EXHIBIT 2
ASSET PURCHASE AGREEMENT
BY AND AMONG
▇▇▇▇▇▇▇ ACQUISITION, INC.
BUYER
and
▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇, INC.
SELLER
and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
November __, 2001
TABLE OF CONTENTS
1. Purchase and Sale............................................................................. 1
1.1 Purchased Assets..................................................................... 1
1.2 Assumption of Specified Liabilities.................................................. 4
1.3 Non-Assumption of Certain Liabilities................................................ 5
1.4 No Expansion of Third-Party Rights................................................... 7
2. Closing Consideration; Adjustment; Allocation of Consideration................................ 8
2.1 Closing Consideration................................................................ 8
2.2 Adjustment........................................................................... 9
2.3 The Closing.......................................................................... 11
3. Representations and Warranties of Seller and ▇▇▇▇▇▇▇.......................................... 11
3.1 Existence; Good Standing; Corporate Authority; Compliance With Law................... 11
3.2 Authorization, Validity and Effect of Agreements..................................... 11
3.3 Ownership of Capital Stock of Seller................................................. 12
3.4 Financial Statements................................................................. 12
3.5 Absence of Certain Changes or Events................................................. 13
3.6 Taxes................................................................................ 13
3.7 Personal Property.................................................................... 13
3.8 Accounts Receivable.................................................................. 13
3.9 Inventory............................................................................ 14
3.10 Business Property Rights............................................................. 14
3.11 Real Property........................................................................ 15
3.12 Title to Property; Encumbrances; Sufficiency of Purchased Assets..................... 15
3.13 Licenses and Permits................................................................. 16
3.14 Compliance with Law.................................................................. 16
3.15 Litigation........................................................................... 16
3.16 Contracts............................................................................ 17
3.17 Labor Matters........................................................................ 17
3.18 Employee Plans....................................................................... 18
3.19 Insurance............................................................................ 18
3.20 Environmental Matters................................................................ 18
3.21 Customers and Suppliers.............................................................. 19
3.22 No Brokers........................................................................... 19
3.23 No Other Agreements to Sell the Purchased Assets..................................... 19
3.24 Accuracy of Information.............................................................. 20
4. Representations and Warranties of Buyer....................................................... 20
4.1 Existence; Good Standing; Corporate Authority; Compliance With Law................... 20
4.2 Authorization, Validity and Effect of Agreements..................................... 20
5. Survival of Provisions/Indemnification........................................................ 21
5.1 Survival of Provisions............................................................... 21
5.2 Indemnification by Seller and ▇▇▇▇▇▇▇................................................ 21
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5.3 Indemnification by Buyer............................................................ 22
5.4 Limitations on Indemnification...................................................... 22
5.5 Conditions of Indemnification....................................................... 24
5.6 Tax Treatment....................................................................... 25
6. Other Covenants and Agreements............................................................... 25
6.1 Restrictive Covenants............................................................... 25
6.1.1 Customer Restriction....................................................... 25
6.1.2 Non-Raid................................................................... 25
6.1.3 Non-Competition............................................................ 26
6.1.4 Reformation................................................................ 26
6.1.5 Injunctive Relief.......................................................... 27
6.2 Conduct of the Business............................................................. 27
6.2.1 Affirmative Covenants........................................................ 27
6.2.2 Negative Covenants........................................................... 27
6.3 Consents and Approvals.............................................................. 28
6.4 Access to Properties and Records.................................................... 28
6.5 Acquisition Proposals............................................................... 29
6.6 Public Announcements................................................................ 29
6.7 Notification of Certain Matters..................................................... 29
6.8 Execution of Additional Documents................................................... 30
6.9 Costs and Expenses.................................................................. 30
6.10 Transfer Taxes...................................................................... 30
6.11 Cooperation on Tax Matters; Business Records........................................ 30
6.12 Allocation of Total Purchase Price.................................................. 31
6.13 Proration of Property Taxes......................................................... 31
6.14 Offer of Employment................................................................. 31
6.15 Guaranty of Receivables............................................................. 32
6.16 Use of Name......................................................................... 33
7. Conditions of Closing........................................................................ 33
7.1 Buyer's Conditions of Closing....................................................... 33
7.2 Seller's Conditions of Closing...................................................... 35
8. Termination and Abandonment.................................................................. 36
8.1 Reasons for Termination............................................................. 36
8.2 Procedure Upon and Effect of Termination............................................ 36
9. Miscellaneous................................................................................ 37
9.1 Notices............................................................................. 37
9.2 Binding Effect; Benefits............................................................ 38
9.3 Entire Agreement.................................................................... 38
9.4 Governing Law....................................................................... 39
9.5 Counterparts........................................................................ 39
9.6 Headings............................................................................ 39
9.7 Waivers............................................................................. 39
9.8 Merger of Documents................................................................. 40
9.9 Incorporation of Exhibits and Schedules............................................. 40
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9.10 Severability........................................................................ 40
9.11 Assignability....................................................................... 40
9.12 Drafting............................................................................ 40
9.13 References.......................................................................... 40
9.14 Calendar Days, Weeks and Months..................................................... 41
9.15 Gender; Plural and Singular......................................................... 41
9.16 Cumulative Rights................................................................... 41
9.17 No Implied Covenants................................................................ 41
9.18 Attorneys' Fees..................................................................... 41
9.19 Indirect Action..................................................................... 41
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of November __,
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2001, by and among ▇▇▇▇▇▇▇ ACQUISITION, INC., a Delaware corporation ("Buyer"),
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▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇, INC., a South Carolina corporation ("Seller"), and ▇▇▇▇▇ ▇.
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▇▇▇▇▇▇▇, an individual ("▇▇▇▇▇▇▇").
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WHEREAS, ▇▇▇▇▇▇▇ is the sole record and beneficial owner of all of the
issued and outstanding capital stock of Seller; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to acquire from
Seller, all of the Purchased Assets (as such term is hereinafter defined) in
accordance with the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Purchase and Sale.
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1.1 Purchased Assets.
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1.1.1 On the terms and subject to the conditions contained in
this Agreement, on the Closing Date (as such term is hereinafter
defined), Seller shall sell, assign, grant, convey, transfer and
deliver to Buyer, and Buyer shall purchase and acquire from Seller,
all of the assets and properties of Seller of every kind, nature
and description (wherever located), as the same shall exist as of
the Closing Date, except the Excluded Assets (as such term is
hereinafter defined). The assets and properties to be sold,
granted, conveyed, transferred, assigned and delivered by Seller to
Buyer hereunder are hereinafter referred to collectively as the
"Purchased Assets." Without limiting the generality of the
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foregoing, the Purchased Assets shall include, without limitation,
the following assets and properties of Seller (except any of the
following which are Excluded Assets):
(i) all accounts, notes, vendor rebate, agency
commission, credit card and other receivables (including,
without limitation, amounts due from Seller's customers
whether recorded as accounts, notes, vendor rebate, agency
commission, credit card or other receivables or reductions
in accounts payable) and related deposits, security or
collateral therefor (including, without limitation,
recoverable customer deposits of Seller);
(ii) all machinery, inventories, inventories of parts,
computers, furniture, furnishings, fixtures, office supplies
and equipment, automobiles, trucks, vehicles, returnable
containers, tools and parts, raw materials and work in
process;
(iii) all drawings, blueprints, specifications,
designs and data of Seller;
(iv) all of Seller's right, title and interest in
and to the name "▇▇▇▇▇▇ and ▇▇▇▇▇▇▇" and all derivations and
variations thereof;
(v) all technology, know-how, designs, devices,
processes, methods, inventions, drawings, schematics,
specifications, standards, trade secrets and other
proprietary information, and all patents and applications
therefor and all trademarks and trade names, trademark and
trade name registrations, service marks and service ▇▇▇▇
registrations, copyrights and copyright registrations, the
applications therefor and the licenses thereto, together
with the goodwill and the business appurtenant thereto;
(vi) all catalogues, brochures, sales literature,
promotional material, samples and other selling material of
Seller;
(vii) all books and records and all files, documents,
papers, agreements, books of account and other records
pertaining to the Purchased Assets or to Seller's business,
including, without limitation, financial statements and
related work papers and letters from accountants, budgets,
pricing guidelines, ledgers, journals, deeds, title
policies, Contracts and other agreements, licenses, computer
files and programs, retrieval programs, operating data and
plans used or held for use in the conduct of the Seller's
business or otherwise relating to Seller's business, other
than the corporate charter, minute books, stock transfer
books, stock certificates, corporate seal and other
organizational documents of Seller, and tax returns, Tax
records, litigation files and any records related solely to
Excluded Assets or Excluded Liabilities;
(viii) all right, title and interest of Seller under
all contracts, agreements, licenses, leases, sales orders,
permits, purchase orders and other commitments (whether oral
or written) by which any of the Purchased Assets are bound
or affected, or to which Seller is a party or by which it is
bound (the "Contracts"), and that Buyer has requested be
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assigned to it pursuant to Section 1.2 hereof;
(ix) all lists of past, present and prospective
customers of Seller's business;
(x) all goodwill relating to the Purchased Assets
or Seller's business as a going concern;
(xi) all governmental establishment and product
licenses and permits, approvals, license and permit
applications and license and permit amendment applications;
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(xii) all claims against third parties, whether or
not asserted and whether now existing or hereafter arising,
related to Seller's business or the Purchased Assets
(including, without limitation, all claims based on any
indemnities or warranties in favor of Seller relating to
Seller's business or any of the Purchased Assets); and
(xiii) all other assets and rights of every kind and
nature, tangible or intangible, of Seller.
Without limiting the generality of the foregoing, the
Purchased Assets shall, except as set forth in Section 1.1.2
hereof, include all assets which are held in connection with, or
used or held for use in the business or operations of, the Seller
set forth in a detailed list of plant and equipment as of Balance
Sheet Date (as such term is hereinafter defined) prepared from
the accounting records of Seller and attached hereto as Schedule
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1.1.1, and all such assets of Seller as may have been acquired by
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Seller which would be included on a list prepared in like manner
from such accounting records as of the Closing Date, except any
such assets which may have been disposed of since the Balance
Sheet Date in the ordinary course of business on a basis
consistent with past practice.
1.1.2 Anything herein contained to the contrary
notwithstanding, the real property owned by Oaks Realty ("Oaks")
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to be leased to Buyer pursuant to the Real Property Agreement (as
such term is hereinafter defined) and the assets and properties
of Seller described in Schedule 1.1.2 hereof, in existence on the
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Closing Date (collectively the "Excluded Assets"), are
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specifically excluded from the Purchased Assets and shall be
retained by Seller.
1.1.3 Subject to Section 1.1.4 hereof, at the Closing,
Seller shall execute and deliver to Buyer (i) a ▇▇▇▇ of Sale,
Assignment and Assumption Agreement, in the form attached hereto
as Exhibit A (the "▇▇▇▇ of Sale, Assignment and Assumption
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Agreement"), under the terms of which Seller shall sell, grant,
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convey, assign, transfer and deliver the Purchased Assets to
Buyer, and (ii) such other bills of sale, deeds, instruments of
assignment and other appropriate documents as may be requested by
Buyer in order to carry out the intentions and purposes hereof.
1.1.4 Notwithstanding the foregoing, this Agreement shall
not constitute an agreement to assign or transfer any Contract if
an assignment or transfer or an attempt to make such an
assignment or transfer without the consent of a third party would
constitute a breach or violation thereof or affect adversely the
rights of Buyer or Seller thereunder; and any transfer or
assignment to Buyer by Seller of any interest under any such
Contract that requires the consent or approval of a third party
shall be made subject to such consent or approval being obtained.
In the event any such consent or approval is not obtained on or
prior to the Closing Date and Buyer waives as of the Closing Date
the condition that such consent or approval be obtained, each of
Seller and ▇▇▇▇▇▇▇ shall continue to use all
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reasonable efforts to obtain any such consent or approval after
the Closing Date until such time as such consent or approval has
been obtained, and each of Seller and ▇▇▇▇▇▇▇ will cooperate with
Buyer in any lawful and economically feasible arrangement to
provide that Buyer shall receive the interest of Seller in all
benefits under any such Contract, including without limitation
performance by Seller as agent if economically feasible;
provided, however, that Buyer shall undertake to pay or satisfy
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the corresponding liabilities for the enjoyment of such benefit
to the extent Buyer would have been responsible therefor
hereunder if such consent or approval had been obtained as of the
Closing Date. Seller and ▇▇▇▇▇▇▇ shall, jointly and severally,
pay and discharge, and shall indemnify and hold Buyer harmless
from and against, reasonable out-of-pocket costs incurred by
Buyer in seeking to obtain or obtaining any such contractual
consent or approval whether before or after the Closing Date.
Nothing in this Section 1.1.4 shall be deemed a waiver by Buyer
of its right to have received on or before the Closing Date an
effective assignment of all of the Contracts it has requested be
assigned to it nor shall this Section 1.1.4 be deemed to
constitute an agreement to exclude any Contracts from the terms
of this Agreement.
1.2 Assumption of Specified Liabilities. Upon the terms and
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subject to the conditions set forth herein, subject however to Section
1.1.4 and 1.3 hereof, and as additional consideration for Buyer's
purchase of the Purchased Assets, Buyer shall, on the Closing Date,
assume, and covenant and agree to pay, perform and discharge when due,
only the following liabilities and obligations of Seller (the "Assumed
Liabilities"):
(i) any and all liabilities, obligations and commitments
relating exclusively to the Seller's business or the Purchased
Assets that are reflected on the Interim Financial Statements (as
such term is hereinafter defined);
(ii) those liabilities or obligations of Seller (x) which
are listed on Schedule 1.2A hereof, or (y) which are current
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liabilities or obligations of Seller incurred in the ordinary
course of business and consistent with past practice after the
date hereof and prior to the Closing in each case less any such
liabilities or obligations which are paid, performed or
discharged by Seller between the date hereof and the Closing
Date; and
(iii) those liabilities or obligations of Seller accruing
after the Closing Date under the terms of a Contract (x) which is
listed on Schedule 1.2B hereof, or (y) which was entered into by
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Seller after the date hereof and prior to the Closing in the
ordinary course of business and consistent with past practice and
which Buyer, in the exercise of its sole discretion, desires to
assume and agree to pay, perform and discharge, in each case less
any such liabilities or obligations which are paid, performed or
discharged by Seller between the date hereof and the Closing Date
(other than any of the foregoing which shall not be assigned as
contemplated by Section 1.1.4 hereof).
