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Exhibit 2.1
ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement ("Agreement") is entered into
this 6th day of February, 1998, by and among WAEKON INDUSTRIES, INC., a
Pennsylvania corporation ("Seller"), ▇▇▇▇▇ ▇▇▇▇▇, an individual, (the
"Stockholder"), and WAEKON CORPORATION, an Ohio corporation ("Buyer"), a
wholly-owned subsidiary of ▇▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇").
Recitals:
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A. Seller is engaged in the business of design, manufacture
and distribution of tools and equipment for the automotive aftermarket and other
related business activities and Stockholder owns certain intellectual properties
used and potentially useful in such business (the "Business").
B. The parties desire that Seller and Stockholder sell to
Buyer and that Buyer purchase from Seller and Stockholder substantially all of
Seller's and Stockholder's assets and assume identified liabilities related to
the Business upon the terms hereinafter set forth.
In consideration of and in reliance upon the mutual
representations, warranties, covenants, obligations and agreements contained
herein and subject to the conditions required by this Agreement, the parties
agree as follows:
1. PURCHASE AND SALE OF ASSETS.
1.1 PURCHASED ASSETS. Seller and Stockholder hereby
agree to sell to Buyer, free and clear of all liens, encumbrances, claims and
other restrictions of any kind, and Buyer hereby agrees to purchase, all of
Seller's and Stockholder's right, title, and interest in and to all of the
properties, assets, and rights owned, used, useful to, acquired for use, or
arising or existing in connection with the Business, whether tangible or
intangible, and whether or not recorded on Seller's books and records, as the
same exist at the Closing (as defined below in Section 9), including, without
limitation, the assets of Seller and Stockholder set forth on SCHEDULE 1.1, and
further including, without limitation, machinery and equipment, inventory
(including raw materials, work-in-process, finished goods, supplies, spare
parts, packaging and shipping materials), receivables, contract rights, warranty
rights, books and records, software and software licenses, permits and other
governmental authorizations pertaining to the Business (to the extent such
authorizations may legally be assigned), know-how, trade secrets, patents,
trademarks, trade names, copyrights (including applications for the foregoing),
and all goodwill of Seller and Stockholder relating to such assets; PROVIDED,
HOWEVER, that (i) Seller and Stockholder shall not sell and Buyer shall not
purchase the Retained Assets of Seller described in Section 1.2 hereof, and (ii)
as to contracts only, Seller shall assign and Buyer shall assume only those
contracts of Seller that are set forth on SCHEDULE 2.1. The assets to be
purchased and sold pursuant to this Agreement are referred to as the "Purchased
Assets."
1.2 RETAINED ASSETS. Seller and Stockholder (to the
extent of his ownership) shall retain, and Buyer shall not purchase (i) cash;
(ii) any rights of Seller or Stockholder arising under this Agreement, (iii)
Seller's corporate minute books, stock records, and
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tax returns or other similar corporate books and records relating to the
Business, and those records, originals of which Seller is required to maintain
under applicable laws (PROVIDED, copies of the same are included among the
Purchased Assets), (iv) any of Seller's real estate interests, (v)personal
assets and personal business relationships of Stockholder, those product
development ideas of Stockholder that are not related to the auto industry nor
those product development ideas that do not utilize Buyer's (or its parent's)
resources, (vi) contract rights and obligations of Seller that are NOT set forth
on SCHEDULE 2.1, or (vii) any other assets of Seller that are set forth on
SCHEDULE 1.2 (collectively, the "Retained Assets").
2. LIABILITIES OF SELLER.
2.1 ASSUMED LIABILITIES. On the Closing Date, Buyer
agrees to assume, the following liabilities and obligations of Seller and
Stockholder existing as of the Closing: (the "Assumed Liabilities"): (a)
Seller's trade accounts payable and accrued expenses incurred in the ordinary
course of business consistent with past practices to the extent reflected or
reserved for on the Closing Balance Sheet (as defined hereafter in Section
3.2(a)) in an amount not to exceed $500,000, (b) up to $900,000 of Seller's bank
debt reflected on the Closing Balance Sheet (the liabilities described in
subparagraphs 2.1(a) and (b) being sometimes referred to herein as the "Assumed
Balance Sheet Liabilities") (c) the liabilities of Seller not reflected on the
Closing Balance Sheet but as listed on SCHEDULE 2.1 and (d) those liabilities
under the contracts set forth on SCHEDULE 2.1 to the extent the corresponding
benefits therefrom are validly assigned to and received by Buyer.
2.2 RETAINED LIABILITIES. Except for the Assumed
Liabilities, Buyer shall not assume nor become responsible for any liability or
obligation of Seller of any nature whatsoever, whether known or unknown,
accrued, absolute, contingent or otherwise, notwithstanding anything in this
Agreement to the contrary.
3. CONSIDERATION.
3.1 PURCHASE PRICE. The initial consideration for the
Purchased Assets shall consist of the following:
(a) Buyer's assumption of the Assumed
Liabilities;
(b) Buyer's cash payment in the amount of
$1,500,000 ("Initial Payment") subject to the provisions of Section 3.2 below,
payable as follows:
(i) $1,150,000, payable by wire
transfer in immediately available funds at the Closing to an account designated
by Seller in writing; and
(ii) $350,000 (the "Holdback") to be
paid to Seller upon final determination of the Purchase Price Adjustment (as
defined and determined, and subject to the provisions of Section 3.2 below).
3.2 DELIVERY OF AND ADJUSTMENT TO INITIAL PAYMENT.
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(a) ADJUSTMENT TO INITIAL PAYMENT. The
Initial Payment shall be adjusted on a dollar for dollar basis to reflect the
amount by which the net asset value of the Purchased Assets is more or less than
$500,000 (the "Purchase Price Adjustment"), as reflected on the balance sheet of
the Business for the period ended as close as practicable prior to the Closing
Date, prepared in accordance with generally accepted accounting principles,
consistently applied, but reflecting only the Purchased Assets and Assumed
Liabilities and otherwise in form acceptable to Buyer and Buyer's accounting and
legal advisors (the "Estimated Closing Balance Sheet"). For purposes of such
calculations, the intellectual property owned by Stockholder and included in the
Purchased Assets shall be valued at -0- on the Closing Balance Sheet.
