppliers' names, mailing lists, art work, photographs, web site(s),
telephone numbers, and advertising material which relate to the Business,
whether in electronic form or otherwise.
2.1.5 PERMITS AND LICENSES. All of Seller's interest in
governmental permits, licenses, notices, approvals, and other governmental
authorizations relating to the Purchased Assets or the Business and
necessary to the ownership or operation thereof to the extent the benefits
thereof are transferable to Purchaser.
2.1.6 TRADE SECRETS. All trade secrets, secret processes and
procedures, know-how, formulae and compositions, engineering, production,
assembly design, installation, other technical drawings and
specifications, working notes and memos, market studies, consultants'
reports, technical and laboratory data, competitive samples, engineering
prototypes, and all similar property of any nature, tangible or
intangible, relating to "Products" (being any of the products manufactured
by the Business in the conduct of the Business prior to the Closing Date).
2.1.7 INTELLECTUAL PROPERTY. All right, title and interest of
Seller in the patents, patent applications, inventions, shop rights,
trademarks, trademark registrations, trade names, service marks, domain
name(s), copyrights, and copyright registrations of the Business, and all
registrations, applications, and licenses relating thereto; and other
intangible rights and the goodwill of the Business symbolized by such
trademarks, devices, marks and trade names, including but not limited to
the names "▇▇▇▇▇▇ Products," "North Shore Plastics," "Red Creek," and
"DEKO COVER."
2.1.8 PROPERTY, PERSONNEL AND ACCOUNTING RECORDS. All records of
Seller relating to the Business, including, but not limited to, property
records, copies of personnel records of Business employees, accounting
records, compliance records, parts lists, manuals, computer programs and
software, patterns, plans, blueprints and drawings, and such other
Business records as Purchaser may reasonably request.
2.1.9 GOODWILL. All right, title and interest of Seller in and to
the goodwill incident to the Business.
2.1.10 INVENTORY. All Inventory of the Business existing at the
Closing Date. The term "Inventory" will mean, collectively, "Raw
Materials" (being any material that is owned by the Business and that will
be incorporated into a Product during the manufacturing, finishing and
packaging process), "Work-In-Process" (being partially completed Products,
not yet ready for sale), "Finished Inventory" (being Products processed
for sale by the Business to customers meeting the applicable
specifications wherever located), supplies, packaging and samples,
including inventory warehoused on a third party's property or held on
consignment.
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2.1.11 ACCOUNTS RECEIVABLE. All trade accounts receivable, notes
receivable, employee advances, sales representative advances and other
miscellaneous receivables associated with the Business on the Closing Date
together with all rights of rescission, replevin, reclamation and stoppage
in transit and rights to returned, reclaimed, or repossessed goods
("Accounts Receivable").
2.1.12 PREPAID EXPENSES. All payments made by Seller for items
which will not be recognized and accounted for as an expense of the
Business until after the Closing Date, and utility or other security
deposits, existing at the Closing Date, for the benefit of the Business
("Prepaid Expenses").
2.1.13 CASH AND OTHER INTANGIBLE ASSETS. All other assets of the
Business, including cash and cash equivalents or similar type investments
(such as certificates of deposit, treasury bills and other marketable
securities), bank accounts and checks received prior to Closing and in the
process of collection, all causes of action, rights of action, contract
rights and warranty and product liability claims against third parties not
in litigation as of the Closing Date, not contained within the categories
described above.
2.2 INSTRUMENTS OF TRANSFER. On the Closing Date or as otherwise agreed,
Seller will deliver, or cause to be delivered, to Purchaser duly executed
instruments of transfer and assignment dated and effective as of the Closing
Date, in a form and in substance reasonably satisfactory to the Purchaser.
3.0 CONSIDERATION AND TERMS
3.1 CONSIDERATION FOR PURCHASED ASSETS.
3.1.1 The aggregate monetary consideration to be paid by Purchaser
to Seller for the Purchased Assets (the "Purchase Price") will consist of:
(a) a cash payment in the amount of $50,000,000
("Consideration"), less any "Post-closing Adjustment"
per Section 3.1.2, which cash payment is allocated among
Seller and among each of the Purchased Assets as listed
on Schedule 3.3;
(b) the cash payment(s) by Purchaser to the Seller for the
"Grossed-up Tax Payments" as defined in Section 3.4;
(c) the "Additional Consideration" as detailed in Section
3.1.3; plus
(d) Purchaser will assume all the liabilities and
obligations of Seller, except to the extent to which the
costs and expenses incurred by Seller in connection with
the negotiations respecting this Agreement and the
transactions contemplated
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hereunder, including costs of finders or investment
bankers, preparation of documents, obtaining any
necessary regulatory approvals and the consummation of
the other transactions contemplated hereby, exceeds the
amount accrued for such expenses on the Balance Sheet,
including without limitation the liabilities listed on
the "Balance Sheet" (being the statement of assets and
liabilities of the Business as of Closing, to be
attached hereto as Exhibit 3.1.1 after Closing),
including (i) the "Payables" (being the accounts payable
associated with the Business and stated on the Balance
Sheet), (ii) the "Accrued Expenses" (being the accrued
expenses associated with the Business and stated on the
Balance Sheet), (iii) all obligations, whether due or to
become due, arising under the contracts assumed by
Purchaser, and (iv) all other liabilities and
obligations of Seller (the "Assumed Liabilities").
3.1.2 A "Post-closing Adjustment" to the Consideration will be made
in the event that as of the Closing Date either: (i) the consolidated
"Shareholder's Equity" of Seller is less than $8,553,286; or (ii) the
consolidated "Working Capital Without Debt" of Seller is less than
$10,457,859 or the consolidated "Debt Obligations"of Seller exceeds
$19,247,104, except that no adjustment is necessary as long as the
consolidated Working Capital Without Debt exceeds $10,457,859 in an amount
equal to or greater than the consolidated Debt Obligations of Seller
exceeds $19,247,104.
The consolidated "Shareholder's Equity" of Seller is determined by
using generally accepted accounting principles ("GAAP") and consistent
with historic practices. The consolidated "Working Capital Without Debt"
of Seller is defined as total "Current Assets" less both "Accounts Payable
- trade" and "Accrued Expenses, etc." (as titled on the consolidated
balance sheet of Seller) for the specified date calculated using GAAP and
consistent with historic practices. The consolidated "Debt Obligations" of
Seller is defined as the "Credit Line," "Current Portion of LTD"
(long-term debt) and "Long-Term Debt"(as titled on the consolidated
balance sheet of Seller) for the specified date calculated using GAAP and
consistent with historic practices.
On or before 45 business days after Closing, Schmitz, Corrigan,
▇▇▇▇▇▇ & Co. will prepare the Balance Sheet of Seller as of July 31, 1999
(done on a consolidated compiled basis), which shall include calculations
of the consolidated Shareholder's Equity, Working Capital Without Debt,
and Debt Obligations, as well as any Post-closing Adjustment.
If as of July 31, 1999 (a) the consolidated Shareholder's Equity is
less than $8,553,286; or (b) the consolidated Working Capital Without Debt
is less than $10,457,859 or the consolidated Debt Obligations exceed
$19,247,104 (except that no adjustment under this subpart (b) is necessary
as long as the consolidated Working Capital Without Debt exceeds
$10,457,859 in an amount equal to or greater than the consolidated Debt
Obligations of Seller exceeds $19,247,104); the difference, being the
Post-closing Adjustment, will be deducted from the Withheld Amount (as
defined in Section 3.2.2).
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Purchaser may object in a written notice to Seller describing the
nature of Purchaser's objections within 15 business days after receipt of
the consolidated Balance Sheet of Seller as of July 31, 1999, which will
include the calculations of the consolidated Shareholder's Equity, Working
Capital Without Debt, and Debt Obligations, as well as any Post-closing
Adjustment. If Purchaser does not object within such 15 day period, the
statements and calculations shall be deemed accepted and approved. If
Purchaser raises an objection within the 15 day period, the parties shall
attempt to resolve the matter or matters in dispute.
If such dispute cannot be resolved within 30 days after such
written notice has been received by Seller, then any specific matter in
dispute shall be submitted to PricewaterhouseCoopers LLP, Cleveland, Ohio
office (the individual thereat to be mutually selected by the Purchaser
and Seller) ("PwC"), which firm shall make a final and binding
determination as to such matter or matters. Such accounting firm shall
deliver its determination regarding the matters submitted to it within 60
days, which determination shall be binding and conclusive upon all
Parties. Purchaser shall promptly deliver the Withheld Amount to Seller
after deducting thereform the Post Closing Adjustment, if any, as
determined by such firm. The fees and expenses of such accounting firm
shall be paid one-half by Purchaser and one-half by Seller.
3.1.3 As additional consideration, Purchaser agrees to pay Seller
for the Purchased Assets, an amount ("Additional Consideration")
calculated based upon the then preceding consecutive 12-months of earnings
before interest and taxes realized by the Business during such period
("EBIT"), as calculated below. The EBIT will be determined using GAAP
applied in a manner consistent with the accounting practices used by
Seller before Closing.
It is the intent of the parties for the purpose of the
determination of the EBIT that during the four year period following the
Closing, the Business will be operated in substantially the same manner as
the Business was operated as of the Closing Date, and the Purchaser will
apply operating, performance and financial criteria to the Business
substantially similar to the criteria applied in connection with the
operation of the Business prior to Closing. During the period that
Additional Consideration can be earned, all dealings between the Business
and the Purchaser and/or its Affiliates shall be on terms no less
favorable to the Business than arms length. The calculation of EBIT will
not include (i) any allocation of home office administrative expenses;
(ii) any costs associated with the purchase of assets pursuant to this
Agreement, including, without limitation, related interest expense,
depreciation of any depreciable assets using a higher adjusted cost basis
than that which was used by Seller before Closing, amortization of
covenants not to compete, goodwill or other intangible assets, or (iii)
the amount by which the payment of salaries to and other related expenses
associated with the employment by the Business of persons not previously
employed by the Seller exceeds such payments prior to the Closing, except
for, in the ordinary course of business, employees hired and for raises
provided to all employees with the approval of ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in
his capacity as President of the ▇▇▇▇▇▇ Products Division of Purchaser.
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No election to receive the Additional Consideration can be made by
Seller until the lapse of a one year period after Closing. After such one
year period, an election to receive the Additional Consideration can be
made by Seller subject to the following:
(a) If Seller elects to receive the Additional
Consideration after the one year period, the amount
payable to Seller will be EBIT times 7.22, less the
sum of $50,000,000, with the result thereof divided by
five.
(b) Otherwise, if ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ is involuntarily
terminated from his employment with Purchaser and
Seller elects to receive the Additional Consideration
after the one year period, the amount payable to
Seller will be EBIT times 8.3, less the sum of
$50,000,000, with the result thereof divided by five.
(c) After the lapse of a four year period after Closing,
Purchaser may elect to pay the Additional
Consideration, the amount payable to Seller will be
EBIT times 8.3, less the sum of $50,000,000, with the
result thereof divided by five.
The Additional Consideration will be paid in cash unless otherwise
mutually agreed to by Seller and Purchaser. If mutually agreed to by
Seller and Purchaser, the Additional Consideration may be paid by
Purchaser in cash, debt (at Purchaser's then cost of borrowing funds), in
shares of Purchaser's common stock valued at the closing price of the
shares on the day of election and which shares must be promptly registered
with the applicable securities agencies and listed on the American Stock
Exchange so that Seller may sell such shares without restriction, or any
combination thereof.
After the one year period after Closing lapses, Seller may send a
written notice to Purchaser as its "Seller Election" electing to receive
all and not part of the Additional Consideration. A Seller Election
received by Purchaser on a day other than the last day of a month, for the
purposes of the EBIT calculation, will be treated as though the election
was made for the last day of the preceding month.