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Subject to Sections 1.1.4 and 1.3 hereof, at the Closing,
Buyer shall execute and deliver to Seller the ▇▇▇▇ of Sale, Assignment
and Assumption Agreement assuming the Assumed Liabilities.
1.3 Non-Assumption of Certain Liabilities. Notwithstanding
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any other provision of this Agreement, Buyer shall not assume, and
shall not be deemed to have assumed or be in any way liable for or
subject to or have any obligation for or with respect to, any
liabilities or obligations of Seller of any kind, nature or description
whatsoever, except as expressly provided in Section 1.2 hereof (the
"Excluded Liabilities"). Except items for which a reserve is set forth
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in the Audited Financial Statements (but only to the extent of such
reserve), anything in Section 1.2 hereof or elsewhere herein to the
contrary notwithstanding and without limiting the generality of the
foregoing, Buyer shall not assume, and shall not be deemed to have
assumed or be in any way liable for or subject to or have any
obligation for or with respect to, any of the following Excluded
Liabilities:
(i) any and all claims, liabilities or obligations
that arise, result from, or relate in any way to any or all
employment practices, decisions, actions, or proceedings
undertaken by Seller prior to or on the Closing Date in
connection with persons employed or seeking to be employed and
any and all claims, liabilities or obligations that arise out
of, result from, or relate to (a) Employment and Labor
Agreements, Employee Policies and Procedures or Plans (as such
terms are hereinafter defined), (b) any National Labor
Relations Board ("NLRB") proceedings based upon events
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occurring, conditions existing or claims arising on or prior
to the Closing Date, (c) any other matters arising out of the
employment of people on or prior to the Closing Date, such as
workers' compensation, wage and hour, safety and health,
employment discrimination, unfunded pension liability for
vested and non-vested employees, and the like, and (d) any
liability, including without limitation federal and state
income tax liability, by reason of Seller's failure, through
any act or omission prior to or on the Closing Date, to comply
with the requirements of COBRA (as such term is hereinafter
defined) with respect to any "qualified beneficiary" (as
defined in COBRA); or
(ii) any and all liabilities or obligations of Seller
in respect of (x) any Taxes (as such term is hereinafter
defined) attributable to periods or events prior to or ending
or occurring on the Closing Date or (y) any Taxes, legal,
accounting, brokerage, finder's fees, or other expenses of
whatsoever kind or nature incurred by Seller or any partner,
affiliate, director, employee or officer of Seller as a result
of the execution of this Agreement or the consummation of the
transactions contemplated hereby; or
(iii) any and all liabilities or obligations of Seller
arising out of any litigation, action, suit or proceeding
based upon an event occurring, a condition existing or a claim
arising (x) on or prior to the Closing Date (including,
without limitation, the litigation, actions, suits,
proceedings and claims listed on Schedule 3.15 hereof), or (y)
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after the Closing Date in the case of claims, litigation,
actions, suits or proceedings in respect of products sold or
services provided by Seller on
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or prior to the Closing Date and attributable to acts
performed or omitted by Seller on or prior to the Closing
Date; or
(iv) all warranties, liabilities or obligations to
customers with respect to the repair or replacement of any
products which have been manufactured, sold or otherwise
provided by Seller on or prior to the Closing Date and which
have been shipped by Seller on or prior to the Closing Date;
or
(v) all warranties, liabilities or obligations to
customers with respect to the repair or replacement of any
products which have been manufactured, sold or otherwise
provided by Seller on or prior to the Closing Date and which
are shipped by Seller on or prior to the Closing Date;
(vi) any and all liabilities or obligations of Seller
under any of the Contracts assigned to Buyer hereunder based
upon an event occurring, a condition existing or a claim
arising (x) on or prior to the Closing Date, or (ii) after the
Closing Date in the case of liabilities or obligations
thereunder attributable to acts performed or omitted by Seller
on or prior to the Closing Date; or
(vii) any and all liabilities or obligations of Seller
arising out of or related to this Agreement; or
(viii) any and all liabilities or obligations arising
out of or related to matters disclosed on Schedule 3.20 and
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any Release (as such term is hereinafter defined) or threat of
Release into the environment of a Hazardous Material (as such
term is hereinafter defined) attributable to any condition or
circumstance, know or unknown, existing or occurring at or on
any real property or premises owned, leased or occupied by
Seller on or prior to the Closing Date (hereafter an
"Environmental Condition"), including without limitation (x)
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any suits, causes of action, proceedings, judgments,
administrative and judicial orders arising out of any matter
relating to such Environmental Condition, (y) any liability
arising in tort (strict or otherwise) resulting from any such
Environmental Condition, and (z) any required or voluntary
cleanup or full or partial remediation of such Environmental
Condition in accordance with the provisions or requirements of
any Environmental Law (as such term is hereinafter defined);
or
(ix) any and all liabilities or obligations related to
Seller's Qualified Profit Sharing Plan.
As used herein, the term "CERCLA" means the Comprehensive
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Environmental Response, Compensation and Liability Act, 42
U.S.C.ss.9601 et seq., as amended.
As used herein, the term "COBRA" means the provisions of the
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Code, ERISA and the Public Health Service Act enacted by Sections
10001 through 10003 of the Consolidated Omnibus Budget Reconciliation
Act of 1985 (P.L. 99-272), including any subsequent amendments to such
provisions.
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As used herein, the term "Code" means the Internal Revenue
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Code of 1986, as amended.
As used herein, the term "ERISA" means the Employee Retirement
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Income Security Act of 1974, as amended.
As used herein, the term "Environmental Laws" shall mean all
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applicable laws and regulations (federal, state, and local) relating to
pollution or to the protection of public safety, public health, public
welfare, industrial hygiene, or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata), including without limitation (i) those laws and
regulations relating to the Release or threatened Release of Hazardous
Materials and to the manufacture, generation, management, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials, (ii) duties or requirements arising out of
common law, and (iii) judicial and administrative interpretations
thereof.
As used herein, the term "Hazardous Material" shall mean (i)
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any chemicals, materials, wastes or substances that are defined,
regulated, determined or identified as toxic or hazardous in any
Environmental Law (including, without limitation, substances defined as
"hazardous substances," "hazardous materials," or "hazardous waste,"
"pollutant or contaminant," "petroleum" or "natural gas liquids" in
CERCLA, the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, or comparable state and local statutes
or in the regulations adopted and publications promulgated pursuant to
said statutes), and (ii) any asbestos, polychlorinated biphenyls, urea
formaldehyde, lead based paint, petroleum, petroleum products, oil,
solid waste, pollutants, and other contaminants (whether or not
regulated under any Environmental Law).
As used herein, the term "Release" shall mean emitting,
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depositing, leaking, spilling, pumping, pouring, emptying, discharging,
injecting, escaping, leaching, dumping or disposing.
As used herein, the terms "Tax" or "Taxes" means all federal,
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foreign, state, county, local or other net or gross income, gross
receipts, sales, use, transfer, transfer gains, ad valorem,
value-added, franchise, production, severance, windfall profit,
withholding, payroll, employment, excise or similar taxes, assessments,
duties, fees, levies or other governmental charges (together with any
interest thereon, any penalties, additions to tax or additional amounts
with respect thereto and any interest in respect of such penalties,
additions or additional amounts).
1.4 No Expansion of Third-Party Rights. The assumption by
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Buyer of any liabilities of Seller hereunder shall in no way expand the
rights or remedies of any third party against Buyer as compared to the
rights and remedies that such third party would have had against Seller
had Buyer not assumed such liabilities. Without limiting the generality
of the preceding sentence, the assumption by Buyer of such liabilities
shall not create any third-party beneficiary rights.
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2. Closing Consideration; Adjustment; Allocation of Consideration.
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2.1 Closing Consideration. The total consideration for the
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Purchased Assets shall consist of the following payments:
2.1.1 At the Closing, Buyer shall pay to Seller an amount
equal to $13,255,000.00, as adjusted pursuant to this Section 2.1.1
(the "Initial Payment"). The Initial Payment shall be made by wire
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transfer to an account or accounts designated by Seller by written
notice to Buyer given at least two (2) business days prior to the
Closing Date. At least seven (7) business days prior to the Closing
Date, Seller shall also deliver to Buyer a schedule (the "Net Book
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Value Statement"), prepared by Seller in good faith, of the Net
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Book Value (as such term is hereinafter defined) as of the close of
business at September 30, 2001. If the Net Book Value as of the
close of business on September 30, 2001 as set forth in the Net
Book Value Statement exceeds $7,154,710.00, the Closing Payment
shall be increased by the amount by which the Net Book Value as set
forth in the Net Book Value Statement exceeds $7,154,710.00. If the
Net Book Value as of the close of business on September 30, 2001 as
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set forth in the Net Book Value Statement is less than
$7,154,710.00, the Closing Payment shall be decreased by the amount
by which the Net Book Value as set forth in the Net Book Value
Statement is less than $7,154,710.00. As used herein, "Net Book
Value" shall mean (i) the total assets of Seller as set forth in a
balance sheet of Seller prepared in accordance with generally
accepted accounting principles (including but not limited to cash,
cash equivalents, accounts receivable, inventory, prepaid expenses,
investments in affiliates, property and equipment (net of
depreciation) and other tangible assets) minus (ii) booked goodwill
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and other booked intangible assets minus (iii) the total
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liabilities of Seller as set forth in a balance sheet of Seller
prepared in accordance with generally accepted accounting
principles (including but not limited to accounts payable, other
accrued liabilities, and accrued taxes (other than federal and
state income taxes)) minus (iv) booked but Excluded Assets plus (v)
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booked but Excluded Liabilities plus (vi) 34% of accrued vacation
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pay.
2.1.2 (a) At the Closing, Buyer also shall deposit
$1,495,000.00 (such amount, the "Deposit") with Chase Manhattan
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Bank, as escrow agent (the "Escrow Agent"), which amount shall be
held and disposed of pursuant to the terms of this Agreement and an
Escrow Agreement in substantially the form attached hereto as
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Exhibit B (the "Escrow Agreement"). The Escrow Agreement shall be
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executed and delivered by Buyer, Seller and the Escrow Agent at the
Closing. Provided no dispute then exists as to any claim by Buyer
of all or a portion of the Escrow Fund and after giving effect to
any additional payments in satisfaction of Seller's
representations, warranties, covenants and obligations under this
Agreement (i) one-half of the total amount held by the Escrow Agent
pursuant to the Escrow Agreement as of May 1, 2002 will be released
to Seller on May 1, 2002, (ii) one-half of the total amount held by
the Escrow Agent as of November 1, 2002 will be released to Seller
on November 1, 2002 and (iii) the remaining Escrow Fund will be
released to Seller on May 1, 2003 and the Escrow
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Agreement shall thereupon terminate. To the extent a dispute does
exist as to a claim or claims on any of the dates set forth in
clauses (i), (ii) or (iii) of the preceding sentence an amount
equal to the amount of such claim or claims will be withheld from
the amount that otherwise would be released to Seller and will
continue to be held in accordance with the provisions of this
Agreement and the Escrow Agreement until such claim or claims have
been fully resolved. Seller's obligations under this Agreement
shall not be affected by any termination of the Escrow Agreement.
As used herein, the term "Escrow Fund" shall mean the Deposit
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delivered as provided above, together with all interest and other
income earned thereon. Notwithstanding anything to the contrary
contained in the Escrow Agreement, the fees, costs and expenses of
the Escrow Agent under the Escrow Agreement shall be borne by
Buyer.
(b) For United States federal income tax purposes (and any
relevant state or local income, franchise or sales and use taxes
purposes), Seller and Buyer shall (x) treat all amounts deposited
into the Escrow Fund as the property of Seller on the date such
amounts are deposited into the Escrow Fund (i.e., as paid to Seller
by Buyer on the date such amounts are deposited into the Escrow
Fund) and (y) Seller shall report and pay any Taxes due and payable
on any income earned on or with respect to the funds deposited in
the Escrow Fund.
2.1.3 As consideration for the covenants contained in Section
6.1.3, Buyer shall pay to Seller and ▇▇▇▇▇▇▇ (or, in the event of
▇▇▇▇▇▇▇'▇ death, his estate) an aggregate amount equal to
$200,000.00 (the "Noncompetition Consideration"). The
----------------------------
Noncompetition Consideration shall be (i) payable to Seller and
▇▇▇▇▇▇▇ in five equal annual installments of $40,000.00, commencing
on the first anniversary of the Closing Date and ending on the
fifth anniversary of the Closing Date and (ii) allocated between
Seller and ▇▇▇▇▇▇▇ in accordance with Schedule 2.1 attached hereto.
------------
2.2 Adjustment.
----------
2.2.1 Within 90 days after the Closing Date, Seller shall
deliver to Buyer (i) financial statements for Seller as of
September 30, 2001 which have been prepared in accordance with
generally accepted accounting principles consistent with Seller's
prior financial statements and audited by ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇▇ (the "Year End Financial Statements") and (ii)
-----------------------------
financial statements for Seller as of the Closing Date which have
been prepared in accordance with generally accepted accounting
principles consistent with Seller's prior financial statements and
audited by ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇ (the "Supplemental
------------
Financial Statements"). The Year End Financial Statements and the
--------------------
Supplemental Financial Statements are herein collectively referred
to as the "Audited Financial Statements". Promptly upon Buyer's
----------------------------
request, Seller shall make available to Buyer copies of the work
papers and back-up materials used by Seller's independent
accounting firm in preparing the Audited Financial Statements and
such other documents as Buyer may reasonably request in connection
with its review of the Audited Financial Statements. The fees and
expenses payable to ▇▇▇▇▇▇▇▇,
9
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇ relating to the Year End Financial Statements
shall be paid 100% by Seller and ▇▇▇▇▇▇▇ (jointly and severally).
The fees and expenses payable to ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇
relating to the Supplemental Financial Statements shall be paid 50%
by Seller and ▇▇▇▇▇▇▇ (jointly and severally) and 50% by Buyer.
2.2.2 Within 30 days after Buyer's receipt of the Audited
Financial Statements, Buyer shall review the Audited Financial
Statements and notify Seller in writing whether or not Buyer
accepts the Audited Financial Statements. If Buyer accepts the
Audited Financial Statements, the Audited Financial Statements
shall become final and binding on all parties .