(b) FINAL CLOSING BALANCE SHEET AND PURCHASE
PRICE ADJUSTMENT REVIEW. Seller will cause its independent accountants to
prepare the Final Closing Balance Sheet and determine the Purchase Price
Adjustment and deliver the same to Buyer in form acceptable to Buyer not later
than February 27, 1998, together with a written certification that the Closing
Balance Sheet has been prepared in accordance with Section 8.1 hereof and other
provisions of this Agreement and that the Purchase Price Adjustment has been
calculated in accordance herewith. Thereafter, Buyer's Chief Financial Officer
and Buyer's independent accountants will conduct a review of the Closing Balance
Sheet and the Purchase Price Adjustment, and Buyer will notify Seller not later
than seven (7) days following receipt thereof, as to whether they are acceptable
to Buyer. If Buyer objects to the Closing Balance Sheet and/or the Purchase
Price Adjustment, and Buyer and Seller are able to resolve their dispute within
fifteen (15) days after Buyer's objection, the Closing Balance Sheet and/or the
Purchase Price Adjustment (as the case may be) reflecting such resolution will
become final and binding on the parties. If Buyer and Seller are unable to
resolve their dispute within fifteen (15) days after Buyer's objection, the
dispute will be resolved by Lytkowski & ▇▇▇▇▇, Inc. (the "Third Party
Accountants"). The Third Party Accountants will be instructed to perform their
services as expeditiously as possible and the resolution of the Third Party
Accountants shall be final and binding on the parties. The fees and expenses of
the Third Party Accountants for the resolution of the dispute shall be shared by
Buyer and Seller in inverse proportion to the respective amounts of the disputed
matters which are resolved in each party's favor.
(c) REFUND OR FINAL PAYMENT.
(i) NO POST-CLOSING REFUND OF
PAYMENT. If the Purchase Price Adjustment is zero, the Holdback shall be
released to Seller, and no further initial consideration payments will be made.
(ii) POST-CLOSING PAYMENT. If the
Purchase Price Adjustment is a positive amount, Buyer will pay Seller the
Purchase Price Adjustment by wire transfer of immediately available funds to an
account designated in writing by Seller, and the Holdback shall be released to
Seller.
(iii) POST-CLOSING REFUND. If the
Purchase Price Adjustment is a negative amount, the Holdback shall be reduced by
such negative amount to a maximum of the Holdback. If the negative amount of the
adjustment exceeds the Holdback, the Seller will return cash consideration
received from Buyer pursuant to Section 3.(b)(i) in an
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amount equal to the amount by which the negative adjustment exceeds the
Holdback. In the event the amount of the Holdback is reduced, Buyer shall retain
such reduction.
(iv) TIME OF POST-CLOSING PAYMENT OR
REFUND. Payment of the Holdback as adjusted and any other post-closing payment
provided for under this Section 3.2(c), if any, will be made not more than three
(3) days after the Purchase Price Adjustment becomes final, as contemplated by
Section 3.2(b) hereof.
3.3 EARN OUT. In addition to the payment provided for
in Section 3.1(b), subject to Section 7.2 (but without regard to Section
3.2(c)), Buyer, will pay additional purchase price consideration based upon the
operations of the Business for the period of sixty (60) months immediately
following the Closing (the "Earn Out Period"). The Earn Out Period payments will
be made within 90 days after the end of each of the Buyer's five (5) fiscal
years following the Closing and will be an amount equal to the sum of (A) 2.5%
of the Business' Revenues during the Earn Out Period of each such year, plus (B)
25% of the Business' Earnings Before Taxes during the Earn Out Period of each
such year (collectively, the "Earn Out"); provided, however, once the Earn Out
has reached $3,500,000 in the aggregate, the formula for computing the amount of
the Earn Out for the remainder of the Earn Out Period shall change from the sum
set forth above to 10% of the Business' Earnings Before Taxes during each fiscal
year or portion thereof remaining in the Earn Out Period. Notwithstanding the
foregoing, the minimum Earn Out payable each year of the Earn Out Period shall
be $150,000. An allocation of Revenues and Earnings Before Taxes will be made to
reflect any partial year of ownership of the Business by Buyer or calculation of
the Earn Out Period.
For purposes of calculating the Earn Out, (A) "Revenues" shall
mean all of Buyer's income from the sale of the Business' Products net of
returns and reserves, and (B) "Earnings Before Taxes" shall mean the Buyer's
Business earnings as a separate division or subsidiary of ▇▇▇▇▇▇ Incorporated
after the Closing, determined in accordance with generally accepted accounting
principles, consistently applied, but excluding any expenses attributable to
Buyer's administrative costs not directly related to operation of the Business,
amortization of the goodwill associated with Buyer's purchase of the Business
pursuant to this Agreement, and interest expense on the money borrowed by Buyer
to effect such purchase.
3.4 ALLOCATION OF PURCHASE PRICE. The parties agree
to allocate the Purchase Price (as defined in Section 3.1) pursuant to and in
compliance with Internal Revenue Code Section 1060, by the residual method to
the Assets as set forth on SCHEDULE 1.1. The parties agree that the fair market
value approximates the book values of the class III assets and that the balance
of the purchase price will be assigned to the class IV assets. The parties
further agree to complete and execute any relevant Internal Revenue Service
forms evidencing their good faith agreement to such allocation, and to file any
other federal or state tax forms in a manner consistent with the allocated
Purchase Price.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDER.
Seller and the Stockholder hereby jointly and severally represent and warrant to
Buyer as follows:
4.1 ORGANIZATION, AUTHORITY AND CAPACITY. Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Pennsylvania, is
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in good standing as a foreign corporation qualified to do business in such other
states where the Business is conducted, and has full corporate power and
authority to own, lease and operate its assets and properties and, carry on the
Business as and where such assets and properties are now owned or leased and as
such business is presently being conducted. Seller and the Stockholder have full
power, authority, and legal capacity to execute, deliver, and perform this
Agreement in accordance with its terms, and such execution, delivery and
performance has been approved by all requisite corporate action by Seller. This
Agreement has been duly executed and delivered by Seller and the Stockholder and
constitutes the legal, valid and binding obligation of Seller and the
Stockholder, enforceable against Seller and the Stockholder in accordance with
its terms.
4.2 NO CONSENTS OR CONFLICTS. Except as set forth on
SCHEDULE 4.2, no consent of, or filing with, any governmental authority or third
party is required in connection with the execution, delivery or performance of
this Agreement or any of the other agreements, instruments or documents to be
delivered by or on behalf of Seller or the Stockholder in connection herewith.
Neither the execution or delivery nor the performance of this Agreement or any
of the other agreements, instruments or documents to be delivered by or on
behalf of Seller or the Stockholder in connection herewith conflicts with,
violates or results in any breach of: (i) any judgment, decree, order, statute,
rule or regulation applicable to Seller or the Stockholder, (ii) any agreement
or instrument to which Seller or the Stockholder is a party or by which Seller
or any of its assets is bound, or (iii) any provision of the Articles of
Incorporation or the By-Laws of Seller.
4.3 FINANCIAL STATEMENTS. Seller has previously
delivered to Buyer Seller's financial statements for the year ended December 31,
1996, and for the twelve (12) month period ended December 31, 1997, including
its balance sheet as of December 31, 1997 (the "Balance Sheet") (all of the
foregoing described financial statements, along with the Balance Sheet are
hereinafter referred to as the "Seller Prepared Financial Statements"). The
Seller Prepared Financial Statements present fairly Seller's financial position
as of the dates indicated and results of operations for the periods indicated on
a basis consistently applied, except as may be indicated therein or in the notes
thereto.