Within 30-days after receipt of a Seller Election, Purchaser shall
calculate the EBIT plus the amount of Additional Consideration due Seller,
and shall provide such calculations, as well as the related work papers to
Seller. Seller may object in a written notice to Purchaser describing the
nature of Seller's objections within 15 business days after receipt of the
EBIT and Additional Consideration calculation. If Seller does not object
within such 15 day period, the calculations shall be deemed accepted and
approved. If Seller raises an objection within the 15 day period, the
parties shall attempt to resolve the matter or matters in dispute.
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If such dispute cannot be resolved within 30 days after written
notice has been received by Purchaser, then any specific matter in dispute
shall be submitted to PwC, which firm shall make a final and binding
determination as to such matter or matters. Such accounting firm shall
deliver its determination regarding the matters submitted to it within 60
days, which determination shall be binding and conclusive upon all
Parties. The fees and expenses of such accounting firm shall be paid
one-half by Purchaser and one-half by Seller.
Seller agrees as part of its obligation to indemnify Purchaser
under this Agreement, that as of Closing it shall provide Purchaser with a
security interest in Seller's contractual right to receive the Additional
Consideration. Seller agrees to execute such documents necessary to grant
Purchaser the security interest as well as to allow Purchaser to perfect
its rights on a first priority basis.
Purchaser and Seller agree that the right to receive the Additional
Consideration may only be assigned by a Seller to its shareholders or
members (as applicable), or as otherwise required by law or court order.
Any assignment in contravention to this restriction will be null and void
and shall not be binding upon the Purchaser. Any assignment shall be
subject to the security interest granted to Purchaser above and the
assignee shall execute such security documents reasonably requested by
Purchaser to ensure the security interest and priority granted Purchaser.
Notice of any assignment and execution of the applicable documents must be
provided to Purchaser in writing before such assignment shall be binding
upon Purchaser. If the right to receive the Additional Consideration is
assigned by a Seller, then for the purposes of this Section, such assignee
will be designated as a "Seller" and may make such elections regarding
when to make a Seller Election to receive Additional Consideration, and in
what form of payment the Additional Consideration will be received, except
that an assignee may only make a Seller Election for all and not part of
its Additional Consideration. The calculation of the Additional
Consideration shall be completed as indicated above, except that the
Additional Consideration will be determined based upon the pro rata amount
assigned and held by the assignee.
3.2 PAYMENT OF CONSIDERATION.
3.2.1 On the Closing Date, or as otherwise agreed, Purchaser will
deliver to Seller by wire transfer the sum of $47,500,000.
3.2.2 On or before 60-days after Closing and upon completion of the
consolidated Balance Sheet of Seller as of July 31, 1999 and the
calculations of the consolidated Shareholder's Equity, Working Capital
Without Debt, and Debt Obligations, as well as any Post-closing Adjustment
by the external accountants for Seller, and assuming there are no
Post-closing Adjustments as detailed in Section 3.1.2 or objections raised
by Purchaser, Purchaser will deliver to the Seller the sum of $2,500,000
("Withheld Amount").
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3.2.3 Purchaser will deliver to Seller (unless the right to receive
such payment has been assigned, then to the assignees) the Additional
Consideration, at such time(s) elected by either Seller or Purchaser, at
such time(s) as delineated in Section 3.1.3.
3.2.4 Purchaser will deliver to the "Shareholders" (as defined in
Section 3.2.4(c)) the cash payment(s) for the "Grossed-up Tax Payments,"
at such time(s) as delineated in Section 3.4.
3.2.5 Any wire transfer of funds by Purchaser will be in
immediately available funds and will be sent to Seller's bank, or to such
other bank within the continental United States as Seller may have
designated by notice to Purchaser.
3.2.6 On the Closing Date Purchaser will assume the Assumed
Liabilities effective as of the Closing Date.
3.3 ALLOCATION OF PURCHASE PRICE. The Parties agree that the Purchase
Price will be allocated as reflected in Schedule 3.3, which schedule will be
completed and agreed to within 60-days after Closing. The portion of the
Purchase Price consisting of Additional Consideration and/or Grossed-up Tax
Payments shall be allocated among Seller based on (a) with respect to Additional
Consideration, which Shareholder of which Seller shall have made the Seller
Election which produced such Additional Consideration, and (b) with respect to
the Grossed-up Tax Payments, the Grossed-up Tax Payments directly attributable
to the Shareholders of each Seller.
3.4 GROSSED-UP TAX PAYMENTS.
3.4.1 A Seller's "Grossed-up Tax Payment" is equal to the amount
such that after:
(a) the receipt by such Seller of the Purchase Price
applicable to such Seller;
(b) the payment by such Seller of all costs of sale
applicable to it pursuant to Section 3.1.1(d);
(c) in the case of ▇▇▇▇▇▇ Products, Inc., Red Creek, Inc.
and North Shore Plastics, Inc., the payment by such
Seller of all federal and Ohio income (including, for
this purpose, interest under Section 453A of the Code)
and franchise Taxes and all interest and penalties
attributable to such Taxes that arise or are incurred as
a result of the transactions contemplated by this
Agreement; and;
(d) the payment of all Taxes by the Shareholders of such
Seller with respect to the aggregate proceeds received
by such Shareholders (other than proceeds that are
assets that are not being purchased by Purchaser and are
listed on Schedule 2.1) upon the distribution of the
remaining proceeds to the Shareholders of such Seller in
liquidation of such Seller (and for purposes of
determining the amount of such Taxes, the liquidation
proceeds received by ▇▇▇▇▇▇ S
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Corporation One, Inc. or by ▇▇▇▇▇▇ S Corporation Two,
Inc. shall be distributed by such corporation to the
▇▇▇▇▇▇ ESBT in liquidation of such corporation);
the aggregate amount of each of such Seller's Shareholder's net
proceeds from the transactions contemplated by this Agreement shall
equal:
(e) the excess of the Purchase Price applicable to such
Seller (net of all costs of sale applicable to it)
pursuant to Section 3.1.1(d), over
(f) the aggregate amount of Taxes that such Shareholders
would have paid on the receipt of their respective
shares of such Purchase Price in exchange for the equity
interests in such Seller assuming that the transaction
had been structured as a sale by such Shareholders of
all of their respective equity interests in such Seller
to the Purchaser, provided, that in the case of
computing the amount of Taxes that the ▇▇▇▇▇▇ ESBT would
have paid on the receipt of its share of the Purchase
Price applicable to The ▇▇▇▇▇▇ Products Company, Ltd. or
to North Shore Plastics, Inc., the computation of Taxes
shall be based on the sale by the ▇▇▇▇▇▇ ESBT of all of
its shares in ▇▇▇▇▇▇ S Corporation One, Inc. and ▇▇▇▇▇▇
S Corporation Two, Inc, respectively.
It is the intention of the parties that this Section 3.4 be
interpreted and applied consistently with the intention of the
parties that the amount received by each Shareholder, net of all
Taxes, be equal to the amount that such Shareholder would have
received, net of all federal, state and local income taxes, on the
sale of such Shareholder's directly or indirectly owned equity
interests in the Sellers. The parties further agree that all
calculations required under this Section 3.4 shall be made on the
assumption that ▇▇▇▇▇▇ Products, Inc., Red Creek, Inc., ▇▇▇▇▇▇ S
Corporation One, Inc. and ▇▇▇▇▇▇ S Corporation Two, Inc. qualify as
S corporations under Section 1361 of the Code..
3.4.2 For purposes of this Section 3.4:
(a) the term "Seller" shall refer to ▇▇▇▇▇▇ Products, Inc.,
The ▇▇▇▇▇▇ Products Company, Ltd., North Shore Plastics,
Inc. or Red Creek, Inc., individually;
(b) the term "Sellers" shall refer to ▇▇▇▇▇▇ Products, Inc.,
The ▇▇▇▇▇▇ Products Company, Ltd., North Shore Plastics,
Inc. and Red Creek, Inc., collectively;
(c) the term "Shareholder" shall refer to the following:
(i) in the case of ▇▇▇▇▇▇ Products, Inc., the ▇▇▇▇▇▇
ESBT and ▇▇▇ ▇▇▇▇▇▇, ▇▇.,
(ii) in the case of The ▇▇▇▇▇▇ Products Company, Ltd.,
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇, ▇▇., and ▇▇▇▇ ▇▇▇▇▇▇ (all of whom
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are members thereof) and the ▇▇▇▇▇▇ ESBT (which is
a beneficial owner of an interest in The ▇▇▇▇▇▇
Products Company, Ltd. by reason of its ownership
of all of the outstanding stock in ▇▇▇▇▇▇ S
Corporation One, Inc., which is a member of The
▇▇▇▇▇▇ Products Company, Ltd.),
(iii) in the case of Red Creek, Inc., the ▇▇▇▇▇▇ ESBT,
and
(iv) in the case of North Shore Plastics, Inc., the
▇▇▇▇▇▇ ESBT (which is a beneficial owner of shares
in North Shore Plastics, Inc. by reason of its
ownership of all of the outstanding stock in
▇▇▇▇▇▇ S Corporation Two, Inc., which is a
shareholder of North Shore Plastics, Inc.), ▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇;
(d) the term "▇▇▇▇▇▇ ESBT" shall refer to a trust created
by ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, that is a shareholder in
▇▇▇▇▇▇ Products, Inc., Red Creek, Inc., ▇▇▇▇▇▇ S
Corporation One, Inc. and ▇▇▇▇▇▇ S Corporation Two,
Inc., which is treated for federal income tax purposes
as an "electing small business trust" within the
meaning of Section 1361(e)(1) of the Code;
(e) if a final determination is made by the Internal
Revenue Service (the "IRS") that the ▇▇▇▇▇▇ ESBT does
not qualify as an "electing small business trust" (as
defined in Section 1361(e)(1) of the Code), then each
reference in this Section 3.4 to the "▇▇▇▇▇▇ ESBT"
shall be deemed to refer instead to "▇▇. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇;" and
(f) if a determination is made by the Ohio Department of
Taxation or otherwise that ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ is
subject to tax for Ohio income tax purposes on income
allocable to the ▇▇▇▇▇▇ ESBT, then each reference in
this Section 3.4 to the "▇▇▇▇▇▇ ESBT" shall be deemed
to refer instead to "▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇."
3.4.3 The amount of the Grossed-up Tax Payment applicable to a
Seller shall be determined and paid at the following times:
(a) at Closing, each Seller shall be paid the Grossed-up
Tax Payment applicable to such Seller assuming that
the Purchase Price applicable to such Seller did not
include any Additional Consideration and that the
Post-closing Adjustment will be assumed to equal the
Withheld Amount;
(b) upon the payment to such Seller of its share of the
Withheld Amount in accordance with Sections 3.1.2 and
3.2.2.;
(c) whenever any Seller, or Shareholder of a Seller, shall
be obligated to make a payment of interest described
in Section 453A of the Code;
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(d) whenever any Seller, or Shareholder of a Seller,
receives Additional Consideration;
(e) whenever any Seller, or Shareholder of a Seller,
believes in good faith that it is required to make a
payment of Taxes by reason of the transactions
described in this Agreement; and
(f) as provided in Section 3.4.5.
