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EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
by and between
WHITE CAP INDUSTRIES, INC.,
and
▇▇▇▇▇ CONCRETE ACCESSORIES, L.P.
September 19, 1997
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
September 19, 1997, is made and entered into by and between White Cap
Industries, Inc., a California corporation ("Buyer"), and ▇▇▇▇▇ Concrete
Accessories, L.P., a limited partnership organized under the laws of California
("Seller").
WHEREAS, Seller is engaged in the business of distributing concrete
accessories, rental equipment and related materials (the "Business"); and
WHEREAS, Seller desires to sell and assign to Buyer, and Buyer
desires to purchase and assume from Seller, on the terms and subject to the
conditions set forth in this Agreement, substantially all of the assets and
certain liabilities of Seller that are currently being used and have been
incurred by Seller in the conduct of the Business.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, agreements and the conditions set forth in this
Agreement, Buyer and Seller hereby agree as follows:
ARTICLE I
TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
1.01 Transfer of Assets. On the terms and subject to the conditions
set forth in this Agreement, Seller shall, at the Closing (as defined in Section
3.01 hereof), sell, transfer and assign to Buyer, and Buyer shall purchase and
acquire from Seller, all of Seller's right, title and interest, as of the
Closing Date (as defined in Section 3.01 hereof), in and to all of the assets of
Seller related to, or used in conjunction with, the Business (collectively,
except for the excluded assets set forth in Section 1.02 hereof, the "Assets"),
including, but not limited to:
(a) all of the equipment, machinery, vehicles, furniture, fixtures,
furnishings and leasehold improvements owned by Seller and used by Seller in the
operation of the Business;
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(b) Seller's interest in all real property leases to which Seller is
a party that are used in connection with the Business, all of which leases are
identified in Section 4.10 of the Disclosure Schedule (as defined in Article IV
hereof);
(c) Seller's interest in all personal property leases to which
Seller is a party that are used in connection with the operation of the
Business, including, without limitation, all agreements pursuant to which Seller
uses any equipment leased by any affiliate of Seller;
(d) all of Seller's inventories of supplies, raw materials, parts,
finished goods, work-in-process, product labels and packaging materials used in
connection with the Business and Seller's interest in all orders or contracts
for the purchase of supplies, raw materials, parts, product labels and packaging
materials used in connection with the Business;
(e) Seller's interest in all licenses, contracts or agreements with
respect to the Business to which Seller is a party and, including, without
limitation, those identified in Section 4.13 of the Disclosure Schedule as being
assumed by the Buyer;
(f) all unfilled or uncompleted customer contracts, commitments or
purchase or sales orders received and accepted by Seller in connection with the
Business in the ordinary course of business;
(g) all documents or other tangible materials embodying technology
or intellectual property rights owned by, licensed to or otherwise controlled by
Seller and used in connection with the Business, whether such properties are
located on Seller's Business premises or on the business premises of Seller's
suppliers or customers, including, without limitation, all software programs
(including both source and object codes) and related documentation for software
used in or developed for support of the Business;
(h) all rights in patents, patent applications, trademarks, service
marks, trade names, corporate names, copyrights, mask works, trade secrets or
other intellectual property rights owned by, licensed to or otherwise controlled
by Seller or used in, developed for use in or necessary to the conduct of the
Business as now conducted or planned to be conducted including, without
limitation, those set forth in the Disclosure Schedule under the caption
referencing Section 4.14 and including the rights to institute or maintain any
action or investigation for and to recover damages for any past infringement
thereof or any actions of unfair competition relating thereto;
(i) the name "▇▇▇▇▇ Concrete Accessories" or any combination of
words in which the full name "▇▇▇▇▇ Concrete Accessories" appears or any rights
associated with such name or any right to use such name in all jurisdictions in
which Seller either currently uses any such name or has any right to use any
such name; provided, that the use of such name shall be limited only to the
conduct of doing business and shall not be used to identify products offered by
Buyer, except to
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the extent permitted by the Distribution Agreements (as defined in Section 10.01
hereof);
(j) all of Seller's books, records and other documents and
information relating to the Assets or the Business, including, without
limitation, all customer, prospect, dealer and distributor lists, sales
literature, inventory records, purchase orders and invoices, sales orders and
sales order log books, customer information, commission records, correspondence,
employee payroll and personnel records, product data, material safety data
sheets, price lists, product demonstrations, quotes and bids and all product
catalogs and brochures (but excluding corporate or partnership minute books and
related records);
(k) all accounts or notes receivable (excluding intra-company
accounts) owing to Seller that relate to the Business;
(l) the current telephone listings of the Business and the right to
use the telephone numbers currently being used at the principal offices and
other offices or facilities of the Business;
(m) all permits, licenses and other governmental approvals held by
Seller with respect to the Business, to the extent they are assignable;
(n) all prepaid expenses and deposits made by Seller with respect to
the Business;
(o) all long-term investments of Seller relating to the Business;
(p) any rights to recovery by Seller arising out of litigation with
respect to the Business that is pending prior to or commences after the Closing
Date; and
(q) goodwill (including all goodwill associated with and symbolized
by the name "▇▇▇▇▇ Concrete Accessories" identified in subsection (i) above as
used as a trademark or service ▇▇▇▇ and all goodwill associated with and
symbolized by any other trademark or service ▇▇▇▇, trade name or corporate name
used in the conduct of the Business as now conducted), all related tangibles and
intangibles which Seller uses in the conduct of the Business and all rights to
continue to use the Assets in the conduct of a going business.
The parties hereto expressly agree that Buyer is not assuming any of the
liabilities, obligations or undertakings relating to the foregoing Assets,
except for those liabilities and obligations specifically assumed by Buyer in
Section 1.03 hereof, all of which liabilities and obligations have been incurred
by Seller in the ordinary course of the Business and none of which arise from
transactions between or among Seller
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and any of Seller's affiliates (other than in connection with supply and
distribution agreements and arrangements entered into between Seller and ▇▇▇▇▇
Group, LLC which have been disclosed to Buyer pursuant to Section 4.20 hereof).
1.02 Excluded Assets. Notwithstanding the terms of Section 1.01, the
following assets shall be retained by Seller and shall not be sold, transferred
or assigned to Buyer in connection with the purchase of the Assets:
(a) all cash and cash-equivalents of Seller;
(b) all bank accounts of Seller;
(c) the rights to any insurance policies or claims of Seller;
(d) the right to use the "▇▇▇▇▇" name in any manner other than as
contemplated by 1.01(i) hereof;
(e) corporate or partnership minute books and related records;
(f) such licenses, permits or other certificates of authority which,
by their terms, are nonassignable, all of which are identified in the Disclosure
Schedule under the caption referencing Section 4.13 or Section 4.22 as being
retained by the Seller.
1.03 Assumption of Liabilities. Buyer shall assume, pay, perform in
accordance with their terms or otherwise satisfy, as of the Closing Date:
(a) all liabilities incurred by Seller in the ordinary course of
conducting the Business that are disclosed in the balance sheet of Buyer dated
as of June 30, 1997 attached hereto as Exhibit A (the "Balance Sheet") that
continue to exist on the Closing Date, excluding (i) all interest-bearing debt
incurred by Seller, and (ii) any asserted or unasserted claims against Seller
arising from the sale of its products prior to the Closing;
(b) all liabilities of the type disclosed in the Balance Sheet that
are incurred by Seller in the ordinary course of conducting the Business,
consistent with the terms and provisions of this Agreement, subsequent to the
date of the Balance Sheet and prior to the Closing Date that continue to exist
on the Closing Date, excluding (i) any interest-bearing debt incurred prior to
the Closing Date, (ii) Taxes (as defined in Section 4.12(e) hereof) incurred
prior to the Closing Date, (iii) any asserted or unasserted claims against
Seller arising from the sale of its products prior to the Closing, and (iv) any
liability for breach of contract, breach of warranty, tort, infringement, claim
or lawsuit arising from the Business or the actions or inactions of Seller prior
to the Closing Date;
(c) Seller's obligations under the leases, agreements, contracts,
arrangements and licenses assigned to Buyer pursuant to Section 8.01(c) hereof;
and
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(d) Seller's obligations under the ▇▇▇▇ Employment Agreement (as
defined in, and in accordance with, Section 2.03 hereof).
1.04 Excluded Liabilities. Other than as set forth above in Section
1.03, Seller shall retain, and Buyer shall not assume, and nothing contained in
this Agreement shall be construed as an assumption by Buyer of, any liabilities,
obligations or undertakings of Seller of any nature whatsoever, whether accrued,
absolute, fixed or contingent, known or unknown due or to become due,
unliquidated or otherwise. Seller shall be responsible for all of the
liabilities, obligations and undertakings of Seller not expressly assumed by
Buyer pursuant to Section 1.03 hereof, and such liabilities shall remain the
liabilities of Seller.
ARTICLE II
PURCHASE PRICE
2.01 Amount. The total purchase price (the "Purchase Price") for the
Assets shall be EIGHT MILLION, FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($8,500,000.00), subject to any adjustments to be made pursuant to Sections 2.02
and 2.03 hereof, payable in the manner provided in Section 2.04 hereof.
2.02 Working Capital Adjustment to Purchase Price.
(a) Adjustments to be Made at Closing. The Purchase Price will be
subject to the following adjustments on the Closing Date, based on the
difference between the Net Working Capital Balance (as defined in Section
2.02(c)) of the Business as of the Closing Date as determined in good faith by
the Seller in consultation with its independent public accountants (the "Closing
Working Capital Balance"), and TWO MILLION, SEVEN HUNDRED FIFTY FOUR THOUSAND
SIX HUNDRED AND NO/100 DOLLARS ($2,754,600.00), the Net Working Capital Balance
of the Business as of June 30, 1997 (the "June 30 Working Capital Balance"):
(i) if the Closing Working Capital Balance exceeds the June 30
Working Capital Balance, the Purchase Price will be increased by the amount by
which the Closing Working Capital Balance exceeds the June 30 Working Capital
Balance;
(ii) if the June 30 Working Capital Balance exceeds the
Closing Working Capital Balance, the Purchase Price will be decreased by the
amount by which the June 30 Working Capital Balance exceeds the Closing Working
Capital Balance; and
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(iii) if the Closing Working Capital Balance equals the June
30 Working Capital Balance, the Purchase Price will not be adjusted pursuant to
this Section 2.02.