4.4 NO LIABILITIES. Seller has no liabilities or
obligations of any kind (accrued, absolute, contingent, known, unknown or
otherwise) except (i) as reflected on the Balance Sheet, (ii) as incurred in the
ordinary course of business, consistent with past practice, since the date of
the Balance Sheet and (iii) as set forth on SCHEDULES 2.1 AND 4.4.
4.5 NO CHANGES. Since the date of the Balance Sheet,
Seller has operated only in the ordinary course, consistent with past practice,
and there has not been any material adverse change, or any event, fact or
circumstance which might reasonably be expected to result in a material adverse
change, in the assets, liabilities, operating performance, business
relationships, or prospects of the Business. Without limiting the generality of
the foregoing, since the date of the Balance Sheet, except as set forth on
SCHEDULE 4.5, there has not been with respect to the Business any:
(a) waiver, release, cancellation or
compromise of any debts owed to it or claims or rights against others exceeding
$10,000 in the aggregate;
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(b) sale, disposition or subjection to any
lien of any assets other than inventory in the ordinary course of business;
(c) unusual or novel method of transacting
business engaged in by Seller or any change in Seller's accounting procedures or
practices (except as required by Buyer) or its financial structure;
(d) any increase in salaries, bonuses or
benefits paid or payable to any employee of more than 5% (on an annualized
basis); or
(e) any material (defined as value of
$75,000 or more) damage, destruction or loss to or of the assets of Seller.
4.6 TITLE TO PURCHASED ASSETS. Except as set forth on
SCHEDULE 4.6, Seller and/or Stockholder own all of the Purchased Assets free and
clear of all liens, claims, encumbrances and other restrictions or limitations
of any kind whatsoever affecting the ability to use or transfer the Purchased
Assets. Except as noted on SCHEDULE 4.6, all liens, claims, encumbrances or
other restrictions or limitations set forth therein shall be fully released and
canceled at the Closing.
4.7 OWNERSHIP OF SELLER. The Stockholder and the
other stockholders listed on SCHEDULE 4.7 own beneficially and of record, free
and clear of all liens and encumbrances, all of the issued and outstanding
capital stock of Seller.
4.8 ASSETS OWNED. Except for the Retained Assets, the
Purchased Assets comprise all of those assets which are used or useful in the
operation of the Business in the ordinary course as presently conducted.
4.9 COMPLIANCE WITH LAWS AND ORDERS.
4.9(a) COMPLIANCE. Except as set forth in
SCHEDULE 4.9.(A), Seller (including each and all of its operations, practices,
properties and assets) is in compliance with all applicable laws, including,
without limitation, those applicable to discrimination in employment,
occupational safety and health, trade practices, competition and pricing,
product warranties, zoning, building and sanitation, employment, retirement and
labor relations, product advertising and the Environmental Laws as hereinafter
defined, except where its failure to be in compliance could not reasonably be
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expected to have a material adverse affect on the transactions contemplated by
this Agreement. Except as set forth in SCHEDULE 4.9.(A), neither Seller nor the
Stockholder has received written notice of any violation or alleged violation
of, and to their knowledge, is subject to any Liability for past or continuing
violation of, any laws. All reports and returns required to be filed by Seller
or the stockholders of Seller in respect of the Business with any Government
Entity have been filed, and were accurate and complete when filed.
4.9(b) LICENSES AND PERMITS. Seller has all
licenses, permits, approvals, authorizations and consents of all Government
Entities and all certification organizations required for the conduct of the
Business (as presently conducted) and operation of the Seller's facilities,
except where its failure to be in compliance could not reasonably be expected to
have a material adverse affect on the transactions contemplated by this
Agreement. All such licenses, permits, approvals, authorizations and consents
are described in SCHEDULE 4.9.(B)(1), are in full force and effect. Except as
set forth in SCHEDULE 4.9.(B)(2), Seller (including its operations, properties
and assets) is and has been in compliance with all such permits and licenses,
approvals, authorizations and consents, except where its failure to be in
compliance could not reasonably be expected to have a material adverse affect on
the transactions contemplated by this Agreement.
4.9(c) ENVIRONMENTAL MATTERS. The applicable
laws relating to pollution or protection of the environment, including Laws
relating to emissions, discharges, generation, storage, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic, hazardous
or petroleum or petroleum-based substances or wastes ("Waste") into the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Waste including, without limitation, the Clean Water
Act, the Clean Air Act, the Resource Conservation and Recovery Act, the Toxic
Substances Control Act and the Comprehensive Environmental Response Compensation
Liability Act ("CERCLA"), as amended, and their state and local counterparts are
herein collectively referred to as the "Environmental Laws". Without limiting
the generality of the foregoing provisions of this SECTION 4.9, Seller is in
full compliance with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
the Environmental Laws or contained in any regulations, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except where its failure to be in compliance
could not reasonably be expected to have a material adverse affect on the
transactions contemplated by this Agreement or the operation of the Business by
Buyer after the Closing. Except as set forth in SCHEDULE 4.9.(C), there is no
litigation nor any demand, claim, hearing or notice of violation pending or, to
the Seller's knowledge, threatened against Seller relating in any way to the
Environmental Laws or any order issued, entered, promulgated or approved
thereunder, except where its failure to be in compliance could not reasonably be
expected to have a material adverse affect on the transactions contemplated by
this Agreement or the operation of the Business by Buyer after the Closing.
Except as set forth in SCHEDULE 4.9.(C), there are, to the Seller's or the
Stockholder's knowledge, no past or present events, conditions, circumstances,
activities, practices, incidents, actions, omissions or plans which may
interfere with or prevent compliance or continued compliance with the
Environmental Laws or with any order issued, entered, promulgated or approved
thereunder, or which may give rise to any liability, including, without
limitation, Liability under CERCLA or similar state or local Laws, or otherwise
form the basis of any litigation, hearing, notice of violation, study or
investigation, based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling, or the emission,
discharge, release or threatened release into the environment, of any Waste.
4.10 ACCOUNTS RECEIVABLE. Except as set forth on
SCHEDULE 4.10, all accounts receivable of the Seller reflected on the Balance
Sheet, and as incurred in the normal course of business since the date thereof,
represent arm's length sales actually made in the ordinary course of business;
are collectible (net of the reserves shown on the Balance Sheet for doubtful
accounts) in the ordinary course of business and, to the Seller's and the
Stockholder's
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knowledge, are subject to no counterclaim or setoff; and are, to the Seller's
and the Stockholder's knowledge, not in dispute.
4.11 INVENTORY. All inventory of Seller reflected on
the Balance Sheet consists of a quality and quantity usable and saleable in the
ordinary course of business, has a value at least equal to the value shown on
such Balance Sheet and is valued in accordance with generally accepted
accounting principles at the lower of cost (on a FIFO basis) or market. All
inventory purchased since the date of such Balance Sheet consists of a quality
and quantity usable and saleable in the ordinary course of business. Except as
set forth in SCHEDULE 4.11(A), all inventory of Seller is located on premises
owned or leased by Seller as reflected in this Agreement. All work-in-process
contained in inventory and listed on SCHEDULE 4.11(B) constitutes items in
process of production pursuant to contracts or open orders taken in the ordinary
course of business or in anticipation of orders. Neither Seller nor any customer
is in material breach of the terms of any obligation to the other, and no valid
grounds exist for any set-off of material amounts billable to such customers on
the completion of orders to which work-in-process relates. All work-in-process
is of a quality ordinarily produced in accordance with the requirements of the
orders to which such work-in-process is identified.