3.4.4 The following shall apply for purposes of determining the
amount of the Grossed-up Tax Payment due at any particular time:
(a) All determinations required to be made under this
Section 3.4 (including whether a Grossed-up Tax
Payment is required and the amount of such Grossed-up
Tax Payment), shall be made jointly by Schmitz,
Corrigan, ▇▇▇▇▇▇ & Co. (or any other firm of certified
public accountants selected from time to time by ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇) and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (or any
other firm of certified public accountants selected
from time to time by the Purchaser) (collectively, the
"Firm"), who shall submit its determination and
detailed supporting calculations to the applicable
Seller (or, if applicable, the affected
Shareholder(s)) (the "Taxpayer") and Purchaser within
15 calendar days after such time or times as may be
requested by the Taxpayer. If the Firm determines that
a Grossed-up Tax Payment is required, the Purchaser
shall pay such Taxpayer the required Grossed-up Tax
Payment within ten calendar days after receipt of such
determination and calculations. Any determination by
the Firm as to the amount of the Grossed-up Tax
Payment shall be binding upon the Purchaser and such
Taxpayer. In the event that Schmitz, Corrigan, ▇▇▇▇▇▇
& Co. (or any other firm of certified public
accountants selected from time to time by ▇▇. ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇) and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (or any other firm
of certified public accountants selected from time to
time by the Purchaser) are unable to agree as to
whether a Grossed-up Tax Payment is required or on the
amount thereof, then such determinations shall be made
by PwC.
(b) Each Taxpayer shall provide the Firm (or, if
applicable, PwC) access to and copies of any tax
returns, books, records and other documents in the
possession of such Taxpayer reasonably requested by
the Firm (or, if applicable, PwC) and otherwise
cooperate with the Firm (or, if applicable, PwC) in
connection with the preparation and issuance of the
determination contemplated by this Section 3.4.4. The
Firm (or, if applicable, PwC) shall not, without the
prior written consent of the Taxpayer, make available
to Purchaser, portions of the Taxpayer's tax returns,
books, records or other documents, or copies thereof.
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(c) The fees and expenses of the Firm (or, if applicable,
PwC) for its services in connection with the
determinations and calculations contemplated by this
Section 3.4 shall be borne by the Purchaser.
3.4.5 As provided in Section 3.4.3(f), the Purchaser shall also be
required to make Grossed-up Tax Payments with respect to a Taxpayer in
accordance with the following:
(a) Any Taxpayer (as defined in Section 3.4.4(a)) may
notify the Purchaser in writing of the issuance of a
Revenue Agent's Report by the Internal Revenue Service
or other tax authority (a "Claim") that , if
successful, would require the payment by the Purchaser
of a Grossed-up Tax Payment. Such notification shall
be given no later than ten days after such Taxpayer
receives such Claim. Such Taxpayer further agrees to
provide a copy of the Claim to the Purchaser and the
date on which additional Taxes are requested to be
paid (in each case, to the extent known by such
Taxpayer). No Taxpayer shall pay any such Taxes prior
to the earlier of (i) the expiration of the
30-calendar-day period following the date on which
such Taxpayer gives such notice to the Purchaser, and
(ii) the date that any payment or amount with respect
to such Claim is due. If the Purchaser notifies such
Taxpayer in writing at least five business days prior
to the expiration of such period that it desires to
contest such Claim, such Taxpayer agrees to:
(i) provide the Purchaser with any written records
or documents in such Taxpayer's possession
relating to such Claim reasonably requested by
the Purchaser;
(ii) take such actions in connection with contesting
such claim as the Purchaser shall reasonably
request in writing from time to time, including,
without limitation, accepting legal
representation with respect to such claim by an
attorney competent in the subject matter and
reasonably selected by the Purchaser;
(iii) cooperate with the Purchaser in good faith in
order to contest effectively such Claim; and
(iv) permit the Purchaser, if legally permitted to do
so, to participate in any proceedings relating
to such Claim;
provided, however, that the Purchaser shall bear and
pay directly all costs and expenses (including
interest and penalties) incurred in connection with
such contest and shall indemnify and hold such
Taxpayer harmless, on an after-tax basis (taking into
account all federal, state and local income taxes,
interest and penalties), for and against any Taxes
imposed as a result of such representation and payment
of costs and expenses. Without limiting the foregoing
provisions of this Section 3.4.5, the Purchaser shall
control all
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proceedings taken in connection with the contest of
any Claim contemplated by this Section 3.4.5 and, at
its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of
such Claim (provided, however, that such Taxpayer may
participate therein at such Taxpayer's own cost and
expense) and may, at the Purchaser's option, either
direct such Taxpayer to pay the Taxes claimed to be
due and ▇▇▇ for a refund or contest the Claim in any
permissible manner, and such Taxpayer agrees to
prosecute such contest to a determination before any
administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as
the Purchaser shall determine; provided, however, that
if the Purchaser directs such Taxpayer to pay the
Taxes claimed to be due and ▇▇▇ for a refund, the
Purchaser shall advance the amount of such payment to
such Taxpayer on an interest-free basis and shall
indemnify and hold such Taxpayer harmless, on an
after-tax basis (taking into account all federal,
state and local income taxes, interest and penalties),
from any Taxes imposed with respect to such advance;
and provided further, however, that such Taxpayer
shall agree, at the request of the Purchaser, to
extend the statute of limitations relating to payment
of taxes for such Taxpayer's taxable year with respect
to which the contested amount is claimed to be due.
Furthermore, the Purchaser's control of any such
contested Claim shall be limited to issues with
respect to which a Grossed-up Tax Payment may be
payable hereunder and such Taxpayer shall be entitled
to settle or contest, as the case may be, any other
issue raised by the IRS or any other taxing authority.
(b) If, after the receipt by a Taxpayer of any payment
from the Purchaser pursuant to this Section 3.4.5,
such Taxpayer receives any refund with respect to such
payment, such Taxpayer agrees (subject to the
Purchaser's complying with the requirements of Section
3.4.5(a) hereof) to pay within 10 days upon receipt to
the Purchaser the amount of such refund (together with
any interest paid or credited thereon net of any taxes
(taking into account all federal, state and local
income taxes, interest and penalties) imposed with
respect thereto). If, after such Taxpayer's receipt of
a payment from the Purchaser pursuant to Section
3.4.5(a) hereof, a determination is made that such
Taxpayer is not entitled to any refund with respect to
such Claim and the Purchaser does not notify such
Taxpayer in writing of its intent to contest such
denial of refund prior to the expiration of thirty
calendar days after such determination, then such
payment shall be forgiven to the extent of the
Grossed-up Tax Payment required to be paid pursuant to
this Section 3.4, and the amount forgiven shall
offset, to the extent thereof, the amount of such
Grossed-up Tax Payment. Any remainder of an advance
shall be promptly repaid upon demand.
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4.0 ASSUMPTION OF LIABILITIES; CONSENTS
4.1 GENERAL LIMITATION ON ASSUMPTION OF LIABILITIES. Except for "Permitted
Encumbrances" (being those encumbrances listed on Schedule 4.1) and liens for
taxes not yet due and payable and except as otherwise provided in Section 4.2
below, Seller will transfer the Purchased Assets to Purchaser free and clear of
all Encumbrances.
4.2 ASSUMED LIABILITIES AND OBLIGATIONS. As of the Closing Date, Purchaser
will undertake, assume, perform and otherwise pay, satisfy and discharge, and
hold Seller harmless from the Assumed Liabilities, pursuant to an Assignment and
Assumption Agreement ("Assumption Agreement"). The Assumption Agreement will
provide for the assumption by Purchaser of the Assumed Liabilities and the
assignment to Purchaser of Seller's right, title and interest in each of the
Leases, contracts, licenses, employment and related agreements listed on
Schedule 6.8 (Item 1) and other agreements necessary for the conduct of the
Business as listed on Schedule 2.1.3, together with all consents of third
parties that the Seller, through the use of commercially reasonable best
efforts, has been able to obtain which are required to make each such assignment
effective as to such third parties.
5.0 CLOSING
5.1 TIME; LOCATION. Subject to the conditions contained herein, the
closing of the transactions to be effected hereunder (the "Closing") will be
held on the Closing Date at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, L.P.A., Akron, Ohio,
or such other place as the Parties will mutually agree.
The term "Closing Date" will mean Monday, August 2, 1999, at 10:00 a.m.,
local time, the date and time when the transfer of the Purchased Assets and the
payment therefor will take place, or such other date and time as the Parties may
mutually agree.
5.2 DOCUMENTS. On the Closing Date, Seller will execute and deliver to
Purchaser the following instruments of transfer and assignment:
5.2.1 A duly executed Right of First Negotiation for the Real
Property, in recordable form.
5.2.2 A duly executed Amendment to Lease Agreement extending the
term of the lease on the ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ property to
August 31, 2018, in recordable form.
5.2.3 A general ▇▇▇▇ of sale, transferring to Purchaser good and
marketable title to all of the tangible personal property included in the
Purchased Assets, subject only to Permitted Encumbrances.
5.2.4 Title to all vehicles included in the Purchased Assets.
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5.2.5 The certificates of Seller described in Sections 8.3(a) and
(b).
5.2.6 The Assumption Agreement.
5.2.7 A legal opinion of Seller's counsel.
5.2.8 The Seller and ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have entered into
the non-disclosure, non-interference and non-compete agreement described
in Sections 10.1 to 10.3.
5.2.9 ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall execute and deliver to Purchaser
an unconditional guaranty, pursuant to which he personally guarantees the
Seller's performance and payment when due of each of its duties and
obligations arising under this Agreement and the Ancillary Agreements (the
"Guaranty").
5.2.10 The Security Agreement.
5.2.11 Such other documents as will reasonably be required by
Purchaser or its counsel.
5.3 ACTIONS BY PURCHASER. On the Closing Date, Purchaser will pay Seller
the cash portion of the Purchase Price in cash or by wire transfer of
immediately available funds, in accordance with Section 3.1.1(a) and (b), and
will further execute and deliver to Seller the following agreements and
documents:
5.3.1 The Assumption Agreement.
5.3.2 The certificates of Purchaser described in Sections 9.3
and 9.4.
5.3.3 A legal opinion of Purchaser's counsel.
5.3.4 Such other documents as will reasonably be required by Seller
or its counsel.
6.0 REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
6.1 ORGANIZATION, GOOD STANDING, POWER. Each Seller (a) is an entity
organized, validly existing and in good standing under the laws of the State of
Ohio; (b) and is qualified to do business and is in good standing as a foreign
corporation in all jurisdictions in which Seller conducts the Business, except
where the failure so to qualify will not have a material adverse effect on the
Business; and (c) has all requisite corporate power and authority (i) to own,
lease and operate the Business and the Purchased Assets and to carry on the
Business as presently being conducted, (ii) to execute, deliver and perform this
Agreement and the "Ancillary Agreements" (being collectively, the real and
personal property conveyances and assignments, the Assumption Agreement and the
Security Agreement) to which it is a party, and (iii) to consummate the
transactions contemplated thereby.
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6.2 AUTHORIZATION OF AGREEMENT AND ENFORCEABILITY. Each Seller has taken,
or will take prior to Closing, all necessary corporate action to authorize the
execution, delivery and performance of this Agreement, the Ancillary Agreements
to which it is a party, and the consummation of the transactions contemplated
thereby. This Agreement and the Ancillary Agreements to which it is a party have
been or will be duly and validly authorized, executed and delivered by each
Seller and, when so executed and delivered, will constitute the valid and
legally binding obligations of each Seller, enforceable in accordance with their
terms, but subject to bankruptcy, insolvency and other similar laws of general
application affecting the enforcement of creditors' rights and to the
availability of equitable remedies being in the discretion of a court of
competent jurisdiction.
6.3 EFFECT OF AGREEMENT. Except as set forth on Schedule 6.3, the
execution, delivery and performance by Seller of this Agreement and the
Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated thereby will not (a) violate any provision of law,
statute or regulation to which each Seller, the Business, or the Purchased
Assets are subject; or (b) violate any judgment, order, writ or decree of any
court applicable to each Seller, the Business, or the Purchased Assets; (c)
result in the breach of, or conflict with, or constitute a default under, any
commitment, contract, or other agreement to which each Seller is party or by
which the Purchased Assets or the Business are bound; or (d) result in the
creation or imposition of any lien, security interest, charge, or encumbrance
upon the Purchased Assets.
