EXHIBIT 2.1
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
▇▇▇▇▇-▇▇▇▇▇ MACHINE COMPANY
AND
AVIATION SALES COMPANY
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
----
ARTICLE I CERTAIN DEFINITIONS.................................................................................. 1
ARTICLE II SALE OF ASSETS: CLOSING; ADJUSTMENT................................................................. 7
Section 2.1. Assets to Be Acquired............................................................. 7
Section 2.2. Excluded Assets................................................................... 9
Section 2.3. Assumption of Liabilities......................................................... 10
Section 2.4. Retained Liabilities.............................................................. 11
Section 2.5. Consideration; Closing Deliveries; Possession..................................... 12
Section 2.6. Time and Place of Closing......................................................... 14
Section 2.7. Closing Procedures................................................................ 14
Section 2.8. Post-Closing Procedures........................................................... 15
Section 2.9. Purchase Price Adjustment......................................................... 16
Section 2.10. Records........................................................................... 16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER........................................................... 18
Section 3.1. Incorporation; Authorization; etc................................................. 18
Section 3.2. Financial Information............................................................. 19
Section 3.3. Properties........................................................................ 19
Section 3.4. Absence of Certain Changes; Solvency.............................................. 20
Section 3.5. Litigation; Orders................................................................ 20
Section 3.6. Intellectual Property............................................................. 20
Section 3.7. Licenses, Approvals, Other Authorizations, Consents,
Reports, etc...................................................................... 21
Section 3.8. Labor Matters..................................................................... 21
Section 3.9. Compliance with Laws.............................................................. 22
Section 3.10. Insurance......................................................................... 22
Section 3.11. Contracts......................................................................... 22
Section 3.12. Environmental Matters............................................................. 23
Section 3.13. No Agreements to Sell Assets...................................................... 25
Section 3.14. Brokers, Finders, etc............................................................. 25
Section 3.15. Accuracy of Representations and Warranties; Schedules and
Exhibits.......................................................................... 25
Section 3.16. No Implied Representation......................................................... 25
Section 3.17. Construction of Certain Provisions................................................ 26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER............................................................. 27
Section 4.1. Organization; Authorization; etc.................................................. 27
Section 4.2. Brokers, Finders, etc............................................................. 27
Section 4.3. Licenses, Approvals, Other Authorizations, Consents,
Reports, etc...................................................................... 27
- i -
PAGE
----
Section 4.4. Accuracy of Representations and Warranties; Schedules and
Exhibits.......................................................................... 28
ARTICLE V COVENANTS OF SELLER AND BUYER........................................................................ 29
Section 5.1. Investigation of Business; Access to Properties and Records....................... 29
Section 5.2. Efforts; Obtaining Consents; Antitrust Laws....................................... 30
Section 5.3. Further Assurances................................................................ 32
Section 5.4. Public Announcements.............................................................. 32
Section 5.5. Accounts and Notes Payable Notices................................................ 33
Section 5.6. Post-Closing Confidentiality...................................................... 33
Section 5.7. Conduct of Business............................................................... 33
Section 5.8. Maintenance of the Assets......................................................... 34
Section 5.9. Preservation of Business.......................................................... 35
Section 5.10. Maintenance of the Records........................................................ 35
Section 5.11. Exclusive Dealings................................................................ 35
Section 5.12. Notice of Developments............................................................ 35
Section 5.13. Supplements to Schedules.......................................................... 36
ARTICLE VI EMPLOYEE BENEFITS................................................................................... 37
Section 6.1. Employee Benefit Plans............................................................ 37
Section 6.2. Termination of Participation...................................................... 37
Section 6.3. [Intentionally left blank]........................................................ 37
Section 6.4. Termination of Seller's Employees................................................. 37
ARTICLE VII TAX MATTERS........................................................................................ 39
Section 7.1. Tax Returns....................................................................... 39
Section 7.2. Sales, Transfer and Similar Taxes................................................. 39
Section 7.3. Cooperation and Exchange of Information........................................... 39
Section 7.4. Prorations........................................................................ 41
ARTICLE VIII CONDITIONS OF BUYER'S OBLIGATION TO CLOSE......................................................... 43
Section 8.1. Representations, Warranties and Covenants of Seller............................... 43
Section 8.2. Filings; Consents; Waiting Periods................................................ 43
Section 8.3. No Injunction or Pending Litigation............................................... 43
Section 8.4. Pre-Acquisition Review............................................................ 43
Section 8.5. Delivery of Records............................................................... 43
Section 8.6. Releases of Liens................................................................. 44
Section 8.7. Performance of Seller's Obligations............................................... 44
Section 8.8. Limitation on Accounts Payable.................................................... 44
Section 8.9. No Material Adverse Change........................................................ 44
Section 8.10. Environmental Audit............................................................... 44
Section 8.11. Audited Financial Information..................................................... 45
- ii -
PAGE
----
ARTICLE IX CONDITIONS TO SELLER'S OBLIGATION TO CLOSE.......................................................... 45
Section 9.1. Representations, Warranties and Covenants of Buyer................................ 45
Section 9.2. No Injunction..................................................................... 45
Section 9.3. Delivery of Initial Purchase Price and Closing Documents.......................... 45
ARTICLE X SURVIVAL; INDEMNIFICATION............................................................................ 46
Section 10.1. Survival.......................................................................... 46
Section 10.2. General Indemnification by Buyer or Seller........................................ 47
Section 10.3. Environmental Indemnification by Seller........................................... 47
Section 10.4. Third Party Claims................................................................ 51
Section 10.5. Bulk Sales Waiver; Indemnification................................................ 52
ARTICLE XI TERMINATION......................................................................................... 53
Section 11.1. Termination....................................................................... 53
Section 11.2. Procedure and Effect of Termination............................................... 53
Section 11.3. Return of Deposit................................................................. 53
ARTICLE XII MISCELLANEOUS...................................................................................... 55
Section 12.1. Non-Assignable Undertakings and Rights............................................ 55
Section 12.2. Counterparts...................................................................... 55
Section 12.3. Governing Law..................................................................... 55
Section 12.4. Entire Agreement.................................................................. 55
Section 12.5. Expenses.......................................................................... 55
Section 12.6. Notices........................................................................... 56
Section 12.7. Successors and Assigns............................................................ 57
Section 12.8. Headings; Definitions............................................................. 57
Section 12.9. Amendments and Waivers............................................................ 57
Section 12.10. Interpretation; Absence of Presumption............................................ 57
Section 12.11. Severability...................................................................... 58
Section 12.12. Settlement of Disputes............................................................ 58
Section 12.13. Survival.......................................................................... 61
- iii -
SCHEDULES
Schedule 1.1(a) Seller's Accounts Payable
Schedule 1.1(b) Seller's Net Working Capital
Schedule 2.1(a)-1 Owned Real Property
Schedule 2.1(a)-2 Leased Real Property
Schedule 2.1(b)(i) Furniture, Fixtures, Machinery and Equipment
Schedule 2.1(b)(ii) Motor Vehicles
Schedule 2.1(b)(iii) Tools and Dies
Schedule 2.1(c) Inventory
Schedule 2.1(d)(i) Contracts
Schedule 2.1(d)(ii) Deposits
Schedule 2.1(e) Letters of Credit and Performance Bonds
Schedule 2.1(f) Drawings and Specifications
Schedule 2.1(g) Proprietary Information and Licenses
Schedule 2.1(h) Computer Hardware, Software and Data Files
Schedule 2.1(j) Sales Representatives
Schedule 2.1(k) Prepaid Expenses
Schedule 2.1(m) Accounts Receivable and Notes Receivable
Schedule 2.1(n) Cash and Cash Equivalents
Schedule 2.1(o) Licenses and Permits
Schedule 2.2(e) Other Excluded Assets
- iv -
Schedule 2.3 Assumed Liabilities
Schedule 3.1 Seller's Jurisdictions of Qualification
Schedule 3.2-1 Summary of Operations for Three Years
Schedule 3.2-2 Liabilities Related to Bonus and Profit-Sharing Plans
Schedule 3.3(a) Encumbrances on Properties
Schedule 3.3(d) Encumbrances on Accounts Receivable
Schedule 3.4(a) Adverse Changes
Schedule 3.5 Litigation; Orders
Schedule 3.7(a) Seller's Licenses, Approvals, Other Authorizations, Consents,
Reports, etc.--Operation of the Business
Schedule 3.7(b) Seller's Licenses, Approvals, Other Authorizations, Consents,
Reports, etc.--Performance of Agreement
Schedule 3.8 Workers' Compensation Claims
Schedule 3.9(a) Non-Compliance with Laws
Schedule 3.10 Insurance
Schedule 3.11 Contracts
Schedule 3.12(b) Environmental Matters
Schedule 3.13 Agreements to Sell Assets
Schedule 4.3 Buyer's Licenses, Approvals, Other Authorizations, Consents,
Reports, etc.
Schedule 6.1(a) Business Employee Benefit Plans
Schedule 6.1(c) Payments Due Under Employee Benefit Plans
Schedule 6.4(a) Active Employees
Schedule 6.4(g) Active Employees in Seller's Tuition Reimbursement Program
- v -
Schedule 7.1 Taxing Authorities
Schedule 7.3(c) Tax Returns
- vi -
EXHIBITS
Exhibit 2.5(c)(vii) Form of Seller's Non-Compete Agreement
Exhibit 2.5(d)(i) Form of Employment Agreement
Exhibit 2.10(a) Description of Required Reports, Documents
and Computer Data
- vii -
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (and, collectively with all of the
Schedules and Exhibits referenced herein and attached hereto, the "AGREEMENT"),
dated as of__________ September, 1997 (the "EFFECTIVE DATE"), is by and between
▇▇▇▇▇-▇▇▇▇▇ MACHINE COMPANY, a corporation organized under the laws of the State
of Kentucky ("SELLER"), and AVIATION SALES COMPANY, a corporation organized
under the laws of the State of Delaware ("BUYER").
WHEREAS, Seller wishes to sell to Buyer all of the assets and
businesses of Seller's Business (as defined herein), and Buyer wishes to
purchase such assets and to assume certain of the liabilities relating to the
Business and such assets, but only to the extent specified herein and excluding,
in all events, the Retained Liabilities (as defined herein), all upon the terms
and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
"ACCOUNTS PAYABLE" means all of the accounts payable by Seller to third
parties related to the Business or the Assets. Seller represents to Buyer that
SCHEDULE 1.1(A) attached hereto sets forth a true, accurate and complete listing
and ageing of all of Seller's Accounts Payable as of September 9, 1997.
"ACTION" shall mean any actual or threatened action, suit, arbitration,
inquiry, proceeding or investigation by or before any Government Authority or
arbitral tribunal.
"ADJUSTED INITIAL NET WORKING CAPITAL" shall mean the Net Working
Capital of Seller as of June 30, 1997, as reflected in SCHEDULE 1.1(B) less the
amount of the July Distribution.
"AFFILIATE" (and, with a correlative meaning, "AFFILIATED") shall mean,
with respect to any Person, any other Person that directly, or through one or
more intermediaries, controls or is controlled by or is under common control
with such first Person and, if such a Person is an individual, any member of the
immediate family (including parents, spouse and children) of such
1
individual and any trust whose principal beneficiary is such individual or one
or more members of such immediate family and any Person who is controlled by any
such member or trust. As used in this definition, "control" (including, with
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"ANTITRUST LAWS" shall mean and include the ▇▇▇▇▇▇▇ Act, as amended,
the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other federal, state, foreign and multinational (including
European Community) statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.
"BUSINESS" shall mean the business of Seller as it is being conducted
by Seller on the Effective Date, consisting of metal stamping, machining and
brazing, which is performed by Seller from the Seller's Facilities.
"BUYER'S ACCOUNTANT" shall mean the Miami, Florida office of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, L.L.P.
"CASH PORTION OF THE PURCHASE PRICE" shall mean the aggregate sum of
FORTY MILLION U.S. DOLLARS ($40,000,000), subject to any adjustments to the
Initial Purchase Price specifically provided for in this Agreement.
"CLAIMS" shall mean all rights, demands, claims, actions and causes of
action (whether for personal injuries or property, consequential or other
damages of any kind).
"CLOSING" shall mean the consummation of the transactions made the
subject of this Agreement.
"CLOSING DATE" shall mean the later of (i) thirty (30) days after the
date of this Agreement, and (ii) five (5) days after the date on which the
conditions set forth in Articles VIII and IX shall be satisfied or duly waived,
or if Seller and Buyer mutually agree on a different date, the date upon which
they have mutually agreed.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"COVERED LIABILITIES" shall mean any and all debts, losses,
liabilities, claims, damages, obligations (including those arising out of any
Action, such as any settlement or compromise thereof or judgment or award
therein), and any reasonable out-of-pocket costs and expenses (including
reasonable attorneys' fees, experts' fees, consultants' fees and expenses)
incurred in defending any Action.
2
"DEPOSIT" shall mean the amount of Four Hundred Thousand and No/100
Dollars ($400,000.00), which shall be paid within two (2) business days after
the date hereof by wire transfer from Buyer to Escrow Agent to be held by Escrow
Agent in a segregated interest-bearing account at a FDIC-insured financial
institution.
"ENCUMBRANCES" shall mean mortgages, liens, encumbrances, security
interests, covenants, conditions, restrictions, rights-of-way, easements and
encroachments, whether recorded or unrecorded.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ESCROW AGENT" shall mean Partners Title Company, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, as agent for Chicago Title Insurance Company.
"FAA" shall mean the United States Federal Aviation Administration.
"GOVERNMENT AUTHORITY" shall mean any government or state (or any
subunit thereof), whether domestic, foreign or multinational (including European
Community), or any agency, authority, bureau, commission, department or similar
body or instrumentality thereof, or any governmental court or tribunal.
"HSR ACT" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"INITIAL PURCHASE PRICE" shall mean the aggregate sum of FORTY-TWO
MILLION FIVE HUNDRED THOUSAND U.S. DOLLARS ($42,500,000) subject to any
additional adjustments specifically provided for in this Agreement.
"NET WORKING CAPITAL" shall mean an amount equal to (a) the sum of (i)
the amount of Seller's Cash, (ii) the amount of Seller's Receivables, (iii) the
book value of Seller's Inventory, (iv) the amount of Seller's Prepaid Expenses,
and (v) Seller's other current assets, less (b) the sum of (i) the amount of
Seller's Accounts Payable, and (ii) the amount of Seller's Accrued Liabilities,
all as in existence as of the relevant date of the calculation of Net Working
Capital; PROVIDED, HOWEVER, that (Y) although the calculation of Adjusted
Initial Net Working Capital does not include the liabilities of Seller related
to Seller's bonus and profit-sharing plans, the liabilities of Seller related to
Seller's bonus and profit-sharing plans shall be included in the calculation of
Net Working Capital as of the Closing Date, and (Z) the following items shall be
subtracted from the calculation of Net Working Capital as of the Closing Date:
(1) Receivables that are over sixty (60) days past due, provided that no
Receivables shall be subtracted unless the amount of Receivables in excess of 90
days exceeds eight percent (8%) of the total amount of the Receivables, and (2)
all Inventory that is obsolete, as determined by the mutual agreement of Seller
and Buyer. If Seller and Buyer are unable to mutually agree on the level of
obsolete Inventory, then Seller and Buyer shall mutually agree upon an
independent expert appraiser whose determination of obsolescence shall be final
and binding on both Seller and Buyer.
3
"PERMITTED LIENS" shall mean (i) statutory liens for Taxes not yet due
and payable and (ii) imperfections of title and Encumbrances, if any, listed on
the Title Commitment which are either not timely objected to by Buyer, or which
are objected to but are not removed or cured by Seller and are waived by Buyer
in the manner provided in Section 5.1.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization, other form
of business or legal entity or Government Authority.
"PURCHASE PRICE" shall mean the aggregate sum of FORTY-TWO MILLION FIVE
HUNDRED THOUSAND U.S. DOLLARS ($42,500,000) decreased, if applicable, in the
manner described in Section 2.9(a), all subject to any additional adjustments
specifically provided for in this Agreement.
"SELLER'S ACCOUNTANT" shall mean the Cincinnati, Ohio office of Clark,
Schaefer, ▇▇▇▇▇▇▇ & Co.
"SELLER'S DEBT" shall mean any indebtedness of Seller related to the
Business or any of the Assets.
"SELLER'S LIENS" shall mean any liens or other encumbrances granted by
Seller to lenders affecting the Business or any of the Assets.
"SELLER'S NON-COMPETE AGREEMENT" shall mean the Agreement Not To
Compete to be executed and delivered by Seller, ▇▇▇▇ ▇▇▇▇ and ▇▇▇ ▇▇▇▇ in favor
of Buyer at the Closing, the form of which is attached hereto as EXHIBIT
2.5(C)(VII).
"TAXES" shall mean (i) all taxes (whether federal, state, local or
foreign) based upon or measured by income and any other tax whatsoever,
including gross receipts, profits, sales, excise, use, occupation, value added,
ad valorem, transfer, franchise, withholding, payroll, employment, excise, real
property or other property taxes, together with any interest or penalties
imposed with respect thereto, and (ii) any obligations under any agreements or
arrangements with respect to any Taxes described in clause (i) above.