4.12 NO LITIGATION. Except as set forth on SCHEDULE
4.12, there is no claim, litigation, investigation or proceeding pending or, to
the knowledge of Seller, threatened against Seller. Except as set forth on
SCHEDULE 4.12, there are no pending or, to the knowledge of Seller, threatened
controversies, grievances or claims by any employee or former employee of Seller
with respect to their employment, compensation, benefits or working conditions.
4.13 CONDITION. Except as set forth on SCHEDULE 4.13,
all items of tangible property included among the Purchased Assets (excluding
individual items of Inventory) are in good operating condition, normal wear and
tear excepted, neither require nor are reasonably expected to require any
special or extraordinary expenditures to remain in such condition beyond normal
maintenance, and are capable of being used for their intended purposes in the
ordinary course of business consistent with past practice.
4.14 TAXES. All tax returns, reports and declarations
(hereinafter collectively, "Tax Returns") required by any governmental authority
to be filed in connection with the properties, Business, income, expenses, net
worth and franchises of Seller have been timely filed by either Seller or the
stockholders of the Seller. All tax due in connection with the properties,
Business, income, expenses, net worth and franchises of Seller ("Taxes") has
been paid by either Seller or the stockholders, other than Taxes which are not
yet due or which, if due, are not yet delinquent or are being contested in good
faith and for which, in all cases, full reserves have been established on the
Balance Sheet. There are no tax claims, audits or proceedings pending in
connection with the properties, Business, income, expenses, net worth and
franchises of Seller, and, to the knowledge of Seller and Stockholder, there are
no such threatened claims, audits or proceedings.
4.15 EMPLOYEE BENEFITS. All employee benefit plans
(as such term is defined in Section 3(3) of Employee Retirement Income Security
Act of 1974 ("ERISA")) and all other employee benefit programs or arrangements
of any type (collectively, the "Plans") maintained by Seller or to which Seller
contributes are listed on SCHEDULE 4.15(A), and, except as disclosed on
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said SCHEDULE 4.15(B), such Plans comply, in all material respects, with all
applicable provisions of any laws, rules or regulations, including, without
limitation, the Internal Revenue Code of 1986, as amended ("Code") and ERISA,
and have so complied during all prior periods during which any such provisions
are applicable. Except as disclosed on said SCHEDULE 4.15(B), Seller (i) has
complied in all material respects with the provisions of ERISA applicable to
Seller as an employer, plan sponsor, plan administrator or fiduciary of any such
Plan, (ii) has administered the Plans in accordance with their terms and (iii)
with respect to any Plan maintained by Seller or to which Seller contributes,
has made all contributions required of it by any law (including, without
limitation, ERISA) or contract and no unfunded liability exists with respect to
any Plan.
4.16 CONTRACTS AND COMMITMENTS.
4.16(a) REAL PROPERTY LEASES. Except as set
forth in SCHEDULE 4.16(A), Seller has no leases of real property.
4.16(b) PERSONAL PROPERTY LEASES. Except as
set forth in SCHEDULE 4.16(B), Seller has no leases of personal property.
4.16(c) PURCHASE COMMITMENTS. Except as set
forth on SCHEDULE 4.16(C), Seller has no purchase commitments for inventory
items or supplies that, together with amounts on hand, constitute in excess of 6
months normal usage and exceeds $100,000 in the aggregate.
4.16(d) SALES COMMITMENTS. Except as set
forth on SCHEDULE 4.16(D), Seller has no sales contracts or commitments to
customers or distributors which aggregate in excess of $100,000 to any one
customer or distributor (or group of affiliated customers or distributors).
Seller has no sales contracts or commitments except those made in the ordinary
course of business, at arm's length, and no such contracts or commitments are
for a sales price which should result in the recognition of a loss by the Seller
(including full amortization of Seller's overhead and selling, general and
administrative expenses).
4.16(e) CONTRACTS FOR SERVICES. Except as
set forth on SCHEDULE 4.16(E), Seller has no agreement, understanding, contract
or commitment (written or oral) with any officer, employee, agent, consultant,
distributor, dealer representative or franchisee that is not cancelable upon 90
days' notice by Seller without liability, penalty or premium of any nature or
kind whatsoever.
4.16(f) POWERS OF ATTORNEY. Other than as
provided herein or as set forth on SCHEDULE 4.16(F), the Seller has not given a
power of attorney, which is currently in effect, to any person, firm or
corporation for any purpose whatsoever.
4.16(g) COLLECTIVE BARGAINING AGREEMENTS.
Seller is not a party to any collective bargaining agreements with any unions,
guilds, shop committees or other collective bargaining groups.
4.16(h) LOAN AGREEMENTS. Except as set forth
on SCHEDULE 4.16(H), Seller is not obligated under any loan agreement,
promissory note, letter of credit, or other evidence of indebtedness as a
signatory, guarantor or otherwise.
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4.16(i) GUARANTEES. Seller has not
guaranteed the payment or performance of any person, firm or corporation, agreed
to indemnify any person or act as a surety, or otherwise agreed to be
contingently or secondarily liable for the obligations of any person.
4.16(j) CONTRACTS SUBJECT TO RENEGOTIATION.
Seller is not a party to any contract with any Government Entity which is
subject to renegotiation.
4.16(k) RESTRICTIVE AGREEMENTS. Except as
set forth on SCHEDULE 4.16(K), Seller is not a party to nor is it bound by any
agreement requiring Seller to assign any interest in any trade secret or
proprietary information, or prohibiting or restricting Seller from competing in
any business or geographical area or soliciting customers or otherwise
restricting it from carrying on its business anywhere in the world.
4.16(l) OTHER MATERIAL CONTRACTS. Seller has
no lease, license, contract or commitment of any nature involving consideration
or other expenditure in excess of $20,000 or involving performance over a period
of more than three months, or which is otherwise material to the operations of
Seller not otherwise included on Schedules 4.16(a)-(k) or 4.21.
4.16(m) NO DEFAULT. Except as listed on
SCHEDULE 4.16(M), Seller is not in default under any lease, contract or
commitment, nor has any event or omission occurred which through the passage of
time or the giving of notice, or both, would constitute a default thereunder or
cause the acceleration of any of Seller's obligations or result in the creation
of any Lien on any of the Purchased Assets. To the Seller's and the
Stockholders' knowledge and as listed on SCHEDULE 4.16(M), no third party is in
default under any lease, contract or commitment to which Seller is a party, nor
has any event or omission occurred which, through the passage of time or the
giving of notice, or both, would constitute a default thereunder or give rise to
an automatic termination, or the right of discretionary termination, thereof.
