Exhibit 10
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of March 13, 2007, is by and between
FIVE STAR PRODUCTS, INC., a Delaware Corporation (the "Purchaser"), and
RIGHT-WAY DEALER WAREHOUSE, INC., a Massachusetts corporation (the "Seller").
A. On January 22, 2006, Seller filed a petition under Chapter 11 of the
United States Bankruptcy Code ("Bankruptcy Code") with the Bankruptcy Court for
the District of Massachusetts ("Bankruptcy Court").
B. The parties hereto wish to provide for the terms and conditions upon
which Purchaser will, subject to Bankruptcy Court Approval, purchase those
Assets of Seller (as defined herein) used in or relating to the business
conducted by the Seller as of the date of this Agreement (the "Business").
C. The parties hereto wish to make certain representations, warranties,
covenants and agreements in connection with the purchase of the Assets and also
to prescribe various conditions to such transaction.
Accordingly, and in consideration of the representations, warranties,
covenants, agreements and conditions herein contained, the parties hereto agree
as follows:
1. PURCHASE OF ASSETS
1.1 Assets to be Purchased.
(a) Upon the terms and subject to the conditions of this
Agreement, Seller will sell, transfer, convey, assign and deliver to
Purchaser, and Purchaser will purchase, at the Closing (hereinafter
defined), all of the assets of Seller used primarily in the Business,
of every nature, kind and description, tangible and intangible, real,
personal or mixed, whether or not carried or reflected on the books and
records of Seller, excepting only the Excluded Assets (as hereinafter
defined). The assets to be sold to Purchaser are sometimes hereinafter
referred to as the "Assets". The Assets shall include, without
limitation, the following assets which relate primarily to the
Business:
(i) all machinery and equipment, computer equipment,
fixtures, furniture, office equipment, tools, vehicles,
software and other tangible personal property owned by Seller
and used exclusively in the operation of the facility located
at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ (the "Brooklyn
Business") including, but not limited to, all such personal
property identified on Exhibit 1.1(a)(i) (collectively, the
"Personal Property");
(ii) all inventory of Seller wherever located,
including raw materials, work-in process, goods in transit,
which shall be reflected by purchase orders entered into in
the normal course of business (the "Goods in Transit"),
finished goods and rights to consigned inventory (if any)
which inventory will be specifically identified as of the
Closing (the "Inventory");
(iii) all of Seller's interest in customer lists
related primarily to the Business;
(iv) all governmental and other permits, licenses,
approvals, certificates of inspection, filings, franchises and
other authorizations relating to the operations of the
Brooklyn Business (the "Permits and Licenses");
(v) copies of all books, records, sales literature
and other data of Seller relating to the Brooklyn Business,
provided, however that Seller shall allow Purchaser access to
all original books, records and data relating to the
accounting, finances or corporate organization of the Business
for four years after the Closing upon reasonable requests
therefor;
(vi) all accounts receivable of Seller as of the
Closing (the "Accounts Receivable");
(vii) all claims, causes of action and rights of
recovery (including, without limitation, under insurance
policies) which relate to the Accounts Receivable;
(viii) all rights of Seller to all trade names and
marks of Seller, including, but not limited to the names
identified on Exhibit 1.1(a)(viii) hereto, and any and all
variations thereof and all marks related thereto; and
(ix) telephone, facsimile and telex numbers, and all
listings in all telephone books and directories for the
Brooklyn Business;
(x) any and all of Seller's goodwill in and going
concern value of the Business.
Other than Assumed Liabilities (hereinafter defined), all
Assets will be sold, transferred, conveyed, assigned and delivered to
Purchaser free and clear of all liens, charges, mortgages, pledges,
encumbrances, or other security interests of any kind or nature,
arising by operation of law or otherwise (collectively "Security
Interests"), liabilities, obligations, rights of third parties (express
or implied), restrictions, licenses, rights of reclamation, claims or
interests of any kind or nature, including any "interest in property"
as defined in Section 363 of the Bankruptcy Code.
(b) Notwithstanding the foregoing, Seller will not sell,
transfer, convey, assign or deliver to Purchaser, and Purchaser will
not purchase from Seller, the following assets (the "Excluded Assets"):
(i) the consideration delivered to Seller pursuant to
this Agreement;
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(ii) the minute books (and any documents related to
Seller's organization or foreign qualification contained in
such minute books), corporate seal and stock records, other
than those relating exclusively to the Brooklyn Business;
(iii) choses in action, shares of capital stock in
and claims against Allpro Corporation, including all rebates
and causes of action against Allpro Corporation;
(iv) any claims, causes of action and choses in
action of Seller including those arising under Sections 362,
510 and 540 through 550 of the Bankruptcy Code;
(v) cash, money and deposits with financial
institutions and others, certificates of deposit, commercial
paper, notes, evidences of indebtedness, stocks, bonds and
other investments and intercompany indebtedness;
(vi) any federal and state tax refunds due to Seller;
(vii) all insurance policies, including all pre-paid
insurance;
(viii) all vehicles, other than those used
exclusively in the operation of the Brooklyn Business; and
(ix) all machinery and equipment, computer equipment,
fixtures, furniture, office equipment, tools, test equipment,
tooling, boats, vehicles, software and other tangible personal
property of Seller other than that which is exclusively used
in the Brooklyn Business; and
(x) any inventory consisting of pesticides which do
not comply with applicable laws, rules, regulations or
ordinances.
(c) Within five (5) days of the date of this Agreement,
Purchaser shall designate those executory contracts and unexpired
leases associated with the Brooklyn Business that Purchaser desires
Seller to assume and assign to Purchaser (the "Designated Contracts");
provided that Purchaser may not designate any insurance contracts for
assumption or assignment. Subject to obtaining the approval of the
Bankruptcy Court, at Closing, Seller shall assume and/or assign to the
Buyer all of the Designated Contracts. To permit the assumption and
assignment of any of the Designated Contracts to Purchaser pursuant to
this Agreement, Purchaser hereby agrees to (i) pay in cash at Closing
(A) any associated cure amount required with respect to the Designated
Contracts, and (B) any attorneys' fees and costs, interest and/or
penalties allowed by the Bankruptcy Court with respect to the
Designated Contracts, and (ii) to provide adequate assurance of future
performance under the Bankruptcy Code with respect to such Designated
Contracts.
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1.2 Liabilities.
(a) Upon satisfaction of all conditions to the obligations of
the parties contained herein (other than such conditions as have been
made in accordance with the terms hereof), Purchaser will assume
accrued 2007 vacation obligations to Seller employees hired by
Purchaser after the Closing, which vacation obligations shall not
exceed $[____] (the "Assumed Liabilities").
(b) Seller expressly understands and agrees that, except for
the Assumed Liabilities and the amount due to Seller's vendors on Trade
Credit Inventory and for Goods in Transit, both as provided in Section
1.5(a)(ii), Purchaser has not agreed to pay, will not be required to
assume and will have no liability or obligation, direct or indirect,
absolute or contingent, for the liabilities of Seller or any respective
affiliates or associates, which liabilities will, as between Seller and
Purchaser remain the sole responsibility of Seller (the "Retained
Liabilities"). Retained Liabilities shall include, without limitation,
any and all obligations of Seller for any accrued severance pay and any
and all obligations of Seller to Seller's vendors, employees or other
creditors.