Each of the following terms is defined in the part or Section of this
Agreement set opposite such term:
TERM SECTION
---- -------
Accrued Liabilities 2.3(a)
Active Employees 6.4(a)
Agreement Preamble
Arbitrator 2.8(b)
Assets 2.1
4
Assumed Liabilities 2.3
Assumed Returned Inventory Liabilities 2.3(e)
Business Condition 3.1(a)
Business Employee Benefit Plans 6.1(a)
Business Employees 6.1(a)
Buyer Preamble
Buyer Indemnified Parties 10.2(b)
Buyer's Promissory Note 2.5(b)
Cash 2.1(n)
CERCLA 3.12(a)(i)
Closing Audit Payment Date 2.9(c)
Closing Date Working Capital Statement 2.8(a)
Competing Transactions 5.11
Contracts 2.1(d)
DOJ 5.2(c)
Effective Date Preamble
Employment Laws 6.4(d)
EPA 10.3(b)(ii)(A)
Excluded Assets 2.2
Federal Aviation Act 3.3(b)
Final Net Working Capital 2.9(a)
FTC 5.2(c)
Hardware, Software and Data Files 2.1(h)
Hazardous Materials 3.12(a)(ii)
Hazardous Materials Contamination 3.12(a)(iii)
Hazardous Substances Laws 3.12(a)(i)
Hired Employees 6.4(a)
Intellectual Property 2.1(q)
Inventory 2.1(c)
JAMS 12.12(b)(ii)
July Distribution 3.4(a)
Leased Real Property 2.1(a)
Licenses 3.7(a)
Missing Inventory 2.7(a)(i)
Names 2.1(p)
Objection Notice 5.1(c)
Owned Real Property 2.1(a)
Physical Inventory 2.7(a)(i)
Prepaid Expenses 2.1(k)
Prorated Taxes 7.4(a)
Purchase Price Adjustment 2.9(a)
RCRA 3.12(a)(i)
Receivables 2.1(m)
Records 2.10
5
Retained Liabilities 2.4
Review 2.8(b)
Seller Preamble
Seller Indemnified Parties 10.2(a)
Seller's Deposits 2.1(d)
Seller's Facilities 2.1(a)
Survey 5.1(b)(i)
Survey Objections 5.1(c)
Tax Audit 7.3(d)
Title Commitment 5.1(b)(ii)
Title Objections 5.1(c)
WARN Act 6.4(d)
6
ARTICLE II
SALE OF ASSETS: CLOSING; ADJUSTMENTS
SECTION 2.1. ASSETS TO BE ACQUIRED. Subject to the
satisfaction or waiver of the conditions set forth herein and to the other
terms, conditions and provisions of this Agreement, at the Closing, Seller shall
sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase,
acquire, accept and pay for, all of Seller's right, title and interest in all of
the properties, assets and other rights (excluding the Excluded Assets) owned or
leased by, or licensed or consigned to, Seller on the Closing Date, including
without limitation, the following (collectively, the "ASSETS"):
(a) all real property and all plants, buildings and improvements
thereon owned, leased or otherwise used by Seller, including without limitation,
the real property described on SCHEDULE 2.1(A)-1 attached hereto and the
improvements located thereon (the "OWNED REAL PROPERTY"), and the real property
described on SCHEDULE 2.1(A)-2 attached hereto and the improvements located
thereon (the "LEASED REAL PROPERTY") (the Owned Real Property and the Leased
Real Property are sometimes hereinafter collectively referred to as the
"SELLER'S FACILITIES");
(b) all fixed assets owned, leased or otherwise used by Seller,
including without limitation, (i) all apparatus, computers and other electronic
data processing equipment, fixtures, machinery, equipment, furniture, office
equipment, motor vehicles, tools, packing and packaging materials and other
tangible personal property owned, leased or otherwise used by Seller of the type
of personal property described on SCHEDULE 2.1(B)(I), which schedule, together
with the schedule of assets to be prepared by M.B. Valuation Services, Inc.
based on its September 8, 1997, inspection of the Seller's Facilities and the
Assets, reflects the personal property owned by Seller to the extent such
personal property has an individual purchase price greater than or equal to
$500, (ii) all motor vehicles owned, leased or otherwise used by Seller of the
type of motor vehicles described on SCHEDULE 2.1(B)(II) attached hereto, which
schedule reflects the motor vehicles as of the Effective Date, and (iii) all
tools and dies owned, leased or otherwise used by Seller, including the tools
not owned by Seller but used by Seller to make the part numbers described on
SCHEDULE 2.1(B)(III) as of the dates set forth on such schedules;
(c) all inventory of Seller (whether existing or on order) as such
inventory shall exist or be on order as of the Closing Date (the "INVENTORY"),
together with all Records relating to such Inventory hereto, which Inventory, as
of September 4, 1997, is in the quantity and condition described on SCHEDULE
2.1(C) attached;
(d) (i) all contracts, agreements, leases of personal property,
unfilled orders for services provided by Seller, franchises, authorizations
granted by original licensed equipment manufacturers and other contracts,
agreements or commitments to which Seller is a party which are in effect on the
Closing Date (including all assignable warranties and indemnities of
manufacturers related to the Inventory but only to the extent that any
assignment thereof shall
7
not affect any of Seller's rights as against any third party (including, without
limitation, any manufacturers) with respect to any Retained Liabilities), except
as otherwise expressly provided in Section 2.2 (collectively, the "CONTRACTS"),
which Contracts, as of the Effective Date, consist of the contracts and
agreements described on SCHEDULE 2.1(D)(I) attached hereto, together with (ii)
all deposits or advance payments made by Seller with third parties in connection
with any Contract or made by third parties with Seller in connection with any
Contract (collectively, the "SELLER'S DEPOSITS"), which Seller's Deposits, as of
the Effective Date, consist of the deposits described on SCHEDULE 2.1(D)(II)
attached hereto;
(e) all letters of credit and performance bonds issued on behalf of
Seller and pursuant to which Seller is a sole beneficiary, including, without
limitation, the letters of credit and performance bonds described on SCHEDULE
2.1(E) attached hereto;
(f) all of Seller's written technical information, data,
specifications, research and development information, engineering drawings and
operating and maintenance manuals, including without limitation, the drawings
and specifications described on SCHEDULE 2.1(F) attached hereto;
(g) all of Seller's proprietary information and licenses from third
persons granting the right to perform services provided by Seller, including
without limitation, the licenses described on SCHEDULE 2.1(G) attached hereto;
(h) all of Seller's computer hardware and operating applications and
programs, source codes, object codes, and computer data files, including systems
documentation and instructions, including without limitation, the computer
hardware and operating applications and programs, source codes, access codes,
and computer data files described on SCHEDULE 2.1(H) attached hereto (the
"HARDWARE, SOFTWARE AND DATA FILES"); provided that Seller and Buyer agree that
no software, source codes, access codes or other system documentation or
instructions will be transferred which would violate any copyright or license or
use agreement;
(i) all accounting books and records, cost information, sales and
pricing data, customer lists, quality records and reports and other books,
records, studies, surveys, reports, plans and documents;
(j) all lists of Seller's agents, representatives, suppliers and
subcontractors, together with all contracts and agreements with the foregoing to
which Seller is a party which are in effect on the Closing Date, including
without limitation, the sales representatives identified in SCHEDULE 2.1(J)
attached hereto;
(k) any of Seller's prepaid expenses for periods after the Closing Date
(the "PREPAID EXPENSES"), including without limitation, the prepaid expenses
described on SCHEDULE 2.1(K) attached hereto;
(l) all intangible and other assets of Seller;
8
(m) all of Seller's accounts receivable and notes receivable, except
"Accounts Receivable/Related Parties" as shown on Seller's June 30, 1997 balance
sheet as such accounts receivable and notes receivable shall exist on the
Closing Date (the "RECEIVABLES"), which Receivables, as of September 9, 1997,
consist of the accounts receivable and the notes receivable described on
SCHEDULE 2.1(M);
(n) all of Seller's cash, certificates of deposit and cash equivalents
(the "CASH"), including without limitation, the cash value of all life insurance
policies held by Seller and the cash and cash equivalents listed on SCHEDULE
2.1(N) attached hereto;
(o) all of Seller's licenses, permits, approvals and authorizations
which have been issued by any Government Authority, including, without
limitation, the licenses and permits described on SCHEDULE 2.1(O) attached
hereto;
(p) all of Seller's logos, trade marks, service marks, and trade names,
including the name "▇▇▇▇▇-▇▇▇▇▇ Machine Company," (together with the goodwill
associated therewith) (the "NAMES"), and all literature, sales materials or
products incorporating the Names; provided that Seller may continue to use the
name "▇▇▇▇▇-▇▇▇▇▇ Machine Company" solely for purposes of filing tax returns and
winding up the affairs of Seller;
(q) all of Seller's copyrights, patents, inventions, processes, trade
secrets and all other proprietary technical and other information and
intellectual property and all licenses, permits and other rights to use the
foregoing, whether patented, patentable or unpatentable (the "INTELLECTUAL
PROPERTY") which Intellectual Property, as of the Effective Date, consists of
the matters described on SCHEDULE 2.1(Q) attached hereto; and
(r) all Claims, if any, which Seller may have against any Person with
respect to or which are related to any of the Assets, except those Claims
described in Section 2.2(c) and Section 2.2(d).
SECTION 2.2. EXCLUDED ASSETS. Notwithstanding anything to the
contrary herein, all of Seller's right, title and interest in all of the
following properties, assets and other rights (collectively, the "EXCLUDED
ASSETS") shall be excluded from the Assets:
(a) all accounting books and records that do not relate to the
Business, as well as copies of business records relating to the Assets (i) that
are reasonably required by Seller or any Affiliate of Seller in order to permit
Seller or any Affiliate of Seller to prepare any Tax return or other filing or
report to be made after the Closing Date or to otherwise comply with law, or
(ii) that relate to the employment of present, former or retired employees of
Seller who are not Hired Employees;
(b) any and all rights of Seller or the Business with respect to Claims
that are related to Retained Liabilities;
9
(c) all Claims of Seller which Seller, any Affiliate of Seller or the
Business may have, on or after the date hereof, against any Government Authority
for refund or credit of any type with respect to Taxes of the Business for
periods ending on or prior to the Closing Date;
(d) all Claims which Seller, any Affiliate of Seller or the Business
may have against any Person with respect to or which are related to any Retained
Liabilities or Excluded Assets; and
(e) the other assets described on SCHEDULE 2.2(E).
SECTION 2.3. ASSUMPTION OF LIABILITIES. Except as set forth in
this Section 2.3, at the Closing Buyer shall not assume, succeed to, be
obligated for or be liable for any of the liabilities and obligations (whether
or not known, suspected, asserted or claimed at the Closing Date or at any time
theretofore or thereafter, whether or not reflected or provided for, or required
to be reflected or provided for, on a balance sheet of the Business and whether
fixed, liquidated, unliquidated, absolute, contingent or otherwise) which relate
to or arise out of the Assets, the Business or any of its operations arising
prior to the Closing Date, or arising from actions taken or omitted to be taken
prior to the Closing Date.
Notwithstanding the foregoing, at the Closing, Buyer shall assume and
shall agree to pay, perform and discharge, and shall indemnify, and hold Seller
and the Seller Indemnified Parties harmless against, all liabilities and
obligations which at any time relate to or arise out of the Business after the
Closing Date, along with the following (collectively, hereinafter referred to as
the "ASSUMED LIABILITIES"):
(a) all liabilities (as determined in accordance with generally
accepted accounting principles applied on a consistent basis) relating to the
Business that have been incurred since June 30, 1997, in the ordinary course of
the business of the Business (the "ACCRUED LIABILITIES");
(b) all liabilities and obligations relating to employee matters to be
assumed by Buyer pursuant to Article VI (including without limitation, all
liabilities and obligations relating to accrued vacation time of Hired
Employees);
(c) all other liabilities and obligations with respect to which Buyer
is obligated to indemnify Seller or the Seller Indemnified Parties under this
Agreement as set forth in Article X;
(d) any Claims asserted in respect of products manufactured, supplied
or sold after the Closing by the Business or in respect of services provided
after the Closing by the Business;
(e) liabilities and obligations relating to inventory of the Business
sold by Seller prior to the Closing Date but returned by the purchaser(s)
thereof after the Closing Date in an amount not to exceed $10,000 in the
aggregate (the "ASSUMED RETURNED INVENTORY LIABILITIES"); and
10
(f) any contracts, agreements, leases, arrangements, unfilled orders,
commitments, or other instruments or obligations of Seller related to the
Business to the extent included within the Assets and specifically described in
the Assignment and Assumption Agreement executed by Seller and Buyer at the
Closing.
In no event shall the Assumed Liabilities be deemed to include any of
the Retained Liabilities described in Section 2.4.
To the best of Seller's knowledge, Seller represents and warrants that
SCHEDULE 2.3 attached hereto sets forth all of the Assumed Liabilities as of
September 9, 1997, except that Seller makes no representation or warranty with
regard to claims that are unknown, unsuspected or unasserted as of the date of
SCHEDULE 2.3. Seller agrees to provide Buyer with an updated SCHEDULE 2.3 not
less frequently than monthly until such time as this Agreement is terminated or
the Closing occurs, and Seller shall provide an updated SCHEDULE 2.3 at the
Closing.
SECTION 2.4. RETAINED LIABILITIES. Seller shall retain, and
shall continue to be responsible after the Closing Date for, and shall hold
Buyer and the Buyer Indemnified Parties harmless against, the "RETAINED
LIABILITIES", which term shall mean the liabilities and obligations which at any
time arise out of the following, and which shall specifically exclude any and
all of the Assumed Liabilities set forth in Section 2.3:
(a) all of the liabilities and obligations (whether or not known,
suspected, asserted or claimed at the Closing Date or at any time theretofore or
thereafter, whether or not reflected or provided for, or required to be
reflected or provided for, on a balance sheet of the Business and whether fixed,
liquidated, unliquidated, absolute, contingent or otherwise) which relate to or
arise out of the Assets, the Business or any of its operations arising prior to
the Closing Date, or arising from actions taken or omitted to be taken prior to
the Closing Date, excluding in all events any Assumed Liabilities (including the
Assumed Returned Inventory Liabilities), but including, without limitation, (i)
any warranty claims made by third parties in connection with sales of the
inventory of the Business prior to the Closing Date and any amounts owed
pursuant to received but unpaid purchase orders, and (ii) liabilities and
obligations relating to inventory of the Business sold prior to the Closing Date
but returned by the purchaser(s) thereof after the Closing Date to the extent in
excess of the Assumed Returned Inventory Liabilities;
(b) any product liability or similar claim for injury to person or
property, regardless of when made or asserted, which arises out of or is based
upon any express or implied representation, warranty, agreement or guarantee
made by Seller, or alleged to have been made by Seller, or which is imposed or
ascribed to be imposed by operation of law, in connection with any service
performed or product sold or leased by or on behalf of Seller on or prior to the
Closing Date, including without limitation, any claim relating to any product
delivered in connection with the performance of such service and any claim
seeking recovery for consequential damage, lost services or income);
(c) any liability or obligation under or in connection with the
Excluded Assets;
11
(d) except as otherwise provided in Section 6.4, any liability or
obligation arising prior to the Closing Date to any Business Employees, agents
or independent contractors of Seller, whether or not employed by Buyer after the
Closing, or under any Business Employee Benefit Plan with respect thereto,
except accrued vacation time of Hired Employees (it being understood that,
pursuant to Section 6.4(d), Buyer shall indemnify Seller, and hold Seller
harmless, with respect to violations, if any, by Buyer of any Employment Laws
with respect to the Hired Employees);
(e) any liability or obligation of Seller arising or incurred in
connection with the negotiation, preparation or execution of this Agreement and
the transactions contemplated hereby, including without limitation, fees and
expenses of counsel and other experts, except that Buyer has agreed to bear the
expenses and fees of Seller's Accountant in connection with the Inventory and
the audit of Seller's 1996 and 1997 financial statements; and
(f) (i) all Taxes of, or relating to, the Assets or the Business for
periods ending prior to the Closing Date and all income Taxes imposed on Seller
or any Affiliate of Seller as a consequence of the transactions contemplated by
this Agreement, and (ii) with respect to the current tax period, all Taxes of,
or relating to, the Assets or the Business accrued prior to the Closing Date, as
determined on a pro rata basis as set forth in Section 7.4.
SECTION 2.5. CONSIDERATION; CLOSING DELIVERIES; POSSESSION.
(a) At the Closing hereunder, Buyer shall purchase the Assets from
Seller, upon and subject to the terms and conditions of this Agreement and in
reliance on the representations, warranties and covenants of Seller contained
herein, in exchange for the Purchase Price.
(b) Subject to the terms and conditions of this Agreement, at the
Closing Buyer shall (i) pay to Seller the Initial Purchase Price by (A) wire
transfer of the Cash Portion of the Purchase Price to the account or accounts
specified by Seller, which wire transfer Seller shall verify, and (B) the
execution and delivery by Buyer to Seller of a promissory note in the original
principal amount of $2,500,000 (the "BUYER'S PROMISSORY NOTE"), and (ii) assume
the Assumed Liabilities pursuant to an Assignment and Assumption Agreement in
form and substance reasonably satisfactory to Seller and Buyer. The Buyer's
Promissory Note shall provide that it (i) shall not bear any interest prior to
maturity, (ii) shall bear interest after maturity at the rate of ten percent
(10%) per annum, (iii) shall be due and payable in two (2) equal installments of
$1,250,000 each, the first installment being due and payable on January 1, 1999,
and the second installment being due and payable on January 1, 2000, (iv) shall
be non-negotiable other than to any of the current shareholders of Seller or
their respective heirs, executors or legal representatives, and (v) shall
otherwise be in form and substance reasonably satisfactory to Seller and Buyer.
In the event that Buyer assigns this Agreement to a subsidiary pursuant to the
terms of Section 12.7, then Buyer shall guaranty the payment in full of the
Buyer's Promissory Note.