4.17 LABOR MATTERS. Except as set forth in SCHEDULE
4.17, within the last five years Seller has not experienced any labor disputes,
union organization attempts or any work stoppage due to labor disagreements in
connection with its business. Except to the extent set forth in SCHEDULE 4.17,
(a) Seller is in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practice; (b) there is no unfair labor
practice charge or complaint against Seller pending or threatened; (c) there is
no labor strike, dispute, request for representation, slowdown or stoppage
actually pending or threatened against or affecting Seller nor any secondary
boycott with respect to products of Seller; (d) no question concerning
representation has been raised or is threatened respecting the employees of
Seller; (e) no grievance which might have a material adverse effect on Seller,
nor any arbitration proceeding arising out of or under collective bargaining
agreements, is pending and no such claim therefor exists; and (f) there are no
administrative charges or court complaints against Seller concerning alleged
employment discrimination or other employment related matters pending or
threatened before the U.S. Equal Employment Opportunity Commission or any
Government Entity.
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4.18 CONFLICTS. Except as set forth on SCHEDULE 4.18,
neither the Stockholder, nor any other person or entity controlled by or under
common control with Seller or the Stockholder, has any direct or indirect
interest in any business enterprise which does business with Seller or competes
with Seller in any manner.
4.19 ABSENCE OF CERTAIN BUSINESS PRACTICES. Except as
set forth on SCHEDULE 4.19, Seller and Stockholders have not, and to the
knowledge of Seller no employee or agent of Seller, or any other person acting
on its behalf has, directly or indirectly, given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other person
which (i) might subject Seller to any damage or penalty in any civil, criminal
or governmental litigation or proceeding, (ii) if not given in the past, might
have had an adverse effect on the Purchased Assets or the Business, or (iii) if
not continued in the future, might adversely affect the Purchased Assets, the
Business or the prospects of the Business.
4.20 BROKERS AND FINDERS. Except as set forth on
SCHEDULE 4.20, no broker, finder or other person or entity acting in a similar
capacity has participated on behalf of Seller or its stockholders in bringing
about the transactions contemplated herein, rendered any services with respect
hereto, or been in any way involved herewith.
4.21 INTELLECTUAL PROPERTY. SCHEDULE 4.21 lists all
registered and unregistered trademarks, copyrights, patents, trade secrets,
formulas, customer lists and know-how in which Seller or Stockholder now has any
interest ("Intellectual Property"), specifying whether such Intellectual
Property is owned, controlled, used or held (under license or otherwise) by
Seller or Stockholder, and also indicating which of such Intellectual Property
is registered. All of the Intellectual Property shown as registered in SCHEDULE
4.21 has been properly registered, all pending registrations and applications
have been properly made and filed and all annuity, maintenance, renewal and
other fees relating to registrations or applications are current. In order to
conduct the Business of Seller, as such is currently being conducted or proposed
to be conducted, Seller does not require any Intellectual Property that it does
not already have or is available from Stockholder. Neither Seller nor
Stockholder is infringing and has not infringed any Intellectual Property of
another in the operation of the Business of Seller, nor, to Seller's or the
Stockholder's knowledge, is any other person infringing the Intellectual
Property of Seller or Stockholder. Neither Seller nor Stockholder has granted
any license or made any assignment of any Intellectual Property listed on
SCHEDULE 4.21, except as noted on said Schedule 4.21, and no other person has
any right to use any Trade Right owned or held by Seller or Stockholder. Seller
nor Stockholder pays any royalties or other consideration for the right to use
any Intellectual Property of others. There is no litigation pending or, to
Seller's or the Stockholders' knowledge, threatened to challenge Seller's or
Stockholder's right, title and interest with respect to its continued use and
right to preclude others from using any Intellectual Property of Seller or
Stockholder. All Intellectual Property of Seller and or Stockholder is valid and
enforceable, and there are no equitable defenses to enforcement based on any act
or omission of Seller.
4.22 MAJOR CUSTOMERS AND SUPPLIERS.
4.22(a) MAJOR CUSTOMERS. SCHEDULE 4.22.(A)
contains a list of the 20 largest customers, including distributors, of Seller
for the combined two (2) most recent fiscal years (determined on the basis of
the total dollar amount of net sales) showing the total dollar
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amount of net sales to each such customer during each such year. Neither Seller
nor the Stockholder has any knowledge or information of any facts indicating,
nor any other reason to believe, that any of the customers listed on SCHEDULE
4.22.(A) will not continue to be customers of the business of Seller after the
Closing at substantially the same level of purchases as heretofore.
4.22(b) MAJOR SUPPLIERS. SCHEDULE 4.22.(B)
contains a list of the 20 largest suppliers to Seller for the combined two (2)
most recent fiscal years (determined on the basis of the total dollar amount of
purchases) showing the total dollar amount of purchases from each such supplier
during each such year. Neither Seller nor any Stockholder has any knowledge or
information of any facts indicating, nor any other reason to believe, that any
of the suppliers listed on SCHEDULE 4.22.(B) will not continue to be suppliers
to the business of Seller after the Closing and will not continue to supply the
business with substantially the same quantity and quality of goods at
competitive prices.
4.23 NO MISREPRESENTATIONS. No representation or
warranty made by Seller or the Stockholder in this Agreement, the Schedules or
Exhibits hereto, or any certificate or document delivered to Buyer contains any
untrue statement of a material fact or omits to state a fact necessary to make
the statements and facts contained therein or herein, in light of the
circumstances under which they are made, not false or misleading. Copies of all
documents delivered or made available to Buyer by Seller were complete and
accurate copies of such documents.
4.24 KNOWLEDGE DEFINED. For purposes of this Section
4, "to the knowledge of Seller" shall mean (i) the actual knowledge of the
Stockholder, and any officer or director of Seller and (ii) the knowledge any of
such persons would have had after making reasonable inquiry of the Seller's
personnel and reasonable investigation and review of Seller's books and records
and other relevant documentation.
5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents
and warrants to Seller and the Stockholder as follows:
5.1 ORGANIZATION AND AUTHORITY OF BUYER. Buyer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Ohio, and has full corporate power and authority to
execute, deliver and perform this Agreement in accordance with its terms. This
Agreement and the transactions contemplated by this Agreement, have been
authorized by all necessary corporate action of Buyer. This Agreement has been
duly executed and delivered by Buyer and constitutes the legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms.
5.2 NO CONSENTS OR CONFLICTS. No consent of, or
filing with, any governmental authority or third party is required in connection
with the execution, delivery or performance of this Agreement by Buyer. Neither
the execution or delivery nor the performance of this Agreement or any of the
other agreements, instruments or documents to be delivered by or on behalf of
Buyer in connection herewith conflicts with, violates or results in any breach
of: (i) any judgment, decree, order, statute, rule or regulation applicable to
Buyer, (ii) any agreement to which Buyer is a party or by which it is bound, or
(iii) any provision of the Articles of Incorporation or the By-Laws of Buyer.