(b) Post Closing Adjustments.
(i) Buyer shall have up to ninety (90) days following the
Closing Date (the "Verification Period") to verify Seller's determination of the
Closing Working Capital Balance. Any adjustments to such determination shall be
made by written notice to Seller within the Verification Period (an "Adjustment
Notice"), setting forth (A) Buyer's objections to Seller's determination of the
Closing Working Capital Balance, (B) Buyer's determination of the Working
Capital Balance, and (C) the proposed purchase price adjustment (the "Proposed
Purchase Price Adjustment"). If Buyer does not deliver an Adjustment Notice to
Seller within the Verification Period, Seller's determination of the Closing
Working Capital Balance shall be final and binding on the parties.
(ii) To the extent that Seller has any objection to the
Proposed Purchase Price Adjustment, such objection shall be made by written
notice to Buyer (the "Objection Notice") within ten (10) days of delivery of the
Adjustment Notice (the "Objection Period"). If Seller does not object to the
Proposed Purchase Price Adjustment within the Objection Period, Buyer shall be
entitled to offset the Proposed Purchase Price Adjustment against the Holdback
(as defined in Section 2.04(c)) in accordance with Section 2.05 hereof.
(iii) If Seller delivers an Objection Notice in response to
any Adjustment Notice delivered by Buyer, and Buyer and Seller are unable to
agree upon the amount of any Proposed Purchase Price Adjustment within ten (10)
days of delivery of the Objection Notice, then the accounting firm of Deloitte &
Touche LLP (the "Auditor") shall be requested to conduct a review and determine
the amount of the Closing Working Capital Balance. The Auditor shall be
instructed in performing such review that both Buyer and Seller shall be
provided with copies of any and all correspondence and drafts distributed to any
party. Prior to issuing its final determination, both Buyer and Seller shall
have the opportunity to provide the Auditor with input and any additional
information that such party deems relevant, provided that the Auditor shall not
be required to use any such input or information in connection with its review
and determination of the Closing Working Capital Balance. Upon completion of its
review and determination, the Auditor shall promptly deliver copies of its
report to Buyer and Seller, setting forth its determination of the Closing
Working Capital Balance (the "Auditor's Report"). The Auditor's Report will be
conclusive and binding upon both Buyer and Seller and Buyer shall be entitled to
offset against the Holdback, in accordance with Section 2.05 hereof, an amount
equal to the excess, if any, of the Closing Working Capital Balance as
determined by the Auditor and reported in the Auditor's Report over the
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Closing Working Capital Balance determined by Buyer on or before the Closing
Date. Each of Seller and Buyer shall pay one-half of the costs and expenses of
the Auditor and the Auditor's Report contemplated by this Section 2.02(b)(iii).
(c) Definition of Net Working Capital Balance. For purposes of this
Section 2.02, the "Net Working Capital Balance" of the Business shall mean (i)
all current assets of the Business (excluding cash and cash equivalents), less
(ii) all current liabilities (excluding the current portion of interest-bearing
debt), plus (iii) the aggregate purchase price, not to exceed $200,000, of all
rental equipment purchased by Seller since June 30, 1997 with cash from
operations in the ordinary course of business, or with debt that is a current
liability assumed by Buyer pursuant to Section 1.03 hereof, to the extent that
such equipment is included in the Assets. Seller agrees to give Buyer at least
ten days' written notice of any purchase of rental equipment contemplated by the
foregoing sentence in excess of $10,000.
2.03 ▇▇▇▇ Employment Agreement. Buyer shall employ ▇▇▇▇▇▇ ▇▇▇▇▇▇
(▇▇▇) ▇▇▇▇, the current President of Seller ("▇▇▇▇"), by assuming the employment
agreement between ▇▇▇▇ and Seller (the "▇▇▇▇ Employment Agreement") on the
Closing Date, provided, that Buyer shall retain the right to terminate ▇▇▇▇ at
any time after the Closing Date subject to the termination obligations set forth
in the ▇▇▇▇ Employment Agreement. In the event that Buyer terminates ▇▇▇▇ after
assuming the ▇▇▇▇ Employment Agreement, Seller and Buyer shall each be
responsible for fifty percent (50%) of any costs incurred in connection with any
liabilities arising under the ▇▇▇▇ Employment Agreement from such termination.
The portion of such termination costs to be borne by Seller will be paid by
Seller to Buyer from the Retention Amount (as defined in Section 2.06) within
five business days after Buyer has given written notice of Buyer's termination
of ▇▇▇▇ and its written analysis of the termination costs required to be paid
under the ▇▇▇▇ Employment Agreement.
2.04 Manner of Payment.
(a) Deposit. On the first business day following execution of this
Agreement, a payment of TWO HUNDRED AND FIFTY THOUSAND AND NO/100 DOLLARS
($250,000.00) shall be made by Buyer by wire transfer payable at the direction
of Seller in immediately available federal funds as a deposit to secure Buyer's
obligation to consummate the transactions contemplated hereby (the "Deposit").
On the Closing Date, the Deposit shall be credited to Buyer's payment of the
Purchase Price pursuant to Section 2.04(b) hereof. In the event that this
Agreement is terminated by Buyer, other than in accordance with Article IX
hereof, or by Seller, in accordance with Sections 9.01(b) or 9.01(g) hereof,
Seller shall be entitled to retain the Deposit. In all other cases, the Deposit
shall be returned to Buyer, by wire transfer payable at the direction of Buyer
in immediately available federal funds, within three (3) business days of the
termination of this Agreement.
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(b) Closing Payment. A payment equal to the Purchase Price (subject
to any adjustments to be made pursuant to Sections 2.02 and 2.03 hereof) less
the Deposit and the Holdback (the "Closing Cash Payment") shall be made by Buyer
by wire transfer payable at the direction of Seller in immediately available
federal funds on or before 12:00 p.m., Pacific Time, on the Closing Date.
(c) Holdback. TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($250,000.00) of the Purchase Price (as adjusted pursuant to Sections 2.02 and
2.03 hereof) (the "Holdback") shall be retained by Buyer in reserve against
those offsets contemplated by Section 2.05 hereof. The Holdback shall be
deposited by Buyer into a segregated, interest-bearing bank account (the
"Holdback Account"). Buyer shall not withdraw any portion of the Holdback, or
any interest thereof, from the Holdback Account other than in accordance with
Section 2.05 hereof.
2.05 Holdback Offset. The Holdback shall be retained by Buyer as
security for the offset rights set forth below:
(a) Offset for Adjustments to Closing Working Capital Balance. Buyer
shall be entitled to offset against the Holdback (i) any Proposed Purchase Price
Adjustment made by Buyer pursuant to Section 2.02(b)(ii) hereof and not objected
to within the Objection Period and (ii) any adjustment to be made pursuant to
Section 2.02(b)(iii) hereof as a result of any Auditor's Report as to the
Closing Working Capital Balance.
(b) Offset for Accounts Receivable. Buyer shall be entitled to an
offset against the Holdback in an amount in cash equal to the Uncollected
Receivables (as hereinafter defined), in accordance with the procedures set
forth below:
(i) On or before the first business day following the date
that is one hundred and eighty (180) days after the Closing Date, Buyer shall
deliver to Seller a statement (the "Receivables Statement") setting forth the
Total Collections (as hereinafter defined) and Uncollected Receivables as of one
hundred and eighty (180) days after the Closing Date (the "Receivables Statement
Date"). For purposes of this Agreement, "Closing Date Receivables" shall mean
all accounts receivable of Seller (net of reserves for doubtful accounts) listed
as of the Closing Date on the schedule of notes and accounts receivable to be
delivered by Seller on the Closing Date pursuant to Section 4.11 hereof and
approved by Buyer and Seller on such date; "Total Collections" shall mean the
amount of cash collected in respect of the Closing Date Receivables through the
Receivables Statement Date; and "Uncollected Receivables" shall equal Closing
Date Receivables, reduced by (i) Total Collections, and (ii) the allowance for
doubtful accounts on the books of Seller for bad debt related to the Closing
Date Receivables. Buyer agrees to process collection of the Closing Date
Receivables in good faith using its normal and customary collection
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procedures. Buyer further agrees that all sums collected through the Receivables
Statement Date from any customer obligated with respect to a Closing Date
Receivable shall be applied (1) first, to the specific invoice referenced on the
customer's check or remittance; (2) second, if no specific invoice is
referenced, to such Closing Date Receivable and (3) third, only after full
satisfaction of such Closing Date Receivable, to Buyer's other accounts
receivables, if any; provided, that Buyer shall not be required to comply with
the application of collections required by clause (2) above if the customer
disputes the validity of such Closing Date Receivable or makes a claim that the
products or services sold related to such Closing Date Receivable are defective
or unsatisfactory.
(ii) At Seller's request, as soon as practicable after
delivery of the Receivables Statement to Seller, Buyer shall reassign to Seller
all of the Uncollected Receivables that Buyer has offset against the Holdback;
provided, however, that at Buyer's request, Buyer and Seller shall negotiate in
good faith for Buyer to purchase the Uncollected Receivables in lieu of such
reassignment, it being understood that Seller is under no obligation to accept
any offer made by Buyer in respect of such purchase and shall be entitled to the
reassignment of the Uncollected Receivables if Buyer and Seller are unable to
agree on a purchase price therefor.
(c) Offset for Indemnification Obligations. Buyer shall be entitled
to offset against the Holdback any indemnifiable Buyer Losses (as defined in
Section 11.02 hereof), provided that, if and to the extent that any Buyer Losses
are based on a claim by a third party against Buyer, such claim must be actually
asserted against Buyer by such third party. In the event that Buyer Losses
exceed the Holdback, Buyer shall be entitled to retain the Holdback and the
Seller shall be responsible for the excess in accordance with, and subject to
the limitations of, Section 11.02 hereof.