(c) Purchaser shall remove the Inventory located at Seller's
Norwood, Massachusetts facility (the "Non-Brooklyn Inventory") within
ten (10) days after the Closing Date. In order to facilitate such
removal, Seller shall use its best efforts to retain a sufficient
number of employees at the Norwood facility for three business days
following the Closing Date at Purchaser's sole cost and expense. After
the Closing Date, Purchaser shall be solely responsible for the costs
associated with the Non-Brooklyn Inventory, including removal, shipping
and security costs; provided that Seller shall pay any rent due for the
Norwood facility through the end of the calendar month in which the
Closing occurs. Purchaser acknowledges that Seller intends to layoff
any employees associated with the Norwood facility on the Closing Date
(subject to the three-day retention provided for above),and to
terminate any insurance respecting such facilities on the tenth day
following the Closing Date.
1.3 Purchase Price.
(a) Subject to adjustment pursuant to Section 1.5 hereof, the
total consideration to be paid by Purchaser to Seller for the Assets
(the "Purchase Price") will be a cash payment equal to Five Million
Dollars ($5,000,000) minus the amount of any reduction of the Purchase
Price pursuant to Section 1.5 hereof (the "Cash Consideration").
(b) Purchaser will pay the Cash Consideration at the Closing
to Seller by certified bank check or wire transfer of immediately
available funds to an account designated by Seller.
(c) A deposit of Two Hundred Thousand Dollar ($200,000) (the
"Deposit") shall be paid to Seller upon executing the Agreement by
certified bank check or wire transfer of immediately available funds to
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an account designated by Seller. If Purchaser fails to consummate the
transactions contemplated in this Agreement through no fault of Seller,
the Deposit shall be forfeited to Seller as Seller's sole and exclusive
remedy at law or in equity.
1.4 Closing.
Unless this Agreement has been terminated and the transactions
contemplated have been abandoned pursuant to Article 7 hereof, a closing (the
"Closing") will be held on second business day following the entry of the Sale
Order (as defined herein), but in any event not later than April 13, 2007 (the
"Closing Date"), provided that no stay of effectiveness of the Sale Order is in
effect. The Closing will be held at such place as the parties may agree, at such
time as the parties may agree, at which time and place the documents and
instruments necessary or appropriate to effect the transactions contemplated
herein will be exchanged by the parties.
1.5 Closing Adjustments of Purchase Price.
(a) Working Capital Adjustment.
(i) Seller shall in good faith take a physical
inventory of the remaining inventory of the Business as of the
close of business on the day immediately prior to the Closing
Date (the "Pre-Closing Inventory"). Such physical inventory
shall be priced out on the same cost basis as the inventory
figures and working capital calculation provided by Seller to
Purchaser as of February 14, 2007 ("February Working
Capital"). Purchaser and Seller agree that the February
Working Capital was $6,575,000, consisting of inventory
aggregating $3,863,000 and accounts receivable aggregating
$2,712,000.
(ii) Seller shall deduct from the amount of the
Pre-Closing Inventory the value (priced out on the same cost
basis as the February Working Capital) of the inventory
purchased on credit at the Brooklyn Business (the "Trade
Credit Inventory") which shall be specifically identified by
Seller in a schedule delivered to Purchaser prior to the
Closing. Hereinafter, the amount of the Pre-Closing Inventory
less the value of the Trade Credit Inventory shall be referred
to as the "Closing Date Inventory" (not to include any Goods
in Transit).
(iii) Seller and Purchaser shall promptly after the
execution of this Agreement meet for the purpose of designing
a process to take an inventory described above and agree with
respect to the design and taking of such inventory, and
Purchaser shall have the right and Seller shall permit
Purchaser to participate in such inventory and review the
calculations related to costing of the physical inventory, in
each case on such basis as Purchaser shall reasonably request.
(iv) Purchaser shall assume and pay any amount due
for: (A) the Trade Credit Inventory, provided, however, that
such amount shall not exceed Eighty Thousand Dollars
($80,000), and (B) the Goods in Transit.
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(v) As of the close of business on the day
immediately prior to the Closing Date, an up-to-date accounts
receivable aged trial balance will be run (the "Closing Date
A/R"). Seller shall execute a certificate setting forth its
good faith estimate of the Closing Date A/R. The sum of the
Closing Date Inventory and the Closing Date A/R shall
hereinafter be referred to as the "Closing Working Capital."
(vi) The working capital adjustment to the Purchase
Price shall be equal to the product of (x) 0.76 and (y) the
total of (a) the February Working Capital, minus (b) the
Closing Working Capital (the "Working Capital Adjustment").
(vii) The Purchase Price shall be decreased by the
Working Capital Adjustment.
(b) Payable Adjustment. The Purchase Price shall be increased
by the amount of any ordinary course post-petition payables related to the
Brooklyn Business that are currently due and payable by Seller at the Closing,
including current wages, utilities, and normal recurring expenses provided that
(i) Seller continues to pay its payables timely and in the ordinary course
within normal billing terms, (ii) Seller will pay April rent for the Leased
Premises as required under the existing lease agreement, and (iii) Seller will
be responsible for paying and reporting of all withholding taxes, social
security, Medicare and similar expenses (the "Payable Adjustment"), and provided
further that the Payable Adjustment shall not exceed Fifty Thousand Dollars
($50,000).
(c) Notwithstanding the foregoing, in no event shall the
Purchase Price exceed Five Million Dollars ($5,000,000).
1.7 Instruments of Transfer to Purchaser.
(a) At the Closing, Seller will deliver to Purchaser:
(i) executed deeds, assignments, bills of sale or
certificates of title, dated the Closing Date, transferring to
Purchaser all of Seller's right, title and interest in and to
the Assets, in form and substance reasonably satisfactory to
Purchaser and its counsel;
(ii) the certificates required of Seller pursuant to
Section 5.9 hereof;
(iii) all data relating to the Assets, property,
goodwill and business included in the Seller's business,
except those books and records related to the Excluded Assets;
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(iv) certified copy of the Sales Order, as defined in
Section 4.3, in form and substance satisfactory to Purchaser;
(v) certificate of an officer certifying that, as of
the time of the Closing, the Sale Order is not subject to
appeal, reversal, reconsideration, modification or amendment
and is not subject to a stay or injunction;
(vi) the duly executed Purchaser Lease required
pursuant to Section 5.11 hereof; and
(vii) any other documents reasonably requested by
Purchaser, to confirm the accuracy of the representations and
warranties and the performance of the agreements of Seller
hereunder.
(b) Seller will take all other actions necessary to put
Purchaser in actual possession and operating control of the Assets; and
(c) At the Closing, Purchaser will deliver to Seller the
following:
(i) the Purchase Price to be paid at the Closing;
(ii) executed Employment Agreement, required pursuant
to Section 5.12 hereof;
(iii) the certificates referred to in Section 6.6
hereof; and
(iv) any other documents reasonably requested by
Seller, to confirm the accuracy of the representations and
warranties and the performance of the agreements of Purchaser
hereunder.
2. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as of the date
hereof as follows and as of the Closing as follows, and confirms that Purchaser
is relying upon the accuracy of each such representation and warranty in
connection with the purchase of the Assets and completion of the transactions
contemplated hereby:
2.1 Corporate Status; Authorization.
Seller is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Subject to
Bankruptcy Court Approval, Seller has full power and authority to enter into
this Agreement and to carry out the transactions contemplated herein. The Board
of Directors of Seller has duly authorized the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein. This Agreement has been duly and validly executed and
delivered by Seller and no other corporate action is necessary. Subject to
Bankruptcy Court approval, this Agreement will be valid and binding legal
obligation of Seller, enforceable against it in accordance with its terms.
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2.2 Non-Contravention.