6.4 RESTRICTIONS; BURDENSOME AGREEMENTS. Except as set forth on Schedule
6.4, each Seller is not a party to any contract, commitment, or agreement, nor
is Seller or any of the Purchased Assets subject to or bound or affected by any
charter, bylaw or other corporate restriction, or any order, judgment, decree,
law, statute, ordinance, rule, regulation or other restriction of any kind or
character which would (a) prevent each Seller from entering into this Agreement
or the Ancillary Agreements to which it is a party or from consummating the
transactions contemplated thereby, or (b) have a material adverse effect upon
the Purchased Assets or Business.
6.5 GOVERNMENT AND OTHER CONSENTS. Except as required by the permits and
licenses referred to in Section 6.14 hereof, and except for such filings or
authorizations as have heretofore been made or obtained, no consent,
authorization, or approval of, or filing with any governmental or regulatory
body is required for the execution, delivery and performance by each Seller of
this Agreement or the Ancillary Agreements.
6.6 FINANCIAL STATEMENTS. The balance sheet and the income statement of
▇▇▇▇▇▇ Products, Inc. for the twelve months ended December 31, 1998, have been
audited and prepared in accordance with GAAP and attached hereto as Schedule
6.6(a), are in accordance with the books and records of the Business and reflect
bona fide transactions, and fairly present in all material respects the
financial condition and results of operation of ▇▇▇▇▇▇ Products, Inc. as of the
date thereof.
The balance sheet and the income statement of The ▇▇▇▇▇▇ Products Company,
Ltd., for the twelve months ended December 31, 1998, have been reviewed and
prepared in accordance with GAAP and attached hereto as Schedule 6.6(b), are in
accordance with the books and records of the Business and reflect bona fide
transactions, and fairly present in all material respects the financial
condition and results of operation of ▇▇▇▇▇▇ Products Company, Ltd. as of the
date thereof.
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The consolidated balance sheet of the Business for the four months ended
April 30, 1999, have been compiled and prepared in accordance with GAAP and
attached hereto as Schedule 6.6(c), are in accordance with the books and records
of the Business and reflect bona fide transactions, and fairly present in all
material respects the financial condition and results of operation of the
Business as of the date thereof.
The consolidated income statements of Seller for the four months ended
April 30, 1999, have been compiled and prepared in accordance with GAAP (with
the exception that footnotes have not been presented therewith), and attached
hereto as Schedule 6.6(d), are in accordance with the books and records of the
Business and reflect bona fide transactions, and fairly present in all material
respects the financial condition and results of operation of each Seller and the
Business as of the date thereof.
6.7 DEBTS, OBLIGATIONS AND LIABILITIES. Except (a) as set forth on page
three of the Consolidated Business Review as prepared by the Falls River Group,
LLC and the financial statements attached hereto on Schedules 6.6(a) through
6.6(d) of the Business provided to Purchaser hereunder, (b) as incurred in the
ordinary course of the Business subsequent to December 31, 1998, or (c) as
described in Schedule 6.7, Seller has no debts, obligations, guarantees or other
liabilities (whether absolute, contingent or otherwise), in respect of the
Purchased Assets or the Business which are of a type which would be required to
be accrued for or otherwise reflected in financial statements prepared in
accordance with GAAP, consistently applied, and Seller does not know of, or have
any reasonable ground to know of, any basis for the assertion against Seller in
respect of its conduct of the Business of any such material liability or
obligation.
6.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1998, except
as set forth on Schedule 6.8 hereto, in its conduct of the Business, Seller has
not:
6.8.1 Amended or terminated any contract other than in the ordinary
course of the Business;
6.8.2 Suffered the occurrence of any events which, individually or
in the aggregate, have had, or should reasonably be expected to have, a
material adverse effect upon the Purchased Assets or the Business as now
conducted by Seller;
6.8.3 Incurred any damage or destruction having a material adverse
effect upon the Purchased Assets or the Business by fire, storm, or
similar casualty, whether or not covered by insurance;
6.8.4 Sold, transferred or leased any of the Purchased Assets,
except for transactions in the ordinary course of the Business;
6.8.5 Waived or released any rights with respect to the Purchased
Assets or the Business other than in the ordinary course of the Business;
6.8.6 Except in connection with the carrying out of the
transactions contemplated by this Agreement, entered into any transaction
other than in the ordinary course of the Business;
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6.8.7 Deferred the payment of any expense or liability, or prepaid
any expense or liability, in anticipation of the consummation of the
transactions contemplated hereby;
6.8.8 Incurred any material fixed or contingent obligation or
entered into any agreement, commitment, or other transaction or
arrangement that is not in the ordinary course of the Business.
6.8.9 Subjected to lien, security interest, or any other
Encumbrance (other than Permitted Encumbrances) any of the Purchased
Assets other than in the ordinary course of business.
6.8.10 Materially increased the compensation of Employees, except
following normal review procedures or as reasonably deemed necessary in
the ordinary course of the Business; or
6.8.11 Materially altered its conduct in its relations with
suppliers or customers other than in the ordinary course of the Business.
6.9 TAXES. All federal, state, county, municipal and foreign tax returns,
reports and declarations which are required to be filed prior to the Closing by
or with respect to the Business have been filed or will be filed by it in a
timely manner. Seller has paid all taxes, assessments and other governmental
charges which have become due and are imposed by law upon the Business or any of
its properties, assets, income, receipts, payrolls, transactions, capital, net
worth or franchise. Except for the items listed on Schedule 6.9, no notice of
deficiency or assessment of additional taxes has been received with respect to
the Business. All taxes, assessments and other governmental charges to be paid
with respect to operations of the Business prior to Closing will be paid as the
same will become due and payable.
6.9.1 Except for liens for current Taxes not yet due, there are no
liens for Taxes and no liens for Taxes will attach as a result of the sale
by Seller to Purchaser of the Purchased Assets.
6.9.2 None of the Purchased Assets directly or indirectly secures
any debt, the interest on which is tax-exempt under Section 103 of the
Internal Revenue Code of 1986, as it may be amended from time to time, and
any successor thereto ("Code").
6.9.3 None of the Purchased Assets is "tax-exempt use property"
within the meaning of Section 168(h) of the Code.
The term "Taxes" will mean all taxes, charges, fees, levies or
other assessment imposed by any taxing authority, including, without
limitation, income, gross receipts, excise, withholding, personal
property, real estate, sale, use, ad valorem, license, lease, service,
severance, stamp, transfer, payroll, employment, customs, duties,
alternative, add on minimum, estimated and franchise taxes (including any
interest, penalties or additions attributable to or imposed on or with
respect to any such assessment).
6.10 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES. Seller owns
and has good title to the Purchased Assets, free and clear of all Encumbrances,
other than (a) any lien for Taxes not yet due and payable, and (b) Permitted
Encumbrances.
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6.11 REAL PROPERTY.
6.11.1 The Leases attached on Schedule 2.1.1 correctly identify the
Real Property subject to the Leases.
6.11.2 No portion of the Real Property subject to the Leases is
occupied by Persons other than Seller, and Seller has entered into no
written or oral agreements or other agreements relating to the occupancy
or use of the Real Property other than the Leases. Seller is in all
material respects in compliance with the terms and conditions of the
Leases, each one of which is in full force and effect. No default exists
with the Leases, or is threatened, and no cause exists for such a default.
6.11.3 Seller has received no written notice of, and otherwise has
no Knowledge of, any pending, threatened or contemplated condemnation,
eminent domain or similar proceedings affecting the Real Property or any
part thereof.
6.11.4 Seller has no Knowledge of any facts or conditions that
cause Seller to believe that there are any material defects in the
structural integrity of the Business facilities which have not been
disclosed to Purchaser.
6.11.5 The Real Property is zoned industrial, which permits the
uses of the Real Property, and the operation of the Business facilities as
currently operated. The present uses of the Real Property do not violate
any provision of any applicable building codes, fire regulations, health
regulations or other governmental ordinances, except for such violations
which, individually or in the aggregate, could not reasonably be expected
to have a material adverse effect on the Business.
6.12 MACHINERY AND EQUIPMENT. The Purchased Assets, together with all
items of personal property leased by the Business, include all machinery and
equipment necessary for the operation of the Business as presently operated;
except as set forth on Schedule 6.12 hereto, all material items of such
machinery and equipment taken as a whole is in such condition and state of
repair as is generally acceptable for operation of the Business as presently
operated; Seller has not deferred any repairs or maintenance of such machinery
and equipment in anticipation of its sale of the Purchased Assets; and Seller
has no Knowledge of any material defect in such machinery and equipment.
6.13 PROPRIETARY RIGHTS. Except as listed on Schedule 6.13, no patents,
patent applications, inventions, intellectual property and trade secret assets
used in the Business and no trademarks, trade names or service marks used in the
Business (all of the foregoing collectively referred to as the "Proprietary
Rights") are material to the operation of the Business as presently operated.
Seller's operations in connection with the Business do not to Seller's Knowledge
violate or infringe the proprietary rights of other parties.
6.14 PERMITS, LICENSES. To Seller's Knowledge, Seller has all material
permits, licenses, registrations, orders and approvals of federal, state, or
local government or regulatory bodies that are
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required to own the Purchased Assets and to operate the Business as presently
operated (including without limitation those required under any "Environmental
Law" (as defined below)) (collectively the "Permits"). To Seller's Knowledge,
Seller is in all material respects in compliance with the terms and conditions
of the Permits. Schedule 6.14 hereto sets forth a correct and complete list of
all material Permits, each one of which is in full force and effect. To
Seller's Knowledge, no suspension or cancellation of any of the material
Permits is threatened and no cause exists for such suspension or cancellation.
Any Permits which cannot be transferred are identified on Schedule 6.14.
6.15 COMPLIANCE WITH THE LAW. Except as otherwise described in this
Article 6, to Seller's Knowledge, the Business has been and is being conducted
in all respects in accordance and in compliance with, all applicable laws,
ordinances, rules and regulations of all federal, state, and local governmental
authorities (other than Environmental Laws, as to which Seller's sole
representations and warranties hereunder are set forth in Section 6.20).
6.16 LITIGATION. Except as described in Schedule 6.16 hereto, there is no
claim, action, suit, proceeding, arbitration, investigation or inquiry pending
before any federal, state, municipal, or other court or governmental or
administrative agency, or, to Seller's Knowledge, threatened against the Seller
or the Business or any of the Purchased Assets, or the transactions contemplated
by this Agreement, which should reasonably be expected to have a material
adverse effect upon the Purchased Assets or the Business or the transactions
contemplated by this Agreement. There is not in existence at present any order,
judgment or decree of any court or other tribunal or any agency enjoining or
requiring Seller to take any action of any kind with respect to the Purchased
Assets or the Business, or to which Seller or the Purchased Assets are subject
or bound. Seller is not in default under any order of any federal, state,
municipal or other governmental agency or with respect to any order, writ,
injunction or decree of any court with respect to the Purchased Assets or the
Business.
6.17 PURCHASE AND SALE OBLIGATIONS. As of the Closing Date, all
unfulfilled purchase and sale orders and all other commitments for purchases and
sales made by Seller in connection with the Business will have been made in the
usual and ordinary course of the Business and in accordance with the customary
pricing policies of Seller in connection with the Business.
6.18 LABOR MATTERS. Except as described in Schedule 6.16 or 6.18 hereto,
there are no discrimination or sexual harassment complaints nor any other kind
of labor related disputes against Seller in connection with the Business pending
before or, to Seller's Knowledge, threatened before any federal, state, or local
court or agency, and, no dispute respecting minimum wage or overtime claims has
arisen. The Business has not experienced any general labor disputes or any work
stoppage due to labor disagreements within the past three years.