(d) Offset Procedures. On the third (3rd) business day following the
date that is one hundred and eighty (180) days after the Closing Date (the
"Offset Payment Date"), Buyer shall (i) provide Seller with a statement setting
forth in reasonable detail the Holdback amount and any offsets, and (ii)
deliver, by wire transfer payable to the order of Seller in immediately
available federal funds, the aggregate amount held in the Holdback Account, less
the amount of any offsets to which Buyer is entitled pursuant to this Section
2.05. Notwithstanding the foregoing, to the extent that Seller has delivered an
Objection Notice relating to any Proposed Purchase Price Adjustment, and such
objection has not been settled as of the Offset Payment Date, either by the
agreement of the parties or by the delivery of the Auditor's Report with respect
to such Proposed Purchase Price Adjustment, Buyer shall be entitled to retain in
the Holdback Account an amount equal to the Proposed Purchase Price Adjustment
(the "Remaining Holdback") until such time as an Auditor's Report with respect
to such Proposed Purchase Price Adjustment. At the time such Auditor's Report is
issued, Buyer shall deliver, by wire transfer payable to the order of Seller in
immediately available federal funds, an amount
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equal to the excess, if any, of the Remaining Holdback over any adjustment to be
made pursuant to Section 2.02(b)(iii) hereof as a result of the Auditor's
Report.
2.06 Retention of Purchase Price by Seller.
(a) To secure any potential indemnification claim of Buyer pursuant
to Section 11.02 hereof, Seller agrees to retain a minimum of $500,000 of the
Closing Cash Payment for a period of one year following the Closing Date in a
segregated, interest-bearing bank account (the "Retention Account"). Seller
shall not distribute any amount held in the Retention Account to any of its
partners during such one-year period. Notwithstanding the foregoing, in the
event Buyer has not terminated ▇▇▇▇'▇ employment with Buyer under the ▇▇▇▇
Employment Agreement prior to the end of such one year period, Seller shall
retain in the Retention Account an amount equal to fifty percent (50%) of the
aggregate costs that would be incurred by Buyer under the ▇▇▇▇ Employment
Agreement through the end of the stated employment term of October 31, 1998 (the
"Term") in the event of such termination (the "▇▇▇▇ Holdback"). If Buyer has not
terminated ▇▇▇▇'▇ employment during a calendar month of the remaining Term,
Seller may distribute to its partners an amount equal to a portion of the ▇▇▇▇
Holdback pro rated for such month. If Buyer terminates ▇▇▇▇, Seller shall be
obligated to pay to the Buyer the remaining balance of the ▇▇▇▇ Holdback from
the Retention Account as of such termination date.
(b) Seller agrees to obtain the written agreement (the "Retention
Agreement") of each of BCA, LLC, the general partner of Seller (the "General
Partner") and each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇, ▇▇., R. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, the individual members of the General
Partner of Seller, pursuant to which each such person will agree to (i) cause
the Seller, on and after the Closing Date, to fulfill its obligations under this
Section 2.06, (ii) defend against any attempt by any limited partner or creditor
of Seller to have any portion of the Retention Amount distributed or paid to
such person prior to the first anniversary of the Closing Date, and (iii)
indemnify and hold harmless Buyer for any loss, liability, damage, expense or
cost arising from Seller's failure to fulfill its obligations under this Section
2.06 or, with respect to an indemnification claim by Buyer against the Retention
Amount pursuant to Section 11.02 hereof, Seller's obligations under such Section
11.02.
2.07 Allocation of Purchase Price. Prior to the Closing Date, Buyer
shall determine an allocation of the Purchase Price among the Assets, subject to
Seller's consent (which shall not be unreasonably withheld), after taking into
account any appraisals which may be obtained by Buyer, the applicable Treasury
Regulations and the fair market value of such items. Buyer shall prepare for
filing all of the tax returns, information returns and statements ("Returns")
that may be required with respect to the transaction provided for herein
pursuant to Section
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1060 of the Internal Revenue Code of 1986, as amended (the "Code"), any Treasury
Regulations promulgated thereunder, any other similar provision of the Code and
any other similar, applicable foreign, state or local tax law or regulation.
Seller shall provide information that may be required by Buyer for the purpose
of preparing such Returns, execute and file such Returns as requested by Buyer
and file all other returns and tax information on a basis that is consistent
with such Returns prepared by Buyer.
ARTICLE III
CLOSING
3.01 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of counsel to Seller,
▇▇▇▇▇▇ ▇▇▇▇ Nemerovski ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇, San Francisco, California, at 10:00
a.m. on October 22, 1997, or at such other place and on such other date as is
mutually agreeable to Buyer and Seller. The date on which the Closing occurs is
referred to herein as the "Closing Date."
3.02 General Procedure. At the Closing, each party shall deliver to
the party entitled to receipt thereof the documents required to be delivered
pursuant to Article VIII hereof and such other documents, instruments and
materials (or complete and accurate copies thereof, where appropriate) as may be
reasonably required in order to effectuate the intent and provisions of this
Agreement, and all such documents, instruments and materials shall be
satisfactory in form and substance to counsel for the receiving party. The
conveyance, transfer, assignment and delivery of the Assets shall be effected by
Seller's execution and delivery to Buyer of a ▇▇▇▇ of sale substantially in the
form attached hereto as Exhibit B (the "▇▇▇▇ of Sale") and such other
instruments of conveyance, transfer, assignment and delivery as Buyer shall
reasonably request to cause Seller to transfer, convey, assign and deliver the
Assets to Buyer, and the assignment and assumption of Seller's Liabilities to
Buyer shall be effected by Seller's and Buyer's execution of an assignment and
assumption agreement substantially in the form attached hereto as Exhibit C (the
"Assignment and Assumption Agreement").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SELLER
The Seller hereby represents and warrants to Buyer that, except as
set forth in the Disclosure Schedule delivered by Seller to Buyer on the date
hereof (the "Disclosure Schedule") (which Disclosure Schedule sets forth the
exceptions to the
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representations and warranties contained in this Article IV under captions
referencing the Sections to which such exceptions apply):
4.01 Organization, Qualification and Power and Authority. Seller is
a limited partnership duly formed, validly existing and in good standing under
the laws of the State of California and has all requisite power and authority
and all authorizations, licenses, permits and certifications necessary to carry
on the Business as now being conducted and to own, lease and operate the Assets.
Seller is qualified to do business in every jurisdiction in which the nature of
its business or its ownership of property requires it to be qualified and in
which the failure to be so qualified would have a material adverse effect on the
financial or operating condition of the Business.
4.02 Subsidiaries. Except as otherwise set forth in Section 4.02 of
the Disclosure Schedule, the Assets do not include any stock, partnership
interest, joint venture interest or any other security or ownership interest
issued by any other corporation, organization or entity.
4.03 Authority; Enforceability. The Seller has the right, legal
capacity, and authority to enter into and perform its obligations under this
Agreement. This Agreement constitutes the valid and legally binding obligation
of the Seller, enforceable in accordance with its terms and conditions, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally, and to the exercise of judicial
discretion in accordance with general principles of equity, including (without
limitation) concepts of materiality, reasonableness, good faith and fair
dealing, and other similar doctrines affecting the enforceability of agreements
generally (regardless of whether considered in a proceeding in equity or at
law).
4.04 Noncontravention. Except as set forth in Section 4.04 of the
Disclosure Schedule, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated herein will (i) violate
any law to which the Seller is subject, (ii) violate any provision of the
limited partnership certificate, limited partnership agreement, articles of
incorporation, bylaws or other governing documents (as the case may be) of the
Seller, (iii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under any agreement,
contract, lease, license, instrument or other arrangement to which the Seller is
a party or by which it is bound or to which any of its assets is subject, or
(iv) result in the imposition of any security interest upon any of the Assets.
4.05 Governmental Authorities; Consents. No consent, approval, or
authorization of, or declaration, filing or registration with any United States
federal or state governmental or regulatory authority is required to be made or
obtained by
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the Seller in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein.
4.06 Financial Statements; Undisclosed Liabilities.
(a) The Balance Sheet attached to this Agreement as Exhibit A and
the financial statements of Seller for the years ended December 31, 1994, 1995
and 1996 previously provided to Buyer (including the notes thereto) (the
"Historical Financial Statements") have each been prepared in accordance with
generally accepted accounting principles ("GAAP") (except, with respect to the
Balance Sheet, subject to changes for year-end adjustments and the omission of
notes) applied on a consistent basis throughout the periods covered thereby,
present fairly the financial condition of the Business as of such dates and for
such periods, are correct and complete, and are consistent with the books and
records of Seller (which books and records are correct and complete).
(b) As of the date of the Balance Sheet, the Business had no
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due, whether known or unknown, and regardless of when
asserted) arising out of transactions entered into prior to the date of the
Balance Sheet, or any action or inaction, or any state of facts existing, with
respect to or based upon transactions or events occurring prior to the date of
the Balance Sheet, except liabilities disclosed in the Balance Sheet or which
arose in the ordinary course of business after the date of the Balance Sheet
(none of which is a material uninsured liability for breach of contract, breach
of warranty, tort, infringement, claim or lawsuit).
(c) The Monthly Financial Statements (as defined in, and to be
delivered by Seller to Buyer pursuant, to Section 10.02 hereof) shall be
prepared in accordance with GAAP (subject to changes for year-end adjustments
and except for the omission of notes) applied on a consistent basis throughout
the periods covered thereby, shall present fairly the financial condition and
the results of operations of the Business as of such dates and for such periods,
and shall be correct and complete, and consistent with the books and records of
Seller (which books and records shall be correct and complete as of the delivery
of the Monthly Financial Statements).
(d) As of the Closing, the Business will have no liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise, whether due
or to become due, whether known or unknown, and regardless of when asserted)
arising out of transactions entered into prior to the Closing, or any action or
inaction, or any state of facts existing, with respect to or based upon
transactions or events occurring prior to the Closing, except liabilities
disclosed in the Financial Statements or which have arisen in the ordinary
course of business after the date of the Financial Statements
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15
(none of which is a material uninsured liability for breach of contract, breach
of warranty, tort, infringement, claim or lawsuit).