12
(c) In addition to the other things required to be done hereunder, at
the Closing, Seller shall, at Seller's sole cost and expense unless otherwise
expressly provided in this Agreement, deliver or cause to be delivered to Buyer
the following:
(i) one or more duly executed Warranty Deeds covering the
Owned Real Property, containing a general warranty of title and
otherwise in form and substance reasonably satisfactory to Seller and
Buyer;
(ii) at Buyer's cost, a standard form owner's policy of title
insurance dated as of the date of the Closing Date issued by a title
company acceptable to Buyer, insuring Buyer's fee simple title to the
Owned Real Property, subject only to the Permitted Liens;
(iii) a duly executed Assignment of Leases in form and
substance reasonably satisfactory to Seller and Buyer;
(iv) a duly executed ▇▇▇▇ of Sale in form and substance
reasonably satisfactory to Seller and Buyer;
(v) a Materials Certification regarding the Inventory in form
and substance reasonably satisfactory to Seller and Buyer;
(vi) to the extent not previously delivered to Buyer, the
materials and information described in Section 2.10 in the form of
originals (or if originals are not available, then true and legible
copies); Seller shall include an inventory record of all such
documentation showing title and reference numbers and other appropriate
identifying information and Seller shall further provide legible,
reproducible current hard copy of all revisions and supplements to such
documentation (PROVIDED, that if such hard copy is not available,
Seller shall deliver microfilm copies); all manuals shall be delivered
to Buyer, shall reflect the configurations of the Inventory at the
Closing, and shall reflect all data, illustrations and text in U.S.
weights and measures;
(vii) Seller's Non-Compete Agreement in the form of EXHIBIT
2.5(C)(VII);
(viii) a legal opinion from ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.S.C.,
counsel to Seller, in form and substance reasonably satisfactory to
Buyer and Buyer's counsel;
(ix) a certificate dated the Closing Date and duly executed on
behalf of Seller to the effect that the condition set forth in Section
8.1 has been satisfied and otherwise reaffirming the representations
and warranties of Seller set forth in this Agreement;
(x) a copy of the resolutions of the shareholders and the
board of directors of Seller, or similar enabling document, authorizing
the execution, delivery and performance of this Agreement by Seller,
and a certificate of its secretary or assistant
13
secretary, dated as of the Closing Date, that such resolutions were
duly adopted and are in full force and effect;
(xi) evidence or copies of any consents, approvals, orders,
qualifications, waivers or releases of liens required pursuant to
Section 8.2 or Section 8.5; and
(xii) originals of any estoppel certificates required by Buyer
pursuant to Section 5.2(a) and which Seller, through the exercise of
reasonable diligence, is able to obtain.
(d) In addition to the payment of the Initial Purchase Price, the
execution and delivery of the Buyer's Promissory Note, the assumption of the
Assumed Liabilities and the other things required to be done hereunder, at the
Closing, Buyer shall deliver, or cause to be delivered, to Seller the following:
(i) a duly executed Employment Agreement with ▇▇▇▇▇ ▇▇▇▇ in
substantially the form of EXHIBIT 2.5(D)(I);
(ii) a legal opinion from ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel
to Buyer, in form and substance reasonably satisfactory to Seller and
Seller's counsel;
(iii) a certificate dated the Closing Date and duly executed
on behalf of Buyer to the effect that the condition set forth in
Section 9.1 has been satisfied and otherwise reaffirming the
representations and warranties of Buyer set forth in this Agreement;
(iv) a copy of the resolutions of the board of directors of
Buyer, or similar enabling document, authorizing the execution,
delivery and performance of this Agreement by Buyer, and a certificate
of its secretary or assistant secretary, dated as of the Closing Date,
that such resolutions were duly adopted and are in full force and
effect; and
(v) if not previously delivered to Seller, all other
certificates, documents, instruments and writings required pursuant
hereto to be delivered by or on behalf of Buyer at or before the
Closing.
(e) At the Closing, Seller shall deliver all tangible items
constituting the Assets in substantially the same condition as they exist as of
the date hereof. Seller shall deliver possession of the Assets to Buyer at the
Seller's Facilities on the Closing Date.
SECTION 2.6. TIME AND PLACE OF CLOSING. The Closing shall take
place on the Closing Date beginning at 10:00 A.M., Eastern time, at the offices
of Seller's Accountant in Cincinnati, Ohio (or such other time and place as may
be agreed to by the parties).
14
SECTION 2.7. CLOSING PROCEDURES.
(a) PHYSICAL INVENTORY. Seller and Buyer have jointly completed a
physical inventory (the "PHYSICAL INVENTORY") of all of the Inventory as of
September 4, 1997, the results of which shall be reflected on the Closing Date
Working Capital Statement, and Seller's machinery and equipment. The Physical
Inventory verifies the physical existence of all of the Inventory to be
reflected on the Closing Date Working Capital Statement and the physical
existence of Seller's machinery and equipment.
(b) VERIFICATION OF INVENTORY RECORDS. Until the Closing Date, Buyer or
Buyer's representative shall also have the right to verify the stated condition
of, and the Records for, the Inventory. Seller shall provide Buyer and Buyer's
representative reasonable access to any and all records and storage facilities
necessary for Buyer and Buyer's representative to verify the stated condition
of, and the Records for, each item of the Inventory; PROVIDED, HOWEVER, that
such verification is conducted during normal business hours and does not
unreasonably disrupt Seller's normal business operations, and PROVIDED FURTHER,
HOWEVER, that Seller shall have the right to observe such verification process
by Buyer when and to the extent conducted at the Seller's Facilities.
SECTION 2.8. POST-CLOSING PROCEDURES.
(a) NET WORKING CAPITAL DETERMINATION. As soon as practicable following
the Closing Date, but in no event later than forty-five (45) days thereafter,
Seller shall, at Seller's cost and expense, prepare and deliver to Buyer a
statement of the Net Working Capital of the Business as of the Closing Date,
which shall be referred to as the "CLOSING DATE WORKING CAPITAL STATEMENT". The
Closing Date Working Capital Statement shall be prepared by Seller from its
books and records maintained as provided in Section 3.2 and in accordance with
generally accepted accounting standards consistently applied. Upon completion of
the Closing Date Working Capital Statement, Seller shall deliver the Closing
Date Working Capital Statement to Buyer. Buyer shall provide to Seller access to
such of its books and records as may reasonably be required for the preparation
of the Closing Date Working Capital Statement.
(b) RESOLUTION OF AUDIT DISPUTES. Buyer shall have forty-five (45) days
to review the proposed Closing Date Working Capital Statement and to notify
Seller of any disputes Buyer may have relating to the proposed Closing Date
Working Capital Statement. Buyer's notice to Seller of any dispute shall specify
in reasonable detail all points of disagreement and demand that a review of such
dispute (a "REVIEW") be conducted by Buyer's Accountant and Seller's Accountant.
Buyer and Seller shall promptly cause Buyer's Accountant and Seller's Accountant
to consult with respect to such points of disagreement in an effort to resolve
all disputes. If Buyer's Accountant and Seller's Accountant are unable to
resolve such disputes within forty-five (45) days after Seller's receipt of
notice of a Review, Buyer's Accountant and Seller's Accountant shall jointly
select the Cincinnati office of a firm of "Big Six" independent public
accountants which has not performed any service since January 1, 1997, for Buyer
or Seller or any of their respective Affiliates to act as arbitrator (the
"ARBITRATOR"). The Arbitrator, within
15
thirty (30) days after having been selected hereunder, shall decide all
remaining points of disagreement with respect to any such proposed Closing Date
Working Capital Statement and deliver a written notice of its determination of
the disputed items to Buyer and Seller. All decisions of the Arbitrator shall be
final, conclusive and legally binding on all parties hereto with respect to the
Closing Date Working Capital Statement. Each of Buyer and Seller shall pay
one-half the fees and expenses of the Arbitrator and shall pay the entire
expenses of their respective legal counsel and accountants.
SECTION 2.9. PURCHASE PRICE ADJUSTMENT.
(a) NET WORKING CAPITAL ADJUSTMENT. If the Net Working Capital as shown
on the Closing Date Working Capital Statement (the "FINAL NET WORKING CAPITAL")
shall be less than the Adjusted Initial Net Working Capital, then the Purchase
Price shall be decreased in an amount equal to the amount by which the Final Net
Working Capital is less than the Adjusted Initial Net Working Capital (such
amount, the "PURCHASE PRICE ADJUSTMENT").
(b) PAYMENT OF PURCHASE PRICE ADJUSTMENT. If the Purchase Price
Adjustment evidences that Seller is obligated to pay a net sum to Buyer, then
Seller shall pay to Buyer the amount of the Purchase Price Adjustment on the
Closing Audit Payment Date by wire transfer of immediately available funds to
the account or accounts designated by Buyer. The Purchase Price Adjustment shall
bear interest, at the rate of nine percent (9%) per annum, from and including
the Closing Date, to but excluding the date of payment. In the event any action
or proceeding is brought to enforce the payment of the Purchase Price
Adjustment, the prevailing party in such action shall be entitled to recover all
attorney's fees and other costs incurred in connection with such action.
(c) For purposes of the payment required to be made pursuant to Section
2.9(b), "CLOSING AUDIT PAYMENT DATE" shall mean the date which is ten (10)
business days after the earliest to occur of (i) the date that Buyer and Seller
agree on a resolution of all disputes concerning the proposed Closing Date
Working Capital Statement, (ii) forty-five (45) days after Buyer receives the
proposed Closing Date Working Capital Statement together with Seller's
Accountant's report thereon, if Seller shall not have received notice from Buyer
on or prior to such date demanding a Review of such proposed Closing Date
Working Capital Statement, (iii) the date on which Buyer's Accountant and
Seller's Accountant shall resolve all disputes with respect to the Closing Date
Working Capital Statement, or (iv) the date on which the Arbitrator shall
resolve all points of disagreement with respect to the Closing Date Working
Capital Statement, as the case may be.
SECTION 2.10. RECORDS. Seller shall, at Seller's sole cost and
expense, deliver to Buyer at the Seller's Facilities, on or before the Closing,
the following records relating to the Inventory but only in the form such
records are already in existence and in the possession or control of Seller or a
third party for the sole benefit of Seller as of the Closing Date (PROVIDED,
that Seller shall have no liability or obligation to Buyer if such third party
does not deliver such documentation to Buyer); PROVIDED, HOWEVER, that nothing
contained in this Section 2.10 shall
16
be construed to require Seller to create any new or additional records or modify
in any way any existing records (the "RECORDS"):
(a) All computer data, in any and all media in which maintained by
Seller, including, without limitation, Stock Action Reports (SAR), Procurement
Action Reports (PAR), Usage Material Management Systems (MMS) data, inventory
details, historic sales and quote activity, purchasing records, warranty records
if applicable, computer data, hard copies of Inventory Activity Reports and
other information described on EXHIBIT 2.10(A), in whatever medium currently
stored;
(b) All historical, engineering, technical, operational and maintenance
files and data related to the Inventory, including, without limitation, purchase
orders, packing slips, material certifications, disc sheets, disc records,
vendor tags or other tags indicating the condition of the Inventory and
historical records for all parts, so as to ensure traceability of each item of
Inventory to the original, FAA-approved manufacturer thereof to the Buyer's
reasonable satisfaction, including without limitation, the records described on
EXHIBIT 2.10(A).
17
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
SECTION 3.1. INCORPORATION; AUTHORIZATION; ETC.
(a) Seller is duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Seller (i) has all
requisite corporate power to own, lease and otherwise operate its properties and
assets and to carry on its business as and where it is now being conducted, and
(ii) is in good standing and is duly qualified to transact business in each
domestic jurisdiction in which the nature of property owned or leased by it or
the conduct of its business requires it to be so qualified, except where the
failure to be in good standing or to be duly qualified to transact business,
would not, individually or in the aggregate, have a material adverse effect on
the Assets or financial condition of the Business taken as a whole (the
"BUSINESS CONDITION"). Seller has delivered to Buyer true, correct and complete
copies of all charter and other organizational documents of Seller. SCHEDULE 3.1
sets forth a list of each of the jurisdictions in which Seller is qualified to
do business.
(b) Seller has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby.
(c) The execution and delivery of this Agreement, the performance of
Seller's obligations hereunder and the consummation of the transactions
contemplated hereby by Seller have been duly and validly authorized by all
necessary corporate proceedings on the part of Seller and no other corporate
proceedings or actions on the part of Seller, its board of directors or
stockholders are necessary therefor.
(d) The execution, delivery and performance by Seller of this Agreement
will not (i) violate any provision of Seller's certificate of incorporation or
by-laws, (ii) violate any provision of, or be an event that is (or with the
passage of time will result in) a violation of, or result in the acceleration of
or entitle any party to accelerate (whether after the giving of notice or lapse
of time or both) any obligation under, or result in the imposition of any lien
upon or the creation of a security interest in any of the Assets pursuant to,
any mortgage, lien, lease, agreement, instrument, order, arbitration award,
judgment, injunction, decree, contractual obligation, license, commitment or
other arrangement to which Seller is a party or by which Seller, the Assets or
the Business are bound, or (iii) except as disclosed on SCHEDULE 3.7(A) OR
SCHEDULE 3.7(B), violate or conflict with any statute, rule or regulation
applicable to Seller, the Assets or the Business or any of its properties or
assets or any other restriction of any kind or character to which Seller, the
Assets or the Business is subject.
18
(e) This Agreement has been duly executed and delivered by Seller, and,
assuming the due execution and delivery of this Agreement by Buyer, this
Agreement constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the rights and remedies of creditors generally and to general
principles of equity (regardless of whether in equity or at law).
(f) Upon consummation of the transactions made the subject of this
Agreement at the Closing, Seller will deliver to Buyer good, indefeasible and
marketable title to the Assets free and clear of any liens, claims, charges,
security interests, options, claims of offset or other legal or equitable
encumbrances (including without limitation the Seller's Liens), except for
Permitted Liens.
SECTION 3.2. FINANCIAL INFORMATION. Attached as SCHEDULE 3.2-1
is a summary of the unaudited balance sheets of Seller relating to the Business
and the related statements of operations of Seller for the operation of the
Business for the last three (3) fiscal years. To Seller's knowledge, the data
contained in such summary is true and accurate in all material respects and was
prepared utilizing the books of account and records of Seller, which books of
account and records, taken as a whole, have been maintained in all material
respects in accordance with the then applicable United States generally accepted
accounting principles consistently applied by Seller, except for the non-accrual
of certain amounts payable under Seller's employee bonus and profit-sharing
plans. As of October 31, 1996, the amount that Seller distributed with respect
to Seller's employee bonus and profit-sharing plans were $426,750 and $564,306,
respectively. Seller represents that a true, correct and complete listing of the
amounts payable under Seller's employee bonus and profit-sharing plans as of the
Effective Date is attached hereto as SCHEDULE 3.2-2.
SECTION 3.3. PROPERTIES.
(a) Except as disclosed on SCHEDULE 3.3(A) attached hereto and except
for properties disposed of since June 30, 1997, in the ordinary course of
business, and subject to any Seller's Liens (which Seller's Liens with respect
to the Assets will be released at the Closing), (i) Seller has good,
indefeasible and marketable title to, or holds by valid and existing lease or
license, free and clear of all mortgages, pledges, liens, encumbrances, security
interests or claims of offset, all of the Assets, (ii) Seller has not conveyed
to any Person any rights or interests in any of the Assets, (iii) no amount is
(or will be) owing under any lease agreement included in or related to the
Assets or the Business with respect to the period through the Closing, (iv) all
indebtedness or liabilities owed by Seller with respect to the Assets or such
agreements or which create an encumbrance upon the Assets or the Business shall
have been paid or cancelled prior to the Closing, except in any of the foregoing
cases for such imperfections of title, mortgages, pledges, liens, encumbrances
or security interests as (y) are set forth on SCHEDULE 3.3(A), or (z) arise out
of Taxes or general or special assessments not in default and payable without
penalty or interest.
19
(b) To Seller's knowledge, SCHEDULE 2.1(C) contains a true, accurate
and complete listing of the quantity, location and condition of the Inventory as
of September 4, 1997. The Inventory is from the inventory of Seller, which
inventory was maintained, to Seller's knowledge, in compliance in all material
respects with Federal Aviation Regulation under the United States Federal
Aviation Act of 1958, as amended, and all regulations, rulings, interpretations
and guidelines published thereunder and from time to time in effect
(collectively, the "FEDERAL AVIATION ACT").
(c) All of the Assets (other than the accounts receivable and notes
receivable and other intangibles) are located at the Seller's Facilities.
(d) SCHEDULE 2.1(M) sets forth a true, correct and complete list of all
of Seller's accounts receivable and notes receivable as of September 9, 1997,
including the aging of each account receivable and note receivable. Except as
set forth on SCHEDULE 3.3(D) attached hereto, Seller has good and marketable
title to each of the accounts receivable and notes receivable listed on SCHEDULE
2.1(M), free and clear of any liens, claims, charges, security interests,
options, claims of offset or other legal or equitable encumbrances.
(e) To the best of Seller's knowledge, the facilities, structures,
machinery and equipment owned or leased by Seller and comprising a portion of
the Assets or utilized by Seller in the conduct of the Business are in good
operating condition and repair, ordinary wear and tear excepted, and are
adequate for the uses to which they are intended to be or are being put. None of
such facilities, structures, machinery or equipment is in need of maintenance or
repairs.
SECTION 3.4. ABSENCE OF CERTAIN CHANGES; SOLVENCY.
(a) Other than the distribution made by Seller to its shareholders on
July 7, 1997, of $2,200,000 (the "JULY DISTRIBUTION"), and except as disclosed
on SCHEDULE 3.4(A) attached hereto or as otherwise specifically contemplated by
the terms and provisions of this Agreement, since June 30, 1997: (i) there has
been no material adverse change in the consolidated net worth of the Business,
(ii) there has been no physical damage, destruction or loss that would, after
taking into account any insurance recoveries payable in respect thereof, have an
adverse effect on the Business Condition, and (iii) no event has occurred and no
condition exists which, individually or in the aggregate, would have a material
adverse effect on this Agreement, the Assets, the Business, or the transactions
contemplated by this Agreement.
(b) Seller is solvent and, after the execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement, will be solvent.
SECTION 3.5. LITIGATION; ORDERS. Except as disclosed on
SCHEDULE 3.5 attached hereto, as of the Effective Date, there are no lawsuits,
actions, administrative or arbitration or other proceedings or governmental
investigations pending or, to Seller's knowledge, threatened by or against
Seller, the Assets or the Business. Except as disclosed on SCHEDULE 3.5, as of
the Effective Date, to Seller's knowledge, there are no judgments or outstanding
orders, injunctions,
20
decrees, stipulations or awards (whether rendered by a court or administrative
agency, or by arbitration) against Seller, the Assets or the Business.
SECTION 3.6. INTELLECTUAL PROPERTY. The Names are the only
material trademarks, service marks or trade names used in connection with the
Business. As of the Effective Date, to Seller's knowledge, no claims have been
asserted by any Person (i) to the effect that the sale of any product or use of
any process as now sold or used by Seller infringes on any patents, (ii) against
the use by Seller of the Names, or (iii) challenging the ownership, validity or
effectiveness of the Names.
SECTION 3.7. LICENSES, APPROVALS, OTHER AUTHORIZATIONS,
CONSENTS, REPORTS, ETC.