Purchaser acknowledges that the Assets are subject to various claims
and Liens, including those asserted by Bank of America, creditors asserting
reclamation claims and others. Subject to receipt of the Sale Order, neither the
execution, delivery and performance of this Agreement nor the consummation of
the transactions contemplated herein will: (i) violate or be in conflict with
any provision of Seller's articles of organization or bylaws; (ii) be in
conflict with, or constitute a default, however defined (or an event which, with
the giving of due notice or lapse of time, or both, would constitute such a
default), under, or cause or permit the acceleration of the maturity of, or give
rise to any right of termination, cancellation, imposition of fees or penalties
under any permit or license necessary for the operation of the Brooklyn
Business; (iii) result in the creation or imposition of any Security Interest,
conditional or installment sales agreement, claim, easement, right of way,
tenancy (other than as relates to Purchaser Lease, as defined herein), covenant,
encroachment, restriction or charge of any nature (whether or not of record) (a
"Lien"), upon the Assets, or any debt, obligation, contract, agreement or
commitment to or by which the Assets are or may be bound; or (iv) violate any
statute, treaty, law, judgment, writ, injunction, decision, decree, order,
regulation, ordinance or other similar authoritative matters (referred to herein
individually as a "Law" and collectively as "Laws") of any foreign, federal,
state or local governmental or quasi-governmental, administrative, regulatory or
judicial court, department, commission, agency, board, bureau, instrumentality
or other authority (referred to herein individually as an "Authority" and
collectively as "Authorities").
2.3 Consents and Approvals.
Subject only to Bankruptcy Court Approval and the notices required to
be obtained in seeking such approval, and to the best of Seller's knowledge, no
consent, approval, order or authorization of or from, or registration,
notification, declaration or filing with ("Consent") any individual or entity,
including without limitation any Authority, is required in connection with the
execution, delivery or performance of this Agreement by Seller or the
consummation by Seller of the transactions contemplated herein.
2.4 Absence of Certain Changes.
Except as caused by or disclosed in Seller's Chapter 11 case, and to
the best of Seller's knowledge, since February 14, 2007, Seller has owned the
Assets and operated the Brooklyn Business in the ordinary course of business and
consistent with past practice. Without limiting the generality of the foregoing,
subject to the foregoing exceptions:
(a) the Brooklyn Business has not experienced any change which
has had a Material Adverse Effect on the Brooklyn Business or
experienced any event or failed to take any action which reasonably
could be expected to result in a Material Adverse Effect on the
Brooklyn Business;
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(b) the Brooklyn Business and the Assets have not suffered any
material loss, damage, destruction of property or other casualty to
property (whether or not covered by insurance);
(c) Seller has not suffered any loss of officers, employees,
dealers, distributors, independent contractors, customers or suppliers
which had or may reasonably be expected to result in a Material Adverse
Effect on the Brooklyn Business; and
(d) no event has taken place which if consummated following
the date hereof would constitute a violation of Section 4.1 hereof.
2.5 Assets.
(a) Seller has good and marketable title to all of the Assets.
(b) Subject to the approval of the Bankruptcy Court, Seller
has full right and power to, and at the Closing will, deliver to
Purchaser good title to all of the Assets, free and clear of any Lien.
(c) The machinery, equipment and other Personal Property
included in the Assets being sold to Purchaser are being sold on an "as
is, where is" basis; provided, however, that to the best of Seller's
knowledge, the Personal Property is presently in working order for its
intended use.
(d) The Assets include all of the property and assets, real,
personal and mixed, tangible and intangible, presently used to carry on
the Brooklyn Business, and the Assets are adequate to carry on the
Brooklyn Business as presently conducted.
(e) Seller does not own any real properties. Seller is not a
foreign person and is not controlled by a foreign person, as the term
foreign person is defined in Section 1445(f)(3) of the Internal Revenue
Code.
2.6 Receivables and Payables.
(a) Seller has good right, title and interest in and to the
inventory and trade accounts receivable constituting the Assets;
(b) none of such trade accounts receivable is subject to any
Lien, other than the Liens set forth in the Debtor's bankruptcy
schedules and statement of financial affairs (collectively the
"Bankruptcy Schedules");
(c) all of the trade accounts receivable owing to Seller
constitute valid and enforceable claims arising from bona fide
transactions in the ordinary course of business; and;
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(d) the aging schedule of the trade accounts receivable of
Seller to be set forth on the report of the Closing Date A/R will be
complete and accurate.
2.7 Litigation.
Except for the Chapter 11 case and the DEC Action (as defined herein),
there is no legal, administrative, arbitration, or other proceeding, suit, claim
or action of any nature or investigation, review or audit of any kind (including
without limitation a proceeding, suit, claim or action, or an investigation,
review or audit, involving any environmental Law or matter), judgment, decree,
decision, injunction, writ or order pending, noticed, scheduled, or, to the
knowledge of Seller, threatened or contemplated by or against or involving
Seller, the Assets or the Brooklyn Business or Seller's officers, directors,
agents or employees (but only in their capacity as such), whether at law or in
equity, before or by any person or entity or Authority, or which questions or
challenges the validity of this Agreement or any action taken or to be taken by
the parties hereto pursuant to this Agreement or in connection with the
transactions contemplated herein.
2.8 Tax Matters.
To the best of Seller's knowledge, there are no facts or circumstances
which could, directly or indirectly, subject Purchaser or any of its affiliates
to Liability of any nature with respect to Taxes of Seller or subject the Assets
to any Lien resulting from the failure to pay, withhold or otherwise satisfy
outstanding Taxes of Seller or any other party.
2.9 Benefit Plans.
To the best of Seller's knowledge, there are no facts or circumstances
which could, directly or indirectly, subject Purchaser or any of its affiliates
to any Liability of any nature with respect to any pension, welfare, incentive,
perquisite, paid time off, severance or other benefit plan, policy, practice or
agreement sponsored, maintained or contributed to by Seller or any affiliate, to
which Seller or any affiliate is a party or with respect to which Seller or any
affiliate could have any Liability, other than Liabilities which are expressly
assumed by Purchaser.
2.10 Contracts and Commitment; No Default.
Exhibit 1.1(a) contains an accurate and complete list and brief
description of all machinery, tools, equipment and other tangible personal
property (other than inventory and supplies) owned, leased or used by Seller in
the operation of the Brooklyn Business, except for items having a cost of less
than $5,000. Seller has provided Purchaser with either a copy of or a summary
description of all leases and Liens relating thereto, identifying the parties
thereto, the rental or other payment terms, expiration date and cancellation and
renewal terms thereof.
2.11 Environmental and Safety Matters.
(a) To the best of Seller's knowledge and except for the DEC
Action, there are no facts or circumstances which could, directly or
indirectly, subject Purchaser or any of its affiliates to any Liability
of any nature whatsoever arising out of or related to any pollution or
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threat to human health or the environment or violation of any
Environmental and Occupational Safety and Health Law that is related in
any way to Seller or any affiliate or any previous owner's or
operator's management, use, control, ownership, or operation of the
Assets, any property, or the Brooklyn Business, including without
limitation, any on-site or off-site activities involving
Environmentally Regulated Materials, and that occurred, existed, arose
out of conditions or circumstances that occurred or existed, or was
caused, in whole or in part, on or prior to the date hereof.
(b) To the best of Seller's knowledge and except for the DEC
Action:
(i) All Environmental Permits (as hereinafter
defined) respecting the Brooklyn Business and the Assets have
been obtained, are in full force and effect and Seller is in
compliance therewith in all material respects.
(ii) There are no agreements, consent orders,
decrees, judgments, license or permit conditions or other
orders or directives of any federal, state or local court,
governmental agency or authority relating to Environmental
Laws and pertaining to the past, present or future ownership,
use, operation, sale, transfer or conveyance of the Leased
Premises (as hereinafter defined) which require any change in
the present condition of the Leased Premises or any work,
repairs, construction, containment, clean-up, investigations,
studies, removal or other remedial action or capital
expenditures with respect to the Leased Premises.