4.07 Events Subsequent to Balance Sheet Date. Except as contemplated
by this Agreement and as set forth in Section 4.07 of the Disclosure Schedule,
since the date of the Balance Sheet, there has not been any material adverse
change in the business, financial condition, operations or results of operations
of the Business. Except as contemplated by this Agreement and as set forth in
Section 4.07 of the Disclosure Schedule, but without limiting the generality of
the foregoing, since the date of the Balance Sheet:
(a) Seller has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than on an arm's-length basis in the
ordinary course of business;
(b) Seller has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
outside the ordinary course of business involving more than $50,000 in the
aggregate which will remain an obligation of Seller following the Closing;
(c) no party (including Seller) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) involving more than $50,000
in the aggregate to which Seller is a party or by which Seller is bound;
(d) Seller has not imposed any security interest upon any of its
assets, tangible or intangible, other than pursuant to purchase money security
interests in the ordinary course of business;
(e) Seller has not made any capital expenditure (or series of
related capital expenditures) involving expenditures of more than $50,000 in the
aggregate other than as shown on the books and records of Seller made available
to the Buyer and its representatives prior to Closing;
(f) Seller has not issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation involving more than $50,000 in the aggregate except
in the ordinary course of business;
(g) Seller has not delayed or postponed the payment of accounts
payable and other liabilities, or made or suffered any material adverse change
in its relationship with its vendors, outside the ordinary course of business;
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(h) there has been no change in the normal operating balances of
Seller's inventory that could reasonably have a material adverse effect on the
operations of Seller;
(i) Seller has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) involving more than
$50,000 in the aggregate;
(j) there has been no change made or authorized in the limited
partnership certificate, limited partnership agreement or other governing
documents of Seller;
(k) Seller has not declared, set aside, or paid any distribution to
any of its general or limited partners (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its general or limited partnership
interests;
(l) Seller has not experienced any material damage, destruction, or
loss to its property not covered by insurance;
(m) except for loans or advances to a partner or employee which will
be paid prior to Closing, Seller has not made any loan or advance to, or entered
into any other transaction with, any of its partners or employees;
(n) Seller has not entered into any employment contract providing
for base compensation in excess of $50,000 or collective bargaining agreement,
written or oral, or modified the terms of any existing such contract or
agreement, other than in the ordinary course of business;
(o) Seller has not granted any increase in the base compensation of
any of its employees other than in the ordinary course of business and
consistent with past practice and custom;
(p) Seller has not adopted, amended, modified, or terminated any
bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its employees and has not granted any
increase in the hourly wage scale to any class of its employees;
(q) Seller has not adopted, amended, modified or terminated any
bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its employees other than for compensation
plans for such employees which are performance-based, not more than one year in
duration, approved and subject to ongoing evaluation by Seller's senior
management and are otherwise in the ordinary course of business of Seller;
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17
(r) Seller has not made any other change in employment terms for any
of its employees outside the ordinary course of business;
(s) Seller has not made or pledged to make any charitable
contribution in excess of $5,000 in the aggregate which amounts are due after
the Closing Date;
(t) there has not been any other material occurrence, event,
incident, action, or transaction outside the ordinary course of business
involving Seller;
(u) all transactions between or among Seller and any of Seller's
affiliates or any other Selling Party or any of such Selling Party's affiliates
since the date of the Balance Sheet are described in Section 4.07 of the
Disclosure Schedule and all such transactions were made on arms-length basis,
with terms as favorable to Seller as could have been obtained from an
unaffiliated third party; and
(v) Seller has not committed to any of the foregoing.
4.08 Title to Assets. Seller has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by the Seller in the
ordinary course of Business (except inventory consigned to the Seller for sale)
or shown on the Balance Sheet, or acquired after the date thereof, free and
clear of all security interests, except for assets disposed of in the ordinary
course of business since the date of the Balance Sheet and except for security
interests identified in Section 4.08 of the Disclosure Schedule and except for
statuory liens for obligations that will have been satsified as of the Closing
Date. All personal property leases to which Seller is a party are identified in
Section 4.08 of the Disclosure Schedule.
4.09 Tangible Assets and Inventory. Seller owns or leases all
buildings, machinery, equipment, and other tangible assets necessary for the
conduct of the Business as presently conducted. Each such tangible asset has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it is presently used. Seller's inventory
consists of finished goods salable by Seller in Seller's ordinary course of
business. The Balance Sheet reflects, and the Financial Statements will reflect,
an adequate reserve for all Seller's inventory that is slow-moving, as
determined in accordance with the Seller's past practices, or is obsolete,
damaged or defective.
4.10 Real Property.
(a) Seller does not own any real property.
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(b) Section 4.10(b) of the Disclosure Schedule lists all real
property leased or subleased to Seller, identifies the lessor, rental rate,
lease term, expiration date and existence of a renewal option. Seller has made
available to Buyer prior to Closing correct and complete copies of the leases
and subleases listed in Section 4.10(b) of the Disclosure Schedule (as amended
to date). With respect to each lease and sublease listed, except as otherwise
indicated in Section 4.10(b) of the Disclosure Schedule:
(i) the lease or sublease is in full force and effect and will
remain in full force and effect on identical terms on and after the Closing,
Seller is in possession of the leased premises and all rental and other
obligations of Seller are current;
(ii) Seller is not in breach or default (or has not received
notice of breach or default), and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or permit termination,
modification, or acceleration under such lease or sublease;
(iii) no party has repudiated any provision of such lease or
sublease;
(iv) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease to which Seller is a party;
(v) Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the leasehold or subleasehold;
and
(vi) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof by Seller and have
been operated and maintained by Seller in compliance with applicable laws,
except to the extent that the failure to receive any such approval, license or
permit for any such facility, or to operate and maintain any such facility in
compliance with applicable laws would not have a material adverse effect on such
facility or Seller's use of such facility as currently used.
4.11 Notes and Accounts Receivable. All notes and accounts
receivable of Seller are reflected properly on its books and records, are valid
receivables, and, to the Seller's Knowledge (as defined below), are subject to
no setoffs or counterclaims and are current and collectible. The schedule of
notes and accounts receivable of Seller delivered to Buyer dated as of August
31, 1997 sets forth all notes and accounts receivable of Seller as of such date.
Seller will also have delivered on the Closing Date a revised schedule of all
notes and accounts receivable of Seller as of the Closing Date. Such schedule
will set forth all notes and accounts
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receivable of Seller as of the Closing Date. As used in this Agreement,
"Seller's Knowledge" means, as of the date of this Agreement, the actual
knowledge, after inquiry, of (i) the general partner of the Seller, (ii) each
executive officer of the Seller; and (iii) each member and manager of the
general partner of the Seller, and (iv) each general partner of Duff, Ackerman,
▇▇▇▇▇▇▇▇ & Associates, L.P.; and, as of the Closing Date, the actual knowledge,
after inquiry, of each of the foregoing persons listed in (i) through (iv)
above, as well as (v) each of the Seller's department heads or supervisors; and
(vi) the manager of each business location operated by the Seller.
4.12 Tax Matters.
(a) Seller has timely filed with the appropriate governmental
agencies materially complete and accurate Tax Returns (as defined below)
required to be filed by it in respect of all applicable Taxes, if any, required
to be paid through the date hereof, and will timely file any such Tax Return
required to be filed by it prior to the Closing Date with respect to all
applicable Taxes, if any, required to be paid through the Closing Date. All such
Tax Returns were prepared in material compliance with applicable law and all
Taxes, if any, due, or claimed to be due by any taxing authority, pursuant
thereto (whether or not shown as due on any Tax Return) have been paid. In
addition, all Taxes, if any, due or claimed to be due by any taxing authority
(whether or not shown on any Tax Return), prior to the Closing Date for which
Seller may be liable in its own right or as a transferee of the assets of, or
successor to, any corporation, person, association, partnership, joint venture
or other entity, have been paid on a timely basis, or an adequate reserve has
been established therefor. Except as set forth in Section 4.12(a) of the
Disclosure Schedule, Seller currently is not the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where Seller does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction or otherwise required to file a
Tax Return in such jurisdiction. There are no liens or security interests on any
of the assets of Seller that arose in connection with any failure (or alleged
failure) to pay any Tax.
(b) Seller has withheld and paid all Taxes that Seller is required
to withhold and pay in connection with amounts paid or owing to any employee,
independent contractor, creditor, general or limited partner, or other third
party.
(c) Seller has at all times during its existence been, and currently
is, treated as a partnership for tax reporting purposes. Seller has taken no
action, and there is no basis, that would cause Seller to be treated as an
association taxable as a corporation.
(d) Seller will make available to the Buyer prior to Closing correct
and complete copies of all federal, state, local and foreign income Tax Returns
and
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all written communications from the Internal Revenue Service or other Tax
authorities relating to any such Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by Seller.
(e) As used in this Agreement, "Tax" means any federal, state,
local, or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under IRC Code Sec. 59A), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, highway, estimated, or
other tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not imposed by any governmental or
quasi-governmental authority; and "Tax Return" means any return, declaration,
report, claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
4.13 Contracts. Section 4.13 of the Disclosure Schedule lists the
following contracts and other agreements to which Seller is a party:
(a) any agreement (or group of related agreements) for the lease of
personal property to or from any person providing for lease payments in excess
of $25,000 per annum;
(b) any agreement (or group of related agreements) for the purchase
or sale of supplies, products, or other personal property, or for the furnishing
or receipt of services, the performance of which will (i) extend over a period
of more than one year and involve consideration in excess of $50,000 in the
aggregate, or (ii) result in a loss to the Business of more than $50,000 in any
twelve month period;
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements) under which
Seller created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation in excess of $50,000 in the aggregate
or under which it has imposed a security interest on any of its assets, tangible
or intangible;
(e) any agreement concerning confidentiality or noncompetition;
(f) any agreement among Seller and any of Seller's general or
limited partners, or any of their affiliates or relatives;
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(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of Seller's current or former employees;
(h) any collective bargaining agreement;
(i) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
or severance benefits that would make such individual one of the ten highest
paid individuals by Seller;
(j) any agreement under which Seller has advanced or loaned any
amount to (i) any of its general or limited partners, or (ii) any of its
employees, outside the ordinary course of business;
(k) any other written agreement (or group of related agreements)
under which the consequences of a default or termination could reasonably be
expected to have a material adverse effect on the Business; or
(l) any other agreement (or group of related agreements) the
performance of which involves the payment of consideration in excess of $50,000
in the aggregate during any twelve month period.