(a) The Assets include all of the agreements, materials, and real and
personal property interests and rights reasonably necessary for vehicular and
pedestrian access, ingress and egress to and from the Seller's Facilities, to
operate and maintain the Seller's Facilities, without interference with the
operations and conduct of Buyer's business thereon, all in accordance with the
applicable law, except to the extent that would not have a material adverse
effect on the Business Condition or that would not affect the ability of Seller
to enter into this Agreement or consummate the transactions contemplated hereby
and except for land use permits and related items which must be applied for by
Buyer and issued to Buyer. SCHEDULE 3.7(A) attached hereto includes a list of
all licenses, permits, franchises and other authorizations of any Government
Authority that are necessary for the operation and maintenance of the Business
(the "LICENSES"), true, correct and complete copies of which have been delivered
by Seller to Buyer or otherwise been made available by Seller for Buyer. Except
as disclosed on SCHEDULE 3.7(A), all such Licenses are in full force and effect.
As of the Effective Date, except as disclosed on SCHEDULE 3.7(A), no proceeding
is pending or, to Seller's knowledge, no proceeding is pending or threatened
seeking the revocation or limitation of any such license, permit, franchise or
other authorization.
(b) SCHEDULE 3.7(B) attached hereto lists all registrations, filings,
applications, notices, consents, approvals, orders, qualifications and waivers
required to be made, filed, given or obtained by Seller or any of its Affiliates
with, to or from any Person in connection with the execution, delivery,
performance and consummation of the transactions made the subject of this
Agreement, except for those that become applicable solely as a result of the
specific regulatory status of Buyer or its Affiliates.
SECTION 3.8. LABOR MATTERS. As of the Effective Date, there
are no collective bargaining agreements with labor unions or associations
representing employees of the Business. During the three calendar years
preceding the Closing Date, there have been no union organization efforts
involving Seller's employees, including card signings. As of the Effective Date,
neither Seller nor the Business is involved in any labor dispute, arbitration,
lawsuit or administrative proceeding relating to labor matters involving the
employees of the Business,
21
other than the threatened and pending workers' compensation claims set forth on
SCHEDULE 3.8 attached hereto and the matters described on SCHEDULE 3.5 attached
hereto.
SECTION 3.9. COMPLIANCE WITH LAWS.
(a) Except as indicated on SCHEDULE 3.9(A) attached hereto, the conduct
of the business of the Business complies in all material respects with all
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable thereto, and Seller has obtained all approvals, authorizations,
consents, licenses, franchises and other permits the absence of which would
impair any Asset or Seller's ability to enter into this Agreement or consummate
the transactions contemplated hereby. The parties agree that the representation
contained in the preceding sentence does not relate to or cover environmental
matters, and that the Seller makes no representation or warranty with respect to
environmental matters, except as specifically set forth in Section 3.12.
(b) To Seller's knowledge, neither Seller, nor any shareholder,
director, officer, partner, employee or agent of Seller, nor any other Person
acting on their behalf, has, directly or indirectly, given or agreed to give any
payment (in kind or in cash), gift or similar benefit to any customer, supplier,
governmental employee, lobbyist, labor union, political action committee,
candidate for public office or other Person who is or may be in a position to
help or hinder the business of Seller (or assist any of them in connection with
any actual or proposed transaction) which (i) might subject Buyer to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, might have had an adverse effect on the Assets, the
Business or the operations of Seller, or (iii) if not continued in the future,
might adversely affect the Assets, the Business or Buyer, or might subject the
Buyer to suit or penalty in any private or governmental litigation or
proceeding.
SECTION 3.10. INSURANCE. SCHEDULE 3.10 attached hereto lists
all insurance policies owned or held by Seller on the Effective Date, covering
the Business. As of the Effective Date, all such policies are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the Effective Date have been paid to the extent due, and no notice of
cancellation or termination has been received with respect to any such policy.
SECTION 3.11. CONTRACTS. Except as otherwise disclosed on
SCHEDULE 3.11 attached hereto or SCHEDULE 6.1(A) attached hereto, as of the
Effective Date, Seller is not a party to any (i) employment or consulting
agreement, (ii) distributor or manufacturer's representative contract, (iii)
lease of real or personal property, whether as lessor or lessee, (iv)
consignment of inventory, whether as consignor or consignee, (v) joint venture
or partnership agreement, (vi) technology license agreement, (vii) agreement or
commitment for capital expenditure, (viii) agreement continuing over a period of
more than one (1) year from its date requiring future payment or payments in
excess of $10,000 per year, or (ix) other contract, agreement or arrangement
requiring future payment or payments in excess of $10,000 per year. With respect
to all contracts listed on SCHEDULE 3.11, except as disclosed on said Schedule,
such contracts are legal, valid and binding and in full force and effect in
accordance with their terms, and Seller
22
is not, as of the Effective Date, in breach thereof or default thereunder and
there does not exist under any provision thereof, as of the Effective Date, any
event that, with the giving of notice or the lapse of time or both, would
constitute such a breach or default, except for such failures and such breaches,
defaults and events as to which requisite waivers or consents have been or are
obtained or which would not, individually or in the aggregate, have a material
adverse effect on the Business Condition. To Seller's knowledge, no dispute
exists with respect to any of the contracts listed on SCHEDULE 3.11, except as
described on SCHEDULE 3.11. SCHEDULE 3.11 lists, as of the Effective Date, all
indebtedness owed by Seller, including without limitation, all notes, mortgages,
indentures and other obligations and agreements and other instruments and other
liabilities and obligations, whether accrued, absolute, contingent or otherwise,
for or relating to any lending or borrowing (including assumed debt) effected by
Seller or to which any of the Assets or the properties of the Business are
subject.
SECTION 3.12. ENVIRONMENTAL MATTERS.
(a) DEFINITIONS. For the purposes of this Agreement, unless the context
otherwise specifies or requires, the following terms shall have the meaning
herein specified:
(i) "HAZARDOUS SUBSTANCES LAWS" shall mean all present or
future laws, ordinances, rules, regulations and standards of any
Government Authority relating to the use, analysis, production,
storage, treatment, sale, disposal or transportation of any Hazardous
Materials, including, without limitation, the Resource Conservation and
Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.) ("RCRA"), the
Comprehensive Environmental Response Compensation and Liability Act of
1980 (42 U.S.C. Section 9601 et seq.) ("CERCLA"), the Federal Water
Pollution Control Act (33 U.S.C. Section 1251), the Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Section 136), and
the Clean Air Act, all as may be amended from time to time.
(ii) "HAZARDOUS MATERIALS" shall mean (A) any "hazardous
waste" as defined by RCRA, and regulations promulgated thereunder; (B)
any "hazardous substance" as defined by CERCLA, and regulations
promulgated thereunder; (C) asbestos; (D) polychlorinated biphenyls;
(E) underground storage tanks, whether empty, filled or partially
filled with any substance; (F) any substance the presence of which on
the Seller's Facilities is prohibited by any Hazardous Substances Laws;
and (G) any other substance which by any Hazardous Substances Laws
requires special handling or notification of any federal, state or
local governmental entity in its collection, storage, treatment or
disposal.
(iii) "HAZARDOUS MATERIALS CONTAMINATION" shall mean any
presently existing contamination of any real or personal property,
soil, groundwater, air or other elements or any contamination of the
buildings, facilities, soil, groundwater, air or other elements on, at,
below or of any other property as a result of Hazardous Materials.
23
(b) HAZARDOUS MATERIALS WARRANTIES. Seller hereby represents and
warrants that, except as set forth on SCHEDULE 3.12(B) attached hereto:
(i) To Seller's knowledge, no Hazardous Materials are located
on the Seller's Facilities;
(ii) Neither Seller nor, to Seller's knowledge, any other
person has ever caused or permitted any Hazardous Materials to be
released or disposed of on, under or at the Seller's Facilities or any
part thereof;
(iii) No part of the Seller's Facilities is being used or has,
to Seller's knowledge, been used at any previous time for the
generation, disposal, storage, treatment, processing or other handling
of Hazardous Materials, nor, to Seller's knowledge, is any part of the
Seller's Facilities affected by any Hazardous Materials Contamination;
(iv) To Seller's knowledge, no property adjoining the Seller's
Facilities is being used or has ever been used at any previous time for
the generation, disposal, storage, treatment, processing or other
handling of Hazardous Materials nor, to Seller's knowledge, is any
other property adjoining the Seller's Facilities affected by Hazardous
Materials Contamination;
(v) No investigation, administrative order, consent order and
agreement, litigation or settlement with respect to Hazardous Materials
or Hazardous Materials Contamination is in existence or, to Seller's
knowledge, proposed or threatened with respect to the Seller's
Facilities. No portion of the Seller's Facilities is currently on and,
to Seller's knowledge, has ever been on or been proposed to be on the
National Priorities List under CERCLA or on the CERCLIS or any similar
federal or state "Superfund" or "Superlien" list;
(vi) To the best of Seller's knowledge, Seller has disposed of
all wastes, including those containing any Hazardous Materials, in
compliance with all applicable Hazardous Substances Laws, and Seller
has not received any notice or claim of liability for any off-site
contamination;
(vii) To the best of Seller's knowledge, all environmental
permits required for the operation of the Business conducted at the
Seller's Facilities are listed on SCHEDULE 3.12(B) attached hereto, and
there are no pending or renewal applications for issuance of any
additional environmental permits for the operations conducted at the
Seller's Facilities;
(viii) To the best of Seller's knowledge, Seller has not
transported or arranged for the transportation of any Hazardous
Materials to any location that is listed or
24
proposed for listing on the National Priorities List under CERCLA or on
the CERCLIS or any similar federal or state "Superfund" or "Superlien"
list;
(ix) To the best of Seller's knowledge, there are not now, and
never have been, any underground storage tanks located on the Seller's
Facilities;
(x) To the best of Seller's knowledge, Seller is in material
compliance with all applicable Hazardous Substances Laws and has not
received any notice or claim of liability under any Hazardous
Substances Laws; and
(xi) Seller has provided Buyer with copies of all safety data
sheets for MSDS, which refer to Hazardous Materials which Seller uses
in connection with the Business.
SECTION 3.13. NO AGREEMENTS TO SELL ASSETS. Except as set
forth on SCHEDULE 3.13 attached hereto and except for the transactions
contemplated by this Agreement, and, except for sales of the Inventory in the
ordinary course of business prior to the Closing Date, Seller has no legal
obligation, absolute or contingent, to any Person to sell the Assets or sell the
Business, or to effect any merger, consolidation or other reorganization of
Seller or to enter into any agreement with respect thereto.
SECTION 3.14. BROKERS, FINDERS, ETC. Seller has not employed,
and is not subject to the valid claim of, any broker, finder, consultant or
other intermediary in connection with the transactions contemplated hereby who
would have a valid claim for a fee or commission from Buyer in connection with
such transactions, except MidWest Capital Group, Inc. Seller shall be
responsible for all fees payable to MidWest Capital Group, Inc. and hereby
agrees to indemnify and hold harmless Buyer with respect thereto. The indemnity
obligations of Seller to Buyer under this Section 3.14 shall be absolute and
unconditional obligations of Seller and shall not be subject to the thresholds
and limitations set forth in Article X.
SECTION 3.15. ACCURACY OF REPRESENTATIONS AND WARRANTIES;
SCHEDULES AND EXHIBITS.
(a) No representation, warranty or other statement made by or on behalf
of Seller in this Agreement or any other document executed or to be executed in
connection therewith contains any untrue statement of a material fact or omits
to state any material fact necessary to make the statements herein or therein
taken as a whole not misleading in light of the circumstances under which they
were made.
(b) Disclosure of any fact or item by Seller in any Schedule or Exhibit
hereto referenced by a particular paragraph or section in this Agreement shall,
should the existence of the fact or item or its contents be relevant to any
other paragraph or section, be deemed to be disclosed with respect to that other
paragraph or section whether or not an explicit cross-reference appears.
25
SECTION 3.16. NO IMPLIED REPRESENTATION. NOTWITHSTANDING
ANYTHING CONTAINED IN THIS ARTICLE OR ANY OTHER PROVISION OF THIS AGREEMENT, IT
IS THE EXPLICIT INTENT OF EACH PARTY HERETO THAT SELLER IS NOT MAKING ANY
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE
EXPRESSLY GIVEN IN THIS AGREEMENT, THE SCHEDULES AND THE DOCUMENTS, INSTRUMENTS
AND CERTIFICATES TO BE DELIVERED TO BUYER AT THE CLOSING, INCLUDING, BUT NOT
LIMITED TO, ANY IMPLIED WARRANTY OR REPRESENTATION AS TO CONDITION,
MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE AS TO ANY OF
THE ASSETS AND IT IS UNDERSTOOD THAT BUYER TAKES ALL OF SUCH PROPERTIES AND
ASSETS ON AN "AS IS" AND "WHERE IS" BASIS. It is understood that any cost
estimates, projections or other predictions contained or referred to in the
Schedules hereto and any cost estimates, projections or predictions that have
been or shall hereafter be provided to Buyer or any of its Affiliates, agents or
representatives are not and shall not be deemed to be representations or
warranties of Seller. NOTWITHSTANDING ANY PROVISION OF THIS SECTION 3.16 TO THE
CONTRARY, BUT SUBJECT IN ALL EVENTS TO THE TERMS OF THIS AGREEMENT WITH RESPECT
TO SURVIVAL OF THE REPRESENTATIONS, WARRANTIES AND AGREEMENTS THAT ARE CONTAINED
HEREIN, SELLER ACKNOWLEDGES THAT (A) BUYER IS RELYING ON THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS ARTICLE III AND IN ARTICLE VI IN DECIDING TO ENTER
INTO THIS AGREEMENT, AND (B) BUYER'S DECISION TO CONSUMMATE THE TRANSACTIONS
MADE THE SUBJECT OF THIS AGREEMENT SHALL NOT BE CONSTRUED AS, OR BE DEEMED TO
BE, A WAIVER OF BUYER'S RELIANCE ON THE REPRESENTATIONS AND WARRANTIES CONTAINED
IN THIS ARTICLE III AND IN ARTICLE VI IN ELECTING TO CONSUMMATE THE TRANSACTIONS
MADE THE SUBJECT OF THIS AGREEMENT. BUYER REPRESENTS AND WARRANTS THAT THE
ASSETS DO NOT CONSTITUTE "CONSUMER PRODUCTS" WITHIN THE MEANING OF THE
▇▇▇▇▇▇▇▇-▇▇▇▇ WARRANTY ACT AND THAT IF ANY WARRANTY IS NEVERTHELESS IMPOSED
UNDER THAT ACT IT SHALL BE LIMITED TO A PERIOD OF THIRTY (30) DAYS.
SECTION 3.17. CONSTRUCTION OF CERTAIN PROVISIONS. It is
understood and agreed that neither the specification of any dollar amount in the
representations and warranties contained in this Agreement nor the inclusion of
any specific item in the Schedules or Exhibits is intended to imply that such
amounts or higher or lower amounts, or the items so included or other items, are
or are not material, and neither party shall use the fact of the setting of such
amounts or the fact of the inclusion of any such item in the Schedules or
Exhibits in any dispute or controversy between the parties as to whether any
obligation, item or matter is or is not material for purposes of this Agreement.
26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
SECTION 4.1. ORGANIZATION; AUTHORIZATION; ETC. Buyer is a
corporation duly organized and validly existing under the laws of the State of
Delaware. Buyer has full power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance of Buyer's obligations hereunder and the consummation of the
transactions contemplated hereby by Buyer have been duly and validly authorized
by all necessary corporate proceedings on the part of Buyer and no other
proceedings or actions on the part of Buyer, its board of directors or
stockholders are necessary therefor. The execution, delivery and performance by
Buyer of this Agreement will not (i) violate any provision of the certificate of
incorporation or bylaws or similar organizational instrument of Buyer, (ii)
violate any provision of, or be an event that is (or with the passage of time
will result in) a violation of, or result in the acceleration of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both) any obligation under, or result in the imposition of any lien upon or the
creation of a security interest in any of Buyer's assets or properties pursuant
to, any mortgage, lien, lease, agreement, instrument, order, arbitration award,
judgment, injunction or decree to which Buyer is a party or by which Buyer is
bound, or (iii) violate or conflict with any statute, rule or regulation
applicable to Buyer or any of its properties or assets or any other restriction
of any kind or character to which Buyer is subject. This Agreement has been duly
executed and delivered by Buyer, and, assuming the due execution and delivery of
this Agreement by Seller, this Agreement constitutes the legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting the rights and remedies of creditors
generally and to general principles of equity (regardless of whether in equity
or at law).
SECTION 4.2. BROKERS, FINDERS, ETC. Buyer has not employed,
and is not subject to the valid claim of, any broker, finder, consultant or
other intermediary in connection with the transactions contemplated hereby who
would have a valid claim for a fee or commission from Seller in connection with
such transactions. Buyer agrees to indemnify and hold harmless Seller with
respect to any claims of any broker, finder, consultant or other intermediary
claiming through Buyer. The indemnity obligations of Buyer to Seller under this
Section 4.2 shall be absolute and unconditional obligations of Seller and shall
not be subject to the thresholds and limitations set forth in Article X.
SECTION 4.3. LICENSES, APPROVALS, OTHER AUTHORIZATIONS,
CONSENTS, REPORTS, ETC. SCHEDULE 4.3 attached hereto lists all registrations,
filings, applications, notices, consents, approvals, orders, qualifications or
waivers required to be made, filed, given or obtained by Buyer with, to or from
any Person in connection with the execution, delivery, performance and
27
consummation of the purchase of the Assets and the Business, except for those
that become applicable solely as a result of the specific regulatory status of
Seller or its Affiliates.
SECTION 4.4. ACCURACY OF REPRESENTATIONS AND WARRANTIES;
SCHEDULES AND EXHIBITS.
(a) No representation, warranty or other statement made by or on behalf
of Buyer in this Agreement or any other document executed or to be executed in
connection therewith contains any untrue statement of a material fact or omits
to state any material fact necessary to make the statements herein or therein
taken as a whole not misleading in light of the circumstances under which they
were made.