(iii) There are no actions, suits, claims or
proceedings, pending or threatened, which could cause the
occurrence of expenses or costs of any nature or description
or which seek money damages, injunctive relief, remedial
action or any other remedy that arise out of, relate to or
result from (A) a violation or alleged violation of any
applicable Environmental Law or non-compliance or alleged
non-compliance with any Environmental Permit, (B) the presence
of any Hazardous Substance or a Release or the threat of a
Release on, at or from the Leased Premises or any property
adjacent to or within the immediate vicinity of the Leased
Premises, or (C) human exposure to any Hazardous Substance,
noises, vibrations or nuisances of whatever kind to the extent
the same arise from the condition of the Leased Premises or
the ownership, use, operation, sale, transfer or conveyance
thereof or the Brooklyn Business.
(iv) Seller's current operations are in compliance
with, Seller has not been charged with non-compliance with,
Seller has not received any notice of alleged non-compliance
with, and to the best of Seller's knowledge, Seller is not
under investigation for its failure to comply in any respect
with any and all statutes, laws, ordinances, rules,
regulations, permits, licenses, orders and/or directives of
any Governmental Agency, governing or regulating the presence,
use generation, storage, transportation, handling,
transferring, disposing, discharging or emitting of any
materials or substances, or constituents or components
thereof, that have been determined by a Governmental Agency to
be of a hazardous, toxic or pollutive nature ("Regulated
Materials").
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(v) Except in a manner that is in compliance with
applicable law, no employee of Seller has been exposed to any
Regulated Materials in the course of employment with Seller.
(vi) Without limiting the scope of the foregoing,
Seller has made available to Purchaser any and all
environmental audit or similar reports and analyses within the
possession or control of Seller or any Shareholder concerning
the environmental compliance status of Seller or the Leased
Premises and any presence thereon of any Hazardous Substances,
pollutants, and contaminants.
All capitalized terms used in this Section 2.11 and elsewhere in this
Agreement and not heretofore defined shall have the meanings set forth below:
"DEC Action" means that action commenced against Seller by the New York
State Department of Environmental Conservation under Index No. CO2-20070112-1.
"Environment" means any water or water vapor, land surface or
subsurface, air, fish, wildlife, biota and all other natural resources.
"Environmental Laws" means all federal, state an local environmental,
land use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances and codes relating to the protection, preservation or restoration of
the Environment or governing the exposure to, use, storage, treatment,
generation, transportation, processing, handling, production or disposal of
Hazardous Substances and the rules, regulations, policies, guidelines,
interpretations, decisions, orders and directives of federal, state and local
governmental agencies and authorities. The term Environmental Laws includes,
without limitation, the following statutes, each as amended (i) the federal
Clean Air Act; (ii) the federal Clean Water Act; (iii) the federal Resource
Conservation and Recovery Act of 1976 ("RCRA"); (iv) the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980 ("CERCLA"); (v)
the federal Toxic Substances Control Act; (vi) the federal Occupational Safety
and Health Act of 1970; (vii) the federal Safe Drinking Water Act; and (viii)
the federal Insecticide, Fungicide and Rodenticide Act.
"Environmental Permits" means all permits, licenses, approvals,
authorizations, consents, or registrations required by any applicable
Environmental Law in connection with the ownership, use and/or operation of the
Premises or the Brooklyn Business including, but not limited to, those relating
to the storage, treatment, generation, transportation, processing, handling,
production or disposal of Hazardous Substances or the sale, transfer or
conveyance of the Premises.
"Governmental Agency" means any federal, state, local or foreign
political subdivision, court, agency, or any other entity, body, organization or
group, exercising any executive, legislative, judicial, quasi-judicial,
regulatory or administrative function of government.
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"Hazardous Substance" means, without limitation, any flammable
materials, explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum and petroleum based
products, methane, hazardous materials, hazardous wastes, hazardous or toxic
substances or related materials, as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections
9601, et seq. (CERCLA)), the Hazardous Materials Transportation Act, as amended
(49 U.S.C. Sections 1801, et seq.), the Resource Conservation and Recovery Act,
as amended (42 U.S.C. Sections 6901, et seq.), the Toxic Substances Control Act,
as amended (15 U.S.C. Sections 2601, et seq.), or any other applicable
Environmental Law and regulations adopted and publications promulgated
thereunder.
"Improvements" means the buildings, structures and other improvements
located upon the Premises.
"Premises" for the purposes of this Section 2.11, shall mean any and
all land now or previously owned, used, managed, occupied, possessed, leased or
controlled by Seller related to the Brooklyn Business, including, but not
limited to, the Leased Premises.
"Release" has the same meaning as given to that term in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Sections 9601, et seq.), and the regulations promulgated
thereunder.
2.12 Brokers.
Neither Seller nor any of Seller's respective directors, officers,
shareholders or employees have employed any broker, finder, or financial advisor
or incurred any liability for any brokerage fee or commission, finder's fee or
financial advisory fee, in connection with the transactions contemplated hereby,
nor is there any basis known to Seller for any such fee or commission to be
claimed by any person or entity.
2.13 Real Estate.
Seller does not own, and the Assets do not include, a fee interest in
any real property. The only real property used in the conduct of the Brooklyn
Business is that which is used in the conduct of the Brooklyn Business and is
commonly known as ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ (the "Leased
Premises" or the "Brooklyn Facility") which Seller currently leases from ▇▇▇▇▇▇
Realty LLC ("Landlord"). Except for the existing lease of the Leased Premises
(the "Lease"), Seller is not a party to any leases, licenses or similar
agreements for the use or occupancy of real property owned by a third party
related to the Brooklyn Business. The Leased Premises have direct access to
public roads or access to public roads by means of a perpetual access easement,
such access being sufficient to satisfy the current and reasonably anticipated
normal transportation requirements of the business presently conducted thereat.
The Leased Premises are served by all utilities in such quantity and quality as
are sufficient to satisfy the current normal business activities conducted
thereat. Seller has not received notice of any condemnation proceeding with
respect to any portion of the Leased Premises or any access thereto, and to the
best of Seller's knowledge, no such proceeding is contemplated by any
governmental authority. Seller has not received notice of any special
assessments which may affect the Leased Premises, and, to the best of Seller's
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knowledge, no such special assessment is contemplated by any government
authority. All items of machinery and equipment used in the Brooklyn Business
which constitute fixtures at the Leased Premises are the exclusive property of
Seller, are included in the Assets, and Seller's conveyance of the same to
Purchaser does not violate or conflict with the rights of Landlord or any other
party.
2.14 Inventory.
The Inventory is being sold on an "as is, where is" basis, without
representation or warranty. The amount of Inventory reported to Seller as of
February 14, 2007 constituted Seller's Inventory at Seller's ordinary and usual
book value.
2.15 Permits and Licenses.
To the best of Seller's knowledge, the Permits and Licenses constitute
all licenses, permits, approvals required to conduct the Brooklyn Business as
heretofore conducted. All Permits and Licenses are valid and in full force and
effect. This Agreement and consummation of the transactions contemplated hereby
will not terminate or adversely affect the existence, validity and continued
effectiveness of any of the Licenses and Permits.
2.16 Compliance with Law.
To the best of Seller's knowledge and except as would not have a
Material Adverse Effect, Seller is and has been in compliance with all laws,
ordinances, regulations, orders, licenses, franchises, permits, decrees, or
similar items applicable to it, its properties and assets, and to the operation
of the Brooklyn Business, including, but not limited to such laws and
regulations relating to protection of the public health or environment, waste
disposal, hazardous substances or wastes and occupational health and safety.