Seller has made available to Buyer prior to Closing a correct and complete copy
of each written agreement listed in Section 4.13 of the Disclosure Schedule and
a brief written summary setting forth with particularity the terms and
conditions of any oral agreement referred to in Section 4.13 of the Disclosure
Schedule. With respect to each such agreement: (i) the agreement currently is
legal, valid, binding, enforceable, and in full force and effect; (ii) to the
Seller's Knowledge, the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms as of the Closing
Date immediately after giving effect to the consummation of the transactions
contemplated hereby; (iii) the Seller is not in breach or default and, to the
Seller's Knowledge, no other party is in breach or default and no event has
occurred which with notice or lapse of time would constitute a breach or default
or permit termination, modification, or acceleration, under the agreement; and
(iv) to Seller's Knowledge, no party has repudiated any provision of the
agreement.
4.14 Intellectual Property Rights. Section 4.14 of the Disclosure
Schedule describes all rights in patents, patent applications, trademarks,
service marks, trade names, corporate names, copyrights mask works, trade
secrets, know-how or other intellectual property rights owned by, licensed to or
otherwise controlled by Seller in connection with the conduct of the Business or
used in, developed for use in or necessary to the conduct of the Business as now
conducted
- 20 -
22
or planned to be conducted. To Seller's Knowledge, Seller owns and possesses all
right, title and interest, or holds a valid license, in and to the rights set
forth under such caption. Section 4.14 of the Disclosure Schedule describes all
intellectual property rights which have been licensed to third parties and those
intellectual property rights which are licensed from third parties. Seller has
not received any notice of, nor are there any facts known to Seller which
indicate a likelihood of, any infringement or misappropriation by, or conflict
from, any third party with respect to the intellectual property rights listed in
the Disclosure Schedule; no claim by any third party contesting the validity of
any intellectual property rights listed under such caption has been made, is
currently outstanding or, to the Seller's Knowledge, is threatened; Seller has
not received any notice of any infringement, misappropriation or violation by
Seller of any intellectual property rights of any third parties and Seller has
not infringed, misappropriated or otherwise violated any such intellectual
property rights; and, to the Seller's Knowledge, no infringement, illicit
copying, misappropriation or violation has occurred or will occur with respect
to products currently being sold by Seller or with respect to the products
currently under development (in their present state of development) or with
respect to the conduct of the Business as now conducted.
4.15 Litigation. No action, suit or proceeding is pending or, to the
Seller's Knowledge, threatened against Seller before any court or quasi-judicial
or administrative agency of any federal, state, local, or foreign jurisdiction
wherein an unfavorable injunction, judgment, order, decree, ruling, or charge
would (a) prevent consummation of any of the transactions contemplated by this
Agreement, (b) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation, or (c) materially adversely affect the
right of Buyer to conduct the Business following the Closing.
4.16 Product Warranty and Liability. It is Seller's standard
practice to sell each product sold by it in conformity with all applicable
contractual commitments, if any, and all express and implied warranties of the
manufacturer. All products sold by Seller have been sold in conformity with such
practice. No product sold by Seller is subject to any other guaranty, warranty
or other indemnity beyond the applicable standard terms and conditions of sale.
Except as set forth in Section 4.16 of the Disclosure Schedule, Seller has no
liability arising out of any injury to individuals or property as a result of
the ownership, possession or use of any product sold by Seller prior to the
Closing.
4.17 Employees. Except as set forth in Section 4.17 of the
Disclosure Schedule, to the Seller's Knowledge, no executive, key employee, or
group of employees has any plans to terminate employment with Seller prior to or
after the Closing. Seller is not a party to or bound by any collective
bargaining agreement, nor has Seller experienced any strikes, grievances, claims
of unfair labor practices, or other collective bargaining disputes. Seller has
not taken any action, or omitted to
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take any action, that would result in any unfair labor practice. To the Seller's
Knowledge, no organizational effort is presently being made or threatened by or
on behalf of any labor union with respect to employees of Seller. All of
Seller's current procedures, policies and training practices with respect to
employee matters, including, without limitation, those relating to the hiring
and termination of employees and worker safety, conform with applicable laws to
which the Seller is subject, except for any such noncompliance as would not,
singly or in the aggregate, have a material adverse effect on the Business. All
employees of Seller have been properly classified as exempt or non-exempt for
overtime compensation. All overtime compensation earned by employees of Seller
has been properly paid or accrued.
4.18 Employee Benefits.
(a) Except as set forth in Section 4.18 of the Disclosure Schedule,
with respect to all employees and former employees of Seller who perform or
performed functions in connection with Seller's business and all dependents and
beneficiaries of such employees and former employees: (i) Seller does not
maintain or contribute to any nonqualified deferred compensation or retirement
plans, contracts or arrangements; (ii) Seller does not maintain or contribute to
any qualified defined contribution plans (as defined in Section 3(34) of ERISA
(as defined below) or Section 414(i) of the Code (as defined below); (iii)
Seller does not maintain or contribute to any qualified defined benefit plans
(as defined in Section 3(35) of ERISA or Section 414(j) of the Code); (iv)
Seller does not maintain or contribute to any employee welfare benefit plans (as
defined in Section 3(1) of ERISA); and (v) Seller does not maintain any
severance plan for, or have any severance agreement with, any employee. Seller
has no unfunded liability with respect to any Employee Benefit Plan.
(b) To the extent required (either as a matter of law or to obtain
the intended tax treatment and tax benefits), all Employee Benefit Plans (as
defined below) comply in all material respects with the requirements of ERISA
and the Code. With respect to the Employee Benefit Plans, (a) all required
contributions which are due have been made and a proper accrual has been made
for all contributions due in the current fiscal year; and (b) there have been no
Prohibited Transactions (as defined below) that would have a material adverse
effect on the Business.
(c) Seller does not contribute (and has not ever contributed) to any
multi-employer plan, as defined in Section 3(37) of ERISA. Seller has no actual
or potential liabilities under Section 4201 of ERISA for any complete or partial
withdrawal from a multi-employer plan. Seller has no actual or potential
liability for death or medical benefits after separation from employment, other
than (i) death benefits under the employee benefit plans or programs (whether or
not subject to
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24
ERISA) set forth under Section 4.18 in the Disclosure Schedule, (b) health care
continuation benefits described in Section 4980B of the Code, or (c) other
actual or potential liabilities that would not, singly or in the aggregate, have
a material adverse effect on the Business.
(d) Neither Seller nor any of its partners, agents or employees, has
committed any breach of fiduciary responsibility imposed by ERISA or any other
applicable law with respect to the Employee Benefit Plans which would subject
Seller, Buyer or any of their respective directors, officers, partners, agents
or employees to any liability under ERISA or any applicable law.
(e) Seller has not incurred any liability for any tax or civil
penalty or any disqualification of any Employee Benefit Plan imposed by Sections
4980B and 4975 of the Code and Part 6 of Title I and Section 502(i) of ERISA.
(f) As used in this Agreement:
"Employee Benefit Plan" means any (i) nonqualified
deferred compensation or retirement plan or arrangement which is an
Employee Pension Benefit Plan, (ii) qualified defined contribution
retirement plan or arrangement which is an Employee Pension Benefit
Plan, (iii) qualified defined benefit retirement plan or arrangement
which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (iv) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set
forth in ERISA Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set
forth in ERISA Sec. 3(1).
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Multiemployer Plan" has the meaning set forth in ERISA
Sec. 3(37).
"Multiemployer Plan" has the meaning set forth in ERISA
Sec. 3(37).
4.19 Insurance. Section 4.19 of the Disclosure Schedule sets forth
the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which Seller is a party, a named
insured, or otherwise the beneficiary of coverage:
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(a) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(b) the policy number and the period of coverage;
(c) the scope (including an indication of whether the coverage was
on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(d) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (i) the policy is legal, valid,
binding, enforceable, and in full force and effect, (ii) Seller will keep such
policy in full force and effect on identical terms through the Closing Date;
(iii) neither Seller nor, to the Seller's Knowledge, any other party to the
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices) and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (iv) to the
Seller's Knowledge, no party to the policy has repudiated any provision thereof.
Section 4.19 of the Disclosure Schedule describes any self-insurance
arrangements affecting Seller.
4.20 Affiliate Transactions. Except as disclosed in the Disclosure
Schedule under the caption referencing this Section 4.20, no general or limited
partner or employee of Seller, or any of their affiliates or relatives, has been
involved in any business arrangement or relationship (other than normal employee
or partnership relationships) with Seller within the past twelve months, and
none of the foregoing persons owns any assets, tangible or intangible, which is
used in the Business.
4.21 Relationship with Suppliers. Seller currently has good
relationships with its suppliers of materials. Seller currently is not in
dispute with any current or former supplier and no supplier has notified Seller
that it will stop business with Seller prior to the Closing or with Buyer, in
the operation of the Business, after the Closing.
4.22 Legal Compliance; Permits.
(a) Except as set forth in Section 4.22 of the Disclosure Schedule,
Seller has complied with all laws applicable to it except to the extent that any
noncompliance would not, singly or in the aggregate, have a material adverse
effect on the financial condition or operations of the Business or the value of
the Assets, and neither Seller, nor any of its general or limited partners or
employees, has
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received any notice of any violation of any applicable federal, state, or local
statute, law, or regulation (including, without limitation, any applicable
building, zoning, environmental protection, or other law, ordinance or
regulation) affecting its properties, the Assets or the operation of the
Business.
(b) Seller has, in full force and effect, all licenses, permits and
certificates, from federal, state, local and foreign authorities (including,
without limitation, federal and state agencies regulating occupational health
and safety) necessary to conduct the Business and own and operate the Assets
(collectively, the "Permits"). A true, correct and complete list of all the
Permits is set forth under the caption referencing this Section 4.22 in the
Disclosure Schedule, with an indication as to whether the Permit is assignable
to Buyer. Seller has conducted its business in compliance with all material
terms and conditions of the Permits.