(b) Disclosure of any fact or item by Buyer in any Schedule or Exhibit
hereto referenced by a particular paragraph or section in this Agreement shall,
should the existence of the fact or item or its contents be relevant to any
other paragraph or section, be deemed to be disclosed with respect to that other
paragraph or section whether or not an explicit cross-reference appears.
28
ARTICLE V
COVENANTS OF SELLER AND BUYER
SECTION 5.1. INVESTIGATION OF BUSINESS; ACCESS TO PROPERTIES
AND RECORDS.
(a) After the date hereof, Seller shall afford to representatives of
Buyer reasonable access to its offices, plants, properties, books and records
during normal business hours, in order that Buyer may have full opportunity to
make such investigations as it desires of the affairs of Seller and the
Business; PROVIDED, HOWEVER, that such investigations shall be upon reasonable
notice and shall not unreasonably disrupt the personnel and operations of
Seller. All requests for access to the offices, plants, properties, books, and
records relating to Seller and the Business shall be made to such
representatives of Seller as Seller shall designate, who shall be solely
responsible for coordinating all such requests and all access permitted
hereunder.
(b) Buyer shall, at Buyer's sole cost and expense, obtain within
fifteen (15) days after the Effective Date:
(i) a current on-the-ground, as-built survey for each separate
tract of the Seller's Facilities made by a registered and licensed
public surveyor satisfactory to Buyer (collectively, the "SURVEY"),
containing a certificate of the surveyor in the form satisfactory to
Buyer, and including the plotting and permanent location of all
easements, rights-of-ways, encroachments, improvements, building
set-back lines, fences, gullies, ditches marshes swamps and other areas
appearing to be "wetlands," above-ground and underground storage tanks,
and other matters located on or affecting the Seller's Facilities; and
(ii) a complete, up-to-date and binding commitment for title
insurance covering the Seller's Facilities, issued by Escrow Agent
(collectively, the "TITLE COMMITMENT"), together with true, legible and
complete copies of all documents referred to in the Title Commitment.
(c) If the Survey shows any matters that are reasonably objectionable
to Buyer ("SURVEY OBJECTIONS"), or if the Title Commitment reveals any matters
that are reasonably objectionable to Buyer ("TITLE OBJECTIONS"), Buyer shall so
notify Seller of such Survey Objections and/or Title Objections in writing (an
"OBJECTION NOTICE") within ten (10) days from the latest of Buyer's receipt of
the Survey or the Title Commitment. Seller hereby agrees to use its best efforts
and reasonable diligence to correct and cure such Survey Objections and/or Title
Objections, within ten (10) days after receiving Buyer's Objection Notice.
Seller shall pay whatever costs are necessary to clear the Seller's Facilities
of monetary liens or encumbrances. If any lien or encumbrance of any nature or
kind affecting the Seller's Facilities (or any part thereof) is filed of record
by Seller or with Seller's consent or approval after the Effective Date (except
as may be expressly required or permitted elsewhere herein), then Seller shall
be
29
obligated to remove and obtain a full and final recorded release of such lien or
encumbrance upon demand by Buyer without regard to the cost required to remove
it.
(d) If any of the Title Objections and/or Survey Objections which
Seller is not required to cure (or which Seller is required to cure subject to
best efforts as set out above but which cannot with best efforts and reasonable
diligence be cured to Buyer's reasonable satisfaction within the time period set
out above) are not cured within the time period set forth above, then Buyer, at
Buyer's option, may elect, as Buyer's sole and exclusive remedy, to either (i)
cancel this Agreement, in which event the Deposit shall be refunded to Buyer
free and clear of all rights and claims of Seller with respect thereto, neither
Buyer nor Seller shall have any further rights or obligations under this
Agreement, and this Agreement shall terminate, or (ii) waive such uncured Title
Objections and/or Survey Objections in writing. If Buyer elects option (ii),
then Seller shall deliver the Seller's Facilities to Buyer at the Closing
subject to the Survey Objections and/or Title Objections as to which objection
has been waived.
(e) If Buyer fails, within the time period provided for in Section
5.1(c), to notify Seller of any particular Survey Objections and/or Title
Objections as to matters disclosed by the Survey or the Title Commitment, then
Buyer shall be deemed to have waived objection to those matters, such matters
shall be considered Permitted Liens for purposes of this Agreement, and the
Seller's Facilities, if purchased, shall be purchased subject to such Permitted
Liens.
SECTION 5.2. EFFORTS; OBTAINING CONSENTS; ANTITRUST LAWS.
(a) Subject to the terms and conditions herein provided, Seller and
Buyer each agree to use reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated hereby, and to cooperate with the other in connection
with the foregoing, including using all reasonable efforts (i) to obtain all
necessary waivers, consents and approvals from other parties to loan agreements,
leases and other contracts, (ii) to obtain all consents, approvals and
authorizations that are required to be obtained under any Federal, state, local
or foreign law or regulation, (iii) to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
hereto to consummate the transactions contemplated hereby, (iv) to effect all
necessary registrations and filings including, but not limited to, any filings
required under the HSR Act and submissions of information requested by any
Government Authority, (v) to deliver to Buyer prior to or at the Closing
estoppel certificates in form and substance reasonably satisfactory to Buyer and
Seller executed by the account debtors (as to any account debtor whose accounts
receivable or notes payable to Seller total in excess of $15,000) containing
such other representations and warranties as may be reasonably requested by
Buyer, and (vi) to fulfill all conditions to this Agreement.
(b) Buyer further hereby agrees that, in the event Seller fails to
deliver any or all of the estoppel certificates described in Section 5.2(a)(v),
and Buyer nevertheless elects to consummate the purchase of the Assets and the
Business, Buyer shall be deemed to have forever waived any and all rights or
claims it has or might have with respect to Seller's failure to obtain
30
any such estoppel certificates prior to Closing. Seller hereby agrees that,
notwithstanding Seller's efforts to obtain the estoppel certificates described
in Section 5.2(a)(v), Buyer shall have the right to contact any third party who
conducts any business with the Business for the purpose of confirming the
relative rights, liabilities and obligations between Seller and such third party
to the extent related to the Business.
(c) Seller and Buyer further covenant and agree, with respect to any
threatened or pending preliminary or permanent injunction or other order, decree
or ruling or statute, rule, regulation or executive order that would adversely
affect the ability of the parties hereto to consummate the transactions
contemplated hereby, to respectively use all reasonable efforts to prevent the
entry, enactment or promulgation thereof, as the case may be. In furtherance and
not in limitation of the foregoing, Buyer and Seller shall use all reasonable
efforts to resolve such objections, if any, as may be asserted with respect to
the transactions contemplated hereby under any Antitrust Law. If any suit is
instituted challenging any of the transactions contemplated hereby as violative
of any Antitrust Law, Buyer shall use all reasonable efforts to take such action
as may be required (i) by the applicable Government Authority (including the
Antitrust Unit of the United States Department of Justice (the "DOJ") or the
Federal Trade Commission (the "FTC")) in order to resolve such objections as
such Government Authority may have to such transactions under such Antitrust
Law, or (ii) by any domestic or foreign court or similar tribunal, in any suit
brought by a private party or Government Authority challenging the transactions
contemplated hereby as violative of any Antitrust Law, in order to avoid the
entry of, or to effect the dissolution of, any injunction, temporary restraining
order or other order that has the effect of preventing the consummation of any
of such transactions.
(d) Notwithstanding any of the terms or provisions of this Section 5.1
to the contrary, if either party in its reasonable judgment determines, upon
advice from counsel, that its participation in any pending or threatened
investigation or litigation relating to this Agreement would have a material
adverse effect upon such party or upon the Business, the Assets or the Business
Condition, then such party may terminate the Agreement without any further
obligation or liability to the other party hereto for damages or otherwise.
Without limiting the generality of the foregoing, also and specifically, the
entry by a court, in any suit brought by a private party or Government Authority
challenging the transactions contemplated hereby as violative of any Antitrust
Law, of an order or decree permitting the transactions contemplated hereby, but
requiring that any of the Assets, or any of the businesses, product lines or
assets of any of Seller or Buyer or their respective Affiliates be divested or
held separately by Seller or Buyer, or that would otherwise materially limit
Seller's or Buyer's freedom of action with respect to, or its ability to retain,
the Business or any portion thereof or any of Seller's or Buyer's or their
respective Affiliates' other assets or businesses, shall be deemed a failure to
satisfy the conditions specified in Sections 8.2, 8.3 and 9.2, and thereafter
neither Seller nor Buyer shall have any further rights or obligations hereunder.
(e) Each party hereto shall promptly inform the other of any material
communication from the FTC, the DOJ or any other Government Authority regarding
any of the transactions contemplated hereby. If either party or any Affiliate
thereof receives a request for additional
31
information or documentary material from any such Government Authority with
respect to the transactions contemplated hereby, then such party will endeavor
in good faith to make, or cause to be made, as soon as reasonably practicable
and after consultation with the other party where such consultation is necessary
or appropriate, an appropriate response in compliance with such request. Buyer
will advise Seller promptly in respect of any understandings, undertakings or
agreements (oral or written) that Buyer proposes to make or enter into with the
FTC, the DOJ or any other Government Authority in connection with the
transactions contemplated hereby to the extent such understandings, undertakings
or agreements (oral or written) may affect Seller in any material respect.
SECTION 5.3. FURTHER ASSURANCES. Seller and Buyer agree that,
from time to time, whether before, at or after the Closing Date, each of them
will, and will cause their respective Affiliates to, execute and deliver such
further instruments of conveyance and transfer and take such other action as may
be reasonably necessary to carry out the purposes and intents of this Agreement.
Without limiting the generality of the preceding sentence, Buyer shall cooperate
with Seller to enable Seller to obtain and take possession of all Excluded
Assets, from and after the Closing. Furthermore, after the Closing, and for no
further consideration, Seller shall (a) perform all acts (including, without
limitation, the use of its best efforts) to enable Buyer to accomplish the
transfer or issuance of all authorizations of any Government Authority and all
other registrations, permits, approvals and the like as contemplated by this
Agreement and as shall be required from time to time for Buyer to operate the
Business, and (b) execute, acknowledge and deliver such assignments, transfers,
consents and other documents and instruments as Buyer or its counsel may
reasonably request, in each case, to vest in Buyer, and protect Buyer's right,
title and interest in, and enjoyment of, the Assets and the Business intended to
be conveyed, assigned, transferred and granted to Buyer pursuant to this
Agreement. If requested by Buyer, Seller further agrees to use its reasonable
best efforts to prosecute or otherwise enforce in its own name for the benefit
of Buyer any claims, rights or benefits that are transferred to Buyer by this
Agreement and that require prosecution or enforcement in any of Seller's name.
Any prosecution or enforcement of claims, rights or benefits under this Section
5.3 shall be at Buyer's sole expense, unless the prosecution or enforcement is
made necessary by a breach of this Agreement by Seller. Following the Closing,
Seller shall refer to Buyer, as promptly as practicable, any telephone calls,
letters, orders, notices, requests, inquiries and other communications relating
to the Assets and the Business transferred or granted at such Closing.
Notwithstanding the generality of the foregoing, Seller acknowledges and agrees
that, if, after the Closing, Seller receives any payments or other consideration
attributable to the accounts receivable or notes receivable included within the
Assets, then Seller shall hold any and all such payments or consideration in
trust for the benefit of Buyer and Seller shall, as soon as practicable,
segregate and turn over to Buyer any and all such payments and consideration.
Seller further acknowledges and agrees that the agreements of Seller contained
in the preceding sentence shall be absolute and unconditional obligations of
Seller and shall not be subject to the thresholds and limitations set forth in
Article X.
SECTION 5.4. PUBLIC ANNOUNCEMENTS. Seller and Buyer will
consult with each other before issuing, or permitting any agent or Affiliate to
issue, any press releases or
32
otherwise making or permitting any agent or Affiliate to make, any public
statements with respect to this Agreement and the transactions contemplated
hereby. Notwithstanding the foregoing, Buyer shall be permitted to file any
required disclosures or issue any press releases relating to the purchase of the
Assets and the Business as may be required by the federal securities laws or by
any securities exchange on which securities of Buyer or its Affiliates are
listed, and Seller and Buyer shall, upon the Closing of the purchase of the
Assets and the Business, issue a joint press release in form and substance
reasonably satisfactory to Buyer and Seller.
SECTION 5.5. ACCOUNTS AND NOTES PAYABLE NOTICES. Seller shall
assist Buyer and Buyer's agents and representatives in delivering notices from
Seller, in form and substance reasonably satisfactory to Seller and Buyer, and
at Buyer's sole cost and expense, to each Person to whom Seller anticipates it
will owe an Account Payable or note payable as of the Closing Date notifying
such Person that Seller shall remain liable for the payment of such Account
Payable or note payable pursuant to the terms hereof. Seller hereby covenants
and agrees that it will provide Buyer with a list of the Persons to whom such
notice should be addressed; it being understood that the failure to transmit any
such notice to any such Person shall not be deemed a breach of this Agreement.
SECTION 5.6. POST-CLOSING CONFIDENTIALITY. After the Closing,
Seller shall not use or disclose to any Person any trade or business secrets
relating to the Business, and Seller shall not intentionally disclose, directly
or indirectly, any such information, and shall cause such information to be kept
confidential and not used in any way detrimental to Buyer; PROVIDED, that (i)
Seller may use or disclose any such information which has been publicly
disclosed (other than directly or indirectly by Seller after the Effective
Date), (ii) to the extent that Seller may become legally compelled to disclose
any of such information, Seller may disclose such information if Seller has used
its best efforts, and shall have afforded Buyer the opportunity, to obtain any
appropriate protective order, or other satisfactory assurance of confidential
treatment, for the information to be so disclosed, and (iii) Seller may disclose
any such information to Seller's agents and experts who agree to be bound by
this confidentiality provision.
SECTION 5.7. CONDUCT OF BUSINESS. From the Effective Date
through the Closing Date, except as otherwise provided for in, or contemplated
by, this Agreement, and, except as consented to or approved by Buyer in writing,
Seller covenants and agrees that:
(a) Seller shall operate the Business in the ordinary course;
(b) Seller shall not (i) create, incur or assume any long-term or
short-term debt for money borrowed (including obligations in respect of capital
leases), except in connection with replacements of maturing or other debt, (ii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any Person other
than obligations relating to the Business, or (iii) make any loans, advances or
capital contributions to or investments in, any Person (except for customary
loans or advances to employees);
33
(c) Seller shall not acquire any assets similar to the Assets except
for inventory acquired in connection with the Business in the ordinary course of
business;
(d) except as required by law or contractual obligations or other
understandings or arrangements existing on the Effective Date, Seller shall not
(i) increase in any manner the base compensation of, or enter into any new bonus
or incentive agreement or arrangement with, any of its directors, officers or
other employees, (ii) pay or agree to pay any pension, retirement allowance or
similar employee benefit to any such director, officer or employee, whether past
or present, (iii) make any distribution, bonus or extraordinary payment to any
new or existing director, officer or employee, (iv) enter into any new
employment, severance, consulting, or other compensation agreement with any new
or existing director, officer or employee, or (v) commit the Business to any
additional pension, profit-sharing, deferred compensation, group insurance,
severance pay, retirement or other employee benefit plan, fund or similar
arrangement or amend or commit the Business to amend any of such plans, funds or
similar arrangements in existence on the Effective Date;
(e) except in the ordinary course of business or as required by law or
contractual obligations existing on the date hereof or as provided for in or
contemplated by this Agreement or as may be approved in advance in writing by
Buyer, Seller shall not (i) create any new security interest, lien or
encumbrance on its properties or assets, or (ii) enter into any joint venture or
partnership;
(f) Seller shall maintain books and records of the Business as
previously maintained and shall deliver to Buyer, within five (5) days after
preparation thereof, current financial statements reflecting the results of
operation of the Business, including, without limitation, balance sheets, profit
and loss statements and statements of changes in working capital;
(g) Seller shall not enter into any contract or agreement except in the
ordinary course of business or with the prior written consent of Buyer; and
(h) Seller shall not agree to take any action prohibited by this
Section 5.7.
Notwithstanding the provisions of this Section 5.7, nothing in this
Agreement shall be construed or interpreted to prevent Seller or the Business,
to the extent such actions do not impair Seller's ability to perform its
obligations under this Agreement, from engaging in any transaction incident to
the normal cash management procedures of Seller or the Business, including
short-term investments in bank deposits, money market instruments, time
deposits, certificates of deposit and bankers' acceptances and borrowings for
working capital purposes and purposes of providing additional funds to the
Business in the ordinary course of business.
SECTION 5.8. MAINTENANCE OF THE ASSETS. From the Effective
Date through the Closing Date, Seller will maintain the Assets in a reasonably
diligent manner and, in particular, Seller shall use its best efforts:
34
(a) Not to cancel or permit any insurance in effect on the Effective
Date relating to Seller, the Assets or the Business to lapse or terminate
(unless renewed or replaced by like coverage), without the prior written consent
of Buyer;
(b) Not to violate or fail to comply with any laws applicable to
Seller, the Assets or the Business without the prior written consent of Buyer;
(c) To keep and maintain the Assets in as good a condition as they
exist on the Effective Date and continue to store the Assets in accordance with
prudent industry practices; and
(d) Not to take, or omit to take, any action that would have the effect
of violating any of the representations, warranties, covenants and agreements of
Seller contained in this Agreement.
SECTION 5.9. PRESERVATION OF BUSINESS. Subject to the terms
and conditions hereof, until the Closing, Seller shall, and shall cause the
Business to, use best efforts to preserve the business of the Business intact,
to keep available to the Business the services of the Active Employees and to
preserve the goodwill of customers, suppliers, and others having business
relations with the Business.
SECTION 5.10. MAINTENANCE OF THE RECORDS. Until the earlier of
the termination of this Agreement or the Closing and delivery of the Records to
Buyer in accordance with the terms and conditions of this Agreement, Seller (a)
shall maintain the Records where presently located in the Seller's Facilities,
(b) shall not remove any of the Records, (c) shall continue to input data into
the Seller's computer related to the Assets, (d) shall not sell, transfer or
otherwise assign any right, title or interest in or to the Records to any third
party, and (e) shall take all reasonable steps to protect Buyer's interest in
the Records.