2.17 Accuracy of Information.
No representation or warranty made by Seller in this Agreement or in
any agreement, instrument, document, certificate, statement or letter furnished
or to be furnished to Seller at the Closing in connection with any of the
transactions contemplated by this Agreement contains or will contain any untrue
statement of material fact or omit or will omit to state any material fact
necessary in order to make the statements herein or therein not misleading in
light of the circumstances in which they are made, and all of the foregoing
completely and correctly present the information required or purported to be set
forth herein or therein. Except for the bankruptcy filing and general economic
and industry conditions generally known, there is no fact or circumstances known
to Seller which adversely affects, or in the future, as now reasonably foreseen
by Seller, is likely to adversely affect the conditions (financial or other),
properties, assets, liabilities, business, or operations or reasonably
foreseeable prospects of the Brooklyn Business and Assets which have not been
set forth in this Agreement. The representations and warranties contained in
this Article 2 or elsewhere in this Agreement or any document delivered pursuant
hereto will not be affected or deemed waived by reason of the fact that Seller
or its representatives knew or should have known that any such representation or
warranty is or might be inaccurate in any respect. All representations,
warranties, covenants and agreements of Seller shall be true and complete as of
the Closing and shall terminate at the Closing.
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2.18 Seller's Knowledge.
For the purposes of this Agreement, "the best of Seller's knowledge" or
words of similar import mean the best knowledge after due inquiry of the
following individuals: (a) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (b) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and (c) ▇▇▇▇
▇▇▇▇.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to Seller as of the date hereof as
follows:
3.1 Corporate Organization.
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of Delaware.
3.2 Authorization.
Purchaser has all the requisite corporate power and authority to enter
into this Agreement and to carry out the transactions contemplated herein. The
Board of Directors of Purchaser has taken all action required by law, its
articles of incorporation and bylaws or otherwise to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein and no action of the stockholders of Purchaser
is required. This Agreement has been duly and validly executed and delivered by
Purchaser. This Agreement is a valid and binding legal obligation of Purchaser
enforceable against it in accordance with its terms subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws of applicability
relating to or affecting creditors' rights and general principals of equity.
3.3 Non-Contravention.
Neither the execution, delivery and performance of this Agreement nor
the consummation of the transactions contemplated herein will: (i) violate any
provision of the articles of incorporation or bylaws of Purchaser; or (ii)
violate, be in conflict with, or constitute a default, however defined (or an
event which, with the giving of due notice or lapse of time, or both, would
constitute such a default), under, or cause or permit the acceleration of the
maturity of, or give rise to, any right of termination, cancellation, imposition
of fees or penalties under, any debt, note, bond, lease, mortgage, indenture,
license, obligation, contract, commitment, franchise, permit, instrument or
other agreement or obligation to which Purchaser is a party or by which
Purchaser or any of its properties or assets is or may be bound (unless with
respect to which defaults or other rights, requisite waivers or consents shall
have been obtained at or prior to the Closing) or (iii) result in the creation
or imposition of any Lien, upon any property or assets of Purchaser under any
debt, obligation, contract, agreement or commitment to which Purchaser is a
party or by which Purchaser or any of its assets or properties is or may be
bound; or (iv) violate any Law of any Authority.
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3.4 Consents and Approvals.
Subject only to Bankruptcy Court Approval, no Consent is required by
any person or entity, including without limitation any Authority, in connection
with the execution, delivery and performance by Purchaser of this Agreement, or
the consummation of the transactions contemplated herein.
3.5 Brokers.
Except as set forth in the Disclosure Schedule, neither Purchaser, nor
any of its officers, directors or employees have employed any broker, finder, or
financial advisor or incurred any liability for any brokerage fee or commission,
finder's fee or financial advisory fee, in connection with the transactions
contemplated hereby, nor is there any basis known to Purchaser for any such fee
or commission to be claimed by any person or entity.
3.6 Accuracy of Information.
No representation or warranty made by Purchaser in this Agreement or in
any agreement, instrument, document, certificate, statement or letter furnished
or to be furnished to Seller at the Closing by or on behalf of Purchaser in
connection with any of the transactions contemplated by this Agreement contains
or will contain any untrue statement of material fact or omit or will omit to
state any material fact necessary in order to make the statements herein or
therein not misleading in light of the circumstances in which they are made, and
all of the foregoing completely and correctly present the information required
or purported to be set forth herein or therein. There is no material fact as of
the date hereof which has not been disclosed in writing to Seller to which
Purchaser has knowledge, related to the subject matter of this Agreement. The
representations and warranties contained in this Article 3 or elsewhere in this
Agreement or any document delivered pursuant hereto will not be affected or
deemed waived by reason of the fact that Seller or its representatives knew or
should have known that any such representation or warranty is or might be
inaccurate in any respect.
4. COVENANTS OF THE PARTIES
4.1 Conduct of Business of Seller.
Except as contemplated by this Agreement, during the period from the
date of this Agreement to the Closing Date, Seller will conduct the Brooklyn
Business and its operations according to its ordinary and usual course of
business, to use its best efforts to preserve substantially intact the Brooklyn
Business and to use its best efforts to preserve its current relationships with
customers, employees, suppliers and other persons with which it has significant
business relations. Without limiting the generality of the foregoing, and,
except as otherwise expressly provided in this Agreement, prior to the Closing
Date, without the prior written consent of Purchaser, Seller will not:
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(a) sell, transfer, or otherwise dispose of any of the
properties or assets (real, personal or mixed, tangible or intangible)
of the Brooklyn Business, other than in the ordinary course of business
and consistent with past practice;
(b) terminate, enter into or amend in any material respect any
contract, agreement, lease, license or commitment necessary for the
operation of the Brooklyn Business, or take any action or omit to take
any action which will cause a breach, violation or default (however
defined) under any such items, except in the ordinary course of
business and consistent with past practice;
(c) (i) enter into any contract, commitment or arrangement
exceeding $10,000 in value for the Brooklyn Business other than for
acquisition of Inventory for the Brooklyn Business entered into in the
ordinary course of business and consistent with past practice or (ii)
enter into sales orders for the Brooklyn Business other than those
which are entered into in the ordinary course of business and
consistent with past practice or (iii) enter into acquisitions of
Assets unrelated to the Brooklyn Business other than those which are in
the ordinary course of business and consistent with past practice and
not exceeding $10,000 in connection with any contract, commitment or
arrangement, or (iv) enter into other sale orders except those which
are individually less than $250,000 and on arms length terms and
conditions; provided no single sales order or related sales orders is
in excess of $250,000, such consent not to be unreasonably withheld or
delayed;
(d) otherwise effect any change in its condition (financial or
other), properties, assets, liabilities, business, operations or
prospects except changes in the ordinary course of its business and
consistent with its past practice and which do not, either in any case
or in the aggregate, have a Material Adverse Effect on the Brooklyn
Business or the Assets;
(e) agree in writing or otherwise to take any of the foregoing
actions or any action which would make any representation or warranty
in this Agreement untrue or incorrect in any material respect;
(f) sell or otherwise transfer any Inventory after the
physical inventory provided for in Section 1.5(a)(i).
4.2 Full Access to Purchaser.
Subject to the confidentiality agreement dated February 15, 2007,
throughout the period prior to the Closing, Seller will afford to Purchaser, and
its directors, officers, employees, counsel, accountants, investment advisors
and other authorized representatives and agents, access to the facilities,
properties, books and records of its business in order that Purchaser may have
full opportunity to make such investigations as it shall desire to make of the
affairs of the Brooklyn Business and the Assets. Seller will furnish such
additional financial and operating data and other information as Purchaser will,
from time to time, reasonably request, including without limitation access to
the working papers of its independent certified public accountants; provided,
however, that any such investigation will not affect or otherwise diminish or
obviate in any respect any of the representations and warranties of Seller
herein.