(c) In connection with the Business, Seller has not made or agreed
to make gifts of money, other property or similar benefits (other than
incidental gifts of articles of nominal value) to any actual or potential
customer, supplier, governmental employee or any other person in a position to
assist or hinder Seller in connection with any actual or proposed transaction.
(d) In particular, but without limiting the generality of the
foregoing, Seller has not violated and has no liability, and has not received a
notice or charge asserting any violation of or liability under, the federal
Occupational Safety and Health Act of 1970 or any other federal or state acts
(including rules and regulations thereunder) regulating or otherwise affecting
employee health and safety in connection with the Business.
4.23 Environmental Compliance.
(a) Seller and all real property leased or otherwise operated by
Seller (the "Real Property") is currently, and at all times during Seller's
ownership and/or operation of the Business has been, in compliance in all
material respects with all applicable Environmental Laws (as defined below). At
all times during the Seller's ownership and/or operation of the Real Property,
there has not been, or is not now occurring, any Release (as defined below) of
any Hazardous Material (as defined below) or any Contamination (as defined
below) on, under or from the Real Property, except any such Release permitted
by, and made in accordance with, applicable Environmental Laws. Except as
disclosed on Section 4.23 of the Disclosure Schedule, to the Seller's Knowledge,
at all times prior to Seller's ownership and/or operation of the Real Property,
there did not occur any Release of any Hazardous Material or any Contamination
on, under or from the Real Property, except any such Release permitted by, and
made in accordance with, applicable Environmental Laws.
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(b) Seller has obtained and maintained in full force and effect, all
environmental permits, licenses, certificates of compliance, approvals and other
authorizations necessary to conduct the Business, and to own or operate the Real
Property (collectively the "Environmental Permits"). Seller has conducted its
activities and business in compliance in all material respects with all terms
and conditions of any Environmental Permits. Seller has filed all reports and
notifications required to be filed under applicable Environmental Laws.
(c) Except as disclosed on Section 4.23 of the Disclosure Schedule,
neither Seller nor any general or limited partner or employee of Seller has
received any notice that any Third Party Environmental Claims (as defined below)
or Regulatory Actions (as defined below) have been asserted or assessed against
Seller or the Real Property and, except as disclosed on Section 4.23 of the
Disclosure Schedule, to the Seller's Knowledge, no Third Party Environmental
Claims or Regulatory Actions are pending or threatened against Seller or the
Real Property arising out of or due to, or allegedly arising out of or due to,
(i) the Release on, under or from the Real Property of any Hazardous Materials;
(ii) any Contamination of the Real Property, including, without limitation, the
presence of any Hazardous Material which has come to be located on or under the
Real Property from another location; (iii) any violation or alleged violation of
any Environmental Law with respect to the Real Property or the activities of
Seller; (iv) any injury to human health or safety or to the environment by
reason of the past or present condition of, or past or present activities on or
under, the Real Property; or (v) the generation, manufacture, storage,
treatment, handling, transportation or other use, however defined, of any
Hazardous Material by or for Seller on or off the Real Property.
(d) Except as disclosed on Section 4.23 of the Disclosure Schedule,
Seller has not stored, transported, handled, treated, processed, used or
disposed of any Hazardous Materials on, in or under the Real Property, including
specifically, but not limited to, PCBs, asbestos or asbestos containing
materials, radon, urea formaldehyde or radioactive materials, except any of the
foregoing permitted by, and made in accordance with, applicable Environmental
Laws.
(e) Except as disclosed on Section 4.23 of the Disclosure Schedule,
Seller has not transported or arranged for the transportation of any Hazardous
Materials to any location which is: (i) listed on the EPA's National Priorities
List of Hazardous Waste Sites (the "National Priorities List"); (ii) listed on
the Comprehensive Environmental Response, Compensation, Liability Information
System ("CERCLIS") or on any similar state list; or (iii) the subject of any
Regulatory Action which may lead to claims against Buyer for damages to natural
resources, personal injury, clean-up costs or clean-up work, including, but not
limited to, claims under CERCLA.
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(f) Except as disclosed on Section 4.23 of the Disclosure Schedule,
to the Seller's Knowledge, none of the Real Property is listed in the National
Priorities List or any other list, schedule, log, inventory or record, however
defined, maintained by any federal, state or local governmental agency with
respect to sites from which there is or has been a Release of any Hazardous
Material or any Contamination. Except as disclosed on Section 4.23 of the
Disclosure Schedule, to the Seller's Knowledge, no part of the Real Property was
ever used, nor is it now being used (i) as a landfill, dump or other disposal,
storage, transfer or handling area for Hazardous Materials which requires a
permit under Environmental Laws; or (ii) as a gasoline service station. There
are no underground or above ground tanks on the Real Property.
(g) As used in this Agreement:
"Clean-up" shall mean removal and/or remediation of, or
other response to (including, without limitation, testing,
monitoring, sampling or investigating of any kind) any Release of
Hazardous Materials or Contamination, to the satisfaction of all
applicable governmental agencies, in compliance with Environmental
Laws and in compliance with good commercial practice.
"Contamination" shall mean the presence of, or Release
on, under, from or to the Real Property of any Hazardous Material,
except the routine storage and use of Hazardous Materials from time
to time in the ordinary course of business, in compliance with
Environmental Laws and compliance with good commercial practice.
"Environmental Law(s)" shall mean any and all federal,
state and local laws, statutes, codes, ordinances, regulations,
rules, consent decrees, judicial orders, administrative orders or
other requirements relating to the environment or to human health or
safety associated with the environment, all as amended or modified
from time to time. Environmental Laws shall include, but are not
limited to, the following statutes and all rules and regulations
relating thereto, all as amended or modified from time to time:
(i) The Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), as
amended by the Superfund Amendments and Reauthorization
Act of 1986 ("▇▇▇▇") 42 U.S.C. Sections 9601-9675; the
Resource Conservation and Recovery Act of 1976 ("RCRA")
42 U.S.C. Section 6901-6991; the Clean Water Act 33
U.S.C. Section 1321 et seq; the Clean Air Act 42 U.S.C.
Sections 7401 et seq; the Federal Insecticide, Fungicide
and Rodenticide Act ("FIFRA") 7 U.S.C. Section 136 et
seq; the Toxic Substances Control Act ("TSCA") 15 U.S.C.
Sections 2601-2671;
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the Food, Drug and Cosmetic Act; and the Occupational
Safety and Health Act of 1970, and
(ii)all similar California state and local
laws, statutes, codes, ordinances, regulations and
rules.
"Hazardous Material(s)" shall mean (A) any substance,
the presence of which requires investigation or remediation under
any Environmental Law or under common law; (B) any toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous substance which is regulated by any
Environmental Law; (C) any substance, the presence of which poses or
threatens to pose a hazard to the health or safety of persons on or
about the Real Property; and (D) urea-formaldehyde, polychlorinated
biphenyls, asbestos or asbestos-containing materials, radon,
petroleum and petroleum products.
"Regulatory Action(s)" shall mean any claim, demand,
action or proceeding brought or instigated by any governmental
agency in connection with any Environmental Law (including without
limitation civil, criminal and/or administrative proceedings),
whether or not seeking costs, damages, penalties or expenses.
"Release" shall mean the spilling, leaking, disposing,
discharging, emitting, depositing, injecting, leaching, escaping, or
any other release or threatened release, however defined, and
whether intentional or unintentional, of any Hazardous Material.
"Third Party Environmental Claim(s)" shall mean third
party claims, actions, demands or proceedings (other than Regulatory
Actions) based on negligence, trespass, strict liability, nuisance,
toxic tort or detriment to human health or welfare due to any
Release of Hazardous Materials or Contamination, and whether or not
seeking costs, damages, penalties or expenses.
4.24 Partners and Affiliates of Seller. Section 4.24 of the
Disclosure Schedule sets forth a true and complete list of (a) each of Seller's
general and limited partners, and (b) each partner or shareholder of any entity
that, directly or indirectly, holds a general or limited partnership interest in
Seller.
4.25 Liabilities Assumed by Buyer. All of the liabilities and
obligations of Seller to be assumed by Buyer pursuant to this Agreement have
been incurred by Seller in the ordinary course of the Business and none arise
from transactions between or among Seller and any of Seller's affiliates or any
other
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Selling Party or any of such Selling Party's affiliates, except those
disclosed in the Disclosure Schedule under the caption referencing Section 4.20.
4.26 Broker's Fees. Seller has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement, other than to Duff, Ackerman,
▇▇▇▇▇▇▇▇ & Associates, L.P., the fees and expenses of which will be paid by
Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
5.01 Incorporation. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of California.
5.02 Authority; Enforceability. Buyer has the right, legal capacity,
and corporate authority to enter into and perform its obligations under this
Agreement. This Agreement constitutes the valid and legally binding obligation
of Buyer, enforceable in accordance with its terms and conditions, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally, and to the exercise of judicial
discretion in accordance with general principles of equity, including (without
limitation) concepts of materiality, reasonableness, good faith and fair
dealing, and other similar doctrines affecting the enforceability of agreements
generally (regardless of whether considered in a proceeding in equity or at
law).
5.03 Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated herein
will (i) violate any law to which Buyer is subject, (ii) violate any provision
of the articles of incorporation or bylaws of Buyer, or (iii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify or cancel, or
require any notice under any agreement, contract, lease, license, instrument or
other arrangement to which Buyer is a party or by which it is bound or to which
any of its assets is subject.
5.04 Governmental Authorities; Consents. No consent, approval, or
authorization of, or declaration, filing or registration with any United States
federal or state governmental or regulatory authority is required to be made or
obtained by Buyer in connection with the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein.
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5.05 Litigation. No action, suit or proceeding is pending or, to the
best of Buyer's knowledge, threatened against Buyer before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would (a) prevent consummation of any of the transactions contemplated
by this Agreement, or (b) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation.