With respect to the Business and except to the extent set forth in
Schedule 6.18, (a) Seller and the Business are in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, and wages and hours, and are not engaged in any
unfair labor practice; (b) there is no unfair labor practice charge or
complaint against Seller pending or, to Seller's Knowledge, threatened, before
the National Labor Relations Board; (c) there is no labor strike, request for
representation, slowdown or stoppage actually pending or, to Seller's
Knowledge, threatened against or affecting Seller; and (d) Seller has not
received written notice of
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any demand concerning union representation having been raised within the past
three years and, to Seller's Knowledge, no such representation is threatened,
respecting the Employees. The Business is not now, and has not at any time
within the past three years been, subject to any collective bargaining
agreement.
6.19 EMPLOYEE BENEFITS.
6.19.1 To the best of its Knowledge, Seller has not taken any
action which may result in Purchaser being a party to, or bound by, any
Plan subject to the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all regulations promulgated thereunder
("ERISA"), and, Purchaser will have no liability under any ERISA Plan or
payroll practice/employee arrangement following the consummation of the
transactions contemplated hereby; except that Purchaser will assume as of
Closing the ▇▇▇▇▇▇ Products, Inc. Employee Savings 401(k) Plan ("401K
Plan") and Purchaser will be responsible for continuing to provide health
care coverage to those persons who had elected or who were eligible to
elect such coverage up through the Closing Date.
6.19.2 Seller warrants that no ERISA Plan or other employee
arrangement has provided for the payment of retiree benefits in any manner
such that Purchaser would become liable to make such payments. There have
been no failures to provide health care continuation coverage ("COBRA
Coverage") under any welfare benefit plans sponsored by Seller which
Sections 601 through 608 of ERISA require.
6.19.3 Seller represents and warrants to Purchaser that there
currently is no defined contribution retirement plan, other than the 401K
Plan, nor any defined benefit retirement plan maintained by the Seller for
its employees, nor has there been any such plan(s) in existence or
maintained by Seller in the past three years.
6.20 ENVIRONMENTAL COMPLIANCE. Except as described in Schedule 6.20:
(a) There has been no disposal or treatment of hazardous
substances by Seller (or any predecessor in interest or entities acquired,
combined. merged or amalgamated) or any release at, on or under any real
property, or the Real Property, by Seller or to Seller's Knowledge, by any other
person, in violation of any Environmental Law (as defined below) or which would
require investigation, assessment or remedial action under any Environmental
Law; and (ii) none of the sediment, surface or subsurface soil, ground water or
surface water of such real property, or the Real Property, is, or has been,
contaminated by any release.
(b) Seller has not received any (i) notice from any
governmental authority or other third party of any alleged violation with
respect to any Environmental Law; or (ii) notice of any actual, pending or
threatened regulatory action involving Seller or involving any present or
former owner, lessee or operator of any real property, or the Real Property.
(c) There are no (i) incinerators, septic tanks, underground
tanks or cesspools which have been located, on, at or under any real property,
or the Real Property; (ii) all sewage from the
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Real Property is discharged into a public sanitary sewer system; and (iii)
there has been no release by Seller of regulated or hazardous substances into
the environment or into any adjoining or adjacent property.
(d) Seller has obtained all permits, consents and approvals to
conduct the Business and operations in compliance with all applicable
Environmental Laws.
For purposes of this Agreement, the term "Environmental Laws"
shall mean any and all laws, statutes, ordinances, rules, regulations, orders,
agreements or determinations of any governmental authority pertaining to the
operation, emission, discharge or release of pollutants, contaminants, hazardous
substances or wastes into the environment or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, hazardous substances or
wastes or the investigation, assessment, clean-up or other remediation thereof.
For purposes of this Agreement, the term "Governmental Authority" includes, but
is not limited to the federal, provincial and municipality and other political
subdivisions in which the properties and Seller are located or which exercises
jurisdiction over any of the properties, and any agency, department, commission,
board, bureau or instrumentality or any of them that exercises jurisdiction over
any of the properties or Seller.
6.21 SECURITIES. No shares of stock or other securities are included in
the Purchased Assets.
6.22 ILLEGAL PAYMENTS. No part of the Business is dependent upon, or
results from, any payments, direct or indirect, in the nature of bribes,
kick-backs, or similar payments to any government or agency thereof or to any
other Person, or in the nature of contributions to any domestic or foreign
political party or candidate, and no illegal payments have been made.
6.23 INTEREST IN BUSINESS. Seller has not granted, and there is not
outstanding, any option, right, agreement or other obligation pursuant to which
any Person could claim a right to acquire, in any way, all or any part of, or
interest in, the Business, other than any which might arise in the ordinary
course of the Business as a result of a sale, or agreement to sell, Product.
6.24 BROKERS, FINDERS, COUNSEL AND AGENTS. Other than the fees and costs
payable by Seller to Falls River Group, LLC, Seller is not directly or
indirectly obligated to pay any fee or commission to anyone as a broker, finder
or in any other similar capacity in connection with this Agreement or the
transactions contemplated hereby. The fees and costs payable under this Section
will be paid by Seller from the Purchase Price received hereunder and they will
not be accrued on the Balance Sheet or Financial Statements.
6.25 PRODUCTS LIABILITY. Except as disclosed on Schedule 6.16, there are
no pending or, to Seller's Knowledge, threatened, claims for personal injury,
property damage or (except for returned products) breach of warranty against
Seller with respect to any products manufactured, processed, sold or distributed
by the Business. There is no reason to expect that significant or extraordinary
product liability claims will be made against Seller after the Closing Date that
relate to such products manufactured, processed, sold or distributed prior to
the Closing Date.
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6.26 YEAR 2000 COMPLIANCE. Except as disclosed on Schedule 6.26, the
assets, products, components, systems, processes, controls or other goods, work
or services of Seller are Year 2000 Compliant. For purposes of this Agreement,
"Year 2000 Compliant" means:
(a) the functions, calculations and computing processes
perform in a consistent manner and without interruptions, regardless of the date
in time on which processes are actually performed, and regardless of the data
input or output, whether before, on, during or after January 1, 2000, and
whether or not the data is affected by leap years;
(b) date data is accepted, calculated, compared, sorted,
extracted, sequenced or otherwise processed, and returned and displayed, in a
consistent manner regardless of the dates used in such data, whether before, on,
during or after January 1, 2000; and
(c) the assets, products, components, systems, processes,
controls or other goods accept and respond to year-date input, and store and
display data in a manner that is unambiguous as to the century in a defined,
predetermined and appropriate manner.
6.27 SOFTWARE LICENSES. Except as disclosed on the Disclosure Schedule,
Seller has a valid license for any and all computer software used in the
business and Seller is in compliance with the terms of each such license.
7.0 REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
7.1 ORGANIZATION, GOOD STANDING, POWER. Purchaser is a corporation
organized, validly existing and in good standing under the laws of Ohio and has
all requisite corporate power and authority, licenses, permits and franchises to
own, lease and operate the Business and the Purchased Assets and to execute,
deliver and perform this Agreement and the Ancillary Agreements to which it is a
party and to consummate the transactions contemplated thereby.
7.2 AUTHORIZATION OF AGREEMENT AND ENFORCEABILITY. Purchaser has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Agreement and the Ancillary Agreements to which it is a
party and the consummation of the transactions contemplated thereby. This
Agreement and the Ancillary Agreements to which Purchaser is a party have been
duly and validly authorized, executed and delivered by and constitutes the valid
and legally binding obligations of Purchaser, enforceable in accordance with
their terms, but subject to bankruptcy, insolvency and other similar laws of
general application affecting the enforcement of creditors' rights and to the
availability of equitable remedies being in the discretion of a court of
competent jurisdiction.
7.3 EFFECT OF AGREEMENT; CONSENTS. No consent, authorization, approval
or exemption by, or filing with, any governmental or public body or authority is
required, which will not have been obtained by Purchaser on or prior to the
Closing Date, in connection with the execution, delivery and
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performance by Purchaser of this Agreement and the Ancillary Agreements to
which either of them is a party or the taking of any action contemplated
thereby. The execution, delivery and performance of this Agreement and the
Ancillary Agreements to which Purchaser is a party and the consummation of the
transactions contemplated by it thereof will not (with or without the giving
of notice or the lapse of time, or both) (a) violate any judgment, order, writ
or decree of any court applicable to Purchaser, (b) violate any provision of
law, statute or regulation to which Purchaser is subject or (c) result in
breach of, or conflict with, any contract or other agreement if the effect of
such breach or conflict would impair Purchaser's ability to perform its
obligations hereunder.
7.4 LITIGATION. There is no claim, action, suit, proceeding,
arbitration, investigation, or inquiry before any federal, state, municipal, or
other court or governmental or administrative or self-regulatory body or agency,
or any private arbitration tribunal or, to Purchaser's Knowledge, threatened
against Purchaser or any of its respective assets, or the transactions
contemplated by this Agreement, which should reasonably be expected to have an
adverse effect upon the transactions contemplated by this Agreement or
Purchaser's ability to perform its obligations hereunder.
7.5 INFORMATION ON PURCHASER. Except as set forth or disclosed in the
filings made by Purchaser with the Securities and Exchange Commission
("Commission") filed by Purchaser with the Commission prior to the date of this
Agreement, since December 31, 1998 to the date of this Agreement, there has not
been any change in the financial condition, results of operations or business of
Purchaser that either individually or in the aggregate has had a material
adverse effect on Purchaser.
8.0 COVENANTS OF SELLER; CONDITIONS PRECEDENT TO OBLIGATIONS OF
PURCHASER
8.1 PRE-CLOSING AFFIRMATIVE COVENANTS. Seller covenants to the
Purchaser that, between the date of this Agreement and the Closing, Seller will:
(a) Give to Purchaser and its counsel, accountants,
consultants and other representatives reasonable access, during normal business
hours, to such of the properties, books, accounts, contracts and records of
Seller and furnish to Purchaser all such information concerning Seller and the
business as Purchaser reasonably may request.
(b) Except as permitted on Schedule 8.1(b), or required hereby
or as Purchaser may otherwise consent to in writing, operate the business only
in the usual, regular and ordinary manner as such business was conducted prior
to the date hereof and, to the extent consistent with such operation, use its
reasonable best efforts to (i) preserve and keep intact its present business
organization, (ii) keep available the services of the employees of Seller, and
(iii) preserve Seller's relationships with customers, suppliers and others
having business dealings with Seller until the Closing Date.
(c) Maintain the Purchased Assets, whether owned or leased,
including the spare parts inventory, in good repair, order and condition, in
accordance with manufacturer's instructions and Seller's past practices,
reasonable wear and tear excepted.
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(d) Maintain Seller's books and records in the usual, regular
and ordinary manner, in accordance with GAAP and on a basis consistent with
prior years.
(e) Comply in all material respects with all laws and
regulations applicable to Seller and to the conduct of the business.
(f) Perform all the obligations of Seller relating to the
assets and the Business without material default in accordance with the past
practices of Seller.
(g) Obtain in writing as promptly as possible all approvals
and consents required with respect to all material contracts, instruments or
other agreements, without cost or expense to the Purchaser, in order to
effectuate the contemplated transaction, and to deliver to Purchaser copies of
such approvals and consents.
(h) Give to Purchaser prompt written notice of any damage by
fire or other casualty upon the assets or the business.
(i) Advise Purchaser promptly in writing of any fact which
would have been required to be set forth or disclosed in or pursuant to this
Agreement, or which would result in the breach in any material respect by Seller
of any representation or warranty or any covenant or agreement hereunder.
(j) Not publish or disclose and not authorize or give
permission to any of its officers, employees, directors, agents or
representatives or any third party to publish or disclose any trade secrets or
other confidential information or any data or business or financial books,
records, or other information of, or pertaining to, Purchaser, which have been
furnished to Seller by Purchaser or to which Seller, or any of his agents,
attorneys, or accountants have had access during any investigation made in
connection with this Agreement and which is not otherwise available to Seller,
except as required by law.