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4.3 Bankruptcy Court Approval; Other Filings; Consents; Removal of
Objections.
(a) As promptly as practicable after the date hereof but in no
event later than March 12, 2007, Seller will file, with the Bankruptcy
Court, a motion seeking an order in form and substance reasonably
satisfactory to Purchaser authorizing performance by Seller of its
obligations hereunder in a form and in substance reasonably
satisfactory to Purchaser ("Sale Order"). Seller will promptly make any
filings, take all actions and use its best efforts to obtain any and
all other approvals and orders necessary or appropriate for the
consummation of the transactions contemplated hereby ("Bankruptcy Court
Approval"). The Sale Order will contain a finding that Purchaser is a
buyer in good faith within the meaning of Section 363(m) of the
Bankruptcy Code, and will authorize the parties to perform all
provisions of this Agreement.
(b) If the Sale Order or any other orders of the Bankruptcy
Court relating to this Agreement are appealed by any party (or a post
hearing motion, including without limitation a motion for amended
findings or reconsideration or stay pending appeal, is filed with
respect to such order, or a petition for certiorari or motion for
rehearing or re-argument is filed with respect to such appeal), Seller
will take all steps as may be reasonable and appropriate to prosecute
such appeal, petition or motion, or defend against such appeal,
petition or motion, and Purchaser will cooperate in such efforts, and
each of Purchaser and Seller will use its best efforts to obtain an
expedited resolution of any such appeal; provided, however, nothing
herein will preclude Seller or Purchaser from consummating the
transactions contemplated herein and waiving the requirement that the
Sale Order or other orders are final.
(c) Purchaser hereby waives the provisions of Federal Rule of
Bankruptcy Procedure 6004(g).
4.4 Break-up Fee.
Subject only to approval by the Bankruptcy Court, in the event the
Bankruptcy Court authorizes (by entering a order confirming a Plan of
Reorganization or by separate order) Seller to sell the Assets (through a sale
of assets, sale of stock, merger or otherwise) to a third party ("Alternative
Transaction"), and provided this Agreement has not been terminated because of a
material breach of Purchaser's obligations, representations or warranties
hereunder, and subject to the further provisions of this Section 4.4, Seller
will pay to Purchaser Fifty Thousand Dollars ($50,000) ("Break-up Fee"). The
Break-up Fee will become due in immediately available funds upon the earlier to
occur of (a) closing of an Alternative Transaction, or (b) the 45th day
following the date that the court approves the Alternative Transaction.
Unless required by the Bankruptcy Court, Seller will not consider an
Alternative Transaction unless, at a minimum, the Alternative Transaction (a)
provides for aggregate consideration of at least One Hundred Thousand Dollars
18
($100,000) in excess of the value of the Purchase Prince, on terms not
materially more burdensome or conditional to Seller than the terms of this
Agreement and (b) a deposit of Two Hundred Thousand Dollars ($200,000) is posted
by the third party. Purchaser will have the right to further bid in excess of
any such overbid, and in connection with such overbid shall be entitled to a
credit against such overbid in the amount of the Break-up Fee.
4.5 Further Assurances; Cooperation; Notification.
(a) Each party hereto will, before, at and after Closing,
execute and deliver such instruments and take such other actions as the
other party or parties, as the case may be, may reasonably require in
order to carry out the intent of this Agreement. Without limiting the
generality of the foregoing, at any time after the Closing, at the
request of Purchaser and without further consideration, Seller will
execute and deliver such instruments of sale, transfer, conveyance,
assignment and confirmation and take such action as Purchaser may
reasonably deem necessary or desirable in order to more effectively
consummate the transactions contemplated hereby and to vest in
Purchaser good and marketable title to, all of the Assets, to put
Purchaser in actual possession and operating control thereof and to
assist Purchaser in exercising all rights with respect thereto, without
further cost or expense to Purchaser.
(b) At all times from the date hereof until the Closing, each
party will promptly notify the other in writing of the occurrence of
any event which it reasonably believes will or may result in a failure
by such party to satisfy the conditions specified in this Article 4.
4.6 Supplements to Representations and Warranties.
Not more than five (5) days or less than three (3) days prior to the
Closing, Seller will supplement or amend the representations and warranties
contained in this Agreement.
4.7 Public Announcements.
Except as required to obtain Bankruptcy Court approval of this
Agreement, none of the parties hereto will make any public announcement with
respect to the transactions contemplated herein without the prior written
consent of the other party, which consent will not be unreasonably withheld or
delayed; provided, however, that Purchaser may make such filings with the
Securities and Exchange Commission as it believes are appropriate and issue
press releases as it deems appropriate.
4.8 Tax Matters.
(a) The parties hereto will cooperate to make any necessary
filings with state and local or foreign taxing Authorities and to
furnish any required supplemental information with respect to any state
and local or foreign Tax liabilities resulting from the consummation of
the transactions contemplated herein.
19
(b) Seller will file all federal, foreign and state income Tax
Returns for Seller reflecting all activities of Seller through and
including the Closing Date.
(c) Seller and Purchaser will:
(i) each provide the other with such assistance as
may reasonably be requested by any of them in connection with
the preparation of any Tax Return, audit or other examination
by any taxing Authority or judicial or administrative
proceedings relating to liability for Taxes,
(ii) each retain and provide the other with any
records or other information which may be relevant to such Tax
Return, audit or examination, proceeding or determination,
(iii) each provide the other with any final
determination of such audit or examination, proceeding or
determination that affects any amount required to be shown on
any Tax Return of the other for any period, and
(iv) without limiting the generality of the
foregoing, Seller and Purchaser will retain, until the
applicable statutes of limitations (including all extensions)
have expired, copies of all Tax Returns, supporting work
schedules and other records or information which may be
relevant to such Tax Returns for all Tax periods or portions
thereof ending on or before the Closing Date and will not
destroy or otherwise dispose of any such records without first
providing the other party with a reasonable opportunity to
review and copy the same.
4.9 Change of Name.
As soon as reasonably feasible after the Closing, Seller will
discontinue using, in any commercial respect, the name "Right-Way" or any
variation thereof, and Seller will promptly take all reasonable steps, subject
to Bankruptcy Court Approval, to amend its Articles of Organization to change
its name to a name which does not include "Right-Way"; provided that Seller
shall not be obligated to seek shareholder approval for such a change of name.
4.10 Conditions.
Seller shall use its commercially reasonable efforts to cause all
conditions for the Closing as set forth in this Agreement to be met.
5. CONDITIONS TO PURCHASER'S OBLIGATIONS.
Notwithstanding any other provision of this Agreement to the contrary,
the obligation of Purchaser to effect the transactions contemplated herein will
be subject to the satisfaction at or prior to the Closing of each of the
following conditions:
5.1 Representations and Warranties True.
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The representations and warranties of Seller contained in this
Agreement will be in all material respects true, complete and accurate as of the
date when made and at and as of the Closing as though such representations and
warranties were made at and as of such time, except for changes specifically
permitted or contemplated by this Agreement, and except insofar as the
representations and warranties relate expressly and solely to a particular date
or period, in which case they will be true and correct in all material respects
at the Closing with respect to such date or period.
5.2 Performance.
Seller will have performed and complied in all material respects with
all agreements, covenants, obligations and conditions required by this Agreement
to be performed or complied with by Seller on or prior to the Closing.
5.3 Bankruptcy Court Approval.
The Bankruptcy Court has entered the Sale Order on or before April 11,
2007.