SECTION 5.11. EXCLUSIVE DEALINGS. During the term of this
Agreement, neither Seller nor any of its Affiliates shall initiate, solicit or
encourage, or take any other action to facilitate, any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to, any
sale of all or a portion of the Assets to any other Person (a "COMPETING
TRANSACTION"), or negotiate with any Person in furtherance of such inquiries, or
consummate a Competing Transaction.
SECTION 5.12. NOTICE OF DEVELOPMENTS. From and after the
Effective Date and until the Closing Date, Seller shall give prompt notice to
Buyer of any material development affecting the Assets, the Business, and the
leases, liabilities, financial condition, operations, employee relations or
future prospects of Seller. Seller shall (a) give prompt notice to Buyer of any
material development affecting the ability of the parties to consummate the
purchase and sale of the Assets and the Business as contemplated by this
Agreement, and (b) promptly notify Buyer in writing of any events, facts and
occurrences arising subsequent to the Effective Date which could result in any
breach of any representation or warranty or breach of any covenant
35
contained in or which could have the effect of making any of the representations
and warranties in this Agreement false or misleading in any respect.
SECTION 5.13. SUPPLEMENTS TO SCHEDULES. From time to time
prior to the Closing Date, Seller will promptly supplement or amend the
Schedules hereto with respect to any matter hereafter arising which, if existing
or occurring at or prior to the Effective Date, would have been required to be
set forth or described in the Schedules or which is necessary to correct any
information in the Schedules or in any representation and warranty of Seller
which has been rendered inaccurate thereby. No such supplement or amendment
shall be deemed to cure any breach of any representation or warranty made in
this Agreement by Seller.
36
ARTICLE VI
EMPLOYEE BENEFITS
SECTION 6.1. EMPLOYEE BENEFIT PLANS. Seller hereby represents
and warrants to Buyer as follows:
(a) SCHEDULE 6.1(A) lists all compensation and benefit plans, contracts
and arrangements (other than routine administrative procedures or
government-required programs) in effect as of the Effective Date sponsored or
maintained by Seller or its Affiliates including all pension, profit sharing,
savings and thrift, bonus, incentive or deferred compensation, severance pay and
medical and life insurance plans in which any current or former employees of
Seller or their respective dependents (collectively, "BUSINESS EMPLOYEES")
participate (collectively, "BUSINESS EMPLOYEE BENEFIT PLANS").
(b) All Business Employee Benefit Plans which are "employee benefit
plans," as defined in Section 3(3) of ERISA, are in compliance with and have
been administered in compliance with all applicable requirements of law,
including but not limited to the Code and ERISA, and all contributions or
premiums required to be made to each such plan under the terms of such Plan,
ERISA or the Code for all periods of time prior to the Effective Date and the
Closing Date have been or will be, as the case may be, made or accrued.
(c) Except as otherwise set forth on SCHEDULE 6.1(C), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any material payment
(including severance, unemployment compensation, golden parachute or otherwise)
becoming due under any Business Employee Benefit Plan, (ii) materially increase
any benefits otherwise payable under any Business Employee Benefit Plan, or
(iii) result in the acceleration of the time of payment or vesting of any such
benefits to any material extent.
SECTION 6.2. TERMINATION OF PARTICIPATION. Except as otherwise
provided in this Article VI, the active participation of all Business Employees
in each Business Employee Benefit Plan shall cease as of the Closing Date and no
additional benefits shall be accrued thereunder for such employees.
SECTION 6.3. [INTENTIONALLY LEFT BLANK]
SECTION 6.4. TERMINATION OF SELLER'S EMPLOYEES.
(a) Subject to the provisions of Section 6.4(b), on the Closing Date,
Seller shall terminate all personnel employed by Seller being more particularly
identified on SCHEDULE 6.4(A), and any Persons which are hired by Seller to
replace such employees prior to the Closing Date (collectively, "ACTIVE
EMPLOYEES") effective as of 12:00 midnight on the Closing Date, and Seller shall
bear the cost of the termination of such Active Employees; PROVIDED, HOWEVER,
that Buyer shall have the right to offer employment to such Active
37
Employees on such terms and conditions as may be acceptable to Buyer in its sole
discretion (the Persons actually hired by Buyer are referred to herein as the
"HIRED EMPLOYEES"). Buyer agrees that it will first hire Hired Employees from
the existing full time pool of Active Employees before it hires any of Seller's
temporary workers.
(b) Buyer shall indemnify and shall hold Seller and the Seller
Indemnified Parties harmless from and against all Covered Liabilities with
respect to all Hired Employees for all actions of Buyer occurring after the
Closing Date, including any Covered Liabilities with respect to Hired Employees
arising out of the transactions contemplated by this Agreement. Without limiting
the foregoing, Buyer shall indemnify and shall hold Seller and the Seller
Indemnified Parties harmless from and against any claims asserted by any Hired
Employee for any severance package from Seller.
(c) Seller acknowledges and agrees that, pursuant to the terms of the
Seller's Non- Compete Agreement, neither Seller nor any Affiliate will hire or
offer to hire any of the Active Employees for a period of five (5) years after
the Closing Date.
(d) Notwithstanding anything in this Agreement to the contrary, Seller
and Buyer covenant and agree to cooperate and to consult with each other to
ensure that neither Seller nor Buyer, nor both of them, violate the Worker
Adjustment and Retraining Notification Act ("WARN ACT"), or any federal or state
equal opportunity anti-discrimination, wage and hour or any other employment
law, rule or regulation that is or may be applicable to the provisions hereof
(collectively, "EMPLOYMENT LAWS"). Each of Seller and Buyer covenant and agree
that neither will take any separate actions or omissions, or joint actions or
omissions, which would cause either Seller or Buyer, or both, to violate any of
the Employment Laws. Seller and Buyer further covenant and agree that in the
event any of the Employment Laws are violated, Seller shall be solely
responsible and liable for any and all Claims relating to any violation by
Seller of the Employment Laws (except to the extent Seller is indemnified by
Buyer for violations of Employment Laws by Buyer with respect to the Hired
Employees pursuant to the terms of this Agreement), and Buyer shall be solely
responsible and liable for any and all Claims relating to any violation by Buyer
of the Employment Laws.
(e) To the extent permitted under applicable law, Buyer agrees to use
reasonable efforts to assist the Hired Employees in rolling over any amounts
accrued for the benefit of such Hired Employees under Seller's pension and
profit sharing plan(s) to the 401(k) Plan maintained by Buyer. Any such
transfers shall occur as soon as practicable after all legal and administrative
prerequisites are met after the Closing Date.
(f) Buyer agrees that notwithstanding any contrary employment policy of
Buyer in effect as of the Effective Date or the Closing Date, any Hired Employee
who as of the Closing Date is or will be employed by Seller for a period of at
least ten (10) years, shall be entitled to receive four (4) weeks of paid
vacation after having worked for Seller (and, if applicable, Buyer after the
Closing Date) for a period of fifteen (15) years. Moreover, those Hired
Employees
38
who as of the Closing Date have been employed by Seller for at least fifteen
(15) years shall continue to receive four (4) weeks of paid vacation.
(g) Buyer further agrees that notwithstanding any contrary employment
policy of Buyer in effect as of the Effective Date or the Closing Date, any
Hired Employee who as of the Closing Date is actively participating in Seller's
tuition reimbursement program shall be entitled to continue to receive the
benefits accorded thereunder for so long as such employee continues to
participate in such continuing education programs. Hired Employees who are not
as of the Closing Date participating in such tuition reimbursement program shall
not be offered such program after the Closing Date. SCHEDULE 6.4(G) attached
hereto lists all of the Active Employees currently participating in Seller's
tuition reimbursement program.
39
ARTICLE VII
TAX MATTERS
SECTION 7.1. TAX RETURNS. Seller represents and warrants that
all Tax returns required to be filed for taxable periods ending on or prior to
the Closing Date by, or with respect to any of the Assets, Seller or the
Business have been or will be filed in accordance with all applicable laws. All
Taxes with respect to Seller, the Assets or the Business (whether or not
requiring the filing of a return and including any interest, penalties and
additions thereto) due and payable have been, and as of the Closing Date will
have been, timely paid in full. Neither Seller nor any Affiliate of Seller nor
any member of an affiliated or combined group of which Seller or any Affiliate
of Seller is a member is a party to any threatened action or proceeding for
assessment or collection of Taxes and no claim for assessment or collection of
Taxes has been asserted against Seller, any Affiliate of Seller or any member of
such affiliated or combined group. Seller represents and warrants that SCHEDULE
7.1 attached hereto sets forth the name, address and account number of all
taxing authorities for which Seller has paid Taxes for the three (3) years
preceding the Effective Date. Seller is not a foreign person within the meaning
of Section 1445 of the Code.
SECTION 7.2. SALES, TRANSFER AND SIMILAR TAXES. Buyer shall be
liable for, and shall hold harmless Seller and the Seller Indemnified Parties,
from and against any and all documentary stamp Taxes and surtaxes levied by the
States of Ohio and Kentucky in connection with the transfer of the Assets to
Buyer, and all other Taxes and fees levied in connection with the transfer of
the Assets to Buyer, including but not limited to sales, transfer, use, and
filing fees and Taxes. Buyer and Seller shall each be liable for, and shall hold
harmless the other party and the Seller Indemnified Parties and the Buyer
Indemnified Parties, as the case may be, from and against any income Taxes
levied against such party in connection with the transactions contemplated by
this Agreement.
SECTION 7.3. COOPERATION AND EXCHANGE OF INFORMATION.
(a) As soon as practicable, but in any event within thirty (30) days
after Seller's request, from and after the Closing Date, Buyer shall provide
Seller with such cooperation and shall deliver to Seller such information and
data concerning the pre-Closing operations of the Business and make available
such knowledgeable employees of the Business as Seller may reasonably request,
including providing the information and data required by Seller's customary Tax
and accounting questionnaires, in order to enable Seller to complete and file
all Tax returns which it or its Affiliates may be required to file with respect
to the operations and business of the Business through the Closing Date or to
respond to audits by any taxing authorities with respect to such operations and
to otherwise enable Seller to satisfy its internal accounting and Tax
requirements. Such cooperation and information shall include promptly forwarding
copies of appropriate notices and forms or other communications received from or
sent to any taxing authority which relate to the operations and business of the
Business through the Closing Date, and providing copies of all relevant Tax
returns, together with accompanying schedules and
40
related workpapers, documents relating to rulings or other determinations by any
taxing authority and records concerning the ownership and Tax basis of property,
which Buyer may possess and which relate to the operation and business of the
Business through the Closing Date. Buyer shall make its employees and facilities
available on a mutually convenient basis to provide explanation of any documents
or information provided hereunder.
(b) For a period of seven (7) years after the Closing Date or such
longer period as may be required by law, Buyer shall retain in accordance with
I.R.S. Rev. Proc. 86-19 and 91- 59, and neither destroy nor dispose of, all Tax
returns, books and records (including computer files) of, or with respect to the
activities of, the Business for all taxable periods ending on or prior to the
Closing Date. Thereafter, Buyer shall not destroy or dispose of any such Tax
returns, books or records unless it first uses good faith efforts to offer such
Tax returns, books and records to Seller in writing at least sixty (60) days
prior to such proposed destruction or disposition; PROVIDED, HOWEVER, that sixty
(60) days after Buyer offers such Tax returns, books or records to Seller in
writing, if Seller does not accept such offer, Buyer shall be free to dispose of
or destroy such records and if Seller accepts such offer, Buyer shall no longer
have any obligation hereunder with respect to records delivered to Seller and
provided further, however, that Seller shall not, in any event, have any claim
against Buyer or Buyer's successors, assigns or Affiliates for any failure by
Buyer or Buyer's successors, assigns or Affiliates to give such notice of
proposed destruction or disposition. Seller shall have the right to access any
and all Tax Returns, books and records retained by Buyer as Seller may
reasonably require upon reasonable notice to Buyer.
(c) Buyer and Seller and their respective Affiliates shall cooperate in
the preparation of all Tax returns relating in whole or in part to taxable
periods ending on or before or including the Closing Date that are required to
be filed after such date, a list of which is set forth on SCHEDULE 7.3(C)
attached hereto. Such cooperation shall include, but not be limited to,
furnishing prior years' Tax returns or return preparation packages illustrating
previous reporting practices or containing historical information relevant to
the preparation of such Tax returns, and furnishing such other information
within such party's possession requested by the party filing such Tax returns as
is relevant to their preparation. In the case of any state, local or foreign
joint, consolidated, combined, unitary or group relief system Tax returns, such
cooperation shall also relate to any other taxable periods in which one party
could reasonably require the assistance of the other party in obtaining any
necessary information.
(d) Seller shall have the right, at its own expense, to control any
audit or examination by any taxing authority ("TAX AUDIT"), initiate any claim
for refund, contest, resolve and defend against any assessment, notice of
deficiency, or other adjustment or proposed adjustment relating to any and all
Taxes for any taxable period ending on or before the Closing Date with respect
to the Business. In this regard, Seller agrees, notwithstanding any other
provision of this Agreement, to indemnify, defend, and hold harmless Buyer and
the Buyer Indemnified Parties from and against any and all claims, liabilities,
damages, losses, actions, causes of action, costs fees and expenses, including
without limitation, court costs and attorney's fees and expenses, in any way
arising out of any such Tax Audit. The indemnities of Seller contained in this
41
Section 7.3(d) shall be absolute and unconditional obligations of Seller and
shall not be subject to the thresholds and limitations set forth in Article X.
(e) If either party fails to provide any information reasonably
requested by the other party that such other party is obligated to provide to
the requesting party pursuant to the terms of this Agreement in the time
specified herein, or if no time is specified pursuant to this Section 7.3,
within a reasonable period, or otherwise fails to do any act required of it
under this Section 7.3, then the other party shall be obligated, notwithstanding
any other provision of this Agreement, to indemnify the requesting party and the
Seller Indemnified Parties or the Buyer Indemnified Parties, as the case may be,
and the other party shall so indemnify and hold harmless the requesting party
and the Seller Indemnified Parties or the Buyer Indemnified Parties, as the case
may be, from and against any and all costs, claims or damages, including all
Taxes or deficiencies thereof, payable as a result of such failure.
SECTION 7.4. PRORATIONS.
(a) Any paid or unpaid Taxes relating to the Assets or the Business for
the periods during which the Closing occurs, including, without limitation, ad
valorem taxes, personal property taxes and inventory taxes, if applicable
(collectively, the "PRORATED TAXES"), shall not be deemed to be part of the
Assumed Liabilities or Assets to be acquired by Buyer, but shall be prorated
between Seller and Buyer as provided in this Section 7.4. Any Prorated Taxes
shall be apportioned between Seller and Buyer as of the Closing Date, with Buyer
bearing only that portion of such expense as the number of days beginning with
the first day after the Closing Date to the end of such period bears to the
total number of days in the applicable period and Seller bearing only that
portion of such expense as the number of days in such period prior to and
including the Closing Date bears to the total number of days in the applicable
period. Buyer and Seller shall each promptly pay to the other any Prorated Taxes
properly attributable to one party, but paid by the other, and, to the extent
practicable, all Taxes subject to proration hereunder shall be adjusted in cash
by the parties hereto at Closing. To the extent not adjusted in cash at Closing,
all requests for payment of Taxes properly attributable to one party that are
received by the other will be promptly forwarded to the other party, which shall
promptly pay the same. In the event either party pays any Prorated Taxes for
which the other party is obligated in whole or in part, such paying party shall
deliver to the other party reasonable documentation evidencing the applicable
Prorated Tax and the other party shall promptly reimburse such party. Any amount
reimbursable under this Section 7.4 and not so reimbursed within thirty (30)
days after the date of request for reimbursement shall bear interest at the rate
of nine percent (9%) per annum from the date of such request until the date
paid.
(b) Buyer shall be responsible for the payment of all operating
expenses related to the Assets and the Business attributable to periods after
the Closing Date, and Seller shall be responsible for the payment of all
operating expenses related to the Assets and the Business incurred for all prior
periods prior to and including the Closing Date.
42
(c) To the extent possible, the amount of any adjustment described in
this Section 7.4 shall be estimated and paid at the Closing, based upon the best
information available to Buyer and Seller at the time, and shall be adjusted as
soon thereafter as may be reasonably practicable when final ▇▇▇▇▇▇▇▇ are
available or when such amounts may be determined with reasonable certainty. The
provisions of this Section 7.4 shall survive the Closing.
43
ARTICLE VIII
CONDITIONS OF BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to consummate the purchase of the Assets and the
Business shall be subject to the satisfaction on or prior to the Closing Date,
or waiver by Buyer, of all of the following conditions:
SECTION 8.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
SELLER. The representations and warranties of Seller contained in this Agreement
shall have been true on the Effective Date without regard to any schedule
updates and shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date, except for representations and warranties
that speak as of a specific date or time other than the Closing Date (which need
only be true and correct in all material respects as of such date or time), and
the covenants and agreements of Seller to be performed on or before the Closing
Date in accordance with this Agreement shall have been duly performed or
complied with in all material respects.
SECTION 8.2. FILINGS; CONSENTS; WAITING PERIODS. All
registrations, filings, applications, notices, consents, assignments, approvals,
estoppel certificates, orders, qualifications and waivers either (a) listed on
SCHEDULE 3.7(B) and indicated thereon as being a condition to the Closing for
Buyer or (b) described in Section 5.2(a)(iv) shall have been filed, made or
obtained, and all applicable waiting periods under the HSR Act (if applicable)
shall have expired or been terminated.
SECTION 8.3. NO INJUNCTION OR PENDING LITIGATION. At the
Closing Date, there shall be no legislation, injunction, restraining order or
decree of any nature of any court or Government Authority of competent
jurisdiction that is in effect that restrains or prohibits the consummation of
the purchase of the Assets and the Business, and there shall be no action, suit
or proceeding, in law or in equity, instituted or threatened before any federal,
state, county or local court, department, commission, agency or other
instrumentality or arbitrator or similar entity pertaining to the transactions
contemplated by this Agreement or to their consummation, excluding any action,
suit or proceeding instituted or threatened by Buyer.