2.2.3 If Buyer in good faith objects to any item set forth on
the Audited Financial Statements, Buyer shall give written notice
thereof to Seller within 30 days after receipt of the Audited
Financial Statements, specifying in reasonable detail the nature
and extent of such disagreement and Buyer and Seller shall have a
period of 30 days from Seller's receipt of such notice in which to
resolve such disagreement. If such notice of objection is not given
to Seller within 30 days after receipt of the Audited Financial
Statements, it shall be deemed that Buyer has accepted the Audited
Financial Statements with respect to all items set forth therein,
and the Audited Financial Statements shall become final and binding
on all parties. Any disputed items which cannot be agreed to by the
parties within 30 days from Seller's receipt of Buyer's notice of
objection to any of the items set forth in the Audited Financial
Statements shall be submitted for resolution to the Greenville,
South Carolina office of KPMG, LLP. If for any reason KPMG, LLP is
unable to act in such capacity, such determination will be made by
any other nationally recognized accounting firm (excluding the
previously mentioned accounting firms) selected by the Greenville,
South Carolina office of KPMG, LLP. The engagement of and the
determination by KPMG, LLP (or other accounting firm designated by
KPMG, LLP, as applicable) shall be completed within 60 days after
such assignment is given to such firm and shall be final and
binding and shall be nonappealable by Seller and Buyer. The fees
and expenses payable to such firm in connection with such
determination will be borne 50% by Seller and ▇▇▇▇▇▇▇ (jointly and
severally) and 50% by Buyer.
2.2.4 Within three (3) business days after the date that the
Audited Financial Statements become final and binding in accordance
with Section 2.2.2 or 2.2.3, as the case may be, either (i) Buyer
shall pay to Seller in cash (by means of federal funds wire or
interbank transfer in immediately available funds) the amount of
any adjustment if the Net Book Value as of the Closing Date
determined based on the Audited Financial Statements is more than
the Net Book Value set forth in the Net Book Value Statement or
(ii) Buyer shall be entitled to receive from the Escrow Fund a
portion of the Deposit equal to the amount of any adjustment if the
Net Book Value as of the Closing Date determined based on the
Audited Financial Statements is less than the Net Book Value set
forth in the Net Book Value Statement, and Buyer and Seller shall
promptly execute and deliver a joint instruction letter to the
Escrow Agent to such effect.
10
2.3 The Closing. The closing of the purchase and sale of the
-----------
Purchased Assets provided herein (the "Closing") shall occur (i) at the
offices of ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, a professional corporation, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., local time,
on November 1, 2001 provided all of the conditions set forth in Section
7 hereof shall be fulfilled or waived in accordance herewith or (ii) at
such other time and place or on such other date as Seller and Buyer may
mutually agree (such date and time of Closing being herein referred to
collectively as the "Closing Date"). The Closing shall be deemed to
------------
have occurred as of 12:01 a.m. on the Closing Date.
3. Representations and Warranties of Seller and ▇▇▇▇▇▇▇. Seller and
----------------------------------------------------
▇▇▇▇▇▇▇, jointly and severally, represent and warrant to Buyer as follows:
3.1 Existence; Good Standing; Corporate Authority; Compliance With
--------------------------------------------------------------
Law. Seller (i) is a corporation duly incorporated, validly existing
---
and in good standing under the laws of its jurisdiction of
incorporation; (ii) is duly licensed or qualified to do business as a
foreign corporation under the laws of any jurisdiction in which the
character of the properties owned or leased by it therein or in which
the transaction of its business makes such qualification necessary;
(iii) has all requisite corporate power and authority to own its
properties and carry on its business as now conducted; (iv) is not in
default with respect to any order of any court, governmental authority
or arbitration board or tribunal to which Seller is a party or is
subject; (v) is not in violation of any laws, ordinances, governmental
rules or regulations to which it is subject; and (vi) has obtained all
licenses, permits and other authorizations except where the failure to
have such licenses, permits and authorizations would not have a
Material Adverse Effect and has taken all actions required by
applicable laws or governmental regulations in connection with its
business as now conducted. As used herein, "Material Adverse Effect"
-----------------------
shall mean any event, occurrence, fact, condition, change or effect
that is materially adverse to the business, operations, prospects,
results of operations, condition (financial or otherwise), properties
(including tangible properties), assets (including intangible assets)
or liabilities of Seller's business.
3.2 Authorization, Validity and Effect of Agreements.
------------------------------------------------
3.2.1 The execution and delivery of this Agreement and all
agreements and documents contemplated hereby by Seller, and the
consummation by it of the transactions contemplated hereby, have
been duly authorized by the Board of Directors of Seller and all of
Seller's stockholders, and no other corporate proceedings on the
part of Seller are necessary to authorize this Agreement and the
transactions contemplated hereby.
3.2.2 This Agreement constitutes, and all agreements and
documents contemplated hereby when executed and delivered pursuant
hereto will constitute, the valid and legally binding obligations
of each of Seller and ▇▇▇▇▇▇▇ enforceable in accordance with their
terms, except that enforceability may be limited by applicable
bankruptcy, insolvency or other similar laws of general
11
application now or hereafter in effect relating to the enforcement
of creditors' rights generally.
3.2.3 The execution and delivery of this Agreement by each of
Seller and ▇▇▇▇▇▇▇ does not, and the consummation of the
transactions contemplated hereby by each of Seller and ▇▇▇▇▇▇▇ will
not (i) except as set forth on Schedule 3.2 hereof, require the
------------
consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority or any
third party; (ii) result in the breach of any term or provision of,
or constitute a default under, or result in the acceleration of or
entitle any party to accelerate (whether after the giving of notice
or the lapse of time or both) any obligation under, or result in
the creation or imposition of any Encumbrance (as such term is
hereinafter defined) upon any part of the property of Seller or
▇▇▇▇▇▇▇ pursuant to any provision of, any order, judgment,
arbitration award, injunction, decree, indenture, mortgage, lease,
license, lien, or other agreement or instrument to which Seller or
▇▇▇▇▇▇▇ is a party or by which either of them is bound; or (iii)
violate or conflict with any provision of the bylaws or certificate
of incorporation of Seller as amended to the date hereof. As used
herein, the term "Encumbrance" means any security interest, pledge,
-----------
mortgage, lien (including without limitation, environmental and tax
liens), charge, adverse claim, preferential arrangement, or
restriction of any kind, including, without limitation, any
restriction on the use, transfer, or other exercise of any
attributes of ownership.
3.3 Ownership of Capital Stock of Seller.
------------------------------------
3.3.1 ▇▇▇▇▇▇▇ is the record and beneficial owner of all of the
issued and outstanding capital stock of Seller.
3.3.2 There are no options, warrants, convertible securities
or other rights, agreements, arrangements or commitments of any
character relating to the capital stock of Seller or obligating
Seller or ▇▇▇▇▇▇▇ to issue or sell any shares of capital stock of,
or any other interest in, Seller.
3.4 Financial Statements.
--------------------
3.4.1 Seller has furnished to Buyer (i) a balance sheet of
Seller as of September 30, 2000; (ii) a statement of operations of
Seller as of September 30, 2000; (iii) a balance sheet of Seller as
of April 30, 2001 (the "Balance Sheet Date"); and (iv) a statement
------------------
of operations of Seller for the seven months ended on the Balance
Sheet Date; copies of which are attached hereto as Exhibit C. The
---------
financial statements referred to in (iii) and (iv) above are herein
collectively referred to as the "Interim Financial Statements". The
----------------------------
financial statements referred to in (i) through (iv) above are
herein collectively referred to as the "Financial Statements".
--------------------
3.4.2 The Financial Statements fully and fairly set forth the
financial condition of Seller as of the dates indicated, and the
results of its operations for the periods indicated, in accordance
with generally accepted accounting principles
12
consistently applied, except as otherwise stated therein.
3.5 Absence of Certain Changes or Events. Since the Balance
------------------------------------
Sheet Date, there has not been: (i) any material adverse change in the
business, operations, properties, condition (financial or other) or
prospects of Seller, and no factor or condition exists and no event has
occurred that would be likely to result in any such material adverse
change, (ii) any material loss, damage, or other casualty to the
Purchased Assets (other than any for which insurance awards have been
received or guaranteed), or (iii) any loss of the employment, services
or benefits of any key employee of Seller. Since the Balance Sheet
Date, Seller has operated its business in the ordinary course of
business consistent with past practice and has not: (i) incurred or
failed to pay or satisfy any material obligation or liability (whether
accrued, contingent or otherwise) except in the ordinary course of
business consistent with past practice, (ii) incurred or failed to
discharge or satisfy any Encumbrance other than Encumbrances arising in
the ordinary course of business that do not, individually or in the
aggregate, interfere with the use, operation, enjoyment or
marketability of any of the Purchased Assets, all of which shall be
released as of the Closing Date, (iii) sold or transferred any of the
assets of Seller or canceled any debts or claims or waived any rights
material to the operations of its business, (iv) defaulted on any
material obligation, (v) entered into any transaction material to its
business, or materially amended or terminated any arrangement material
to its business or relating to its business, except in the ordinary
course of business consistent with past practice, (vi) except as set
forth on Schedule 3.5, redeemed any of its capital stock or declared,
------------
made or paid any dividends or distributions (whether in cash,
securities or other property) to the holders of its capital stock or
otherwise, or (vii) entered into any agreement or made any commitment
to do any of the foregoing.
3.6 Taxes. Seller (i) has duly and timely filed or caused to
-----
be filed all federal, state, local and foreign tax returns required to
be filed by it prior to the date hereof which relate to it or with
respect to which it or the Purchased Assets are liable or otherwise in
any way subject; (ii) has paid or fully accrued for all Taxes shown to
be due and payable on such returns (which Taxes are all the Taxes due
and payable under the laws and regulations pursuant to which such
returns were filed); and (iii) has properly accrued for all such Taxes
accrued in respect of it or the Purchased Assets for periods subsequent
to the periods covered by such returns. No deficiency in payment of any
such Taxes for any period has been asserted by any taxing body and
remains unsettled at the date hereof. There are no liens for, or with
respect to, Taxes on any of the Purchased Assets, other than liens for
current Taxes which are not yet due or payable.
3.7 Personal Property. The machinery, equipment, furniture,
-----------------
fixtures and other tangible personal property owned, leased or used by
Seller in its business are sufficient and adequate to carry on its
business as presently conducted and are in good and merchantable
operating condition and repair and, to Seller's and ▇▇▇▇▇▇▇'▇
knowledge, are suitable for the purposes for which they are used,
normal "wear and tear" excepted.
3.8 Accounts Receivable. All trade accounts, notes and other
-------------------
receivables of Seller reflected in the Balance Sheet and all trade
accounts, notes and other receivables of
13
Seller included in the Purchased Assets or arising between the Balance
Sheet Date and the date hereof have arisen in the ordinary course of
business and represent bona fide, undisputed indebtedness (subject to
no counterclaim, right of setoff or warranty claim) incurred by the
applicable account debtor for goods held subject to delivery
instructions or heretofore shipped or delivered pursuant to a contract
of sale or for services heretofore performed by Seller.
3.9 Inventory. The inventories of Seller reflected in the
---------
Interim Financial Statements or included in the Purchased Assets, or
acquired by Seller between the Balance Sheet Date and the date hereof,
are carried in accordance with generally accepted accounting
principles, and do not include any inventory (other than the amount of
normal shrinkage in inventory since the Balance Sheet Date) which is
not usable or saleable in the ordinary course of business as heretofore
conducted, unless full and adequate reserves have been provided
therefor on such Interim Financial Statements in accordance with
generally accepted accounting principles consistently applied.
3.10 Business Property Rights.
------------------------
3.10.1 Schedule 3.10 hereof sets forth (i) all
-------------
computer software, patents, and registrations for trademarks,
trade names, service marks and copyrights which are unexpired
as of the date hereof and which are used or held for use in
connection with Seller's business, as well as all applications
pending on said date for patents or for trademark, trade name,
service ▇▇▇▇ or copyright registrations, and all other
proprietary rights, owned or held by Seller; and (ii) all
licenses granted by or to Seller and all other agreements to
which Seller is a party and which relate, in whole or in part,
to any items of the categories mentioned in (i) above or to
other proprietary rights of Seller which are used or held for
use in connection with Seller's business (collectively,
"Business Property Licenses"). All of the Business Property
--------------------------
Licenses are (x) in full force and effect in accordance with
their terms and no default exists thereunder by Seller or, to
the knowledge of Seller and ▇▇▇▇▇▇▇, by any party thereto, (y)
are free and clear of all Encumbrances, and (z) do not contain
in change in control or other terms or conditions that will
become applicable or inapplicable as a result of the
consummation of the transaction contemplated by this
Agreement. Seller has delivered to Buyer true and complete
copies of all Business Property Licenses.
3.10.2 The property referred to in Section 3.10.1
hereof, together with (i) all designs, methods, inventions and
know-how, related thereto and (ii) all trademarks, trade
names, service marks, and copyrights claimed or used by Seller
which have not been registered (collectively "Business
--------
Property Rights"), constitute all such proprietary rights
---------------
owned or held by Seller.
3.10.3 Seller owns or has valid rights to use all
such Business Property Rights without conflict with the rights
of others except in the case of the name "▇▇▇▇▇▇ and ▇▇▇▇▇▇▇"
as may be restricted by the Third and Sixth paragraphs of the
Stock Acquisition Agreement dated October 1, 1999 between
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Company (the "▇▇▇▇▇▇ Agreement").
Except as set forth in the
14
Third and Sixth paragraphs of the ▇▇▇▇▇▇ Agreement, there are,
and immediately after the Closing will be, no restrictions or
limitations on the Buyer's right to use the name "▇▇▇▇▇▇ and
▇▇▇▇▇▇▇". True and complete copies of the Third and Sixth
paragraphs of the ▇▇▇▇▇▇ Agreement have been provided by
Seller to Buyer. Except as set forth in Schedule 3.15 hereof,
-------------
no person or entity has made or, to the best of Seller's and
▇▇▇▇▇▇▇'▇ knowledge, threatened to make any claims that Seller
is in violation of or infringes any other proprietary or trade
rights of any third party. To the best of Seller's and
▇▇▇▇▇▇▇'▇ knowledge, no third party is in violation of or is
infringing upon any Business Property Rights. All royalties,
license fees, charges and other amounts payable by, on behalf
of, to, or for the account of, Seller in respect of any
Business Property Rights are disclosed in the Financial
Statements.