(k) Not undertake any course of action inconsistent with
satisfaction of the conditions applicable to Seller set forth in this Agreement,
and Seller shall use its reasonable best efforts to do all such acts and take
all such measures as may be necessary to comply with the representations,
agreements, conditions and other provisions of this Agreement.
8.2 PRE-CLOSING RESTRICTIVE COVENANTS. Between the date of this
Agreement and the Closing, Seller will not:
(a) Sell, transfer, assign, lease, encumber or otherwise
dispose of any of the Purchased Assets other than in the ordinary course of
business.
(b) Change the character of the Business.
(c) Incur any material fixed or contingent obligation or enter
into any agreement, commitment, or other transaction or arrangement that is not
in the ordinary course of business.
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(d) Subject to a new lien, security interest, or any other
encumbrance on any of the Purchased Assets, other than in the ordinary course of
business.
(e) Without the written consent of Purchaser, enter into any
transaction, take any action, or by inaction permit any event to occur, which
would result in any of the representations and warranties of the Seller herein
contained not being true and correct in any material respect at and as of the
time immediately after the occurrence of such transaction or event.
(f) Increase the rate of compensation paid, or pay any bonus
to anyone connected with the business, except for (i) merit raises provided to
employees in accordance with Seller's past practice, (ii) bonuses paid to Seller
employees (other than the executives of Seller) in accordance with Seller's past
practice and (iii) contributions to Seller's profit sharing plan in accordance
with Seller's past practice. Seller further agrees not to establish or adopt any
new pension or profit-sharing plan, deferred compensation agreement or employee
benefit arrangement of any kind whatsoever covering or affecting Seller's
employees.
(g) Publicize, advertise, or announce and use its reasonable
best efforts not to permit any of its agents or representatives to publicize,
advertise, or announce, to any third party, except as required pursuant to this
Agreement to obtain the consent of such third party, and except as required in
the interest of the business, the entering into of this Agreement, the terms of
this Agreement, or the transactions contemplated hereby.
(h) Directly or indirectly solicit or engage in discussions or
negotiations with, or provide any non-public information to or otherwise
cooperate with, any other person who seeks to acquire, or expresses an interest
in acquiring, all or any substantial part of the business, or for the purpose of
effecting a transaction inconsistent with the Purchaser's acquisition of the
business.
(i) Except in the ordinary course of business, cancel, release
or relinquish any debts of or claims against others held by Seller, and no
rights relating to the Business shall be waived.
(j) Other than in the ordinary course of business, Seller will
not terminate or modify any lease, contract, governmental license, permit or
other authorization or agreement affecting Seller, the Business or the Purchased
Assets or the operation thereof, subject however to Section 5.2.2.
8.3 PRE-CLOSING CONDITIONS. The obligations of Purchaser hereunder are
subject to the fulfillment at the Closing Date of each of the following
conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. Except as
affected by transactions contemplated hereby and except any representations or
warranties which were expressly stated as being made as of a specified date, the
representations and warranties of Seller contained in this Agreement and any
Ancillary Agreements to which it is a party are true in all material respects on
and as of the Closing Date.
(b) PERFORMANCE OF AGREEMENTS. Seller will have performed in
all material respects all obligations and agreements and complied in all
respects with all covenants and
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conditions contained in this Agreement and in each Schedule or Exhibit
attached hereto to be performed or complied with on its part at or prior to
the Closing Date, including but not limited to providing the documents listed
under Section 5.2.
(c) ABSENCE OF MATERIAL DAMAGE TO PURCHASED ASSETS. As of the
Closing Date there will have been no occurrence of any event that, individually
or in the aggregate, has had, or should reasonably be expected to have, a
material adverse effect upon the Purchased Assets or the Business taken as a
whole, specifically including, but not limited to, the financial condition and
operating results, or any damage or destruction to any of the Purchased Assets
by fire, storm, or other like or unlike casualty, whether or not covered by
insurance.
(d) SELLER'S CERTIFICATE AND LEGAL OPINION. Purchaser will
have received a certificate from Seller, dated as of the Closing Date,
reasonably satisfactory in form and substance to Purchaser and its counsel,
certifying as to the fulfillment of all matters specified in Section 8.3(a) and
Section 8.3(b) hereof. Purchaser will also have received an opinion of Seller's
legal counsel, dated as of the Closing Date, reasonably satisfactory in form and
substance to Purchaser and its counsel.
(e) SECRETARY'S CERTIFICATE. Purchaser will have received a
certificate, dated the Closing Date, of the Secretary of each Seller with
respect to (a) the resolutions adopted by the Board of Directors of each Seller
and the shareholders of each Seller approving this Agreement and the Ancillary
Agreements to which Purchaser is a party, and the other transactions
contemplated hereby, (b) the incumbency and specimen signature of each officer
or representative of each Seller executing this Agreement and the Ancillary
Agreements to which each Seller is a party, and (c) such other certificates as
may reasonably be requested, including but not limited to those regarding good
standing and tax compliance.
(f) INJUNCTION AND HSR APPROVAL. On the Closing Date, there
will be no injunction, writ, preliminary restraining order or any order of any
nature in effect issued by a court of competent jurisdiction directing that the
transactions provided for herein, or any of them, not be consummated as herein
provided, and that Purchaser and Seller have received approval, early
termination or the waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended ("HSR Act") has expired.
(g) PAY EMPLOYEES TO CLOSING DATE. Each Seller shall have paid
or accrued all wages, salaries and other sums, including but not limited to the
amounts due under the ▇▇▇▇▇▇ Plans (as defined in Section 10.6.2) due Employees
through the close of business on July 31, 1999 and shall have listed these
amounts on the Balance Sheet.
(h) COMPLIANCE WITH AGREEMENT. Seller shall have not
undertaken any course of action inconsistent with satisfaction of the conditions
applicable to it set forth in this Agreement; and Seller will have used its best
efforts to do all such acts and take all such measures as may be necessary to
comply with the representations, agreements, conditions and other provisions of
this Agreement.
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9.0 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligations of Seller are subject to the fulfillment at the Closing
Date of each of the following conditions:
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Except as affected by
transactions contemplated hereby and except any representations or warranties
which were made as of a specified date, the representations and warranties of
Purchaser contained in this Agreement and any Ancillary Agreements to which it
is a party will be true in all material respects on and as of the Closing Date.
9.2 PERFORMANCE OF AGREEMENT. Purchaser will have performed in all
material respects all obligations and agreements and complied in all respects
with all covenants and conditions contained in this Agreement to be performed or
complied with on its part at or prior to the Closing Date.
9.3 PURCHASER'S CERTIFICATE AND LEGAL OPINION. Seller will have
received a certificate from Purchaser, dated as of the Closing Date, reasonably
satisfactory in form and substance to Seller and its counsel, certifying as to
the fulfillment of the matters specified in Section 9.1 and Section 9.2 hereof.
Seller will have received an opinion of Buyer's legal counsel, dated as of the
Closing Date, reasonably satisfactory in form and substance to Seller and its
counsel, in the form attached hereto as Exhibit 9.3.
9.4 SECRETARY'S CERTIFICATE. Seller will have received a certificate,
dated the Closing Date, of a Secretary of Purchaser with respect to (a) the
resolutions adopted by the Board of Directors of Purchaser approving this
Agreement and the Ancillary Agreements to which Purchaser is a party, and the
other transactions contemplated hereby, (b) the incumbency and specimen
signature of each officer or representative of Purchaser executing this
Agreement and the Ancillary Agreements to which Purchaser is a party, and (c)
such other certificates as may be requested, including but not limited to those
regarding good standing and tax compliance.
9.5 INJUNCTION AND HSR APPROVAL. On the Closing Date, there will be no
injunction, writ, preliminary restraining order or any order of any nature in
effect issued by a court of competent jurisdiction directing that the
transactions provided for herein, or any of them, not be consummated as herein
provided and that Purchaser and Seller have received approval, early
termination or the waiting period under the HSR Act has expired.
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9.6 COMPLIANCE WITH AGREEMENT. Purchaser shall have not undertaken any
course of action inconsistent with satisfaction of the conditions applicable to
it set forth in this Agreement; and Purchaser will have used its best efforts to
do all such acts and take all such measures as may be necessary to comply with
the representations, agreements, conditions and other provisions of this
Agreement.
10.0 OBLIGATIONS AFTER THE CLOSING DATE
10.1 COVENANT NOT TO DISCLOSE. Each Seller and ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(collectively "Sellers") hereby covenant and agree that, except as may be
required by law, rule or regulation, they will not at any time reveal, divulge
or make known to any Person (other than Purchaser) and Sellers will not use for
their own purposes any information that relates to the Business, including, but
not limited to, customer lists or other customer information, trade secrets or
formulae, marketing plans or proposals, financial information, or any data,
written material, records or documents used by or relating to the Business which
are of a confidential nature (collectively, the "Confidential Information").
Confidential Information includes any such information whether or not such
information was developed, devised or otherwise created in whole or in part by
the efforts of Sellers, but will not include such information which is a matter
of public knowledge, unless it is of general public knowledge as a result of the
unauthorized disclosure by Sellers.
10.2 COVENANT NOT TO INTERFERE. Sellers, except for ▇▇. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, hereby covenant and agree that, unless this Agreement is terminated, for
a period of five years after the Closing Date, they will not, whether for their
own account or for the account of any other Person, knowingly initiate
discussions with any person who is an employee of the Purchaser for the purpose
of persuading such employee to terminate his or her employment with the
Purchaser (except with the written permission of the employer or as otherwise
specifically contemplated by this Agreement).
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ agrees that, unless this Agreement is terminated,
for a period of five years after he no longer has employee status with Purchaser
for any reason, he will not, whether for his own account or for the account of
any other Person, knowingly initiate discussions with any person who is an
employee of the Purchaser for the purpose of persuading such employee to
terminate his or her employment with the Purchaser (except with the written
permission of the employer or as otherwise specifically contemplated by this
Agreement).
10.3 COVENANT NOT TO COMPETE. The Sellers, except for ▇▇. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, agree that, unless this Agreement is terminated, for a period of five
years after the Closing Date and in the geographic area in which the Company
is currently doing business, neither they nor their Affiliates will engage,
directly or indirectly, whether as a principal, partner, joint venturer,
shareholder, or agent, in any enterprise which produces products or provides
services of the same type as those which the Business produces as of the
Closing Date, provided, however, that nothing herein will prohibit the
ownership by Sellers of securities of any entity traded on any national
exchange.
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▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ agrees that, unless this Agreement is terminated,
for a period of five years after he no longer has employee status with Purchaser
for any reason, neither he nor his Affiliates will engage, directly or
indirectly, whether as a principal, partner, joint venturer, shareholder, or
agent, in any enterprise which produces products or provides services of the
same type as those which the Business produces products or provides services as
of the date he ceases to be employed for any reason and in the geographic area
in which the Company is currently doing business, provided, however, that
nothing herein will prohibit the ownership by him of securities of any entity
traded on any national exchange. Further, this Section 10.3 shall not prohibit
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ from owning an interest in the entities which lease real
property to the Purchaser provided such entities do not engage in competition
with Purchaser as prohibited under the terms of this Section.
10.4 REASONABLE RESTRICTIONS. Sellers acknowledge that the restrictions
set forth in Sections 10.1 through 10.3 are reasonable and necessary to protect
the Purchaser's interests. Sellers agree that, in the event that any part of
Sections 10.1 through 10.3 shall be held unenforceable or invalid, the remaining
parts thereof shall nevertheless continue to be valid and enforceable as though
the invalid portions had not been a part hereof. In the event that the
geographic area, time period of restriction, activity or subject established in
accordance with Sections 10.1 through 10.3 shall be deemed to exceed the maximum
area, period of restriction, activity or subject which a court of competent
jurisdiction deems enforceable, said area, periods of restriction, activities or
subjects shall, for the purposes of Sections 10.1 through 10.3, be reduced to
the extent necessary to render them enforceable
10.5 NAME CHANGE. Seller agrees to cease using the corporate name
"▇▇▇▇▇▇ Products," "Red Creek," "North Shore Plastics," and "▇▇▇▇▇▇" as of
Closing and agrees to change the corporate names within seven business days
after Closing.