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5.3 BROKERS AND FINDERS. Except as set forth on
Schedule 5.3, no broker, finder or other person or entity acting in a similar
capacity has participated on behalf of Buyer in bringing about the transactions
contemplated herein, rendered any services with respect thereto or been in any
way involved therewith.
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS.
6.1 The representations and warranties of Seller and
the Stockholder set forth in Section 4 hereof will survive the Closing,
regardless of any investigation made by any party hereto, until the second
anniversary of the Closing Date, except that the representations and warranties
contained in Sections 4.1, 4.2, 4.6, 4.9, 4.12, 4.14 and 4.21 will survive for
the applicable statute of limitations (including extensions). The
representations and warranties of Buyer set forth in Section 5 hereof will
survive the Closing, regardless of any investigation made by any party hereto,
until the second anniversary of the Closing Date, except that the
representations and warranties contained in Section 5.1 and 5.2 will survive for
the applicable statute of limitations (including extensions).
6.2 The restrictive covenants set forth in Section
7.1 shall survive the Closing or termination of this Agreement for any reason,
and the other covenants contained in Sections 7.2, 7.3, 7.4, 7.5, and 8 shall
survive the Closing.
7. RESTRICTIVE COVENANTS.
7.1 CONFIDENTIALITY. Without the prior written
consent of the other party, both parties shall at all times hold in strictest
confidence the terms of this Agreement and any and all non-public information
concerning the Business, Buyer or any of Buyer's affiliated companies, except as
necessary to enforce a good faith claim against the other party or mandated by a
court order or other judicial or administrative process.
7.2 NON-COMPETITION. Seller shall not, for a period
from the Closing to one (1) year following the final Earn Out Period payment,
without the prior written consent of Buyer, engage or invest, directly or
indirectly, in any form of business activity or organization that is
substantially similar to the Business in any area where Buyer or any affiliate
of Buyer operates the Business. The Employment Agreement with the Stockholder
provided for in Section 8.3 shall contain a restrictive covenant similar to that
contained in the previous sentence.
In the event Seller breaches the covenant
contained in this Section 7.2 or Stockholder breaches the restrictive covenant
contained in the Employment Agreement, Buyer's obligations under Section 3.3
hereof shall be limited to the minimum payment required under such Section from
and after the date of the first such breach. Any limitation of payment by Buyer
under Section 3.3 pursuant to the operation of this Section shall be in addition
to and not in limitation of any rights of enforcement or damages available to
Buyer in respect of a breach by Seller or Stockholder with respect to any other
Section contained in this Agreement.
7.3 NON-INTERFERENCE. Seller shall not, for a period
from the Closing to one (1) year following the final Earn Out Period payment,
without the prior written consent of Buyer, directly or indirectly induce or
attempt to induce any employee, agent, consultant,
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representative, supplier, or customer of Buyer or any of its affiliated
companies to terminate its relationship with Buyer or such affiliate or
otherwise interfere with a relationship between Buyer or such an affiliate and
any of their employees, agents, consultants, representatives, suppliers, or
customers.
7.4 ADEQUATE CONSIDERATION. Seller and Stockholder
acknowledge and agree that the obligations of Buyer hereunder constitute
adequate consideration for the their obligations under this Section 7.
7.5 REMEDIES. Seller acknowledges that a breach of
any of the provisions of this Section 7 will result in irreparable damage to
Buyer for which there will be no adequate remedy at law, and agree that Buyer,
in addition to its rights at law, will be entitled to injunctive and other
equitable relief to enforce such provisions, without having to post any bond.
7.6 REFORMATION. In the event any provision of this
Section 7 shall be determined to be unenforceable or invalid, such provision
shall be enforceable in part to the fullest extent permitted by law, such
invalidity or unenforceability shall not otherwise affect any other provision of
this Agreement or any similar agreement, and this Agreement shall otherwise
remain in full force and effect.
8. ADDITIONAL AGREEMENTS.
8.1(a) Seller and Stockholder will cause the
financial statements of Seller to be prepared and audited for the 12 month
period ending December 31, 1997 ("1997 Audit") by Seller's independent public
accountants and to have such financial statements and audit report prepared and
delivered to Buyer at least seven (7) days prior to the Closing in form and
substance satisfactory to Buyer and otherwise
(i) to comply with the rules and regulations
promulgated by the Securities and Exchange Commission for inclusion of such
financial statements and audit report in Buyer's required filings under the
Securities Act of 1933, as amended and the Securities Exchange Act of 1934 as
amended (together, the "Securities Laws");
(ii) including a report of Sellers'
independent public accountants without any exceptions in respect of the audit of
the balance sheet or statement of income of Seller; and
(iii) accompanied by the consent of such
independent public accountants to be inclusive of their report and such
financial statements as part of the required reports, registration statements
and filings by Buyer under the Securities Laws as may be required from time to
time in the future.
Buyer will assume and pay the reasonable
costs and expenses of such audit by Seller's independent public accountant to
the extent that such costs exceed the amount otherwise attributable to the form
of accounting review typically performed by such accountant in respect of
Seller's fiscal year and financial statement preparation and report; provided
Buyers obligations assumed in this sentence will not exceed $15,000. Buyers
independent public accountants may observe such audit or portions thereof as may
be advisable in Buyer's discretion.
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8.1(b) The Closing Balance Sheet prepared pursuant to
Section 3.2(b) will reflect a net worth of Seller of at least $500,000, bank
debt not in excess of $900,000 and other balance sheet liabilities to be assumed
by Buyer not in excess of $500,000.
8.1(c) Seller and Stockholder will cause the 1997
Audit and the Closing Balance Sheet to be prepared in accordance with generally
accepted accounting principles, consistently applied with Seller's past
practices except with modifications accepted by Buyer in writing and will fairly
reflect the Seller's financial condition as of the dates of such balance sheets
and results of operations for the periods indicated.
8.2 As of the Closing, Buyer may not have all
required licenses, permits and other governmental or vendor authorizations
necessary for it to take title to all of the Purchased Assets and to hereafter
operate all aspects of the Business. Seller agrees to cooperate with Buyer in
timely obtaining such licenses, permits and other governmental and vendor
authorizations, and further agrees that Buyer, at its request, may operate the
Business under the authority of any of Seller's licenses, permits or other
governmental authorizations of the type that Buyer has not yet obtained,
PROVIDED, that such operation does not violate applicable Laws or regulations,
and that Buyer indemnifies and holds Seller harmless against any and all costs,
liability, loss, damage or deficiency resulting from Seller's good faith
performance of these obligations at Buyer's request.
8.3 At the Closing, Buyer or its parent will enter
into an Employment Agreement with Stockholder, to be effective from and after
the Closing, in substantially the form attached hereto as Exhibit A (the
"Employment Agreement").
8.4 At the Closing, Buyer will enter into a lease
with Stockholder with respect to the Kirkwood Pennsylvania premises where the
Business is currently conducted, to be effective from and after the Closing, on
terms commercially satisfactory to Buyer (which terms shall include market rate
rent) and in substantially the form attached hereto as Exhibit B (the "Lease").