3.11 Real Property. Schedule 3.11 sets forth all of the real
------------- -------------
property owned by Seller and real property leased to Seller and
specifies the location of each property, the use of the facility
thereon, the name of the owner or the names of lessor and the lessee,
the square footage of improvements and the acreage of land. Seller has
delivered to Buyer (i) a copy of each deed or lease by which Seller
acquired title to or its interest in the real property described in
Schedule 3.11, (ii) a copy of all title abstracts and title insurance
-------------
policies Seller has for the real property described in Schedule 3.11
-------------
(iii) a copy of the most recent survey or surveys Seller has for the
real property described in Schedule 3.11, and (iv) a copy of all
-------------
certificates of occupancy for the improvements on the real property
described in Schedule 3.11 and a copy of any variance granted with
-------------
respect to any of such real property described in Schedule 3.11
-------------
pursuant to applicable zoning laws or ordinances all of which documents
are true and complete copies thereof as in effect on the date hereof.
Seller has not received any written notice from any governmental
agency, board, bureau, body, department or authority of any United
States, with respect to the ownership or use of any of the real
property described in Schedule 3.11. Except as set forth in Schedule
------------- --------
3.11 there is no easement, right-of-way agreement, license, sublease,
----
occupancy agreement, or like instrument with respect to any of the real
property described in Schedule 3.11. Each lease pursuant to which
-------------
Seller leases any real property is in full force and effect and is
valid and enforceable in accordance with its terms. There is not under
any such lease any default by Seller or any event that with notice or
lapse of time or both would constitute such a default by Seller and
with respect to which Seller has not taken adequate steps to prevent
such default from occurring; all of such events, if any, and the
aforesaid steps taken by Seller are set forth in Schedule 3.11. To the
-------------
best of Seller's and ▇▇▇▇▇▇▇'▇ knowledge, there is not under any such
lease any default by any other party thereto or any event that with
notice or lapse of time or both would constitute such a default
thereunder by such party.
3.12 Title to Property; Encumbrances; Sufficiency of Purchased
---------------------------------------------------------
Assets. Seller has good, valid and marketable fee simple title to all
------
the properties and assets shown on the Interim Financial Statements or
thereafter acquired, including the Purchased Assets (except for (i)
inventory subsequently sold or otherwise disposed of for fair value in
the ordinary course of business consistent with past practice, (ii)
accounts receivable subsequently collected in the ordinary course of
business consistent with past practice and (iii) immaterial amounts of
inventory, machinery and equipment that have
15
been determined to be obsolete or otherwise not necessary and have been
disposed of in the ordinary course of business consistent with past
practice), in each case free and clear of all Encumbrances except for
any Encumbrance reflected in Schedule 3.12 hereof. No part of Seller's
-------------
business is operated by Seller through any person or entity other than
Seller. The Purchased Assets comprise all assets and services required
for the continued conduct of Seller's business as now being conducted.
The Purchased Assets are adequate for the purposes for which such
assets are currently used or are held for use, and there are no facts
or conditions affecting the Purchased Assets which could, individually
or in the aggregate, interfere with the use or operation thereof as
currently used or operated, or their adequacy for such use.
3.13 Licenses and Permits. Schedule 3.13 hereof sets forth a
-------------------- -------------
true and complete list of all of Seller's licenses, permits,
franchises, authorizations, registrations, approvals and certificates
of occupancy (or their equivalent) issued or granted to it with respect
to Seller's business by the government of the United States or of any
state, city, municipality, county or town thereof, or of any foreign
jurisdiction, or any department, agency, board division, subdivision,
audit group or procuring office, commission, bureau or instrumentality
of any of the foregoing (the "Licenses and Permits"), and all pending
--------------------
applications therefor. Except as set forth on Schedule 3.13, each of
-------------
Seller's Licenses and Permits has been duly obtained, is valid and in
full force and effect, and is not subject to any pending or, to the
best of Seller's and ▇▇▇▇▇▇▇'▇ knowledge, threatened administrative or
judicial proceeding to revoke, cancel, suspend or declare such License
and Permit invalid in any respect.
3.14 Compliance with Law. The operations of Seller's business
-------------------
have been conducted in all material respects in accordance with all
applicable laws, regulations, orders and other requirements of all
courts and other governmental or regulatory authorities, domestic or
foreign, having jurisdiction over Seller and its assets, properties and
operations. Neither Seller nor ▇▇▇▇▇▇▇ has received notice of any
violation of any such law, regulation, order or other legal
requirement, or is in default with respect to any order, writ,
judgment, award, injunction or decree of any national, state or local
court or governmental or regulatory authority or arbitrator, domestic
or foreign, applicable to Seller's business or the Purchased Assets.
3.15 Litigation. Except as set forth in Schedule 3.15 hereof,
---------- -------------
there are no claims, actions, suits, proceedings or investigations
pending or, to the best of Seller's and ▇▇▇▇▇▇▇'▇ knowledge, threatened
before any federal, state or local court or governmental or regulatory
authority, domestic or foreign, or before any arbitrator of any nature,
brought by or against Seller or any of its officers, directors,
employees, or agents involving, affecting or relating to any of the
Purchased Assets or the transactions contemplated by this Agreement,
nor does there exist any fact which might reasonably be expected to
give rise to any such suit, proceeding, dispute or investigation.
Neither Seller nor any of the Purchased Assets is subject to any order,
writ, judgment, award, injunction or decree of any federal, state or
local court or governmental or regulatory authority, domestic or
foreign, or any arbitrator of any nature, that affects or might affect
the Purchased Assets, or that would or might interfere with the
transactions contemplated by this Agreement.
16
3.16 Contracts. Schedule 3.16 hereof sets forth a true and
--------- -------------
complete list of all Contracts, including but not limited to: (i)
leases, licenses, permits, insurance policies and other arrangements
concerning or relating to machinery, equipment or real estate; (ii)
employment, consulting, collective bargaining or other similar
arrangements relating to or for the benefit of current, future or
former employees, agents, and independent contractors or consultants;
(iii) agreements and instruments relating to the borrowing of money or
obtaining of or extension of credit, (iv) brokerage or finder's
agreements; (v) contracts involving a sharing of profits or expenses;
(vi) acquisition or divestiture agreements; (vii) service agreements,
manufacturer's representative, or distributorship agreements; (viii)
arrangements limiting or restraining Seller from engaging or competing
in any lines of business or with any person or entity; (ix) documents
granting a power of attorney; and (x) any other agreements or
arrangements that are material to the business of Seller.
All of the Contracts are in full force and effect and are
valid, binding and enforceable against the parties thereto in
accordance with their terms. Seller and, to its knowledge and ▇▇▇▇▇▇▇'▇
knowledge, each other party to the Contracts has performed all
obligations required to be performed by it to date under, and is not in
default or delinquent in performance, status or any other respect
(claimed or actual) in connection with, the Contracts, and no event has
occurred which, with due notice or lapse of time or both, would
constitute such a default. The enforceability of the Contracts will not
be affected in any manner by the execution, delivery and performance of
this Agreement. Seller has delivered to Buyer or its representatives
true and complete originals or copies of all the Contracts.
3.17 Labor Matters. Except as set forth in Schedule 3.17
------------- -------------
hereof: (i) Seller is not a party to any employment agreements with
employees that are not terminable at will, or that provide for the
payment of any bonus or commission, (ii) Seller is not a party to any
agreement, policy or practice that requires it to pay termination or
severance pay to salaried, non-exempt or hourly employees (other than
as required by law), (iii) Seller is not a party to any collective
bargaining agreement or other labor union contract nor does Seller know
of any activities or proceedings of any labor union to organize any
such employees, and (iv) Seller is not a party to or subject to any
conciliation agreements, consent decrees or settlements with respect to
Seller's business or its employees. Seller has furnished to Buyer
complete and correct copies of all such agreements (the "Employment and
--------------
Labor Agreements"). Seller has not breached or otherwise failed to
----------------
comply with any provisions of the Employment and Labor Agreements,
there are no grievances outstanding thereunder and all of such
agreements are assignable to Buyer.
Except as set forth in Schedule 3.17 hereof: (i) Seller is in
-------------
compliance with all applicable laws relating to employment and
employment practices, wages, hours, and terms and conditions of
employment except where the failure to comply would not have a Material
Adverse Effect, (ii) there is no unfair labor practice charge or
complaint pending before the NLRB relating to Seller, or, to Seller's
and ▇▇▇▇▇▇▇'▇ knowledge, threatened against Seller, (iii) there is no
labor strike, material slowdown or material work stoppage or lockout
pending or, to Seller's and ▇▇▇▇▇▇▇'▇ knowledge, threatened against or
17
affecting Seller, and Seller has not experienced any strike, material
slowdown or material work stoppage, lockout or other collective labor
action by or with respect to employees of Seller, (iv) there is no
representation, claim or petition pending before the NLRB or any
similar foreign agency and no question concerning representation exists
relating to the employees of Seller, (v) there are no charges with
respect to or relating to Seller pending before the Equal Employment
Opportunity Commission or any state, local or foreign agency
responsible for the prevention of unlawful employment practices, and
(vi) neither Seller nor ▇▇▇▇▇▇▇ has received notice from any national,
state, local or foreign agency responsible for the enforcement of labor
or employment laws of an intention to conduct an investigation of it
and no such investigation is in progress.
Seller has furnished Buyer with a complete and accurate list
of all its employee manuals, policies, procedures and work-related
rules ("Employee Policies and Procedures"). Seller has provided Buyer
--------------------------------
with a copy of all its written Employee Policies and Procedures and a
written description of all unwritten Employee Policies and Procedures.
Each of the Employee Policies and Procedures can be amended or
terminated at will by Seller.
3.18 Employee Plans. Except as set forth in Schedule 3.18
-------------- -------------
hereof, Seller does not maintain and does not have any obligation to
contribute to any pension, savings, retirement, health, life,
disability, other insurance, severance, bonus, incentive compensation,
stock option or other equity-based or other employee benefit or fringe
benefit plans, whether or not "employee benefit plans" as defined in
Section 3(3) of ERISA (collectively referred to herein as the "Plans").
-----
Seller or any trade or business (whether or not incorporated) which is
or has ever been treated as a single employer with Seller under Section
414(b), (c), (m) or (o) of the Code ("ERISA Affiliate") has incurred no
---------------
liability under Title IV of ERISA or Section 412 of the Code, except
for any such liability which has been satisfied in full, and no events
have occurred and no circumstances exist that could reasonably be
expected to result in any such liability to Seller or any ERISA
Affiliate.
3.19 Insurance. Schedule 3.19 hereof lists the fidelity bonds
--------- -------------
and the aggregate coverage amount and type and generally applicable
deductibles of all insurance policies insuring Seller and/or the
Purchased Assets or relating to Seller's employees. Seller shall
maintain the coverage under all policies and bonds listed in Schedule
--------
3.19 hereof in full force and effect through the Closing Date.
----
3.20 Environmental Matters. All Licenses and Permits required
---------------------
under all Environmental Laws have been obtained and maintained in
effect for Seller and the Purchased Assets. Seller and the Purchased
Assets are in compliance with all Environmental Laws and with all such
Licenses and Permits. Seller has not performed or suffered any act
which could give rise to, or has otherwise incurred, liability to any
Person under any Environmental Law, nor has Seller or ▇▇▇▇▇▇▇ received
notice of any such liability or any Claim therefor or submitted notice
pursuant to section 103 of CERCLA to any governmental agency nor
provided information in response to a request for information pursuant
to Section 104(e) of CERCLA or any analogous state or local information
gathering authority. No Hazardous Material has been released, placed,
18
dumped or otherwise come to be located on, at, beneath or near any of
the Purchased Assets or any surface waters or groundwaters thereon or
thereunder. Except as set forth on Schedule 3.20 hereof, there have
-------------
been and are no aboveground or underground storage tanks or
asbestos-containing materials located at or within the premises where
any of the Purchased Assets are located. None of Seller's properties
previously owned or leased is identified or proposed for listing on the
National Priorities List under 40 C.F.R. ss. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇, the
Comprehensive Environmental Response Compensation and Liability
Inventory System ("CERCLIS") or any analogous list of any state or
-------
foreign government and Seller is not aware of any conditions on such
properties which, if known to a governmental authority, would qualify
such properties for inclusion on any such list. Seller has furnished
Buyer with copies of all environmental studies, assessments or reports.
None of the properties previously owned or leased by Seller, or any
current or previous business operations conducted by it, are the
subject of any investigation respecting any violation of any
Environmental Law, or any releases of Hazardous Material into any
surface water, ground water drinking water supply, land surface or
subsurface strata, or ambient air. Seller has not reported any material
violation of any applicable Environmental Law to any governmental
authority. Seller has not sent, transported, or directly arranged for
the transport of any garbage, solid waste or Hazardous Material,
whether generated by it or another Person, to any site listed on the
National Priorities List or proposed for listing on the National
Priorities List or to a site included on the CERCLIS list, the Texas
list of hazardous waste sites or any state list of sites requiring
investigation or remedial action as a result of environmental issues.
There is not now, nor has there ever been on or in any properties
previously leased or owned by Seller, any generation, treatment,
recycling, storage or disposal of any hazardous waste, as that term is
defined under 40 C.F.R. Part 261 or any state equivalent.
3.21 Customers and Suppliers. Neither Seller nor ▇▇▇▇▇▇▇ has
-----------------------
received notice that, nor does Seller or ▇▇▇▇▇▇▇ have any knowledge
that, any customer of Seller has, will or plans to discontinue doing
business with Seller. Seller does not have any outstanding purchase
contracts or commitments or unaccepted purchase orders which are in
excess of the normal, ordinary and usual requirements. Seller has not
received payment for any services to be performed after the Closing or
any products to be delivered or manufactured after the Closing. No
supplier or subcontractor to Seller has reduced its shipments of orders
issued by Seller, or threatened to discontinue, supplying such items or
services to Seller on reasonable terms. Neither Seller nor ▇▇▇▇▇▇▇ has
received notice that, nor does Seller or ▇▇▇▇▇▇▇ have any knowledge
that, any such supplier or subcontractor to Seller has, will or plans
to discontinue doing business with Seller on substantially the same
terms as are consistent with its past practices.
3.22 No Brokers. Neither Seller nor any related party has
----------
entered into any contract, arrangement or understanding with any person
or firm which may result in the obligation of Buyer to pay any finder's
fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
3.23 No Other Agreements to Sell the Purchased Assets. Neither
------------------------------------------------
Seller nor any related party has any commitment or legal obligation to
any other person other than
19
Buyer to sell, assign, transfer or effect a sale of any of the
Purchased Assets (other than inventory in the ordinary course of
business), to effect any merger, consolidation, liquidation,
dissolution or other reorganization of Seller, or to enter into any
agreement or cause the entering into of an agreement with respect to
any of the foregoing.