ARTICLE VI
COVENANTS OF SELLER
6.01 Conduct of the Business. In connection with the Assets or the
Business, the Seller each agree to observe each term set forth in this Section
6.01 and agrees that, from the date hereof until the Closing Date, unless
otherwise consented to by Buyer in writing:
(a) The Business shall be conducted only in, and Seller shall not
take any action except in, the ordinary course of Seller's business, on an
arm's-length basis and in accordance in all material respects with all
applicable laws, rules and regulations and Seller's past custom and practice;
(b) Seller shall not, directly or indirectly, do or permit to occur
any of the following insofar as they relate to Business or the Assets: (i) sell,
pledge, dispose of or encumber any of the Assets, except in the ordinary course
of business; (ii) acquire (by merger, exchange, consolidation, acquisition of
stock or assets or otherwise) any corporation, partnership, joint venture or
other business organization or division or material assets thereof; (iii) incur
any indebtedness for borrowed money or issue any debt securities except the
borrowing of working capital in the ordinary course of business and consistent
with past practice; (iv) permit any accounts payable owed to trade creditors to
remain outstanding except to the extent consistent with past practice; (v)
accelerate, beyond the normal collection cycle, collection of accounts
receivable; or (vi) enter into or propose to enter into, or modify or propose to
modify, any agreement, arrangement or understanding with respect to any of the
matters set forth in this Section 6.01(b);
(c) Seller shall not adopt or amend any bonus, profit sharing,
compensation, pension, retirement, deferred compensation, employment or other
employee benefit plan, trust, fund or group arrangement for the benefit or
welfare of any employees or affiliates;
(d) Seller shall not cancel or terminate its current insurance
policies covering the Assets and the Business, or cause any of the coverage
thereunder to lapse, unless simultaneously with such termination, cancellation
or lapse,
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replacement policies providing coverage equal to or greater than the coverage
under the canceled, terminated or lapsed policies for substantially similar
premiums are in full force and effect;
(e) Seller shall (i) use its best efforts to preserve intact the
organization and goodwill of the Business, keep available the services of
Seller's officers and employees as a group and maintain satisfactory
relationships with suppliers, distributors, customers and others having business
relationships with Seller in connection with the Business; (ii) confer on a
regular and frequent basis with representatives of Buyer to report operational
matters and the general status of ongoing operations with respect to the
Business; (iii) not intentionally take any action which would render, or which
reasonably may be expected to render, any representation or warranty made by it
in this Agreement untrue at the Closing; (iv) notify Buyer of any emergency or
other change in the normal course of the Business or in the operation of the
properties of the Business and of any governmental or third party complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) if such emergency, change, complaint, investigation or hearing
would be material, individually or in the aggregate, to the business, operations
or financial condition of Seller or to Seller's or Buyer's ability to consummate
the transactions contemplated by this Agreement; and (v) promptly notify Buyer
in writing if Seller shall discover that any representation or warranty made by
it in this Agreement was when made, or has subsequently become, untrue in any
respect;
(f) Seller shall (i) file any Tax returns, elections or information
statements with respect to any liabilities for Taxes of Seller, if any, or other
matters relating to Taxes of Seller which affect the Assets and pursuant to
applicable law must be filed prior to the Closing Date; (ii) promptly upon
filing provide copies of any such Tax returns, elections or information
statements to Buyer; and (iii) make any such Tax elections or other
discretionary positions with respect to Taxes taken by or affecting Seller only
upon prior consultation with and consent of Buyer to the extent that such
election affects any Asset;
(g) Neither Seller nor any of its Affiliates shall make any election
with respect to Taxes, change an annual accounting period, adopt or change any
accounting method or file any amended return, report or form, if such election,
adoption, change or filing would have the effect of increasing the Tax liability
of the Buyer with respect to any period ending after the Closing Date; and
(h) Seller shall not perform any act referenced by (or omit to
perform any act which omission is referenced by) the terms of Section 4.07.
6.02 Access to Books and Records. Between the date hereof and the
Closing Date, Buyer and its counsel, accountants, and other representatives
shall
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have reasonable access to all properties, books, accounts, records, contracts,
and documents of or relating to Seller. Seller shall furnish or cause to be
furnished to Buyer and its representatives all data and information concerning
the business, finances, and properties of Seller that may reasonably be
requested to complete its due diligence review of Seller. Seller also agrees to
provide the same access to Buyer's lenders in futherance of such lenders' due
diligence contemplated by Section 7.01(b).
6.03 Conditions. Seller shall take all commercially reasonable
actions necessary or desirable to cause the conditions set forth in Section 8.01
to be satisfied and to consummate the transactions contemplated herein as soon
as reasonably possible after the satisfaction thereof (but in any event within
three business days of such date).
6.04 Notices and Consent. Seller will give any notices to third
parties, and will use its best efforts to obtain any third party consents,
including, without limitation, the consent of lessors and sublessors, that Buyer
may reasonably request in connection with the consummation of the transactions
contemplated by this Agreement.
6.05 Exclusivity. Until the date of Closing or the earlier
termination (for whatever reason) of this Agreement, neither Seller nor any of
its general or limited partners or employees, nor any other Selling Party shall
solicit, initiate or encourage any other bids for the sale of the Business or
the Assets or enter into any other negotiations for the sale of the Business or
the Assets without the written consent of Buyer. Seller will notify Buyer
immediately if any person makes any proposal, offer, inquiry or contact with
respect to any of the foregoing.
6.06 Notice of Developments. Seller shall give prompt written notice
to Buyer of any material adverse development causing a breach of any of the
representations and warranties contained in Article IV hereof or Seller's
awareness of the breach of any representation, warranty or covenant contained in
this Agreement. No disclosure by Seller pursuant to this Section 6.06, however,
shall be deemed to amend or supplement the Disclosure Schedule or to prevent or
cure any misrepresentation or breach of warranty.
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ARTICLE VII
COVENANTS OF BUYER
Buyer covenants and agrees with Seller as follows:
7.01 Due Diligence.
(a) The parties agree that Buyer shall conduct a due diligence
investigation of Seller (including, without limitation, a review of the
information, documents and other matters identified in the Disclosure Schedule
or delivered pursuant to the terms of this Agreement) which shall commence
promptly following the execution of this Agreement and, except as provided in
subsection (b) below, shall be completed by Buyer no later than October 10,
1997. If, during the course of such investigation, Buyer obtains any actual
knowledge of any fact causing a breach of any of the representations and
warranties contained in Article IV hereof, Buyer shall promptly inform Seller
thereof in writing.
(b) The parties acknowledge that the lenders providing the financing
necessary for Buyer to consummate the transactions contemplated by this
Agreement will conduct a due diligence review, including an environmental due
diligence review (the "Environmental Due Diligence Review"), of Seller in scope
and substance as may reasonably be requested by such lenders and agreed to by
Buyer. Buyer agrees that it shall be solely responsible for the costs and
expenses related to the such due diligence review, including the Environmental
Due Diligence Review. In order to complete such Environmental Due Diligence
Review, Buyer will retain an environmental consultant mutually satisfactory to
the Buyer and its lenders (the "Environmental Consultant"), and request that the
Environmental Consultant deliver to the Buyer no later than October 10, 1997 (i)
a Phase I or limited scope environmental assessment of all Real Property of the
Seller, prepared in substance and pursuant to such methods as is requested by
the Buyer, and (ii) if such Phase I or limited scope environmental assessment
recommends a Phase II environmental assessment, a Phase II environmental
assessment that shall include the testing of the soil, surface or subsurface
waters, and air quality at, in, on, beneath or about the Real Property, in a
manner consistent with good engineering practice. Seller agrees to cooperate
with Buyer and the Environmental Consultant in completing the Environmental Due
Diligence Review.
7.02 Conditions. Buyer shall take all commercially reasonable
actions necessary or desirable to cause the conditions set forth in Section 8.02
to be satisfied and to consummate the transactions contemplated herein as soon
as reasonably possible after the satisfaction thereof (but in any event within
three business days of such date).
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7.03 Notices and Consent. Buyer will give any notices to third
parties, and will use its best efforts to obtain any third party consents,
including, without limitation, the consent of lessors and sublessors, that
Seller may reasonably request in connection with the consummation of the
transactions contemplated by this Agreement.
7.04 Notice of Developments. Buyer shall give prompt written notice
to Seller of any material adverse development causing a breach of any of the
representations and warranties contained in Article V hereof or Buyer's
awareness of the breach of any representation, warranty or covenant contained in
this Agreement. No disclosure by Buyer pursuant to this Section 7.04, however,
shall be deemed to prevent or cure any misrepresentation or breach of warranty.
7.05 Financing. Immediately upon execution of this Agreement, Buyer
shall use its best efforts to obtain by October 17, 1997 a commitment letter
("Commitment Letter") consistent with standard commercial lending practices
executed by a reputable institutional lender which evidences a commitment by
such institutional lender to lend to Buyer money sufficient, together with funds
currently available to Buyer, to pay the Purchase Price to Seller.
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 Conditions to Buyer's Obligations. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) the representations and warranties set forth in Article IV
hereof shall be true and correct in all material respects at and as of the
Closing Date as though then made and as though the Closing Date had been
substituted for the date of this Agreement throughout such representations and
warranties (without taking into account any disclosures by Seller of
discoveries, events or occurrences arising on or after the date hereof), except
that any such representation or warranty made as of a specified date (other than
the date hereof) shall only need to have been true on and as of such date;
(b) Seller shall have performed in all material respects all of the
covenants and agreements required to be performed and complied with by it under
this Agreement prior to the Closing, including, but not limited to, that set
forth in Section 2.06 hereof;
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(c) Seller shall have assigned to Buyer the leases, agreements,
contracts, arrangements and licenses specified in Sections 4.08, 4.10, 4.11,
4.13, 4.14, 4.19 and 4.22(b) of the Disclosure Schedule.