8.5 The parties hereto agree to execute and deliver
to any other party any and all documents and instruments, and do and perform
such acts, in addition to those expressly provided for herein, as may be
necessary or appropriate to carry out or evidence the transactions contemplated
by this Agreement, whether before, at or after the Closing. Notwithstanding
anything contained in this Agreement to the contrary, this Agreement will not
constitute an agreement to assign any contract or claim or any right or benefit
arising thereunder or resulting therefrom if an attempted assignment thereof,
without the consent of a third party thereto, would constitute a breach thereof
or in any way affect the rights of Buyer thereunder. Seller and the Stockholder
shall use their best efforts to obtain the consent of the other party to any of
the foregoing contracts or claims to the assignment thereof to Buyer in all
cases that such consent is required for assignment or transfer.
8.6 Buyer shall use all reasonable efforts to collect
the accounts receivable included in the Purchased Assets. If and to the extent
Seller indemnifies Buyer for a breach of Seller's representation and warranty
concerning collectability of Seller's accounts receivable set forth in Section
4.10 Buyer shall transfer such account receivable to Seller who may thereafter
pursue collection by any means it deems appropriate.
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8.7 During the period commencing on the Closing Date
and ending upon the final Earn Out Period payment contemplated by SECTION 3.3,
Buyer covenants and agrees as follows:
(a) Buyer shall cause separate and distinct
books and records for the Business to be maintained;
(b) Buyer shall deliver to Stockholder, the
appointed representative of Seller, within forty-five (45) days following the
close of each fiscal quarter of Buyer (other than that coinciding with the end
of its fiscal year) such information as is reasonably required by Seller in
order to substantiate calculations of the Earn Out payments provided in Section
3.3 hereof, as of such date.
9. CLOSING. The consummation of the transactions contemplated
by this Agreement (the "Closing") will take place on FEBRUARY 16, 1998, upon the
satisfaction of each of the following conditions, at the offices of ▇▇▇▇▇▇,
Halter & ▇▇▇▇▇▇▇▇ LLP, Cleveland, Ohio, or at such other date or place as the
parties may agree in writing, and shall be effective as of the close of business
on such date (the "Closing Date"); provided however, if the Closing has not
occurred by April 30, 1998, this Agreement shall be terminated and the parties
shall be released from their obligations hereunder, except those provisions
hereof that, by their terms, surviving such termination.
9.1 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The
obligations of Buyer under this Agreement are subject to and shall be
conditioned upon the satisfaction by Seller and Stockholder of each of the
following conditions:
(a) INTERIM PERIOD CONDITIONS.
(i) REPRESENTATIONS AND WARRANTIES
TRUE. The representations and warranties of Seller and Stockholder contained
herein shall have been true and correct in all material respects on and as of
the date of this Agreement, and shall be true and correct in all material
respects on and as of the Closing Date as if those representations and
warranties were made on and as of the Closing Date, except for changes permitted
by the terms of this Agreement and except insofar as any of those
representations and warranties relate solely to a particular date or period, in
which case they shall be true and correct in all material respects on and as of
the Closing Date with respect to such date or period.
(ii) PERFORMANCE OF OBLIGATIONS AND
AGREEMENTS. Seller and the Stockholder shall have performed, in all material
respects, their obligations and agreements contained in this Agreement to be
performed or complied with by them on or before the Closing Date.
(iii) NO CHANGE. There shall have
been no material adverse change in the financial condition, results of
operations, or prospects of the Business or the Purchased Assets since the date
of this Agreement.
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(iv) LEGAL ACTION. There shall be no
pending or threatened legal action or inquiry which challenges the validity or
legality of or seeks or could reasonably be expected to prevent, delay or impose
conditions on the consummation of the transactions contemplated by this
Agreement.
(v) DUE DILIGENCE REVIEW. Buyer
shall have conducted a due diligence review of Seller and the Purchased Assets
the results of which are satisfactory to Buyer, it being agreed that Buyer shall
have the right but not the obligation to undertake such a review at Buyer's
expense.
(vi) LIEN TERMINATIONS. Buyer shall
have received terminations of all security interests in, and releases of all
liens on, the Purchased Assets, including, but not limited to, UCC Termination
Statements, except to the extent such liens are listed on SCHEDULE 4.6.
(b) CLOSING DELIVERIES. The
following items shall have been delivered to Buyer, in form and substance
acceptable to Buyer and its counsel:
(i) CONSENTS. The consent to the
transactions contemplated by this Agreement of any third party whose consent is
required for the consummation of such transactions by Seller or the
Stockholders;
(ii) BOARD AND STOCKHOLDER APPROVAL.
Certified copies of the resolutions of Seller's Board of Directors and the
Stockholders approving the consummation of the transactions contemplated by this
Agreement;
(iii) TRANSFER INSTRUMENTS. Bills of
sale, assignments and other transfer instruments sufficient to convey, transfer,
and assign to Buyer, and to effectively and legally vest in Buyer all of
Seller's and Stockholder's right, title and interest in and to the Purchased
Assets;
(iv) APPOINTMENT OF VINCI. An
instrument signed by Seller and any other necessary persons appointing Vinci as
the sole representative of Seller, its stockholders and any assignee of them for
purposes of dealing with Buyer on behalf of Seller and others in respect of the
adjustment to the initial consideration and the Earn Out Period payments.
(v) CLOSING CERTIFICATE. A
certificate signed by Seller's President and the Stockholder, in form
satisfactory to Buyer, to the effect that there has been no material adverse
change to the Business or the Purchased Assets since the date of this Agreement
and as to compliance by Seller and Stockholder with the Agreement;
(vi) EMPLOYMENT AGREEMENT. The
Employment Agreement fully signed by Vinci;
(vii) LEASE. The Lease fully signed
by Vinci; and
(viii) OPINION OF SELLER'S COUNSEL.
The opinion of Seller's counsel in respect of the organization and authority of
Seller, validity and enforceability of the
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Agreement and the transfer of the Purchased Assets and such other matters as
Buyer reasonably requests;
(ix) OTHER DELIVERIES. Such other
instruments and documents as may be reasonably requested in order to give effect
to the transactions contemplated by this Agreement.
9.2 CONDITIONS PRECEDENT TO SELLER'S AND THE
STOCKHOLDER'S OBLIGATIONS. The obligations of Seller and the Stockholder under
this Agreement are subject to and shall be conditional upon the satisfaction by
Buyer, of each of the following conditions:
(a) INTERIM PERIOD CONDITIONS.
(i) REPRESENTATIONS AND WARRANTIES
TRUE. The representations and warranties of Buyer contained herein shall have
been true and correct in all material respects on and as of the date of this
Agreement, and shall be true and correct in all material respects on and as of
the Closing Date as if those representations and warranties were made on and as
of the Closing Date, except for changes permitted by the terms of this Agreement
and except insofar as any of those representations and warranties relate solely
to a particular date or period, in which case they shall be true and correct in
all material respects on and as of the Closing Date with respect to such date or
period.