3.24 Accuracy of Information. None of Seller's or ▇▇▇▇▇▇▇'▇
-----------------------
representations, warranties or statements contained in this Agreement,
in the Schedules and Exhibits hereto or in any other document delivered
to the Buyer in connection with the transactions contemplated by this
Agreement, contains or will contain any untrue statement of a material
fact or omits to state any material fact necessary in order to make any
of such representations, warranties or statements, in light of the
circumstances under which they were made, not misleading. All
information relating to Seller that is known or would on reasonable
inquiry be known to Seller and/or ▇▇▇▇▇▇▇ and that may be material to a
purchaser of the Purchased Assets has been disclosed in writing to
Buyer and any such information arising on or before the Closing Date
will forthwith be disclosed in writing to Buyer.
4. Representations and Warranties of Buyer. Buyer
-----------------------------------------
represents and warrants to Seller and ▇▇▇▇▇▇▇ as follows:
4.1 Existence; Good Standing; Corporate Authority; Compliance
---------------------------------------------------------
With Law. Buyer (i) is a corporation duly organized under the laws of
--------
its jurisdiction of organization; (ii) is duly licensed or qualified to
do business as a corporation under the laws of all other jurisdictions
in which the character of the properties owned or leased by it therein
or in which the transaction of its business makes such qualification
necessary; (iii) has all requisite corporate power and authority to own
its properties and carry on its business as now conducted; (iv) is not
in default with respect to any order of any court, governmental
authority or arbitration board or tribunal to which Seller is a party
or is subject; (v) is not in violation of any laws, ordinances,
governmental rules or regulations to which it is subject; and (vi) has
obtained all licenses, permits and other authorizations and has taken
all actions required by applicable laws or governmental regulations in
connection with its business as now conducted.
4.2 Authorization, Validity and Effect of Agreements.
------------------------------------------------
4.2.1 The execution and delivery of this Agreement and all
agreements and documents contemplated hereby by Buyer, and the
consummation by it of the transactions contemplated hereby,
have been duly authorized by all requisite corporate action.
4.2.2 This Agreement constitutes, and all agreements and
documents contemplated hereby when executed and delivered
pursuant hereto for value received will constitute, the valid
and legally binding obligations of Buyer enforceable in
accordance with their terms, except that enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium, bulk sales, preference,
equitable subordination, marshalling or other similar laws of
20
general application now or hereafter in effect relating to the
enforcement of creditors' rights generally and except that the
remedies of specific performance, injunction and other forms
of equitable relief are subject to certain tests of equity
jurisdiction, equitable defenses and the discretion of the
court before which any proceeding therefor may be brought.
4.2.3 The execution and delivery of this Agreement by
Buyer does not, and the consummation of the transactions
contemplated hereby will not, (i) require the consent,
approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority or
any third party, (ii) result in the breach of any term or
provision of, or constitute a default under, or result in the
acceleration of or entitle any party to accelerate (whether
after the giving of notice or the lapse of time or both) any
obligation under, or result in the creation or imposition of
any Encumbrance upon any part of the property of Buyer
pursuant to any provision of, any order, judgment, arbitration
award, injunction, decree, indenture, mortgage, lease,
license, lien, or other agreement or instrument to which Buyer
is a party or by which it is bound, and (iii) violate or
conflict with any provision of the bylaws or certificate of
incorporation of Buyer as amended to the date hereof.
5. Survival of Provisions/Indemnification.
--------------------------------------
5.1 Survival of Provisions. All the respective
----------------------
representations, warranties covenants and agreements of each of the
parties to this Agreement made herein or in any certificate or other
document furnished or to be furnished by the parties pursuant hereto
(except covenants and agreements which are expressly required to be
performed and are performed in full on or before the Closing Date)
shall be considered to have been relied upon by the other party hereto,
as the case may be, shall survive delivery by the parties hereto of the
consideration to be given by them hereunder, and shall survive the
execution hereof, the Closing hereunder and the Closing Date.
5.2 Indemnification by Seller and ▇▇▇▇▇▇▇. Upon the terms and
-------------------------------------
subject to the conditions set forth in Section 5.4 hereof and this
Section 5.2, Seller and ▇▇▇▇▇▇▇, jointly and severally, agree to
indemnify, defend, protect, save and hold harmless each Buyer
Indemnitee (as such term is hereinafter defined) against, and will
reimburse each Buyer Indemnitee on demand for, any and all Losses (as
such term is hereinafter defined) made or incurred by or asserted
against such Buyer Indemnitee, at any time after the Closing Date,
directly or indirectly, arising out of, related to, caused by, or
resulting from any of the following ("Seller Indemnifiable Claims"):
---------------------------
(a) any and all Excluded Liabilities; or
(b) any inaccuracy, omission, misrepresentation, breach of
warranty, or nonfulfillment of any term, provision, covenant
or agreement on the part of Seller or ▇▇▇▇▇▇▇ contained herein
or in any certificate or other instrument furnished or to be
furnished by Seller or ▇▇▇▇▇▇▇ to Buyer pursuant hereto.
21
As used herein, the term "Losses" shall mean, with respect to
------
any person or party, any payment, loss, liability, obligation, damage
(including, without limitation, consequential, punitive, special or
otherwise), deficiency, lien, claim, suit, cause of action, judgment,
cost or expense (including, without limitation, reasonable attorneys'
fees and court costs) of any kind, nature or description.
As used herein, the term "Buyer Indemnitee" shall mean Buyer
----------------
and any entity controlling, controlled by or under common control with
Buyer.
As used herein, the term "control," "controlling," and
------- -----------
"controlled" shall mean the possession, directly or indirectly, of the
----------
power to direct or cause the direction of the management and policies
of a person or party, whether through the ownership of voting
securities or voting interests, by contract or otherwise.
5.3 Indemnification by Buyer. Upon the terms and subject to
------------------------
the conditions set forth in Section 5.4 hereof and this Section 5.3,
Buyer agrees to indemnify, defend, protect, save and hold harmless
Seller against, and will reimburse Seller on demand for, any and all
Losses made or incurred by or asserted against Seller, at any time
after the Closing Date, directly or indirectly, arising out of, related
to, caused by, or resulting from any of the following ("Buyer
-----
Indemnifiable Claims"):
--------------------
(a) any Assumed Liability; or
(b) any inaccuracy, omission, misrepresentation, breach of
warranty, or nonfulfillment of any term, provision, covenant
or agreement on the part of Buyer contained herein or in any
certificate or other instrument furnished or to be furnished
by Buyer to Seller pursuant hereto.
5.4 Limitations on Indemnification. Rights to indemnification
under Section 5.2 or 5.3 hereof are subject to the following
limitations:
(a) Except for Losses incurred by the Buyer Indemnitees
with respect to Seller Indemnifiable Claims relating to any
Title and Authorization Warranty or any matter referred to in
Section 5.2(a), no amount shall be payable by Seller and
▇▇▇▇▇▇▇ in indemnification under Section 5.2 hereof until and
unless the aggregate of all Losses incurred by all Buyer
Indemnitees with respect to one or more Seller Indemnifiable
Claims (other than Losses incurred by the Buyer Indemnitees
relating to any Title and Authorization Warranty or any matter
referred to in Section 5.2(a)) shall exceed $25,000.00 (the
"Threshold"), and thereafter the Buyer Indemnitees shall be
---------
entitled to indemnification under Section 5.2 hereof for all
such Losses incurred by all Buyer Indemnitees including the
Threshold, to a maximum indemnification obligation of Four
Million Five Hundred Thousand Dollars ($4,500,000.00). As used
herein, "Title and Authorization Warranty" shall mean any
--------------------------------
representation or warranty contained in Section 3.1, Section
3.2, Section 3.3 or the first sentence of Section 3.12.
22
(b) With respect to any Losses incurred by any Buyer
Indemnitee with respect to any Seller Indemnifiable Claim
relating to any Title and Authorization Warranty or any matter
referred to in Section 5.2(a), such Buyer Indemnitee shall be
entitled to indemnification under Section 5.2 hereof for all
such Losses incurred by such Buyer Indemnitee with respect to
such Seller Indemnifiable Claim regardless of the amount of
such Losses.
(c) The obligations of Seller and ▇▇▇▇▇▇▇ under
Section 5.2 hereof with respect to any Losses incurred by any
Buyer Indemnitee with respect to Seller Indemnifiable Claims
relating to any Title and Authorization Warranty or any matter
referred to in Section 5.2(a) hereof shall not expire.
(d) Subject to Section 5.4(h) hereof, the obligations
of Seller and ▇▇▇▇▇▇▇ under Section 5.2 hereof with respect to
any Losses incurred by any Buyer Indemnitee with respect to
any Seller Indemnifiable Claim relating to any representation
or warranty of Seller and ▇▇▇▇▇▇▇ set forth in Section 3.6
hereof shall terminate at the close of business on the 120/th/
day following the expiration of the applicable statute of
limitations with respect to the Tax liabilities in question
(after giving effect to any waiver, mitigation or extension
thereof).
(e) Subject to Section 5.4(h) hereof, the obligations
of Seller and ▇▇▇▇▇▇▇ under Section 5.2 hereof with respect to
any Losses incurred by any Buyer Indemnitee with respect to
any Seller Indemnifiable Claim relating to any representation
or warranty of Seller and ▇▇▇▇▇▇▇ set forth in Section 3.15,
3.17, 3.18 or 3.20 hereof shall terminate on the fifth
anniversary of the Closing Date.
(f) Subject to Section 5.4(h) hereof, the obligations
of Seller and ▇▇▇▇▇▇▇ under Section 5.2 hereof with respect to
any Losses incurred by any Buyer Indemnitee with respect to
any Seller Indemnifiable Claim relating to any representation
or warranty of Seller and ▇▇▇▇▇▇▇ (other than Losses incurred
by the Buyer Indemnitees relating to any Title and
Authorization Warranty, any matter referred to in Section
5.2(a) or any representation or warranty of Seller and ▇▇▇▇▇▇▇
set forth in Section 3.6, 3.15, 3.17, 3.18 or 3.20 hereof)
shall terminate on the third anniversary of the Closing Date.
(g) Subject to Section 5.4(h) hereof, the obligations
of Buyer under Section 5.3 hereof with respect to any Losses
incurred by any Seller with respect to any Buyer Indemnifiable
Claim relating to any matter referred to in Section 5.3 hereof
shall terminate on the fifth anniversary of the Closing Date.
(h) The foregoing provisions of this Section 5.4
notwithstanding, if, prior to the termination of any
obligation to indemnify, written notice of a Seller
Indemnifiable Claim or a Buyer Indemnifiable Claim, as the
case may be, is given by the Party seeking indemnification
(the "Indemnified Party") to the Party from whom
-----------------
indemnification is sought (the "Indemnifying Party") the
------------------
Indemnified Party shall not be precluded from pursuing such
claim breach, occurrence, other matter, or suit or action, or
from recovering from the Indemnifying Party (whether
23
through the courts or otherwise) on the Seller Indemnifiable
Claim or the Buyer Indemnifiable Claim, as the case may be, by
reason of the termination otherwise provided for above in this
Section 5.4, if any.
5.5 Conditions of Indemnification. With respect to any actual
-----------------------------
or potential claim, any written demand, the commencement of any action,
or the occurrence of any other event which involves any Seller
Indemnifiable Claim or Buyer Indemnifiable Claim (a "Claim"):
-----
(a) Promptly after the President of the party seeking
indemnification (the "Indemnified Party") first receives
-----------------
written documents pertaining to the Claim, or if such Claim
does not involve a third party Claim (a "Third Party Claim"),
-----------------
promptly after the Indemnified Party first has actual
knowledge of such Claim, the Indemnified Party shall give
notice to the party from whom indemnification is sought (the
"Indemnifying Party") of such Claim in reasonable detail and
------------------
stating the amount involved, if known, together with copies of
any such written documents.
(b) The obligation of the Indemnifying Party to indemnify
the Indemnified Party with respect to any Claim shall not be
affected by the failure of the Indemnified Party to give the
notice with respect thereto in accordance with Section 5.5(a)
hereof unless the Indemnifying Party shall establish by clear
and convincing evidence that it has been irretrievably
prejudiced thereby.
(c) If the Claim involves a Third Party Claim, then the
Indemnifying Party shall have the right, at its sole cost,
expense and ultimate liability regardless of the outcome, and
through counsel of its choice (which counsel shall be
reasonably satisfactory to the Indemnified Party), to
litigate, defend, settle or otherwise attempt to resolve such
Third Party Claim; provided, however, that if in the
-------- -------
Indemnified Party's reasonable judgment a conflict of interest
may exist between the Indemnified Party and the Indemnifying
Party with respect to such Third Party Claim, then the
Indemnified Party shall be entitled to select counsel of its
own choosing, reasonably satisfactory to the Indemnifying
Party, in which event the Indemnifying Party shall be
obligated to pay the fees and expenses of such counsel.
Notwithstanding the preceding sentence, the Indemnified Party
may elect, at any time and at the Indemnified Party's sole
cost, expense and ultimate liability, regardless of the
outcome, and through counsel of its choice, to litigate,
defend, settle or otherwise attempt to resolve such Third
Party Claim. If the Indemnified Party so elects (for reasons
other than the Indemnifying Party's failure or refusal to
provide a defense to such Third Party Claim), then the
Indemnifying Party shall have no obligation to indemnify the
Indemnified Party with respect to such Third Party Claim, but
such disposition will be without prejudice to any other right
the Indemnified Party may have to indemnification under
Section 5.2 or 5.3 hereof, regardless of the outcome of such
Third Party Claim. If the Indemnifying Party fails or refuses
to provide a defense to any Third Party Claim, then the
Indemnified Party shall have the right to undertake the
defense, compromise or settlement of such Third Party Claim,
through
24
counsel of its choice, on behalf of and for the account and at the risk of
the Indemnifying Party, and the Indemnifying Party shall be obligated to
pay the costs, expenses and attorney's fees incurred by the Indemnified
Party in connection with such Third Party Claim. In any event, Seller and
the Buyer Indemnitees shall fully cooperate with each other and their
respective counsel in connection with any such litigation, defense,
settlement or other attempted resolution.