5.4 Certificate(s) of Counsel to Seller.
Seller shall have caused to be filed with the Bankruptcy Court a
Certificate of Service executed by bankruptcy counsel to Seller certifying
service of the motion to approve the Sale Order contemplated by this Agreement
to all creditors (as that term is defined in the Bankruptcy Code) including all
parties to contracts with Seller.
5.5 Required Approvals and Consents.
(a) All action required by law and otherwise to be taken by
Seller to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
will have been duly and validly taken.
(b) All Consents of or from all Authorities required hereunder
to consummate the transactions contemplated herein, will have been
delivered, made or obtained, and Purchaser will have received copies
thereof.
(c) The Bankruptcy Court shall have entered the Sale Order.
5.6 Adverse Changes.
There shall have been no Material Adverse Effect on the Assets or the
Brooklyn Business since the date of this Agreement.
21
5.7 No Proceeding or Litigation.
No suit, action, investigation, inquiry or other proceeding by any
Authority or other person or entity will have been instituted or threatened
which delays or questions the validity or legality of the transactions
contemplated hereby or which, if successfully asserted, would individually or in
the aggregate, otherwise have a Material Adverse Effect on the Brooklyn Business
or Assets.
5.8 Legislation.
No Law will have been enacted which prohibits, restricts or delays the
consummation of the transactions contemplated hereby or any of the conditions to
the consummation of such transaction.
5.9 Certificates.
Purchaser will have received such certificates of Seller, in a form and
substance reasonably satisfactory to Purchaser, dated the Closing Date, to
evidence compliance with the conditions set forth in this Article 5 and such
other matters as may be reasonably requested by Purchaser.
5.10 Appropriate Documentation.
Purchaser will have received, in a form and substance reasonably
satisfactory to Purchaser and its counsel, dated the Closing Date, all bills of
sale, deeds, assignments, consents and other conveyance and transfer
documentation consistent with the negotiated provisions of this Agreement and
necessary to vest title in the Assets with Purchaser and otherwise consummate
the terms of this transaction.
5.11 Purchaser Lease.
On or prior to Closing, the Landlord shall have entered into a new
lease with Purchaser regarding the Brooklyn Facility (the "Purchaser Lease")
upon terms and conditions set forth in the form of lease agreed by the Landlord
and Purchaser prior to the executing of this Agreement by Purchaser and the
Lease shall be terminated on the Closing Date.
5.12 Employment Agreement.
Purchaser shall have entered into an agreement for the employment after
the Closing of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on terms mutually agreed to by Purchaser and
Seller.
5.13 Environmental Due Diligence.
Purchaser shall have completed its environmental due diligence
investigation of the Brooklyn Business property and shall not have exercised its
rights under Section 7.3 to terminate this Agreement.
5.14 Schedule of Receivables and Inventory.
Seller shall provide a list of all accounts receivable of Seller and
Inventory of Seller as of the Closing Date.
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5.15 Aging Schedule.
Seller shall provide the aging schedule of all trade accounts
receivable of Seller as of the Closing Date.
6. CONDITIONS TO OBLIGATIONS OF SELLER.
Notwithstanding anything in this Agreement to the contrary, the
obligation of Seller to effect the transactions contemplated herein will be
subject to the satisfaction at or prior to the Closing of each of the following
conditions:
6.1 Representations and Warranties True.
The representations and warranties of Purchaser contained in this
Agreement will be in all material respects true, complete and accurate as of the
date when made and at and as of the Closing, as though such representations and
warranties were made at and as of such time, except for changes permitted or
contemplated in this Agreement, and except insofar as the representations and
warranties relate expressly and solely to a particular date or period, in which
case they will be true and correct in all material respects at the Closing with
respect to such date or period.
6.2 Performance.
Purchaser will have performed and complied in all material respects
with all agreements, covenants, obligations and conditions required by this
Agreement to be performed or complied with by Purchaser at or prior to the
Closing.
6.3 Required Approvals and Consents.
(a) All action required by law and otherwise to be taken by
Purchaser to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
will have been duly and validly taken.
(b) All Consents of or from all Authorities required hereunder
to consummate the transactions contemplated herein, will have been
delivered, made or obtained, and Seller will have received copies
thereof.
(c) The Bankruptcy Court shall have entered the Sale Order.
6.4 No Proceeding or Litigation.
No suit, action, investigation, inquiry or other proceeding by any
Authority or other person or entity will have been instituted or threatened
which delays or questions the validity or legality of the transactions
contemplated hereby or which, if successfully asserted, would individually or in
the aggregate, otherwise have a Material Adverse Effect on Purchaser's business,
financial condition, prospects, assets or operations.
23
6.5 Legislation.
No Law will have been enacted which prohibits, restricts or delays the
consummation of the transactions contemplated hereby or any of the conditions to
the consummation of such transaction.
6.6 Certificates.
Purchaser will have furnished to Seller such certificates and other
documents, instruments and writings to evidence the fulfillment of the
conditions set forth in this Article 6 as Seller may reasonably request.
6.7 Payment of Consideration.
Seller will have received satisfactory evidence that the actions to be
taken and documents to be delivered pursuant to Section 1.3 have been taken or
delivered, as the case may be.
7. TERMINATION AND ABANDONMENT.
7.1 Termination by Mutual Consent.
This Agreement may be terminated at any time prior to the Closing by
the written consent of Seller and Purchaser.
7.2 Termination by Either Seller or Purchaser.
Either Seller or Purchaser may terminate this Agreement if:
(a) the Closing shall not have been consummated by 5:00 p.m.
(Boston, Massachusetts) on April 13, 2007 (provided that the right to
terminate this Agreement under this Subsection 7.2(a) will not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of or resulted in the failure of the
Closing to occur on or before such date); or
(b) any court of competent jurisdiction in the United States
or some other governmental body or regulatory authority will have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Closing or
permitting consummation of the Closing only subject to a condition or
restriction unacceptable to either party and such order, decree, ruling
or other action shall have become final and nonappealable.
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7.3 Termination by Purchaser.
Purchaser may terminate this Agreement at any time prior to the Closing
Date if:
(a) Seller fails to comply in any material respect with any of
the covenants, conditions or agreements contained in this Agreement
required to be performed or complied with by Seller prior to the
Closing Date;
(b) any representation or warranty of Seller contained in this
Agreement is or becomes untrue or incorrect in any material respect
(except for changes permitted by this Agreement and those
representations which address matters only as of a particular date that
remain true and correct as of such date);
(c) the sale of the Assets is subject to any stay, or if any
order of the Bankruptcy Court approving, modifying or confirming this
Agreement, providing for notice of any related court hearing,
overruling any objection to this Agreement, or rejecting any
purportedly "higher and/or better" offer(s) for the Assets, is
materially modified or vacated by the Bankruptcy Court, or appealed by
anyone and such person obtains an order staying consummation of any of
the transactions contemplated by this Agreement, staying the occurrence
of the Closing Date, or delaying the mailing or publication of any
required notice. Seller shall provide Purchaser with written notice of
any such modification, appeal or stay immediately upon receipt of
notice thereof, which notice to Purchaser shall contain a copy of the
notice of appeal or any other applicable pleadings applications or
orders.
7.4 Termination by Seller.
This Agreement may be terminated prior to the Closing Date by action of
Seller if:
(a) Purchaser fails to comply in any material respect with any
of the covenants, conditions or agreements contained in this Agreement
required to be performed on or complied with by Purchaser prior to the
Closing Date; or
(b) any representation or warranty of Purchaser contained in
this Agreement is or becomes untrue or incorrect in any material
respect (except for changes permitted by this Agreement and those
representations which address matters as of a particular date that
remain true and correct as of such date).