10.6 TRANSITION OF EMPLOYEES.
10.6.1 EMPLOYEES; ASSUMPTION OF EMPLOYMENT CONTRACTS.
Purchaser will, on the Closing Date, offer employment to all of the
Persons employed by the Business on the Closing Date on the same terms
and conditions to which they are then employed by the Seller, and
Purchaser will assume the employment contracts listed on Schedule
10.5.1.
10.6.2 EMPLOYEE BENEFITS GENERALLY. Immediately after Closing,
all Persons employed by Purchaser will have the benefits previously
provided under the 401K Plan, the the ▇▇▇▇▇▇ Products Life Insurance
Plan with Anthem and the ▇▇▇▇▇▇ Products, Inc. Group Health Plan with
Anthem (collectively the "▇▇▇▇▇▇ Plans"). After Closing, Purchaser
shall have the unilateral right to change such benefits at any time and
from time to time to conform such benefits to those provided generally
to the employees of Purchaser.
10.6.3 POST-RETIREMENT HEALTH COVERAGE. Seller has no
post-retirement health coverage plans or agreements. Neither the
Purchaser nor any of its Affiliates will be liable for the payment of
any health expenses incurred by individuals who retired from the
Seller's employment on or before the Closing Date.
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10.6.4 DISABILITY BENEFITS. Seller has no liability for the
payment of long-term or short-term disability benefits to employees or
individuals who terminated employment with the Seller on or before the
Closing Date.
10.6.5 COOPERATION. The Purchaser and the Seller agree to
cooperate in collecting and providing such information as may be
required by either in order to discharge their respective obligations
under this Section 10.6.
10.7 FURTHER ASSURANCES OF SELLER. After the Closing Date, Seller will,
at the request of Purchaser, execute, acknowledge and deliver to Purchaser, all
such further assignments, conveyances, endorsements, deeds, special powers of
attorney, consents and other documents, and take such other action as Purchaser
may reasonably request (a) to transfer to and vest in Purchaser, and protect its
rights, title and interest in, all the Purchased Assets, and (b) otherwise to
consummate the transactions contemplated by this Agreement. In addition, from
and after the Closing Date, Seller will afford to Purchaser and its attorneys,
accountants and other representatives access, during normal business hours, to
such books of account and other financial records relating to the Business as
may reasonably be required in connection with the preparation of financial
information or tax returns of Purchaser.
10.8 FURTHER ASSURANCE OF PURCHASER. From and after the Closing Date,
Purchaser will afford to Seller and its attorneys, accountants and other
representatives access, during normal business hours, to such books of account
and other financial records relating to the Business as may reasonably be
required in connection with the preparation or audit of financial information or
tax returns of Seller for periods concluding on or prior to the Closing Date.
Purchaser will cooperate in all reasonable respects with Seller with respect to
its former interest in the Business and in connection with claims and litigation
asserted by or against third parties, including, but not limited to, making
employees available to assist with, or provide information in connection with,
claims and litigation, provided, that Seller reimburses Purchaser for the
reasonable costs incurred by Purchaser in connection therewith. Purchaser will
maintain the records obtained by it under Section 2.1.9 for a period of six
years after the Closing Date.
10.9 RELEASE OF SELLER AND GUARANTORS FROM NOTE. Prior to Closing,
Seller shall take all action necessary and appropriate to obtain the full and
unconditional release of the Seller and the guarantors from all of their
respective obligations to KeyBank, N.A.("Bank") as reflected on Schedule 2.1.3
("KeyBank Loans"). At Closing, Purchaser agrees as part of its agreement to
assume the KeyBank Loans, to execute such documents requested by Bank to release
Seller and the guarantors from the KeyBank Loans.
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11.0 INDEMNIFICATION
11.1 INDEMNIFICATION BY SELLER. Seller covenants and agrees with
Purchaser that it will pay and perform, and will indemnify Purchaser, its
directors and officers, all Persons controlled by, controlling or under common
control with Purchaser, and each of their successors and assigns (individually,
a "Purchaser Indemnified Party"), and hold them harmless from, against and in
respect of any and all costs, losses, claims, liabilities, fines, penalties,
damages and expenses (including interest which may be imposed in connection
therewith and court costs and reasonable fees and disbursements of counsel, but
after taking into account any insurance proceeds received by Purchaser with
respect thereto and any net tax benefits to Purchaser resulting therefrom)
(collectively, "Seller's Indemnified Liabilities") resulting from, arising out
of, or incurred by any Purchaser Indemnified Party, after the Closing Date, in
connection with:
11.1.1 Any breach of any of the covenants, representations or
warranties made by Seller in this Agreement or the Ancillary
Agreements.
(a) Claims for indemnification with respect to
breach of the warranties set forth in Section 6.1
(Organization, Good Standing, Power); Section 6.2
(Authorization of Agreement and Enforceability); Section 6.3
(Effect of Agreement); Section 6.10 (Title to Personal
Property); and in the General ▇▇▇▇ of Sale, may be made by the
Purchaser at any time after the Closing Date.
(b) Claims for indemnification with respect to
breach of the warranties in Section 6.9 (Taxes) and Section
6.18 (Labor Matters), must be made by the Purchaser prior to
the expiration of the statute of limitations applicable to the
matter that gives rise to the claim.
(c) Claims for indemnification with respect to the
breach of any of the other warranties set forth in Article 6,
and claims for indemnification or claims for all other debts,
obligations, liabilities of, or claims against, Seller of any
kind, including those arising out of or relating to the
operation of the Business prior to the Closing Date, must be
made by Purchaser on or before the second anniversary of the
Closing Date, except to the extent they are covered under
paragraphs (a) and (b) above, and then pursuant to the periods
indicated therein.
11.2 INDEMNIFICATION BY PURCHASER. Purchaser covenants and agrees with
Seller that it will pay and perform, and will indemnify Seller, its directors,
officers or managers, all Persons controlled by, controlling or under common
control with Seller, and each of their successors and assigns (individually, a
"Seller Indemnified Party"), and hold them harmless from, against and in respect
of any and all costs, losses, claims, liabilities, fines, penalties, damages and
expenses (including interest which may be imposed in connection therewith and
court costs and reasonable fees and disbursements of counsel, but after taking
into account any insurance proceeds received by Seller with respect thereto and
any net tax benefits to Seller resulting therefrom) (collectively, "Purchaser's
Indemnified Liabilities") resulting from, arising out of, or incurred by any
Seller Indemnified Party, after the Closing Date, in connection with:
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11.2.1 Any breach of any of the representations, warranties or
covenants made by Purchaser in Article 7 hereof or elsewhere in this
Agreement or Ancillary Agreements.
(a) Claims for indemnification with respect to
breach of the warranties set forth in Section 7.1
(Organization, Good Standing, Power); Section 7.2
(Authorization of Agreement and Enforceability); and Section
7.3 (Effect of Agreement) may be made by the Seller at any
time after the Closing Date.
(b) Claims for indemnification with respect to any
attempt (whether or not successful) by any Person to cause or
to require Seller to pay or to discharge any Assumed Liability
or any other debt, obligation, liability or commitment of
Purchaser (except with regard to any liability for which
Seller has been expressly released or with regard to the
Leases) may be made by the Seller during any period prior to
the discharge in full of the underlying Assumed Liability,
debt, obligation, liability or commitment.
(c) Claims for indemnification with respect to (i)
the breach of any of the other warranties set forth in Article
7, (ii) failure or default by Purchaser in respect of any of
the covenants or agreements made by Purchaser in this
Agreement or Ancillary Agreements (including without
limitation obligations or liabilities arising out of or in
connection with Purchaser's ownership of the Purchased Assets
or the operation of the Business after the Closing), or the
existence of which would constitute a breach of any
representation, warranty, covenant or agreement contained in
this Agreement must be made by the Seller on or before the
second anniversary of the Closing Date.
11.3 PROCEDURES FOR INDEMNIFICATION.
11.3.1 Each Indemnified Party will promptly give notice
hereunder to the indemnifying party ("Notice of Claim") after obtaining
written notice of any claim as to which recovery may be sought against
the indemnifying party, and, if such indemnity will arise from the
claim of a third party, will permit the indemnifying party to assume
the defense of any such claim and any litigation or other proceeding
resulting from such claim; provided, however, that Purchaser (or any
Purchaser Indemnified Party) will not be required to permit Seller to
assume the defense of any claim or litigation which, if not first paid,
discharged or otherwise complied with, would result in an interruption
or disruption of the conduct of the business of Purchaser or any
material part thereof.
Notwithstanding the foregoing, the right to indemnification
hereunder will not be affected by any failure of an Indemnified Party
to give such notice. The notice required hereunder will specify the
basis for the claim for indemnification and the "Indemnified
Liabilities" (collectively, Seller's Indemnified Liabilities and
Purchaser's Indemnified Liabilities) arising therefrom to the extent
ascertainable at the time of the notice. Failure by an indemnifying
party to notify an Indemnified Party of its election to defend any
such claim or action by a third party within 21-days after notice
thereof will have been given to the
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indemnifying party will be deemed a waiver by the indemnifying party
of its right to defend such claim or action if the Indemnified
Party's ability to defend such claim or action would be prejudiced by
the indemnifying party's assumption of the defense after such time.
11.3.2 The indemnifying party will not, in the defense of such
claim or any litigation resulting therefrom, consent to entry of any
judgment (other than a judgment of dismissal on the merits without
costs) or enter into any settlement, except with the written consent of
the Indemnified Party (which will not be unreasonably withheld) if such
settlement involves the entry of injunctive relief binding upon the
Indemnified Party or its assets or requiring the Indemnified Party to
make any payment not indemnified hereunder.
11.3.3 If the indemnifying party will not assume the defense
of any such claim by a third party, or litigation resulting therefrom,
after receipt of notice from the Indemnified Party, the Indemnified
Party may defend against such claim or litigation in such manner as it
deems appropriate.
11.3.4 If the indemnifying party will notify the Indemnified
Party that it disputes any claim made by the Indemnified Party, then
the Parties hereto will endeavor to settle and compromise such claim,
and if unable to agree on any settlement or compromise, such claim for
indemnification will be settled by appropriate mediation and then
arbitration, as delineated in Section 14.18, and any liability
established by reason of such settlement, compromise, mediation or
arbitration, will be deemed to be finally determined; provided,
however, that the indemnifying party must notify the Indemnified Party
of the disputed claim within 180 days of the receipt by the
indemnifying party of the notice required by Section 11.3.1 hereof. Any
claim that is finally determined in the manner set forth above will be
paid promptly by the indemnifying party in cash.
11.3.5 The Party seeking indemnification pursuant to this
Article 11 will bear the burden of proof as to each and every element
of such indemnification claim.
11.4 INSURANCE, MITIGATION AND RELATED MATTERS.
11.4.1 The Indemnified Party will use its reasonable efforts
to make insurance claims relating to any claim for which it is seeking
indemnification pursuant to this Section 11 provided that the
Indemnified Party will not be obligated to make such an insurance claim
if the Indemnified Party in its reasonable judgment believes the cost
of pursuing such an insurance claim together with any corresponding
increase in insurance premiums or other chargebacks to the Indemnified
Party, as the case may be, would exceed the value of the claim for
which the Indemnified Party is seeking indemnification. The
indemnifying party will be subrogated to all rights of the Indemnified
Party in respect of any loss borne by the indemnifying party.
11.4.2 Each person entitled to indemnification hereunder
will take all reasonable steps to mitigate all losses, costs,
expenses and damages after becoming aware of any event
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which could reasonably be expected to give rise to any losses, costs,
expenses and damages that are indemnifiable or recoverable hereunder
or in connection herewith.