5.6 Tax Treatment. Buyer and Seller agree to treat all payments made by
-------------
such Party to or for the benefit of the other Party under the indemnity
provisions of this Agreement as adjustments to the Purchase Price for Tax
purposes and that such treatment shall govern for purposes hereof.
6. Other Covenants and Agreements.
------------------------------
6.1 Restrictive Covenants.
---------------------
6.1.1 Customer Restriction. Each of Seller and ▇▇▇▇▇▇▇ covenants and
--------------------
agrees that it or he shall not, for a period of five years from and after
the Closing Date, working alone or in conjunction with one or more other
persons or entities, for compensation or not, (i) provide or offer to
provide to any Customer (as such term is hereinafter defined) any product
or service similar to that offered by Seller immediately prior to the
Closing Date, or (ii) induce or attempt to induce any Customer to withdraw,
curtail or cancel its business with Buyer or any of its subsidiaries or
affiliates or in any manner modify or fail to enter into any actual or
potential business relationship with Buyer or any of its subsidiaries or
affiliates. As used in this Section 6.1, the term "Customer" means (i) any
--------
person or entity for whom Seller provided any service on or prior to the
Closing Date or to whom Seller provided any product on or prior to the
Closing Date; or (ii) any person or entity for whom Buyer or any of its
subsidiaries or affiliates provided or provides services relating to the
electrical products business after the Closing Date or to whom Buyer or any
of its subsidiaries or affiliates provided or provides a product relating
to the electrical products business after the Closing Date.
6.1.2 Non-Raid. Each of Seller and ▇▇▇▇▇▇▇ covenants and agrees that
--------
it or he shall not, for a period of five years from and after the Closing
Date, working alone or in conjunction with one or more other persons or
entities, for compensation or not, hire, recruit or otherwise solicit or
induce any person or entity who is an employee or Vendor of Seller on the
Closing Date or within the six months immediately preceding the Closing
Date had been an employee or Vendor of Seller, or who is an employee or
Vendor of Buyer or any of its subsidiaries or affiliates after the Closing
Date, to terminate their employment with, or otherwise cease or reduce
their relationship with, Seller or Buyer or any of its subsidiaries or
affiliates, as the case may be. As used in this Section 6.1, the term
"Vendor" means (i) any third party selling or licensing a product or
------
service to a Customer or to Seller on or prior to the Closing Date; or (ii)
any third party
25
selling or licensing a product or service to a Customer or to Buyer or any
of its subsidiaries or affiliates after the Closing Date.
6.1.3 Non-Competition. Each of Seller and ▇▇▇▇▇▇▇ covenants and
---------------
agrees that it or he shall not, for a period of five years from and after
the Closing Date, working alone or in conjunction with one or more other
persons or entities, for compensation or not, permit Seller's or ▇▇▇▇▇▇▇'▇
name to be used by or engage in or carry on, directly or indirectly, either
for itself or as a member of a partnership or other entity or as a
stockholder, member, investor, agent, associate or consultant of any
person, partnership, corporation, limited liability company or other entity
(other than Buyer or a subsidiary or affiliate of Buyer), any business in
competition with the business purchased hereunder (but only for as long as
such business is carried on by (a) Buyer and/or any of its subsidiaries or
affiliates or (b) any person, corporation, limited liability company,
partnership, trust or other organization or entity deriving title from
Buyer and/or any of its subsidiaries or affiliates to the assets and
goodwill of such business) in any county in any state of the United States
in which Buyer or any of its subsidiaries or affiliates conducts such
business. The parties intend that the covenants contained in this Section
6.1.3 shall be deemed to be a series of separate covenants, one for each
county in each state of the United States in which Buyer or any of its
subsidiaries or affiliates conducts such business and, except for
geographic coverage, each such separate covenant shall be identical in
terms to the covenant contained in this Section 6.1.3. Notwithstanding the
foregoing, Buyer agrees that (i) ▇▇▇▇▇▇▇ shall not be restricted from
engaging in the sheet metal or machining businesses so long as ▇▇▇▇▇▇▇ does
not compete with the business purchased hereunder as such business exists
on the date hereof and (ii) ▇▇▇▇▇▇▇'▇ ownership interest in Seltrol, Inc.
("Seltrol") shall not constitute a breach of this Section 6.1.3 so long as
-------
(x) ▇▇▇▇▇▇▇ maintains only a minority interest in Seltrol and (y) Seltrol
does not engage in any business in competition with the business purchased
hereunder as such business exists on the date hereof. Anything to the
contrary notwithstanding, if Seltrol, at anytime during the five year
period, shall begin to compete with the business purchased hereunder, then
and in such event, ▇▇▇▇▇▇▇ shall divest himself, and his affiliates, of all
ownership in Seltrol as soon as practicable and such ownership shall not
constitute a breach of this Section 6.1.3.
6.1.4 Reformation. If, in any judicial proceeding, the court shall
-----------
refuse to enforce any of the separate covenants contained in Section 6.1.1,
6.1.2 or 6.1.3 hereof because the time limit is too long, it is expressly
understood and agreed between the parties hereto that for purposes of such
proceeding such time limitation shall be deemed reduced to the extent
necessary to permit enforcement of such covenants. If, in any judicial
proceeding, the court shall refuse to enforce any of the separate covenants
contained in Section 6.1.1, 6.1.2 or 6.1.3 hereof because it is more
extensive (whether as to geographic area, scope of business or otherwise)
than necessary to protect the business and goodwill of Buyer, it is
expressly understood and agreed between the parties hereto that for
purposes of such proceeding the geographic area, scope of business or other
aspect shall be deemed reduced to the extent necessary to permit
enforcement of such covenants.
26
6.1.5 Injunctive Relief. Each of Seller and ▇▇▇▇▇▇▇ acknowledges that
-----------------
a breach of Section 6.1.1, 6.1.2 or 6.1.3 hereof would cause irreparable
damage to Buyer, and in the event of its actual or threatened breach of the
provisions of Section 6.1.1, 6.1.2 or 6.1.3 hereof, Buyer shall be entitled
to a temporary restraining order and an injunction restraining Seller
and/or ▇▇▇▇▇▇▇ from breaching such covenants without the necessity of
posting bond or proving irreparable harm, such being conclusively admitted
by Seller and ▇▇▇▇▇▇▇. Nothing shall be construed as prohibiting Buyer from
pursuing any other available remedies for such breach or threatened breach,
including the recovery of damages from Seller and/or ▇▇▇▇▇▇▇. Each of
Seller and ▇▇▇▇▇▇▇ acknowledges that the restrictions set forth in Sections
6.1.1, 6.1.2 and 6.1.3 hereof are reasonable in scope and duration, given
the nature of the business of Buyer.
6.2 Conduct of the Business.
-----------------------
6.2.1 Affirmative Covenants. On and after the date hereof and until
---------------------
the Closing Date or the date, if any, on which this Agreement is earlier
terminated and abandoned pursuant to Section 8 hereof (the "Termination
-----------
Date"), Seller shall, and ▇▇▇▇▇▇▇ shall require Seller to:
----
(i) conduct the operations of its business according to its
ordinary and usual course of business consistent with past practice;
and
(ii) use its best efforts to preserve intact its business'
organization and goodwill, to keep available the services of its
employees, and to maintain satisfactory relationships with suppliers,
manufacturer's representatives, distributors, licensors, licensees,
customers, employees and others having business relationships with
Seller.
6.2.2 Negative Covenants. Without limiting the generality of the
------------------
foregoing, and except for actions to be taken in connection with any of the
transactions contemplated hereby, without Buyer's prior written consent,
Seller shall not, and ▇▇▇▇▇▇▇ shall not permit Seller to, on or after the
date hereof and until the earlier of the Closing Date or the Termination
Date:
(i) make any material change in the conduct of its business
or enter into any transaction other than in the ordinary course of
business consistent with past practice;
(ii) make any sale, transfer, or other conveyance of the
Purchased Assets or any part thereof, except transactions pursuant to
the Contracts and dispositions of inventory or worn-out or obsolete
equipment and machinery for fair or reasonable value in the ordinary
course of business consistent with past practice;
(iii) subject any of the Purchased Assets to any Encumbrance;
27
(iv) pay, lend or advance any amount to, or sell, transfer
or lease any properties or assets to, or enter into any agreement or
arrangement with, any of its affiliates;
(v) take any action that would cause any of the
representations and warranties made by it in this Agreement not to
remain true and correct;
(vi) settle, release or forgive any claim or litigation or
waive any right thereto;
(vii) make, enter into, modify, amend in any material respect
or terminate any of the Contracts, bids or expenditures involving an
expenditure of more than $25,000;
(viii) make, change or revoke any election or method of
accounting with respect to Taxes affecting or relating to its
business;
(ix) enter into, or permit to be entered into, any closing
or other agreement or settlement with respect to Taxes, or
(x) commit to do any of the foregoing.
6.3 Consents and Approvals. Seller and ▇▇▇▇▇▇▇ (a) shall, at their cost
----------------------
and expense, use reasonable efforts to obtain all necessary authorizations,
consents, waivers, and approvals of all governmental and regulatory authorities,
and of all other persons or entities required in connection with the execution,
delivery and performance by it and him of this Agreement (including, without
limitation, obtaining all authorizations, consents, waivers and approvals as may
be required in connection with the assignment of those Contracts to be assigned
to Buyer pursuant hereto), and (b) shall reasonably assist and cooperate with
Buyer in preparing and filing all documents, including permit, transfers,
modifications and applications required to be submitted by Buyer to any
governmental or regulatory authority, in connection with such transactions and
in obtaining any governmental consents, waivers, authorizations or approvals
which may be required to be obtained by Buyer in connection with such
transactions (which assistance and cooperation shall include without limitation
timely furnishing to Buyer all information concerning Seller, ▇▇▇▇▇▇▇ or the
Purchased Assets that counsel to Buyer reasonably determines is required to be
included in such documents or would be helpful in obtaining any such consent,
waiver, novation, authorization or approval). Notwithstanding anything contained
herein to the contrary, neither Seller nor ▇▇▇▇▇▇▇ shall have any liability for
costs and expenses related to any consents, waivers and approvals of
governmental are regulatory authorities required in connection with the
execution, delivery and performance by Buyer of this Agreement.
6.4 Access to Properties and Records. Seller and ▇▇▇▇▇▇▇ shall afford to
--------------------------------
Buyer, and to the accountants, counsel, prospective lenders, agents and
representatives of Buyer, upon reasonable notice, full access during normal
business hours, throughout the
28
period from the date hereof through the earlier of the Closing Date or the
Termination Date, to properties, books, Contracts, files and records (including
but not limited to tax returns and correspondence with accountants) of Seller
and, during such period, shall furnish promptly to Buyer all other information
concerning Seller and its business, properties and personnel as Buyer may
reasonably request; provided, however, that no investigation or receipt of
-------- -------
information pursuant to this Section 6.4 shall qualify any representation or
warranty of Seller or ▇▇▇▇▇▇▇ hereunder or the conditions to the obligations of
Buyer. In addition to the foregoing, Seller and ▇▇▇▇▇▇▇ shall provide to Buyer
all environmental studies and reports pertaining to Seller or the Purchased
Assets, and Seller and ▇▇▇▇▇▇▇ acknowledge that Buyer's investigation pursuant
to this Section 6.4 may include, without limitation, (i) testing of the soil,
groundwater, building components, tanks and other equipment, and (ii) contacting
present and potential customers and conducting such due diligence investigation
relating to such customer relations as Buyer deems reasonably necessary or
appropriate.
6.5 Acquisition Proposals. Until the earlier of the Closing Date or the
---------------------
Termination Date, neither Seller nor ▇▇▇▇▇▇▇ shall, directly or indirectly,
through any officer, director, agent, representative (including, without
limitation, investment bankers, attorneys and accountants) or otherwise, (i)
solicit, initiate or encourage submission of inquiries, proposals or offers from
any person, corporation, partnership or other entity or group other than Buyer
(a "Third Party"), relating to any acquisition or purchase of all or a portion
-----------
of the Purchased Assets or any equity interest in Seller; or (ii) participate in
any discussions or negotiations regarding, or furnish to any Third Party any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any Third
Party to do or seek any of the foregoing. Seller and ▇▇▇▇▇▇▇ shall promptly
notify Buyer if any such proposal or offer, or any inquiry or contact with any
Third Party with respect thereto, is made, and shall in any such notice set
forth in reasonable detail the identity of the Third Party and the terms and
conditions of such inquiry, proposal or offer.
6.6 Public Announcements. On or after the date hereof, none of Seller,
--------------------
▇▇▇▇▇▇▇ or Buyer shall disclose the terms of this Agreement or the fact that
negotiations have or will take place to anyone except those officers, employees
and professional advisors who (i) have a need to know such information and (ii)
are informed of its confidentiality. If and when the parties agree to make a
public disclosure of the transaction, Seller, ▇▇▇▇▇▇▇ and Buyer shall agree as
to the content and wording of any such disclosure or press release in a separate
writing signed by the parties; provided, however, upon execution of this
-------- -------
Agreement Buyer shall be entitled to issue such press releases or make any
public statements concerning the Agreement or the transactions contemplated
hereby required or advisable under any applicable law or by any governmental
authority having jurisdiction over such matters with such content and wording as
Buyer shall in its sole discretion deem appropriate.
6.7 Notification of Certain Matters. Seller and/or ▇▇▇▇▇▇▇ shall give
-------------------------------
prompt notice to Buyer, and Buyer shall give prompt notice to Seller and
▇▇▇▇▇▇▇, of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty of
such party contained herein to be untrue
29
or inaccurate in any material respect at any time from the date hereof to the
Closing Date; and (ii) any material failure of Seller, ▇▇▇▇▇▇▇ or Buyer, as the
case may be, or of any officer, director, employee or agent thereof, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder.
6.8 Execution of Additional Documents. Each party hereto will at any time,
---------------------------------
and from time to time after the Closing Date, upon request of the other party
hereto, execute, acknowledge and deliver, without payment, all such further
deeds, assignments, transfers, conveyances, powers of attorney and assurances,
and take all such further action, as may be required to carry out or effectuate
the intentions and purposes of this Agreement, and to transfer and vest title to
any Purchased Asset being transferred hereunder, and to protect the right, title
and interest in and enjoyment of all of the Purchased Assets sold, granted,
assigned, transferred, delivered and conveyed pursuant hereto; provided,
--------
however, that this Agreement shall be effective regardless of whether any such
-------
additional documents are executed.