7.5 Procedure and Effect of Termination.
In the event of termination of this Agreement and abandonment of the
transactions contemplated hereby by Seller or Purchaser pursuant to this Article
7, written notice will be given to the other party and this Agreement will
terminate (other than Sections 4.4, 4.7 and this Section 7.5 and the
transactions contemplated hereby will be abandoned, without further action by
any of the parties hereto. If this Agreement is terminated as provided herein:
25
(a) Upon request therefor, each of the parties hereto will
redeliver all documents, work papers and other material of the other
party relating to the transactions contemplated hereby, whether
obtained before or after the execution hereof, to the party furnishing
the same;
(b) No party will have any liability for a breach of any
representation, warranty, agreement, covenant or the provision of this
Agreement, unless such breach was due to a willful or bad faith action
or omission of such party or any representative, agent, employee or
independent contractor thereof; and
(c) All filings, applications and other submissions made
pursuant to the terms of this Agreement will, to the extent
practicable, be withdrawn from the agency or other person to which
made.
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
All representations, warranties and agreements of the parties contained
in this Agreement or in any instrument delivered pursuant to this Agreement
shall terminate at the Closing.
9. WARRANTY CLAIMS.
Purchaser is not assuming any warranty or related liability for goods
and products sold by Seller prior to Closing.
10. MISCELLANEOUS PROVISIONS.
10.1 Expenses.
Purchaser and Seller will each bear their own costs and expenses
relating to the transactions contemplated hereby, including without limitation,
fees and expenses of legal counsel, accountants, investment bankers, brokers or
finders, printers, copiers, consultants or other representatives for the
services used, hired or connected with the transactions contemplated hereby;
provided, however, that to the extent that sales or use taxes are payable with
respect to the sale of Assets under this Agreement, such taxes shall be payable
by Purchaser. Any costs and risks of loss of delivery of Assets to locations
other than their locations on the Closing Date shall be borne by Purchaser.
10.2 Amendment and Modification.
This Agreement may not be amended or modified except by means of a
writing duly executed by each of the parties hereto.
10.3 Waiver of Compliance; Consents.
Any failure of a party to comply with any obligation, covenant,
agreement or condition herein may be expressly waived in writing by the party
entitled hereby to such compliance, but such waiver or failure to insist upon
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strict compliance with such obligation, covenant, agreement or condition will
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. No single or partial exercise of a right or remedy will preclude any
other or further exercise thereof or of any other right or remedy hereunder.
Whenever this Agreement requires or permits the consent by or on behalf of a
party, such consent will be given in writing in the same manner as for waivers
of compliance.
10.4 No Third Party Beneficiaries.
Nothing in this Agreement will entitle any Employee, other person or
entity (other than a party hereto and his, her or its respective successors and
assigns permitted hereby) to any claim, cause of action, remedy or right of any
kind.
10.5 Notices.
All notices, requests, demands and other communications required or
permitted hereunder will be made in writing and will be deemed to have been duly
given and effective: (i) on the date of delivery, if delivered personally; (ii)
on the earlier of the fifth (5th) day after mailing or the date of the return
receipt acknowledgment, if mailed, postage prepaid, by certified or registered
mail, return receipt requested; (iii) on the date of transmission, if sent by
facsimile, electronic mail or other similar telegraphic communications equipment
and receipt thereof is confirmed telephonically; or (iv) if sent by overnight
delivery by Federal Express or other reputable overnight courier, on the date
after delivery to such courier for overnight delivery:
If to Seller:
To: Right-Way Dealer Warehouse, Inc.
▇▇ ▇▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇ PC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
or to such other person or address as Seller will furnish to the other parties
hereto in writing in accordance with this subsection.
If to Purchaser
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To: Five Star Products, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
With a copy to:
▇▇▇ ▇▇▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
or to such other person or address as Purchaser will furnish to the other party
hereto in writing in accordance with this subsection.
10.6 Assignment.
This Agreement and all of the provisions hereof will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned (whether voluntarily,
involuntarily, by operation of law or otherwise) by any of the parties hereto
without the prior written consent of the other parties, provided, however, that
Purchaser may assign its rights (but not its obligations) under this Agreement,
in whole or in any part, and from time to time, to a wholly owned, direct or
indirect, subsidiary of Purchaser.
10.7 Governing Law.
This Agreement and the legal relations among the parties hereto shall
be governed by and construed in accordance with the internal substantive laws of
the Commonwealth of Massachusetts (without regard to the laws of conflict that
might otherwise apply) as to all matters.
10.8 Counterparts.
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9 Headings.
The table of contents and the headings of the sections and subsections
of this Agreement are inserted for convenience only and shall not constitute a
part hereof.
10.10 Entire Agreement.
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This Agreement and the exhibits and other writings referred to in this
Agreement are part of this Agreement, together they embody the entire agreement
and understanding of the parties hereto in respect of the transactions
contemplated by this Agreement and together they are referred to as this
"Agreement" or the "Agreement". There are no restrictions, promises, warranties,
agreements, covenants or undertakings, other than those expressly set forth or
referred to in this Agreement. This Agreement supersedes all prior agreements
and understandings between the parties with respect to the transaction or
transactions contemplated by this Agreement; provided, that the confidentiality
agreement between Purchaser and Seller, dated February 15, 2007, shall remain in
full force and effect. Any provision of this Agreement that becomes invalid or
unenforceable under applicable Law will be stricken to the extent necessary and
the remainder of such provisions and the remainder of this Agreement will
continue in full force and effect.
10.11 Certain Definitions.
For purposes of this Agreement, the terms:
(a) "Material Adverse Effect" means any event or condition
which, individually or cumulatively with other events or conditions,
has caused or is reasonably likely to cause material adverse change in
or material adverse effect on (i) the current or future business,
customers, customer relations, operations, properties, working capital
condition (financial or otherwise), assets, properties, liabilities or
prospects of the Brooklyn Business, taken as a whole, or (ii) which
would prevent Seller, on the one hand, or Purchaser, on the other hand,
from consummating the transactions contemplated hereby.
(b) "Plans" mean any and all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) and any other plans, funds, arrangements
or practices subject in whole or in part to ERISA.
(c) "Taxes" means all federal, state, local, foreign and other
net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, real or personal property, windfall profits, customs, duties
or other taxes, fees, assessments, charges or levies of any kind
whatever, together with any interest and any penalties, additions to
tax or additional amounts with respect thereto, and the term "Tax"
means any one of the foregoing Taxes.
(d) "Tax Returns" means all returns, declarations, reports,
statements and other documents required to be filed with any Authority
in respect of Taxes, and the term "Tax Return" means any one of the
foregoing Tax Returns.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
FIVE STAR PRODUCTS, INC. RIGHT-WAY DEALER WAREHOUSE, INC.
By: ▇▇▇▇ ▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: President Its: CEO
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LIST OF EXHIBITS
Name of Exhibit Number of Exhibit
List of Assets to be Purchased Exhibit 1.1(a)
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Exhibit 1.1(a)(i)
Owned equipment used in the operation of the Brooklyn Business
Office Furniture and Equipment Desks, chairs, file cabinets, copier,
fax machine, calculators
AT&T Merlin Phone System
Motor Vehicles 2000 Mitsubishi Truck, financed through
▇▇▇▇▇ Commercial, $605.83/month ending
12/01/09
Warehouse Equipment Racking, CCTV security system, alarm
System, ▇▇▇▇▇▇, snowblower, (2) forklifts,
(2) pallet jacks
Data Processing Equipment (4) Barcode scanners, credit card terminal
Assorted networking hardware including
(2) switches, router, wireless router
Leasehold Improvements Offices, restrooms, heaters, emergency
Lighting, heated air curtain
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Exhibit 1.1(a)(viii)
Trade Names and Marks of Seller
Right-Way Dealer Warehouse
33