(ii) PERFORMANCE OF OBLIGATIONS AND
AGREEMENTS. Buyer shall have performed, in all material respects, its
obligations and agreements contained in this Agreement to be performed or
complied with by it on or before the Closing Date.
(b) CLOSING DELIVERIES. The following items
shall have been delivered to Seller, in form and substance acceptable to Seller
and its counsel:
(i) PAYMENT OF PURCHASE PRICE. The
initial consideration referred to in Section 3.1.(b)(i).;
(ii) CONSENTS. The consent to the
transactions contemplated by this Agreement of any third party whose consent is
required for the consummation of such transactions by Buyer; and
(iii) BOARD APPROVAL. Certified
copies of the resolutions of Buyer's Board of Directors approving the
consummation of the transactions contemplated by this Agreement.
(iv) OPINION OF BUYER'S COUNSEL. The
opinion of Buyer's counsel in respect of the organization and authority of
Buyer, validity and enforceability of the Agreement and such other matters as
Seller reasonably requests.
10. INDEMNIFICATION.
10.1 Seller and the Stockholder jointly and severally
agree to indemnify and hold Buyer harmless from and against (i) any and all
loss, damage, liability or deficiency
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resulting from or arising out of any inaccuracy in or breach of any
representation, warranty, covenant, or obligation made or incurred by Seller or
the Stockholder herein, (ii) any imposition (including, without limitation, by
operation of bulk transfer or other laws) or attempted imposition by a third
party upon Buyer of any liability or obligation of Seller which is not an
Assumed Liability, (iii) any and all loss, damage, liability or deficiency
resulting from or arising out of Seller's generation, production, treatment,
transportation, use, or storage before the Closing of, or the presence of for
whatever reason on the date hereof, at the Seller's facilities or the real
property on which they are located, any substances which could result in damage
to the environment or danger to the health and safety of the public and (iv) any
and all costs and expenses (including reasonable attorneys' and accountants'
fees) related to any of the foregoing.
10.2 Buyer agrees to indemnify and hold Seller
harmless from and against (i) any and all loss, damage, liability or deficiency
resulting from or arising out of any inaccuracy in or breach of any
representation, warranty, covenant, or obligation made or incurred by Buyer
herein, (ii) any imposition or attempted imposition by a third party upon Seller
of any Assumed Liability, and (iii) any and all costs and expenses (including
reasonable attorneys' and accountants' fees) related to any of the foregoing.
10.3 If any legal proceedings shall be instituted or
any claim is asserted by any third party in respect of which any party hereto
may be entitled to indemnity hereunder, the party asserting such right to
indemnity shall give the party from whom indemnity is sought prompt written
notice thereof. A delay in giving notice shall only relieve the recipient of
liability to the extent the recipient suffers actual prejudice because of the
delay. The party from whom indemnity is sought shall have the right, at its
option and expense, to participate in the defense of such a proceeding or claim,
but not to control the defense, negotiation or settlement thereof, which control
shall at all times rest with the party asserting such right to indemnity, unless
the proceeding or claim involves only money damages and the party from whom
indemnity is sought:
(a) irrevocably acknowledges in writing
complete responsibility for and agrees to indemnify the party asserting such
right to indemnity, and
(b) furnishes satisfactory evidence of the
financial ability to indemnify the party asserting such right to indemnity,
in which case the party from whom indemnity is sought may assume such control
through counsel of its choice and at its expense, but the party asserting such
right to indemnity shall continue to have the right to be represented, at its
own expense, by counsel of its choice in connection with the defense of such a
proceeding or claim. If the party from whom indemnity is sought does not assume
control of the defense of such a proceeding or claim, the entire defense of the
proceeding or claim by the party asserting such right to indemnity, any
settlement made by the party asserting such right to indemnity, and any judgment
entered in the proceeding or claim shall be deemed to have been consented to by,
and shall be binding on, the party from whom indemnity is sought as fully as
though it alone had assumed the defense thereof and a judgment had been entered
in the proceeding or claim in the amount of such settlement or judgment, except
that the right of the party from whom indemnity is sought to contest the right
of the other to indemnification under this Agreement with respect to the
proceeding or claim shall not be extinguished. If the party from whom indemnity
is sought does assume control of the defense of such a proceeding or claim, it
will
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not, without the prior written consent of the party asserting such right to
indemnity, settle the proceeding or claim or consent to entry of any judgment
relating thereto which does not include as an unconditional term thereof the
giving by the claimant to the party asserting such right to indemnity a release
from all liability in respect of the proceeding or claim. The parties hereto
agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such proceeding or claim.
10.4 The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory, equitable, or common law
remedy available to any party.
11. MISCELLANEOUS.
11.1 AMENDMENTS; BINDING EFFECT. The Agreement
(including each Schedule and Exhibit hereto) may not be amended or modified
except by a document in writing signed by all parties hereto. This Agreement and
the rights and obligations of each party hereunder shall be binding upon and
shall inure to the benefit of the respective successors and permitted assigns of
each of the parties hereto, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto without
the prior written consent of the other parties; provided, however, that Buyer
may assign this Agreement and its rights, interests and obligations hereunder to
its parent companies or to any of its wholly-owned subsidiaries or affiliates
without the prior, written consent of the other parties hereto.
11.2 NOTICES. All notices or other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to be effectively served and delivered (a) when delivered personally; (b)
when given by facsimile (with confirmation of receipt and a copy mailed by
first-class U.S. mail); (c) one (1) business day following deposit with a
recognized national air courier service; or (d) three (3) business days after
being deposited in the United States mail in a sealed envelope, postage prepaid,
return receipt requested to the appropriate party at the following address (or
such other address for a party as shall be specified by notice pursuant hereto):
If to Seller, or the Waekon Industries, Inc.
Stockholder, to: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer: Waekon Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to: ▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
11.3 MISCELLANEOUS. This Agreement together with each
Schedule, Exhibit hereto or other agreements referred to herein between the
parties sets forth the exclusive statement of the agreements among the parties
concerning the subject matter hereof, and there are no agreements or
understandings between or among any of the parties hereto concerning such
subject matter other than as set forth herein. The headings to the various
provisions of this Agreement are for reference purposes only and shall not be
construed as affecting the meaning or interpretation of this Agreement. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
document. This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio without regard to any conflict of laws provisions.
The parties hereby consent to the non-exclusive jurisdiction of the state and
federal courts located in Cleveland, Ohio, provided, however, that the party
bringing any legal action to enforce or interpret any of its rights or
obligations under this Agreement, may bring such action in any forum that has
jurisdiction over such dispute. Either party may seek a binding interpretation
of this Agreement in a court or other tribunal in which both parties have been
sued or joined by a third party, provided that jurisdiction otherwise exists
over the parties.
Signatures on following page.
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IN WITNESS WHEREOF, and intending to be legally bound, the
parties have executed this Asset Purchase Agreement on the date first written
above.
WAEKON INDUSTRIES, INC.
By: /s ▇▇▇▇▇ ▇▇▇▇▇
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Title: President
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/s/ ▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇
WAEKON CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: CEO
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