6.9 Costs and Expenses. Except as otherwise provided herein, all costs and
------------------
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
6.10 Transfer Taxes. Any and all sales, use, transfer, transfer gains or
--------------
similar Taxes ("Transfer Taxes") which result from the transfer of the Purchased
--------------
Assets or Assumed Liabilities pursuant to this Agreement shall be borne by
Seller and/or ▇▇▇▇▇▇▇. The parties shall prepare and file any related tax
returns required to be filed in connection with the payment of such Transfer
Taxes on a timely basis. After the Closing Date, Seller and/or ▇▇▇▇▇▇▇ shall,
upon the request of Buyer, promptly reimburse Buyer for any Transfer Taxes or
related expenses for which either Seller or ▇▇▇▇▇▇▇ is responsible under this
Agreement but which have been paid by Buyer.
6.11 Cooperation on Tax Matters; Business Records. Buyer, Seller and
--------------------------------------------
▇▇▇▇▇▇▇ agree to furnish or cause to be furnished to each other, as promptly as
practicable, such information and assistance relating to Seller as is reasonably
necessary for the preparation and filing of any return, claim for refund or
other required or optional filings relating to Tax matters, for the preparation
for and proof of facts during any tax audit, for the preparation for any Tax
protest, for the prosecution or defense of any suit or other proceeding relating
to Tax matters and for the answer to any governmental or regulatory inquiry
relating to Tax matters.
Buyer agrees to retain possession of all accounting, business, financial
and Tax records and information (i) relating to Seller's business in existence
on the Closing Date transferred to Buyer hereunder and (ii) coming into
existence after the Closing Date which relate to Seller's business prior to or
on the Closing Date, for the period not to exceed six years from the Closing
Date. In addition, from and after the Closing Date, Buyer agrees that it will
not unreasonably withhold access by Seller and its attorneys, accountants and
other representatives (after reasonable notice and during normal business hours
and with reasonable charge), to such personnel, books, records, documents and
any or all other information relating to Seller's business as Seller or ▇▇▇▇▇▇▇
may reasonably
30
deem necessary to properly prepare for, file, prove, answer, prosecute and/or
defend any such tax return, filing, audit, protest, claim, suit, inquiry or
other proceeding. Such access shall include without limitation access to any
computerized information retrieval systems relating to Seller's business.
6.12 Allocation of Total Purchase Price. On or after the Closing Date,
----------------------------------
Buyer shall prepare and deliver to Seller an allocation of the Total Purchase
Price (as such term is hereinafter defined) and the Assumed Liabilities among
the Purchased Assets and the covenant not to compete set forth in Section 6.1.3
of this Agreement (the "Allocation"). The Allocation shall be done in accordance
----------
with Section 1060 of the Code and the Treasury regulations promulgated
thereunder and shall be acceptable to Seller. If Seller objects to the
Allocation, Seller and Buyer shall promptly consult with each other in an effort
to resolve such dispute. If any such point of disagreement cannot be resolved
within 15 days of the date of such consultation, such dispute shall be submitted
to the Greenville, South Carolina office of KPMG, LLP which shall conduct an
appraisal and determine the appropriate Allocation. Such Allocation as
determined by the Greenville, South Carolina office of KPMG, LLP shall be
binding on the Parties and the fees and expenses payable to such firm in
connection with such determination will be borne 50% by Seller and ▇▇▇▇▇▇▇
(jointly and severally) and 50% by Buyer. Neither Buyer nor Seller shall take
any position with any Taxing authority that is inconsistent with the Allocation.
In the event that any Tax authority disputes the Allocation, Seller or Buyer, as
the case may be, shall promptly notify the other party of the nature of such
dispute. Buyer also shall allocate any adjustments to the Total Purchase Price
in the manner as described in this Section 6.12 and such allocations shall
become part of the Allocation. As used herein, the term "Total Purchase Price"
--------------------
shall mean the Initial Payment, as adjusted, plus the Deposit.
----
6.13 Proration of Property Taxes. Ad valorem personal property Taxes and
---------------------------
assessments on the Purchased Assets shall be prorated between Buyer and Seller
as of the Closing Date. All such prorations shall be allocated so that items
relating to time periods ending on or prior to the Closing Date shall be
allocated to Seller and items relating to time periods beginning after the
Closing Date shall be allocated to Buyer. The amount of all such prorations
shall be settled and paid on the Closing Date, provided that final payments with
respect to prorations that are not able to be calculated as of the Closing Date
shall be calculated and paid as soon as practicable thereafter.
6.14 Offer of Employment.
-------------------
6.14.1 Buyer shall offer employment to individuals who are employees
of Seller on the Closing Date, in accordance with Buyer's normal hiring
practices. Set forth on Schedule 6.14 hereof is a list of all employees of
-------------
Seller as of the date hereof and their annual rate of Compensation (as such
term is hereinafter defined) as of the date hereof. As used herein, the
term "Compensation" shall mean all forms of direct and indirect
------------
renumeration and include, without limitation, salaries, commissions,
bonuses, securities, property, insurance benefits, personal benefits and
contingent forms of renumeration. Seller shall cooperate with all requests
made by Buyer for the purpose of facilitating Buyer's hiring of such
employees.
31
As used herein, "Transferred Employees" shall mean all such employees to
---------------------
whom employment is offered by Buyer as provided above and who accept
employment with Buyer, including without limitation those on medical,
disability or other leave of absence, provided that employees on leave
shall not be considered Transferred Employees until the date on which each
such employee is released by the employee's physician to return to work and
the employee actually returns to work. Seller shall be responsible for
giving any notices required under the Worker Adjustment and Retraining
Notification Act to employees of Seller terminated on or prior to the
Closing Date, and who do not immediately become Transferred Employees.
Buyer shall permit all Transferred Employees to participate in Buyer's
401(k) plan pursuant to the terms thereof and, in connection therewith,
shall credit each Transferred Employee with the number of days such
Transferred Employee was employed by Seller for purposes of any length of
service requirements under such 401(k) plan. Nothing herein expressed or
implied shall confer upon any Transferred Employee or other employee or
former employee of Seller or legal representatives thereof, any rights or
remedies, including without limitation any right to employment or continued
employment for any specified period, of any nature or kind whatsoever, or,
except as otherwise provided in this Section 6.14, any right to specific
terms or conditions of employment (including rate of pay, fringe benefits
or position) under or by reason of this Agreement. The employment of any
Transferred Employee or all Transferred Employees may be terminated by
Buyer for any reason or for no reason at any time after the Closing Date.
6.14.2 Unless expressly set forth on Schedule 1.2A attached hereto,
-------------
Buyer shall not assume, and shall not be deemed to assume, (i) any Plans or
any Employment and Labor Agreements or (ii) any liability or obligation
with respect to any employee of Seller who does not become a Transferred
Employee. Seller shall be responsible for all liabilities and obligations
for severance payments or other separation benefits to which any employee
may be or become entitled or claim to be entitled as a result of the sale
by the Seller of its business, including, without limitation, any
termination of such employee's employment with the Seller, any decision of
Buyer not to offer such employee employment with Buyer or any change in
such employee's compensation, fringe benefit coverage or employment
position after the Closing.
6.15 Guaranty of Receivables. At the Closing, Seller and ▇▇▇▇▇▇▇ shall
-----------------------
execute and deliver to Buyer a Guaranty in the form attached as Exhibit D hereto
---------
(the "Receivables Guaranty"), under the terms of which Seller and ▇▇▇▇▇▇▇ shall,
--------------------
jointly and severally, unconditionally guarantee that all indebtedness
represented by the accounts and notes receivable of Seller as of the Closing
Date (net of any allowance for doubtful accounts on the Interim Financial
Statements) will be paid by the respective debtors to Buyer. In the event such
net indebtedness is not paid within 180 days after the Closing Date, Seller and
▇▇▇▇▇▇▇ shall, jointly and severally, within ten days following receipt from
Buyer of notice to such effect make payment to Buyer of an amount in cash equal
to the difference between such net indebtedness and the amount collected in
respect of such accounts and notes receivable, whereupon Buyer shall promptly
assign or cause to be
32
assigned to Seller or ▇▇▇▇▇▇▇ all rights, claims, actions or causes of action
which Buyer may have relating to such unpaid receivables. Following the Closing
Date, Buyer shall send statements to the account debtors or note makers, write
letters and make telephone calls seeking payment. Buyer shall not be obligated
to commence a suit to enforce payment of any accounts or notes receivable or
undertake any extraordinary collection efforts. If Buyer collects with respect
to accounts and notes receivable existing as of the Closing Date an amount in
excess of 100% of the amount guaranteed by Seller pursuant to this Section 6.15,
Buyer shall remit to Seller the amount of such excess as an addition to the
Purchase Price.
6.16 Use of Name. Seller and ▇▇▇▇▇▇▇ acknowledge that following the Closing
-----------
Date they will not be entitled to use the name "▇▇▇▇▇▇ and ▇▇▇▇▇▇▇" or any
variations or derivations thereof. Accordingly, on the Closing Date, Seller and
▇▇▇▇▇▇▇ shall take all necessary action (including, without limitation, filing
appropriate documents with the Secretary of State of the State of South
Carolina) to change Seller's name to a name distinguishable from and not
confusingly similar to "▇▇▇▇▇▇ and ▇▇▇▇▇▇▇."
7. Conditions of Closing.
---------------------
7.1 Buyer's Conditions of Closing. The obligation of Buyer to purchase and
-----------------------------
pay for the Purchased Assets and to assume the specified liabilities and
obligations set forth herein shall be subject to and conditioned upon, at
Buyer's option, the satisfaction at the Closing of each of the following
conditions:
7.1.1 All representations and warranties of Seller and ▇▇▇▇▇▇▇
contained herein shall be true and correct at and as of the Closing Date
with the same effect as though made as of the Closing Date and Seller and
▇▇▇▇▇▇▇ shall have performed all agreements and covenants and satisfied all
conditions on its or his part to be performed or satisfied by the Closing
Date pursuant to the terms hereof, and Buyer shall have received a
certificate of Seller, signed by the President of Seller, and a certificate
of ▇▇▇▇▇▇▇, each dated the Closing Date, to both such effects.
7.1.2 As of the Closing, there shall have been no material adverse
change since the date hereof in the financial condition, business or
affairs of Seller and/or the Purchased Assets, and Seller and/or the
Purchased Assets shall not have suffered any material loss (whether or not
insured) by reason of physical damage caused by fire, earthquake, accident
or other calamity which substantially affects the value of Seller and/or
the Purchased Assets, and Buyer shall have received a certificate of
Seller, signed by the President of Seller, and a certificate of ▇▇▇▇▇▇▇,
each dated the Closing Date, to both such effects.
7.1.3 Seller shall have obtained all authorizations, consents,
waivers and approvals as may be required in connection with the assignment
of those Contracts to be assigned to Buyer pursuant hereto upon terms
acceptable to Buyer in its sole discretion.
33
7.1.4 Seller shall have executed and delivered the ▇▇▇▇ of Sale,
Assignment and Assumption Agreement and such other bills of sale, deeds,
instruments of assignment and other appropriate documents as may be
requested by Buyer in order to carry out the intentions and purposes
hereof.
7.1.5 Seller, ▇▇▇▇▇▇▇ and the Escrow Agent shall have executed and
delivered the Escrow Agreement.
7.1.6 Seller shall have delivered to Buyer a certificate, dated the
Closing Date, of Seller's corporate Secretary certifying:
(i) resolutions of its Board of Directors and stockholders
approving and adopting this Agreement and all transactions
contemplated hereby and authorizing Seller's execution, delivery and
performance of this Agreement and all agreements, documents and
transactions contemplated hereby; and
(ii) the incumbency of its officers executing this Agreement
and all agreements and documents contemplated hereby.
7.1.7 The approval and all consents from third parties and
governmental agencies required to consummate the transactions contemplated
hereby shall have been obtained (including, without limitation, Bank of
America, N.A.).
7.1.8 No suit, action, investigation, inquiry or other proceeding by
any governmental body or other person or legal or administrative proceeding
shall have been instituted or threatened which questions the validity or
legality of the transactions contemplated hereby.
7.1.9 There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of
them not be consummated as so provided or imposing any conditions on the
consummation of the transactions contemplated hereby, which is unduly
burdensome on Buyer.
7.1.10 Buyer shall have received an opinion, dated as of the Closing
Date, from ▇▇▇▇▇, Massey, Evans, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, P.A., legal counsel
for Seller and ▇▇▇▇▇▇▇, in the form attached hereto as Exhibit E.
---------
7.1.11 Buyer shall have obtained bank or other debt financing from
Bank of America, N.A. or other financial institution in an amount
sufficient to pay to Seller the consideration for the Purchased Assets and
upon such other terms and conditions satisfactory to Buyer in its sole and
absolute discretion.
7.1.12 Seller and ▇▇▇▇▇▇▇ shall have executed and delivered the
Receivables Guaranty.
34
7.1.13 Each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
shall have executed and delivered an Employment and Noncompetition
Agreement in the form attached hereto as Exhibit F (the "Form of Employment
--------- ------------------
Agreement").
---------
7.1.14 Oaks shall have executed and delivered the Commercial Lease
Agreement attached hereto as Exhibit G (the "Real Property Agreement").
--------- -----------------------
7.1.15 Buyer shall have completed an investigation of the business,
contracts, legal documents, assets and financial books and records of the
Seller, and Buyer shall be satisfied in its sole and absolute discretion
with the results thereof.
7.2 Seller's Conditions of Closing. The obligation of Seller to sell,
------------------------------
grant, convey, assign, transfer and deliver the Purchased Assets shall be
subject to and conditioned upon, at Seller's option, the satisfaction at the
Closing of each of the following conditions:
7.2.1 All representations and warranties of Buyer contained herein
shall be true and correct at and as of the Closing Date with the same
effect as though made as of the Closing Date and Buyer shall have performed
all agreements and covenants and satisfied all conditions on its part to be
performed or satisfied by the Closing Date pursuant to the terms hereof,
and Seller shall have received a certificate of Buyer, signed by an
authorized officer of Buyer and dated the Closing Date, to both such
effects.
7.2.2 Seller shall have received the Initial Payment in accordance
with Section 2.3 hereof and the Escrow Agent shall have received the
Deposit.
7.2.3 Buyer shall have executed and delivered the ▇▇▇▇ of Sale,
Assignment and Assumption Agreement.
7.2.4 Buyer and the Escrow Agent shall have executed and delivered
the Escrow Agreement.