11.5 LIMITATIONS. The indemnification provided for in this Article 11
is subject to the following limitations:
11.5.1 Neither Seller nor Purchaser shall be obligated to pay
any amounts for indemnification under this Article 11, except in
respect of those claims based upon, arising out of or otherwise in
respect of Organization, Good Standing, Power, Authorization of
Agreement and Enforceability, Effect of Agreement, Title to Personal
Property and under the General ▇▇▇▇ of Sale, or for fraud, as
applicable to the appropriate party, hereof (collectively, the "Basket
Exclusions"), until the aggregate amount for which indemnification has
been claimed by Seller or Purchaser, as the case may be, exclusive of
the Basket Exclusions, equals $250,000 (the "Basket Amount"), whereupon
the Seller or Purchaser, as applicable, shall be obligated to pay in
full all amounts in excess of such Basket Amount due pursuant to this
Article 11, provided however, that in no event shall Seller or
Purchaser be required to pay or be liable under this Article 11 for any
losses, except as indicated in Section 11.5.2 below, if, and to the
extent that, as a result thereof the aggregate of all such
indemnification payments, as the case may be, with respect to losses
shall have exceeded an amount equal to the total amount of
Consideration paid by Purchaser under this Agreement.
11.5.2 The Seller or Purchaser, as applicable, shall be
obligated to pay the Basket Exclusions without regard to the individual
or aggregate amounts thereof and without regard to whether the
aggregate of all other indemnification payments shall have exceeded, in
the aggregate, the Basket Amount.
12.0 TERMINATION
12.1 TERMINATION.
This Agreement may be terminated:
(A) BY SELLER OR PURCHASER.
(i) If the Closing has not taken place on or before
December 31,1999; provided, however, that no party then in breach of
any obligations hereunder shall have the right to terminate;
(ii) After a suspension of all provisions of this
Agreement for 90 days from the Closing Date, if any bona fide action
or proceeding shall be pending against either Party on the Closing
Date that could result in an unfavorable judgment, decree, or order
that would prevent or make unlawful the performance of this Agreement
and such action or proceeding has not been cured; or
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(iii) If any agency of the federal or of any state
government shall have objected at or before the Closing Date to this
acquisition or to any other action required by or in connection with
this Agreement.
(B) BY PURCHASER. By Purchaser, if, on the Closing Date, any of the
conditions set forth in Section 8.3 hereof have not been met or have not been
waived by Purchaser in writing, or Purchaser reasonably determines that
compliance with any request for additional information or changes to the
transaction required by the Federal Trade Commission or the Department of
Justice pursuant to the HSR Act would have a material adverse effect on
Purchaser.
(C) BY SELLER. By Seller, if, on the Closing Date, any of the
conditions set forth in Sections 9.1 through 9.6 hereof have not been met or
have not been waived by Seller in writing.
12.2 RETURN OF DOCUMENTS TO SELLER. If this Agreement is terminated for
any reason pursuant to this Article 12, each party shall return to the other
party all documents and copies thereof which shall have been furnished to it.
12.3 LIMITATIONS ON REMEDIES. If this Agreement is terminated as
provided in this Article 12, this Agreement shall forthwith become wholly void
and of no further force or effect and there shall be no liability on the part of
Purchaser, Seller or their respective officers or directors, except that the
provisions of Sections 14.5, 14.6, 14.11 and 14.17 shall remain in full force
and effect.
13.0 COVENANT OF PRINCIPAL
13.1 COVENANT OF PRINCIPAL. In order to induce Purchaser to enter into
this Agreement and to consummate the transactions contemplated in this
Agreement, ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ agrees that as of the Closing, he shall be
personally and jointly and severally liable for the full and punctual
performance of each and every one of the obligations, covenants and duties of
the Seller arising under or pursuant to this Agreement and the Ancillary
Agreements, and shall provide Purchaser with the Guaranty.
14.0 GENERAL
14.1 EXPENSES. If this Agreement is terminated as provided in Article
12, each of the Parties will pay all costs and expenses incurred or to be
incurred by it in connection with the negotiations respecting this Agreement and
the transactions contemplated hereunder, including costs of finders or
investment bankers, preparation of documents, obtaining any necessary regulatory
approvals and the consummation of the other transactions contemplated hereby,
otherwise the costs and expenses will be allocated pursuant to Section 3.1.1(d).
14.2 PUBLICITY. All notices and other publicity concerning the
transactions contemplated by this Agreement will be jointly planned and
coordinated by and between Purchaser and Seller.
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14.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Subject to Article 11,
the covenants, agreements, representations and warranties of the Parties
contained herein, or in any certificate or other writing, Exhibit or Schedule
delivered, will survive the Closing Date.
14.4 BINDING EFFECT; BENEFITS. This Agreement will inure to the benefit
of the Parties hereto, and will be binding upon the Parties hereto and their
respective successors and assigns. Nothing in this Agreement is intended to
confer on any Person, any rights or remedies under this Agreement.
14.5 NOTICES. All notices and other communications which any Party to
this Agreement may give hereunder will be in writing and will be deemed to have
been duly given by delivering the same to the Party by a reputable courier
service which requires a signature upon delivery, by mailing the same by
registered or certified first class mail, postage prepaid, return receipt
requested, or by telecopier with receipt confirmation (followed by a first class
mailing of the same) to the Party to whom the same is so given or made. For
purposes of this Section 14.5, providing copies to third parties is a matter of
courtesy and shall not be deemed as part of the notice requirement.
14.5.1 IF TO SELLER, TO:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Ibold
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ & Parks LLP
▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Falls River Group, LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
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14.5.2 IF TO PURCHASER, TO:
▇▇▇▇▇ Industries, Inc. With a copy to:
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇'▇▇▇▇
Vice President - Finance ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ L.P.A.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
or to such other address as such Party will have specified by notice to
the other Party hereto.
14.6 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto) and the documents delivered pursuant hereto constitute the
entire agreement and understanding between the Parties and supersede all prior
agreements, oral and written, between the Parties, but not including the
Confidentiality Agreement dated March 14, 1999 and any other agreements executed
between the Parties of even date herewith or hereafter. No change, amendment,
termination or attempted waiver of any of the provisions hereof will be binding
upon any Party unless said act is in writing signed by a senior officer of the
Party to be bound or their respective successors in interest
14.7 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which will be deemed an original and all of which
together will constitute but one and the same instrument.
14.8 HEADINGS. The article, section and other headings contained in
this Agreement are for reference purposes only and will not be deemed to be a
part of this Agreement or to affect the meaning or interpretation of this
Agreement.
14.9 CONSTRUCTION. Within this Agreement, the singular will include the
plural and the plural will include the singular, and any gender will include all
other genders, all as the meaning and the context of this Agreement will
require.
14.10 EXHIBITS AND SCHEDULES. All Exhibits and Schedules hereto have
been delivered by the Parties to each other previously or simultaneously
herewith.
14.11 GOVERNING LAW. This Agreement will be construed in accordance
with, and governed by, the laws of the State of Ohio.
14.12 COOPERATION. The Parties hereto will cooperate fully at their own
expense, except as otherwise provided in this Agreement, with each other and
their respective counsel and accountants in connection with all steps to be
taken as part of their obligations under this Agreement.
14.13 SEVERABILITY. If any term, covenant, condition, or provision of
this Agreement or the application thereof to any circumstance will be invalid or
unenforceable to any extent, the remaining terms, covenants, conditions and
provisions of this Agreement will not be affected thereby and each remaining
term, covenant, condition, and provision of this Agreement will be valid and
will be enforceable to the fullest extent permitted by law. If any provision of
this Agreement is so broad as to be unenforceable, such provision will be
interpreted to be only as broad as is enforceable.
14.14 SUCCESSORS AND ASSIGNS. The covenants, agreements, and conditions
contained herein or granted hereby will be binding upon and will inure to the
benefit of the Parties and their respective successors and permitted assigns.
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14.15 EXCLUSIVE REMEDIES. The rights and remedies herein provided in
this Agreement and the Ancillary Agreements are cumulative and shall be the
exclusive remedies of the parties hereto with respect to claims for monetary
damages related to the matters addressed therein and with respect to the
transactions contemplated hereby.
14.16 PASSAGE OF TITLE AND RISK OF LOSS. Legal title, equitable title
and risk of loss with respect to the Purchased Assets will not pass to Purchaser
until such assets are transferred to Buyer at the Closing.
14.17 DISPUTE RESOLUTION. Except where the Parties have designated a
specific procedure in this Agreement utilizing accountants to resolve a matter,
all disputes under this Agreement shall be resolved as follows:
(a) COOPERATION. The parties agree to cooperate with each
other to attempt to settle all disputes arising under this Agreement without
resort to mediation or arbitration.
(b) MEDIATION. If the parties are unsuccessful in resolving a
dispute to their mutual satisfaction within twenty (20) days from the date that
notice of the dispute is given by one party to the other, either party may
submit the dispute to mediation to Private Judicial Services, Inc. in Cleveland,
Ohio. Neither party may initiate arbitration proceedings until mediation is
completed as determined by the mediator.
(c) ARBITRATION. All disputes or portions thereof which are
not resolved through cooperation and mediation, shall be settled by arbitration
conducted in accordance with the rules and regulations of the American
Arbitration Association, as then in effect except as provided herein. The
parties to such arbitration shall be entitled to conduct discovery and take
depositions.
Unless the parties agree otherwise, any arbitration shall be
held in Cuyahoga County, Ohio, before three independent arbitrators appointed by
the Parties, one arbitrator shall be selected by one party or faction and one
arbitrator shall be selected by the other party or faction. The two arbitrators
shall select a third arbitrator to arbitrate the dispute. If either party or
faction party does not timely select an arbitrator, the arbitrator selected by
the other party or faction shall arbitrate the dispute.
Costs and fees of the arbitrators shall be borne by the
non-prevailing party, unless the arbitrators determine otherwise. The award of
the arbitrators, which may include equitable relief, shall be final and judgment
may be entered upon it in accordance with applicable law in any court having
jurisdiction thereof. Any demand for arbitration shall be in writing and must be
made within a reasonable time after the claim, dispute or other matter in
question has arisen, except as otherwise expressly provided in this Agreement.
In no event shall the demand for arbitration be made after the date that
institution of legal or equitable proceedings based upon such claim, dispute or
other matter would be barred by the applicable statute of limitations or the
date specified in this Agreement, whichever is earlier.
(d) If a dispute arises among the Parties as a result of which
an action is commenced to interpret or enforce any of the terms of this
Agreement, or if there is a breach of any of the terms of this Agreement, the
losing or defaulting Party will pay to the prevailing Party reasonable
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out-of-pocket attorneys' fees, costs and expenses incurred in connection with
the prosecution or defense of such action, unless the arbitrators determine
otherwise.
14.18 RIGHT OF SET OFF. In the event of a breach by Seller of its
indemnification obligations under Article 11 of this Agreement, Purchaser is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all amounts at any time held by
Purchaser on behalf of Seller or ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and any and all
indebtedness at any time owing by Purchaser to Seller or ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
against any and all of the obligations of Seller or ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ now or
hereafter existing under this Agreement or any Ancillary Agreement.
* * *
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed
in their respective names by an officer thereof duly authorized on the date
first above written.
▇▇▇▇▇ INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice
President - Finance
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▇▇▇▇▇▇ PRODUCTS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Its: President
----------------------------
THE ▇▇▇▇▇▇ PRODUCTS COMPANY, LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Its: Managing Partner
----------------------------
NORTH SHORE PLASTICS, INC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Its: President
----------------------------
RED CREEK, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Its: President
----------------------------
AS TO SECTIONS 10.1 THROUGH 10.3, SECTION 13.1 AND 14.18 ONLY:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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