SECTION 8.4. PRE-ACQUISITION REVIEW. Buyer and its
representatives shall have completed a pre-acquisition review of (a) Seller, (b)
the Business, (c) the financial statements and books and records of the
Business, (d) the workpapers and records of the independent certified public
accountants of Seller relating to the Business, (e) the Title Commitment and
Survey described in Section 5.1(b), and (f) structural, mechanical, electrical
and plumbing inspection reports of the Seller's Facilities.
SECTION 8.5. DELIVERY OF RECORDS. Seller shall have delivered
all Records in its possession to Buyer in accordance with the provisions of
Section 2.10.
44
SECTION 8.6. RELEASES OF LIENS. Buyer shall have received
releases of all liens with respect to the Assets in recordable form executed by
all holders of liens that are of record in any jurisdiction; all of which shall
operate to release any and all liens and encumbrances affecting the Assets,
except for Permitted Liens.
SECTION 8.7. PERFORMANCE OF SELLER'S OBLIGATIONS. Seller shall
have furnished or caused to be furnished to Buyer, all items required to be
furnished to Buyer pursuant to other Sections of this Agreement, including
without limitation, the documents described in Sections 2.5(b) and 2.5(c).
SECTION 8.8. LIMITATION ON ACCOUNTS PAYABLE. Buyer shall have
determined to its satisfaction that the Accounts Payable of Seller that are more
than sixty (60) days past due do not exceed $50,000 in the aggregate amount,
excluding Accounts Payable by Seller that are disputed by Seller in good faith.
SECTION 8.9. NO MATERIAL ADVERSE CHANGE. Buyer shall have
determined to its satisfaction that there has been no material adverse change in
the condition of the Business, the Assets or of Seller which would reasonably be
expected to affect the Business or the Assets, except as may be contemplated by
or result from any operations of the Business to the extent such operations are
consistent with the terms and provisions of this Agreement.
SECTION 8.10. ENVIRONMENTAL AUDIT. Buyer shall have completed
to the satisfaction of Buyer environmental studies and audits of the Seller's
Facilities.
SECTION 8.11. AUDITED FINANCIAL INFORMATION. Seller shall have
delivered to Buyer audited balance sheets and related statements of operations
of Seller for the operation of the Business for the period from November 1,
1995, to October 1, 1996. The cost of such audit shall be paid by Buyer.
45
ARTICLE IX
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to consummate the purchase of the Assets and the
Business is subject to the satisfaction on or prior to the Closing Date, or
waiver by Seller, of all of the following conditions:
SECTION 9.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
BUYER. The representations and warranties of Buyer contained in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of such date except for representations and warranties that speak as
of a specific date or time other than the Closing Date (which need only be true
and correct in all material respects as of such date or time) and the covenants
and agreements of Buyer to be performed on or before the Closing Date in
accordance with this Agreement shall have been duly performed in all material
respects.
SECTION 9.2. NO INJUNCTION. At the Closing Date, there shall
be no legislation, injunction, restraining order or decree of any nature of any
court or Government Authority of competent jurisdiction that is in effect that
restrains or prohibits the consummation of the purchase of the Assets and the
Business, excluding any injunction, restraining order or decree resulting from
action initiated by Buyer.
SECTION 9.3. DELIVERY OF THE CASH PORTION OF THE PURCHASE
PRICE AND CLOSING DOCUMENTS. Buyer shall have delivered to Seller the Cash
Portion of the Purchase Price and have executed and delivered to Seller the
documents described in Sections 2.5(b) and 2.5(d).
46
ARTICLE X
SURVIVAL; INDEMNIFICATION
SECTION 10.1. SURVIVAL.
(a) Except as otherwise provided in Sections 7.3(d), 7.4 and 10.3, all
representations, warranties and (except as provided in Section 10.1(e))
covenants and agreements of the parties contained in this Agreement, or any
certificate, document or other instrument delivered in connection herewith (to
the extent not fully performed prior to the Closing Date), shall survive the
Closing only until the twelfth (12th) month anniversary of the Closing, except
for the liabilities or obligations of Seller relating to the payment of Taxes
which shall survive until the applicable statute of limitations shall have
expired.
(b) No action or proceeding may be brought with respect to any of the
representations, warranties, covenants or agreements set forth in this
Agreement, unless written notice thereof, setting forth in reasonable detail the
claimed misrepresentation or breach of warranty, covenant or agreement, shall
have been delivered to the party alleged to have breached such representation,
warranty, covenant or agreement prior to the expiration of the survival time set
forth for such representation, warranty, covenant or agreement in Section
10.1(a) and Section 10.1(e).
(c) In calculating any amount of loss payable to Seller pursuant to
Section 10.2(a) or payable to Buyer pursuant to Section 10.2(b) or Section 10.3,
amounts shall be included for special damages, consequential damages, incidental
damages, lost profits, damages for lost business opportunity, punitive damages
or exemplary damages only to the extent available under applicable law and
further only if awarded by the arbitrators in an arbitration conducted pursuant
to Section 12.12 of this Agreement. Notwithstanding any other provision herein
to the contrary, in no event may special damages, consequential damages,
incidental damages, lost profits, damages for lost business opportunity,
punitive damages or exemplary damages to the extent available under applicable
law, be awarded by any authority other than an arbitrator in an arbitration
conducted pursuant to Section 12.12.
(d) Notwithstanding any provision to the contrary contained in this
Agreement, neither Buyer nor Seller shall make any claim against the other party
for any breach of representation, warranty, covenant or agreement under this
Agreement until the dollar amount of all loss to such other party for such
breaches suffered after the Closing, shall exceed in the aggregate the amount of
$100,000, and, if such amount is exceeded, Buyer or Seller, as the case may be,
shall be required to pay the entire amount of such aggregate loss to the other
party for all such breaches; PROVIDED, HOWEVER, that a party's obligation and
liability for any and all breaches of the representations, warranties, covenants
and agreements set forth in this Agreement shall not exceed in the aggregate an
amount equal to the Purchase Price, and PROVIDED FURTHER, HOWEVER, that the
indemnities of Seller with respect to any Claims against any of the Buyer
Indemnified Parties relating to the Retained Liabilities and of Buyer with
respect to any Claims against any
47
of the Seller Indemnified Parties relating to the Assumed Liabilities,
respectively, shall be absolute and unconditional obligations of Seller and
Buyer, respectively, and shall not be subject to the thresholds and limitations
set forth in this Article X.
(e) Those covenants or agreements that contemplate or may involve
actions to be taken or obligations in effect after the Closing, including those
pursuant to Section 10.3, shall survive in accordance with their terms.
SECTION 10.2. GENERAL INDEMNIFICATION BY BUYER OR SELLER.
(a) From and after the Closing Date, Buyer shall indemnify and hold
harmless Seller, Seller's Affiliates, and each of their respective directors,
officers, employees and agents, and each of the heirs, executors, successors and
assigns of any of the foregoing (collectively, the "SELLER INDEMNIFIED PARTIES")
(i) subject to the applicable notification and timing requirements and the other
limitations provided in Section 10.1, from and against any and all Covered
Liabilities arising out of any breach of any representation or warranty or of
any covenant or agreement which survives the Closing made by Buyer under this
Agreement, (ii) from and against any and all Covered Liabilities arising out of
the failure of Buyer to pay, discharge or perform any of the Assumed
Liabilities, and (iii) the operation of the Business by Buyer after the Closing
Date.
(b) From and after the Closing Date, Seller shall indemnify and hold
harmless Buyer, Buyer's Affiliates, each of their respective directors,
officers, employees and agents, and each of the heirs, executors, successors and
assigns of any of the foregoing (collectively, the "BUYER INDEMNIFIED PARTIES")
from and against (i) subject to the applicable notification and timing
requirements and other limitations and obligations provided in Sections 10.1 and
10.3, any and all Covered Liabilities arising out of any breach of any
representation or warranty or of any covenant or agreement which survives the
Closing made by or on behalf of Seller under this Agreement, (ii) any and all
Covered Liabilities arising out of the failure of Seller to pay, discharge or
perform any of the Retained Liabilities, and (iii) the operation of the Business
by Seller prior to and including the Closing Date.
(c) Except as may otherwise be provided herein, indemnification
pursuant to this Article X shall be the exclusive remedy for any breach by
either party of any representation or warranty contained in this Agreement.
SECTION 10.3. ENVIRONMENTAL INDEMNIFICATION BY SELLER.
(a) Subject to the applicable limitations provided in Section 10.1 and
this Section 10.3 and the obligations of Buyer set forth in this Section 10.3,
for a period of twenty-four (24) months from and after the Closing Date, Seller
shall indemnify and hold harmless the Buyer Indemnified Parties from and against
any and all Covered Liabilities arising out of (i) the breach of any of the
representations and warranties contained in Section 3.12, (ii) the matters set
forth on SCHEDULE 3.12(B), to the extent that those matters require remediation
under or pursuant to
48
any Hazardous Substances Laws, as the same shall exist as of the Closing Date,
(iii) the treatment, storage or disposal, prior to the Closing Date, of
Hazardous Materials or any other petroleum products used or generated in or
related to the operation of the Business, and (iv) the presence of Hazardous
Materials in the fixtures, structures, soil, groundwater or air to the extent
that the presence of such Hazardous Materials occurred prior to the Closing
Date.
(b) Seller's liability under this Section 10.3 shall be subject to the
following:
(i) With respect to any Covered Liability which is the subject
of Section 10.3(a) arising out of the release of any Hazardous
Materials or any petroleum products to the environment prior to the
Closing Date at any facility that is or was operated by the Business or
Seller:
(A) With respect to conditions where Seller agrees
that it has liability upon presentation of a sufficient claim
by Buyer, Seller shall have the option to either:
(1) cause the necessary remediation to be
accomplished at Seller's direction and expense using
Seller's personnel, consultants, and/or contractors,
in accordance with the provisions of Section
10.3(b)(i)(E), in which event Buyer shall furnish
necessary access to the facility and shall make
available (to the extent it does not unreasonably
interfere with Buyer's business or operations and at
Seller's cost and expense) utilities and like
services required to enable Seller's personnel,
consultants, and contractors to perform their work,
and shall promptly comply with all reasonable
requests by such personnel, consultants, and
contractors relating to the remediation work, at the
expense of Seller (which expense shall be credited
toward the aggregate liability of Seller for purposes
of the limitations set forth in Section 10.1)
(PROVIDED that, any remediation performed by Seller
or at Seller's direction, shall be performed in a
manner that does not unreasonably interfere with
Buyer's operations); or
(2) require Buyer to accomplish the
remediation at Buyer's direction using Buyer's
personnel, consultants, and/or contractors, PROVIDED,
HOWEVER, that as a precondition Seller shall have
delivered to Buyer, prior to the initiation of any
such remediation, cash funds or a letter of credit
(from a financial institution and containing such
terms and conditions as are reasonably acceptable to
Buyer), in an amount estimated by an environmental
consultant acceptable to Buyer and Seller to cover
all reasonable expenses to be incurred by Buyer in
connection with that remediation (which funds shall
be credited toward the aggregate liability of Seller
for purposes of the limitations set forth in Section
10.1).
49
(B) (1) With respect to conditions where Seller does
not agree that it has liability or where Buyer
presents a deficient claim, then Seller shall have
the same options as described in Section
10.3(b)(i)(A), except that Seller shall have no
obligation to deposit with Buyer any cash funds or
letter of credit under Section 10.3(b)(i)(A)(2) and
neither party shall have any obligation to reimburse
the other party for any cost or expense incurred by
such other party in connection with the remediation
until and unless there has been a final resolution of
the relative liabilities of the parties thereto by
mutual agreement or under the provisions of Section
12.12. Either party may initiate arbitration under
the provisions of Section 12.12 with respect to any
claim under this Section 10.3(b)(i)(B)(1) at any
point, whether prior to or after commencement of
remediation.
(2) In any situation covered by this Section
10.3, the party conducting the remediation work shall
indemnify each of the Seller Indemnified Parties or
the Buyer Indemnified Parties, as the case may be,
from and against any Covered Liabilities arising from
any third-party claims for personal injury or
property damage from the performance of the
remediation work, whether based upon negligence,
strict liability or any other theory of recovery in
either law or equity.
(C) Seller's liability to remediate contamination or
to indemnify Buyer and the Buyer Indemnified Parties therefor
under this Section 10.3 shall be limited to:
(1) Covered Liabilities arising out of
conditions or matters set forth on SCHEDULE 3.12(B);
and
(2) conditions or matters not set forth on
SCHEDULE 3.12(B) which constitute a breach of the
representations and warranties contained in Section
3.12.
(D) Except as required by law or with the express
prior written consent of Seller in each instance, or unless
Buyer determines in the exercise of its reasonable business
judgment that such action is necessary to prevent Hazardous
Materials Contamination or liability for Buyer related to
Hazardous Materials Contamination that constitutes Covered
Liabilities, Buyer shall not take action or fail to take
action which has the effect of triggering, accelerating, or
expanding Seller's liability to remediate any contamination
(or to pay for such remediation). Notwithstanding any other
provision herein, Seller shall have no liability for, and
Buyer shall indemnify and hold Seller Indemnified Parties
harmless against, any breach by Buyer of this Section
10.3(b)(i)(D).
50
(E) The party directing any remediation work shall
deliver all workplans to the other party for prior written
approval not to be unreasonably withheld or delayed, provide
the other party with reasonable notice prior to commencing any
remediation work, require that consultants and contractors
obtain insurance in the types and amounts reasonably
appropriate considering the scope and extent of the
remediation work, permit representatives of the other party to
observe the remediation work at all reasonable times and in a
manner which does not unreasonably interfere with the progress
of the remediation, perform all remediation work in accordance
with all applicable laws, dispose of all Hazardous Materials
generated in connection with such remediation work in the name
of such party, and promptly furnish to the other party copies
of all reports concerning the remediation (including forecasts
of expenditures, budgets, and other financial information)
which may be prepared by or for the party performing the
remediation and all correspondence to or from environmental
agencies concerning the remediation or the condition being
remediated. All reports, other than those given to a
Government Authority, shall be treated as confidential by the
party receiving such reports and shall not be disclosed to
third parties. All contractors performing any remediation work
on behalf of Seller shall, as a precondition to performing any
such work, deliver to Buyer a written waiver, in form and
substance satisfactory to Buyer, of all rights to assert any
liens or claims against Buyer or any of its properties. The
review, oversight and other expenses incurred by the party not
performing the remediation work, whether payable to
environmental consultants, contractors or otherwise, shall not
be considered Covered Liabilities and shall not be subject to
reimbursement by the other party.
(F) Seller shall have no responsibility and shall
bear no cost to remediate any condition of contamination to a
greater degree or extent than that which is required by
applicable Hazardous Substances Laws.
(ii) With respect to any Covered Liability arising out of any
alleged, actual or threatened contamination at a site which is not, and
has not been, a facility operated by the Business, or arising out of
the inclusion of any facility, whether operated by the Business or not,
as part of a multi-party CERCLA (or state superfund) site, then:
(A) Notwithstanding any other provision in this
Agreement to the contrary, Seller's liability shall be limited
to those matters as to which Buyer shall, by the fifth (5th)
anniversary of the Closing Date, have given Seller notice
specifying in reasonable detail the basis on which liability
arising from the operation of the Business prior to the
Closing Date is claimed; PROVIDED, HOWEVER, that Seller shall
have no liability whatsoever, unless Buyer shall have given
Seller prompt notice upon receiving a claim or notice from the
U.S. Environmental Protection Agency (the "EPA") or any other
Government Authority or upon learning of facts that could give
rise to such a claim; and
51
(B) If either Buyer or Seller is named in the claim
or notice, Buyer and Seller shall each cooperate and assist
the other in the investigation and defense of any indemnified
claims by the EPA or any other Government Authority or other
Person and shall furnish such information relating to the
claim as may be reasonably requested by the other party. Each
party shall permit representatives of the other party to
interview such party's personnel and to examine and copy all
non-confidential records of the Business which may be relevant
to the defense of any such claim.
(iii) For purposes of the reimbursement obligations described
in this Section 10.3, "promptly" shall mean payment in immediately
available funds within thirty (30) days after receipt from any of the
Seller Indemnified Parties or Buyer Indemnified Parties, as the case
may be, of a demand for indemnity payment or reimbursement, or if such
demand is contested, within thirty (30) days of resolution of such
conflict in the demanding party's favor by mutual agreement or under
the procedures of Section 12.12. If Seller or Buyer should fail
promptly to pay a valid reimbursement claim when made, or should pay a
claim subsequently determined not to have been valid, then the unpaid
sum or the wrongfully paid sum, as the case may be, shall bear simple
interest at a rate of nine percent (9%) per annum from the date on
which payment was due, in the case of an unpaid claim, and from the
date on which payment was made, in the case of a wrongfully paid claim,
until payment is made.
SECTION 10.4. THIRD PARTY CLAIMS. If a claim by a third party
is made against an indemnified party (i.e., a Seller Indemnified Party or a
Buyer Indemnified Party), and if such indemnified party intends to seek
indemnity with respect thereto under this Article X, such indemnified party
shall promptly notify the indemnifying party in writing of such claims setting
forth such claims in reasonable detail. The indemnifying party shall have thirty
(30) days (or such shorter period as may be necessary to prevent the loss of any
rights or claims) after receipt of such notice to undertake, through counsel of
its own choosing (subject to the reasonable approval of the indemnified party)
and at its own expense, the settlement or defense thereof, and the indemnified
party shall cooperate with it in connection therewith; PROVIDED, HOWEVER, that
the indemnified party may participate in such settlement or defense through
counsel chosen by such indemnified party, PROVIDED that the fees and expenses of
such counsel shall be borne by such indemnified party. The indemnified party
shall have the right to pay or settle any such claim, PROVIDED that in such
event it shall waive any right to indemnity therefor by the indemnifying party
unless the indemnifying party has consented in writing to such payment or
settlement. If the indemnifying party does not notify the indemnified party
within thirty (30) days (or such shorter period as may be necessary to prevent
the loss of any rights or claims) after the receipt of the indemnified party's
notice of a claim of indemnity hereunder that it elects to undertake the defense
thereof, the indemnified party shall have the right to contest, settle or
compromise the claim but shall not thereby waive any right to indemnity therefor
pursuant to this Agreement.