7.2.5 No suit, action, investigation, inquiry or other proceeding by
any governmental body or other person or legal or administrative proceeding
shall have been instituted or threatened which questions the validity or
legality of the transactions contemplated hereby.
7.2.6 There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of
them not be consummated as so provided or imposing any conditions on the
consummation of the transactions contemplated hereby, which is unduly
burdensome on Seller.
35
7.2.7 Seller shall have received an opinion, dated as of the Closing
Date, from ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, a professional corporation, legal counsel
for Buyer, in the form attached hereto as Exhibit H.
---------
7.2.8 Buyer shall have executed and delivered the Real Property
Agreement.
8. Termination and Abandonment.
---------------------------
8.1 Reasons for Termination. Anything herein or elsewhere to the contrary
-----------------------
notwithstanding, this Agreement may be terminated and abandoned at any time
after the date hereof but not later than the Closing:
8.1.1 by the mutual consent of Seller, ▇▇▇▇▇▇▇ and Buyer; or
8.1.2 by Buyer at any time after November 30, 2001 if, by that date,
the conditions set forth in Section 7.1 hereof shall not have been
fulfilled or waived; or
8.1.3 by Seller and ▇▇▇▇▇▇▇ at any time after November 30, 2001 if,
by that date, the conditions set forth in Section 7.2 hereof shall not have
been fulfilled or waived; or
8.1.4 by Buyer at any time if any investigation of Seller by Buyer,
or any Schedule hereto or any other document delivered to Buyer as
contemplated hereby, shall have revealed any facts or circumstances which,
in the sole and exclusive judgment of Buyer and regardless of the cause
thereof, reflect in an adverse way on Seller's and/or the Purchased Assets'
financial condition, assets, liabilities (absolute, contingent or
otherwise), revenues, business, operations or prospects; or
8.1.5 by Buyer at any time if there has been a material adverse
change in the business, financial condition, or results of operations of
Seller and/or the Purchased Assets after the date hereof (including,
without limitation, any material change in Seller's net working capital);
or
8.1.6 by Buyer at any time if there has been a material breach of any
representation or warranty made Seller or ▇▇▇▇▇▇▇ herein or in any
certificate or other document delivered pursuant hereto or if there has
been any failure by Seller or ▇▇▇▇▇▇▇ to perform in all material respects
all obligations or to comply with all covenants on Seller's or ▇▇▇▇▇▇▇'▇
part to be performed hereunder.
8.2 Procedure Upon and Effect of Termination. In the event of any
----------------------------------------
termination and abandonment pursuant to Section 8.1 hereof, written notice
thereof shall forthwith be given to the other parties and the transactions
contemplated hereby shall thereupon be terminated and abandoned, without further
action by Buyer, Seller or ▇▇▇▇▇▇▇ and there shall be no liability on the part
of Buyer, Seller or ▇▇▇▇▇▇▇ or any of
36
their respective partners, officers, directors or shareholders, except for the
material breach of any representation, warranty or covenant contained herein
that is within the control of the party in breach.
9. Miscellaneous.
-------------
9.1 Notices. Any notice, consent, approval, request, demand, declaration
-------
or other communication required hereunder shall be in writing to be effective
and shall be given and shall be deemed to have been given if (i) delivered in
person with receipt acknowledged, (ii) telexed or telecopied and electronically
confirmed, (iii) deposited in the custody of a nationally recognized overnight
courier for next day delivery, or (iv) placed in the federal mail, postage
prepaid, certified or registered mail, return receipt requested, in each case
addressed as follows:
If to Buyer:
▇▇▇▇▇▇▇ Acquisition, Inc.
c/o AZZ incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
Facsimile #: 817/297-4621
Confirming #: 817/297-4361
Copy to:
F. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇ (a professional corporation)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile #: 817/878-9280
Confirming #: 817/878-3509
If to Seller or ▇▇▇▇▇▇▇:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile #:_________________
Confirming #: 864/288-7917
37
Copy to:
C. ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, Massey, Evans,
▇▇▇▇▇▇ & Haysworth, P.A.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile #: ▇▇▇-▇▇▇-▇▇▇▇
Confirming #: 864-271-7424
or at such other address as may be substituted by giving the other parties not
fewer than five business days' advance written notice of such change of address
in accordance with the provisions hereof. The giving of any notice required
hereunder may be waived in writing by the party entitled to receive such notice.
Every notice, demand, request, consent, approval, declaration or other
communication hereunder shall be deemed to have been duly served, delivered and
received on the date on which personally delivered with receipt acknowledged or
telecopied or telexed and electronically confirmed, or 48 hours after being
deposited into the custody of a nationally recognized overnight courier for next
day delivery, or five business days after the same shall have been placed in the
federal mail as aforesaid. Failure or delay in delivering copies of any consent,
notice, demand, request, approval, declaration or other communication to the
persons designated above to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
9.2 Binding Effect; Benefits. This Agreement shall be binding upon and
------------------------
shall inure to the benefit of the parties and their respective successors and
permitted assigns. Notwithstanding anything contained herein to the contrary,
nothing in this Agreement, expressed or implied, is intended to confer on any
person (other than the parties hereto, the Buyer Indemnitees (but only with
respect to Section 5 hereof), or their respective successors and permitted
assigns) any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
9.3 Entire Agreement. This Agreement, together with the Exhibits,
----------------
Schedules and other agreements and documents contemplated hereby, constitutes
the final written expression of all of the agreements between the parties, and
is a complete and exclusive statement of those terms. Except as specifically
included or referred to herein, this Agreement and the Exhibits, Schedules and
other agreements and documents contemplated hereby supersede all prior
understandings, negotiations and agreements concerning the matters specified
herein. Any representations, promises, warranties or statements made by any
party that differ in any way from the terms of this written Agreement, and the
Exhibits, Schedules and other agreements and documents contemplated hereby,
shall be given no force or effect (except as specifically included or referred
to herein). The parties specifically represent, each to the others, that there
are no additional or supplemental agreements between them related in any way to
the matters herein contained unless specifically included or referred to herein.
No addition to or modification or amendment of any provision hereof shall be
binding upon any party hereto unless made in writing and signed by all parties
hereto.
38
9.4 Governing Law. THIS AGREEMENT, AND ALL QUESTIONS RELATING TO ITS
-------------
VALIDITY, INTERPRETATION, PERFORMANCE AND ENFORCEMENT (INCLUDING, WITHOUT
LIMITATION, PROVISIONS CONCERNING LIMITATIONS OF ACTION), SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF SOUTH CAROLINA
(EXCLUSIVE OF THE CONFLICT OF LAW PROVISIONS THEREOF) APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
9.5 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument; but in making proof of this Agreement,
it shall not be necessary to produce or account for more than one such
counterpart. It is not necessary that each party execute the same counterpart,
so long as identical counterparts are executed by all parties. Executed
signature pages to any counterpart instrument may be detached and affixed to a
single counterpart, which single counterpart with multiple signature pages
affixed thereto constitutes an original counterpart instrument. All such
counterpart signature pages shall be read as though one and they shall have the
same force and effect as if all of the parties had executed a single signature
page.
9.6 Headings. Headings of the Sections of this Agreement are for the
--------
convenience of reference only, and shall be given no substantive or interpretive
effect whatsoever.
9.7 Waivers. Any party may, by written notice to the other parties, (i)
-------
extend the time for the performance of any of the obligations or other actions
of the other parties hereunder; (ii) waive any inaccuracies in the
representations or warranties of the other parties contained herein or in any
other agreement or document delivered pursuant hereto; (iii) waive compliance
with any of the conditions or covenants of the other parties contained herein;
or (iv) waive performance of any of the obligations of the other parties
hereunder. Except as provided in the preceding sentence, no action taken
pursuant hereto, including without limitation any investigation by or on behalf
of any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained herein. No failure or delay on the part of any party in
exercising any right, privilege, power or remedy under this Agreement, and no
course of dealing among the parties, shall operate as a waiver of such right,
privilege, power or remedy; nor shall any single or partial waiver or exercise
of any right, privilege, power or remedy under this Agreement preclude any other
or further exercise of such right, privilege, power or remedy, or the exercise
of any other right, privilege, power or remedy. No notice or demand on any party
in any case shall entitle such party to any other or future notice or demand in
any similar or other circumstances or constitute a waiver of the right of the
party giving such notice or making such demand to take any other or future
action in any circumstances without notice or demand.
39
9.8 Merger of Documents. This Agreement and all agreements and documents
-------------------
contemplated hereby constitute one agreement and are interdependent upon each
other in all respects.
9.9 Incorporation of Exhibits and Schedules. All Exhibits and Schedules
---------------------------------------
attached hereto are by this reference incorporated herein and made a part hereof
for all purposes as if fully set forth herein.
9.10 Severability. If for any reason whatsoever, any one or more of the
------------
provisions hereof shall be held or deemed to be illegal, inoperative,
unenforceable or invalid as applied to any particular case or in all cases, such
circumstances shall not have the effect of rendering such provision illegal,
inoperative, unenforceable or invalid in any other case or of rendering any of
the other provisions hereof illegal, inoperative, unenforceable or invalid.
Furthermore, in lieu of each illegal, invalid, unenforceable or inoperative
provision, there shall be added automatically, as part of this Agreement, a
provision similar in terms of such illegal, invalid, unenforceable or
inoperative provision as may be possible and as shall be legal, valid,
enforceable and operative.
9.11 Assignability. Neither this Agreement nor any of the parties' rights
-------------
hereunder may be assigned or otherwise transferred by any party without the
prior written consent of the other parties; provided, however, that Buyer's or
-------- -------
its successors' or assigns' rights hereunder may be assigned or otherwise
transferred, in whole or in part, without any other party's consent (i) to any
successor by merger or consolidation, (ii) to any bank or other financial
institution, or to any individual, partnership, corporation or other entity,
providing any financing to Buyer, its successors or assigns, or (iii) to any
individual, partnership, corporation or other entity deriving title from Buyer,
or its successors or assigns, to all or substantially all of the Purchased
Assets as constituted on the date of any such transfer. No assignment or other
transfer permitted by this Section 9.11 shall operate as a release of the
assignor's obligations or liabilities hereunder, and the assignor shall remain
liable hereunder notwithstanding such assignment or other transfer. In the event
of any assignment or other transfer permitted by this Section 9.11, an
instrument of assignment shall be executed by the assignee and shall expressly
state that the assignee assumes all of the applicable obligations and
liabilities of the assignor contained herein.
9.12 Drafting. The parties acknowledge and confirm that each of their
--------
respective attorneys have participated jointly in the review and revision of
this Agreement and that it has not been written solely by counsel for one party.
The parties therefore stipulate and agree that the rule of construction to the
effect that any ambiguities are to be or may be resolved against the drafting
party shall not be employed in the interpretation of this Agreement to favor any
party against another.
9.13 References. The use of the words "hereof," "herein," "hereunder,"
----------
"herewith," "hereto," "hereby," and words of similar import shall refer to this
entire Agreement, and not to any particular article, section, subsection,
clause, or paragraph of this Agreement, unless the context clearly indicates
otherwise.
40
9.14 Calendar Days, Weeks and Months. Unless otherwise, specified herein,
-------------------------------
any reference to "day," "week," or "month" herein shall mean a calendar day,
week or month.
9.15 Gender; Plural and Singular. Where the context clearly indicates
---------------------------
otherwise, the singular shall include the plural and vice versa. Whenever the
masculine, feminine or neuter gender is used inappropriately in this Agreement,
this Agreement shall be read as if the appropriate gender had been used.
9.16 Cumulative Rights. All rights and remedies specified herein are
-----------------
cumulative and are in addition to, not in limitation of, any rights or remedies
the parties may have at law, in equity, or otherwise, and all such rights and
remedies may be exercised singularly or concurrently.
9.17 No Implied Covenants. Each party, against the other, waives and
--------------------
relinquishes any right to assert, either as a claim or as a defense, that the
other party is bound to perform or liable for the nonperformance of any implied
covenant or implied duty or implied obligation.
9.18 Attorneys' Fees. The prevailing party in any dispute between the
---------------
parties arising out of the interpretation, application or enforcement of any
provision hereof shall be entitled to recover all of its reasonable attorney's
fees and costs whether suit be filed or not, including without limitation costs
and attorneys' fees related to or arising out of any trial or appellate
proceedings.
9.19 Indirect Action. Where any provision hereof refers to action to be
---------------
taken by any person or party, or which such person or party is prohibited from
taking, such provision shall be applicable whether the action in question is
taken directly or indirectly by such person or party.
[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the day and year hereinabove first set forth.
BUYER:
▇▇▇▇▇▇▇ ACQUISITION, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Title: Secretary
----------------------------------
SELLER:
▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Title: President
----------------------------------
▇▇▇▇▇▇▇:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
42
Agreement 1
Allocation 31
Assumed Liabilities 4
Audited Financial Statements 9
Balance Sheet Date 12
▇▇▇▇ of Sale, Assignment and Assumption Agreement 3
Business Property Licenses 14
Business Property Rights 14
Buyer 1
Buyer Indemnifiable Claims 22
Buyer Indemnitee 22
CERCLA 6
CERCLIS 19
Claim 24
Closing 11
Closing Date 11
COBRA 6
Code 7
Compensation 31
Contracts 2
control 22
controlled 22
controlling 22
▇▇▇▇▇▇▇ 1
Customer 25
Deposit 8
Employee Policies and Procedures 18
Employment and Labor Agreements 17
Encumbrance 12
Environmental Condition 6
Environmental Laws 7
ERISA 7
ERISA Affiliate 18
Escrow Agent 8
Escrow Agreement 8
Escrow Fund 9
Excluded Assets 3
Excluded Liabilities 5
Financial Statements 12
Form of Employment Agreement 35
Hazardous Material 7
Indemnified Party 23, 24
Indemnifying Party 23, 24
Initial Payment 8
Interim Financial Statements 12
Licenses and Permits 16
Losses 22
Net Book Value 8
Net Book Value Statement 8
NLRB 5
Noncompetition Consideration 9
Oaks 3
Plans 18
Purchased Assets 1
Real Property Agreement 35
Receivables Guaranty 32
Release 7
Seller 1
Seller Indemnifiable Claims 21
Supplemental Financial Statements 9
Tax 7
Taxes 7
Termination Date 27
Third Party 29
Third Party Claim 24
Transfer Taxes 30
Transferred Employees 32
Vendor 25
Year End Financial Statements 9
2