52
SECTION 10.5. BULK SALES WAIVER; INDEMNIFICATION. Buyer hereby
waives compliance by Seller with the provisions of any applicable "bulk sales"
or similar laws, subject to the indemnity of Seller contained in this Section
10.5. Seller hereby agrees to indemnify, defend, and hold harmless Buyer and the
Buyer Indemnified Parties from and against any and all claims, liabilities,
damages, losses, actions, causes of action, costs, fees and expenses, including,
without limitation, court costs and attorney's fees, in any way arising out of
any "bulk sales" or similar laws applicable to the purchase of the Assets and
the Business, unless the claim relates to an Assumed Liability. Seller
acknowledges and agrees that the agreements of Seller contained in this Section
10.5 shall be absolute and unconditional obligations of Seller and shall not be
subject to the thresholds and limitations set forth in this Article X.
53
ARTICLE XI
TERMINATION
SECTION 11.1. TERMINATION. This Agreement may be terminated at
any time prior to the Closing by:
(a) the mutual consent of Seller and Buyer;
(b) by Buyer, (i) at any time if the representations and warranties of
Seller contained in Article III and Article VI were incorrect in any material
respect when made or at any time thereafter, or (ii) upon written notice to
Seller given at any time after December 31, 1997 (or such later date as shall
have been specified in writing authorized on behalf of Seller and Buyer) if all
of the conditions precedent set forth in Article VIII have not been met; or
(c) by Seller, (i) at any time if the representations and warranties of
Buyer contained in Article IV were incorrect in any material respect when made
or at any time thereafter, or (ii) upon written notice to Buyer given at any
time after December 31, 1997 (or such later date as shall have been specified in
writing authorized on behalf of Seller and Buyer) if all of the conditions
precedent set forth in Article IX have not been met.
SECTION 11.2. PROCEDURE AND EFFECT OF TERMINATION. In the
event of termination of this Agreement by Seller on the one hand or Buyer on the
other pursuant to Section 11.1, written notice thereof shall forthwith be given
by the terminating party to the other party hereto, and this Agreement shall
thereupon terminate and become void and have no effect, and the transactions
contemplated hereby shall be abandoned without further action by the parties
hereto, except that the provisions of Section 12.5 shall survive the termination
of this Agreement; PROVIDED, HOWEVER, that such termination shall not relieve
any party hereto of any liability for any breach of this Agreement. If this
Agreement is terminated as provided herein all filings, applications and other
submissions made in accordance with Section 3.7(b) shall, to the extent
practicable, be withdrawn from the Persons to which they were made.
SECTION 11.3. RETURN OF DEPOSIT.
(a) In the event the Agreement is terminated by either party pursuant
to Sections 11.1(a), 11.1(b) (for any reason other than a breach or default by
Buyer under this Agreement), or 11.1(c)(ii), and without limiting any rights or
remedies Buyer may otherwise have with respect to any breach of this Agreement,
the Deposit, plus any and all accrued interest thereon, shall be promptly
returned to Buyer by wire transfer to an account designated by Buyer.
(b) In the event the Agreement is terminated by Seller pursuant to
Section 11.1(c)(i) (as a result of a breach or default by Buyer under this
Agreement), the Deposit, plus any and all accrued interest thereon, shall be
promptly delivered to Seller as liquidated damages, and Seller specifically
waives any and all other remedies that Seller may otherwise have with respect
54
to any breach of this Agreement, including without limitation, the right of
specific performance and the right to pursue a claim for damages.
55
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. NON-ASSIGNABLE UNDERTAKINGS AND RIGHTS.
Notwithstanding anything in this Agreement to the contrary, this Agreement shall
not constitute an agreement to assign any claim, contract, license, permit,
lease, commitment, sales order or purchase order which would otherwise be
assigned hereunder if any attempted assignment thereof without the consent of
the other party thereto or the grantor thereof would constitute a breach thereof
or would in any way affect the rights of Seller thereunder. If such consent is
not obtained, Seller shall act as the agent for Buyer in order to obtain for
Buyer the benefits thereunder. To the extent that consents or waivers are not
obtained by Seller prior to Closing but Buyer elects to consummate the purchase
of the Assets and the Business, Seller and Buyer shall continue to seek such
consents or waivers and to cooperate with each other to establish, to the extent
practicable, arrangements that are reasonable and lawful as to both Seller and
Buyer, and which result in the benefits and obligations under such assumed
contracts, leases and permits being apportioned in a manner that is in
accordance with the purpose and intention of this Agreement.
SECTION 12.2. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 12.2, PROVIDED receipt of copies of such counterparts
is confirmed.
SECTION 12.3. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware without
reference to the choice of law principles thereof.
SECTION 12.4. ENTIRE AGREEMENT. This Agreement (including
agreements incorporated herein), and the Schedules and Exhibits hereto supersede
any and all previous agreements and understandings between the parties and
contain the entire agreement between the parties with respect to the subject
matter of this Agreement and there are no agreements, understandings,
representations or warranties between the parties other than those set forth or
referred to herein. Except for Sections 10.2, 10.3 and 10.4, which are intended
to benefit, and to be enforceable by, any of the Seller Indemnified Parties and
the Buyer Indemnified Parties, as the case may be, this Agreement is not
intended to confer upon any Person not a party hereto (other that the successors
and assigns of the parties hereto as permitted by Section 12.7) any rights or
remedies hereunder and no other Person, including any present or future
employees of Buyer or Seller, shall be treated as a third-party beneficiary of
any of the provisions of this Agreement.
SECTION 12.5. EXPENSES. Except as set forth in this Agreement,
whether or not the purchase and sale of the Assets and the Business is
consummated, all legal and other costs
56
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses. Buyer shall pay the cost of the owner's policy of title insurance
described in Section 2.5(c)(ii), as well as the cost of the Survey.
SECTION 12.6. NOTICES. All notices and other communications
hereunder shall be sufficiently given for all purposes hereunder if in writing
and delivered personally, sent by documented overnight delivery service or, to
the extent receipt is confirmed, telecopy, telefax or other electronic
transmission service to the appropriate address or number as set forth below.
Notices to Seller shall be addressed to:
▇▇▇▇▇-▇▇▇▇▇ Machine Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇, President
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇ [CALL ▇▇▇▇▇ ▇▇▇▇
PRIOR TO SENDING]
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.S.C.
200 Covington Mutual Building
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address and to the attention of such other Person as Seller may
designate by written notice to Buyer. Notices to Buyer shall be addressed to:
Aviation Sales Company
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, President
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
57
or at such other address and to the attention of such other Person as Buyer may
designate by written notice to Seller.
SECTION 12.7. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that no party hereto will assign its
rights or delegate its obligations under this Agreement without the express
prior written consent of each other party hereto. Notwithstanding the provisions
of the first sentence of this Section 12.7, this Agreement, and all agreements,
documents and instruments contemplated hereby, may be assigned by Buyer to (a)
financial institutions (for the purposes of granting security interests herein)
and/or (b) a subsidiary of Buyer (for the purposes of assigning the Buyer's
interest herein and therein) without the prior written consent of the Seller;
PROVIDED, HOWEVER, that any assignee of any assignment shall be subject to all
claims of offset and all defenses that may be asserted by the other party to
this Agreement against the assignor to such assignment.
SECTION 12.8. HEADINGS; DEFINITIONS. The Section, Article and
other headings contained in this Agreement are inserted for convenience of
reference only and will not affect the meaning or interpretation of this
Agreement. All capitalized terms defined herein are equally applicable to both
the singular and plural forms of such terms.
SECTION 12.9. AMENDMENTS AND WAIVERS. This Agreement may not
be modified or amended except by an instrument or instruments in writing signed
by all parties hereto. Any party hereto may, only by an instrument in writing,
waive compliance by the other party hereto with any term or provision of this
Agreement on the part of such other party hereto to be performed or complied
with. The waiver by any party hereto of a breach of any term or provision of
this Agreement shall not be construed as a waiver of any subsequent breach.
SECTION 12.10. INTERPRETATION; ABSENCE OF PRESUMPTION.
(a) For the purposes of this Agreement, (i) "to Seller's knowledge"
shall mean the actual knowledge of Seller's executive officers after due
inquiry, which may be satisfied by consultation with, where appropriate, outside
legal counsel, (ii) words in the singular shall be held to include the plural
and vice versa and words of one gender shall be held to include the other
genders as the context requires, (iii) the terms "hereof," "herein," and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the Schedules
and Exhibits hereto) and not to any particular provision of this Agreement, and
Article, Section, paragraph, Exhibit and Schedule references are to the
Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement unless
otherwise specified, (iv) the word "including" and words of similar import when
used in this Agreement shall mean "including, without limitation," unless
otherwise specified, (v) the word "or" shall not be exclusive, and (vi)
provisions shall apply, when appropriate, to successive events and transactions.
58
(b) This Agreement shall be construed without regard to any presumption
or rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
SECTION 12.11. SEVERABILITY. Any provision of this Agreement
which is invalid or unenforceable shall be ineffective to the extent of such
invalidity or unenforceability, without affecting in any way the remaining
provisions of this Agreement.
SECTION 12.12. SETTLEMENT OF DISPUTES.
(a) Except as provided in Section 12.12(c), any dispute or controversy
between the parties hereto arising from or relating to this Agreement or the
construction, validity, interpretation, meaning, performance, non-performance,
enforcement, operation or breach of this Agreement shall be submitted to
mediation, and if such mediation is unsuccessful then to mandatory, final and
binding arbitration. If there arises any dispute or controversy arising from or
relating to this Agreement in connection with which a party seeks to impose
personal liability upon a Seller Indemnified Party or a Buyer Indemnified Party,
the Seller Indemnified Party or the Buyer Indemnified Party against whom such
claim is made has the right, but is not required, to require that such dispute
or controversy be submitted to mediation, and if such mediation is unsuccessful
then to mandatory, final and binding arbitration, in accordance with the
provisions of this Section 12.12. Prior written notice of any dispute or
controversy described in the preceding sentence shall be delivered to the Seller
Indemnified Party or to the Buyer Indemnified Party, who, within ten (10) days
after delivery of the notice, shall deliver to the demanding party a written
statement of whether the mediation and arbitration provisions of this Section
12.12 are elected. If the written response of the Seller Indemnified Party or
the Buyer Indemnified Party is not timely delivered to the claiming party, the
provisions of this Section 12.12 shall not apply to such dispute or controversy.
(b) Any mediation or arbitration under this Agreement shall take place
pursuant to the following procedures:
(i) If a dispute or controversy arises, either party may, in a
written notice delivered to the other party, demand mediation. The
notice shall briefly state the matter in controversy.
(ii) If the parties do not resolve the dispute within ten (10)
days after delivery of the notice of mediation, either party may
request that Judicial Arbitration and Mediation Service ("JAMS") (or
similar mediation service of a similar national scope if JAMS no longer
then exists) appoint an independent mediator, who shall serve as
mediator for all purposes hereof. Each party shall pay one-half of the
cost of the mediator's services, in advance upon request by the
mediator or any party.
(iii) Within ten (10) days after appointment of the mediator,
the mediator shall schedule a meeting among the parties and the
mediator for the purpose of mediating the
59
dispute. If the parties do not resolve the dispute with thirty (30)
days after appointment of the mediator, the dispute shall be resolved
in arbitration and either party may, in a written notice delivered to
the other party, demand arbitration. The notice shall name and appoint
an arbitrator selected by the party demanding arbitration.
(iv) Within thirty (30) days after receiving a demand for
arbitration, the receiving party shall, in a written notice delivered
to the demanding party, name and appoint its own arbitrator. If the
receiving party fails to name and appoint an arbitrator timely, then an
arbitrator shall be selected pursuant to the Commercial Arbitration
Rules of the American Arbitration Association. The two arbitrators so
appointed shall appoint a third arbitrator within thirty (30) days, and
the appointment may be made either by agreement of the two arbitrators
or selected pursuant to the Commercial Arbitration Rules of the
American Arbitration Association.
(v) Each party shall bear its own arbitration fees, costs and
expenses; PROVIDED, HOWEVER, that fees, costs and expenses associated
with judicial proceedings may be awarded by a court under Section
12.12(b)(vii). The arbitration hearing shall be held in Cincinnati,
Ohio at a location designated by a majority of the arbitrators. The
Commercial Arbitration Rules of the American Arbitration Association,
as supplemented hereby, shall apply to the arbitration. The substantive
laws of the State of Florida (excluding conflict of laws provisions)
shall also apply to the arbitration.
(vi) The arbitration hearing shall be concluded within ten
(10) days unless otherwise ordered by a majority of the arbitrators,
and the award thereon shall be made within fifteen (15) days after the
close of submission of evidence. An award rendered by a majority of the
arbitrators shall be final and binding on all parties to the proceeding
and non-appealable, and judgment on the award may be entered by either
party in a court of competent jurisdiction.
(vii) The parties stipulate that the provisions of this
Section 12.12 shall be a complete defense to any suit, action or
proceeding instituted in any federal, state or local court or before
any administrative tribunal with respect to any controversy or dispute
arising out of this Agreement between the parties, and the parties
waive any right to have the award of the arbitrators appealed. The
arbitration provisions of this Agreement shall, with respect to such
controversy or dispute, survive the termination or expiration of this
Agreement. Should any party institute judicial proceedings seeking to
avoid the mediation or arbitration provisions of this Agreement, or
should any party in judicial proceedings unsuccessfully contest an
arbitration award rendered under this Section 12.12, the other party
shall be entitled to recover reasonable attorney's fees, costs and
expenses associated with the judicial proceedings, with the amount of
attorney's fees, costs and expenses to be determined by the court. If a
party fails to comply with the terms of an arbitration award made under
this Agreement, the other party shall be entitled to recover reasonable
attorney's fees, costs and expenses incurred in seeking judicial
confirmation of the award, with the amount of attorney's fees, costs
and expenses
60
to be determined by the court. Failure to comply with the terms of an
arbitration award shall include without limitation the failure to pay
the full amount due under an arbitration award within the time
specified in the arbitration award.
Neither any party hereto nor the arbitrators may disclose the existence or
results of any arbitration hereunder without the prior written consent of the
other party; nor may any party hereto disclose to any third party any
confidential information disclosed by any other party hereto in the course of an
arbitration hereunder without the prior written consent of such other party.
(c) EMERGENCY RELIEF. Notwithstanding anything in this Section 12.12 to
the contrary, either party may seek from a court any provisional remedy that may
be necessary to protect any rights or property of such party pending the
establishment of the arbitral tribunal or its determination of the merits of the
controversy.
(i) JURISDICTION. In connection only with the provisions of
Section 12.12, each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court for the
Southern District of Ohio and, if such court does not have
jurisdiction, of the courts of the State of Ohio in ▇▇▇▇▇▇▇▇ County,
for the purposes of any Action arising out of this Agreement or the
subject matter of this Agreement brought by any other party under
Section 12.12 of this Agreement.
(ii) WAIVER OF DEFENSES. In connection only with the
provisions of this Section 12.12, to the extent permitted by applicable
law, each party hereby waives and agrees not to assert, by way of
motion, as a defense or otherwise, in any such Action under this
Section 12.12, any claim (A) that it is not personally subject to the
jurisdiction of the above-named courts, (B) that the Action is brought
in an inconvenient forum, (C) that it is immune from any legal process
with respect to itself or its property, (D) that the venue of the suit,
action or proceeding is improper, or (E) that this Agreement or the
subject matter of this Agreement may not be enforced in or by such
courts.
(iii) SERVICE OF PROCESS. In connection only with the
provisions of this Section 12.12, Buyer and Seller agree that, even if
at any time during the term of this Agreement Buyer is not qualified to
do business in the State of Ohio, or Seller is not qualified to do
business as a foreign corporation in the State of Ohio, Buyer and
Seller each shall and do hereby irrevocably designate and appoint the
Secretary of State of the State of Ohio as its agent for service of
process in any Action with respect to any matter as to which it submits
to jurisdiction as set forth above; it being agreed that any method of
service upon such agent, with a copy sent to Buyer or Seller, as the
case may be, in the manner set forth in Section 12.6, shall constitute
valid service upon Buyer or Seller, as the case may be.
61
(iv) JUDICIAL RELIEF FOR BREACH OF NON-SOLICITATION
PROVISIONS. Notwithstanding anything in this Section 12.12 to the
contrary, a dispute or controversy relating to a violation or
threatened violation of Section 6.4(c) of this Agreement shall not be
subject to the mediation and arbitration provisions of this Section
12.12, and either party may seek from a court of law any available
judicial remedy, whether legal or equitable (including but not limited
to injunctive relief and damages), based on a breach or threatened
breach of Section 6.4(c) of this Agreement.
SECTION 12.13. SURVIVAL. The disclaimers, waivers, releases,
renunciations and other rights and obligations of the parties under Section 3.16
of this Agreement shall survive forever and shall specifically survive any
transfer of title or possession of any Inventory, any termination or expiration
of this Agreement or any impossibility of performance of this Agreement or
frustration of purpose of this Agreement.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
62
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties as of the Effective Date.
▇▇▇▇▇-▇▇▇▇▇ MACHINE COMPANY
By: /S/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇▇▇▇, President
AVIATION SALES COMPANY
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, President
Signature Page to Asset Purchase Agreement
By and Between
▇▇▇▇▇-▇▇▇▇▇ Machine Company and
Aviation Sales Company
63
JOINDER
TO ASSET PURCHASE AGREEMENT
The undersigned hereby executes and joins in this Asset Purchase
Agreement to acknowledge the provision of Section 2.5(c)(vii).
/S/ ▇▇▇ ▇▇▇▇
----------------------------
▇▇▇ ▇▇▇▇
/S/ ▇▇▇▇ ▇▇▇▇
----------------------------
▇▇▇▇ ▇▇▇▇
The undersigned hereby executes and joins in this Asset Purchase
Agreement to acknowledge the provision of Section 2.5(d)(i).
/S/ ▇▇▇▇▇ ▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇
Signature Page to Joinder
to Asset Purchase Agreement
By and Between
▇▇▇▇▇-▇▇▇▇▇ Machine Company and
Aviation Sales Company
64