(d) Seller shall have obtained, or caused to be obtained, each
consent and approval necessary in order that the transactions contemplated
herein not constitute a breach or violation of, or result in a right of
termination or acceleration of, or creation of any encumbrance on any of the
Assets pursuant to the provisions of, any agreement, arrangement or undertaking
of or affecting Seller or any license, franchise or permit of or affecting
Seller, regardless of whether assigned to Seller pursuant to Section 8.01(c),
including, without limitation, the written approval of the lessor under each
real or personal property lease to be assigned to Buyer to such assignment,
which approval shall contain the lessor's consent to Buyer providing its lenders
with a security interest in Buyer's interest in such leasehold following the
Closing;
(e) Seller's general and limited partners shall have approved this
Agreement and the transactions contemplated hereby to the extent required by law
and Seller's agreement of limited partnership;
(f) all material governmental filings, authorizations and approvals
that are required for the consummation of the transactions contemplated hereby
will have been duly made and obtained;
(g) there shall not be threatened, instituted or pending any action
or proceeding, before any court or governmental authority or agency, domestic or
foreign, (i) challenging or seeking to make illegal, or to delay or otherwise
directly or indirectly restrain or prohibit, the consummation of the
transactions contemplated hereby or seeking to obtain material damages in
connection with such transactions, (ii) seeking to prohibit direct or indirect
ownership or operation by Buyer of all or a material portion of the Assets, or
to compel Buyer or any of its subsidiaries to dispose of or to hold separately
all or a material portion of the business or assets of Buyer and its
subsidiaries, as a result of the transactions contemplated hereby, (iii) seeking
to invalidate or render unenforceable any material provision of this Agreement,
or (iv) otherwise relating to and materially adversely affecting the
transactions contemplated hereby;
(h) there shall not be any action taken, or any statute, rule,
regulation, judgment, order or injunction enacted, entered, enforced,
promulgated, issued or deemed applicable to the transactions contemplated hereby
by any federal, state or foreign court, government or governmental authority or
agency, which would reasonably be expected to result, directly or indirectly, in
any of the consequences referred to in Section 8.01(g) hereof;
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(i) there shall have been no material adverse change in the
financial condition or operations of the Business or the condition or value of
the Assets; provided, that Buyer and Seller agree that the failure to accept
offers of employment made by Buyer consistent with Section 10.04(a) hereof by a
group of Seller employees material to the Business shall be deemed a material
adverse change in the operations of the Business;
(j) there shall have been no damage, destruction or loss of or to
any of the Assets, whether or not covered by insurance, which, in the aggregate,
has, or would be reasonably likely to have, a material adverse effect on the
Business or the condition or value of the Assets;
(k) the information set forth in the Disclosure Schedule shall be
true, complete and correct, in all material respects, and the information
contained therein shall not have changed materially from the information
contained therein as of the date of execution of this Agreement;
(l) Buyer shall have received from counsel for Seller a written
opinion, dated as of the Closing Date, addressed to Buyer, in form and substance
reasonably satisfactory to Buyer and its counsel, with respect to such matters
as Buyer and its counsel may reasonably request;
(m) on the Closing Date, Seller shall have delivered to Buyer all of
the following:
(i) the ▇▇▇▇ of Sale and such other instruments of conveyance,
transfer, assignment and delivery as Buyer shall have reasonably requested
pursuant to Section 3.02 hereof;
(ii) the Assignment and Assumption Agreement;
(iii) a certificate of an appropriate officer of Seller, dated
the Closing Date, stating that the conditions set forth in subsections 8.01(a) -
8.01(k) above have been satisfied;
(iv) copies of the third party and governmental consents and
approvals referred to in subsections (d) and (f) above;
(v) a copy of the text of the resolutions adopted by the
general and/or limited partners of Seller authorizing the execution, delivery
and performance of this Agreement and the consummation of all of the
transactions contemplated by this Agreement; along with a certificate executed
on behalf of Seller, by an appropriate officer certifying to Seller that such
copy is a true, correct
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and complete copy of such resolutions, and that such resolutions were duly
adopted and have not been amended or rescinded;
(vi) incumbency certificates executed on behalf of Seller by
an appropriate officer, certifying the signature and office of each officer
executing this Agreement or any agreements or documents contemplated hereby; and
(vii) such other certificates, documents and instruments as
Buyer reasonably requests related to the transactions contemplated hereby; and
(n) The ▇▇▇▇▇ Group, LLC shall have executed and delivered the
Distribution Agreements and such Distribution Agreements shall be in force and
effect as of the Closing.
8.02 Conditions to Seller's Obligations. The obligations of Seller
to consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) the representations and warranties set forth in Article V hereof
will be true and correct in all material respects at and as of the Closing as
though then made and as though the Closing Date had been substituted for the
date of this Agreement throughout such representations and warranties, except
that any such representation or warranty made as of a specified date (other than
the date hereof) shall only need to have been true on and as of such date;
(b) Buyer shall have performed in all material respects all the
covenants and agreements required to be performed by it under this Agreement
prior to the Closing;
(c) Seller shall have obtained, or caused to be obtained, each
consent and approval required in order to complete the transactions contemplated
hereby;
(d) all material governmental filings, authorizations and approvals
that are required for the consummation of the transactions contemplated hereby
will have been duly made and obtained;
(e) there shall not be threatened, instituted or pending any action
or proceeding, before any court or governmental authority or agency, domestic or
foreign, (i) challenging or seeking to make illegal, or to delay or otherwise
directly or indirectly restrain or prohibit, the consummation of the
transactions contemplated hereby or seeking to obtain material damages in
connection with such transactions, (ii) seeking to invalidate or render
unenforceable any material provision of this Agreement, or (iii) otherwise
relating to and materially adversely affecting the transactions contemplated
hereby;
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(f) there shall not be any action taken, or any statute, rule,
regulation, judgment, order or injunction, enacted, entered, enforced,
promulgated, issued or deemed applicable to the transactions contemplated hereby
by any federal, state or foreign court, government or governmental authority or
agency, which would reasonably be expected to result, directly or indirectly, in
any of the consequences referred to in Section 8.02(e) hereof;
(g) Seller shall have received from counsel for Buyer a written
opinion, dated as of the Closing Date, addressed to Seller, in form and
substance reasonably satisfactory to Seller and its counsel, with respect to
such matters as Seller and its counsel may reasonably request;
(h) on the Closing Date, Buyer shall have delivered to Seller all of
the following:
(i) the Closing Cash Payment, less any amounts withheld
pursuant to Section 2.06(a) hereof;
(ii) a certificate of an appropriate officer of Buyer, dated
the Closing Date, stating that the conditions set forth in subsections 8.01(a) -
8.01(f) above have been satisfied;
(iii) copies of the third party and governmental consents and
approvals referred to in subsections (c) and (d) above;
(iv) a copy of the text of the resolutions adopted by the
Board of Directors of Buyer, authorizing the execution, delivery and performance
of this Agreement and the consummation of all of the transactions contemplated
by this Agreement; along with a certificate executed on behalf of Buyer, by an
appropriate officer certifying to Seller that such copy is a true, correct and
complete copy of such resolutions, and that such resolutions were duly adopted
and have not been amended or rescinded;
(v) incumbency certificates executed on behalf of Buyer by its
corporate secretary, certifying the signature and office of each officer
executing this Agreement or any agreements or documents contemplated hereby; and
(vi) such other certificates, documents and instruments as
Buyer reasonably requests related to the transactions contemplated hereby; and
(i) Buyer shall have executed and delivered the Distribution
Agreements and such Distribution Agreements shall be in force and effect as of
the Closing.
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ARTICLE IX
TERMINATION
9.01 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) by the mutual consent of Buyer and Seller;
(b) by either Buyer or Seller if there has been a material
misrepresentation, breach of warranty or breach of covenant on the part of the
other in the representations, warranties and covenants set forth in this
Agreement or if the information set forth in the Disclosure Schedule is not
true, complete and correct, in all material respects, or if the information
contained therein has changed materially from the information contained therein
as of the date of execution of this Agreement;
(c) by either Buyer or Seller if the transactions contemplated
hereby have not been consummated by October 31, 1997; provided that, neither
Buyer nor Seller will be entitled to terminate this Agreement pursuant to this
Section 9.01(c) if such party's willful breach of this Agreement has prevented
the consummation of the transactions contemplated hereby; or
(d) by Buyer on or prior to October 10, 1997 if Buyer is not
satisfied, in its sole discretion, with any of the results of its due diligence
investigation contemplated by Section 7.01(a);
(e) by Buyer if, after the date hereof, there shall have been a
material adverse change in the financial condition or operations of the Business
or in the value of the Assets; provided, that Buyer and Seller agree that the
failure to accept offers of employment made by Buyer consistent with Section
10.04(a) hereof by a group of Seller employees material to the Business shall be
deemed a material adverse change in the operations of the Business;
(f) by Buyer if, as a result of the Environmental Due Diligence
Review to be performed with respect to Seller's Real Property, it becomes aware
of facts that could reasonably be expected (i) to have a material adverse effect
on the Assets, (ii) have a material adverse effect on the Real Property or (iii)
have a material adverse effect on Buyer, if it were to consummate the
transactions contemplated by this Agreement;
(g) by Seller if Buyer has not delivered to Seller a Commitment
Letter as contemplated by Section 7.05 to Seller on or prior to October 17,
1997; or
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(h) by Buyer or Seller if Buyer and ▇▇▇▇▇ Group (as defined in
Section 10.01) have not entered into the Distribution Agreements (as defined in
Section 10.01) on or before October 1, 1997 or if such agreements do not state
that the sole cause for termination of the Distribution Agreements by ▇▇▇▇▇
Group pertaining to performance standards of Buyer thereunder shall be the
failure to meet the minimum annual sales amounts set forth on Exhibit 9.01(h)
hereto.
9.02 Effect of Termination. In the event of termination of this
Agreement by either Buyer or Seller as provided in Section 9.01, this Agreement
shall become void and there shall be no liability on the part of either Buyer or
Seller, or their respective stockholders, officers, or directors, except that
Sections 2.04(a), 12.01, 12.02 and 12.03 hereof shall survive indefinitely, and
except with respect to breaches of this Agreement prior to the time of such
termination.
ARTICLE X
ADDITIONAL AGREEMENTS
10.01 Distribution Agreement. Seller shall use its best efforts to
cause The ▇▇▇▇▇ Group, LLC, a Delaware limited liability company ("▇▇▇▇▇
Group"), by October 1, 1997, to enter into distribution agreements with Buyer,
in form and substance mutually acceptable to ▇▇▇▇▇ Group and Buyer (the
"Distribution Agreements"), pursuant to which ▇▇▇▇▇ Group shall supply Buyer
with all of Buyer's requirements for ▇▇▇▇▇-labeled products produced by ▇▇▇▇▇
(including chemicals and hardware) and for ▇▇▇▇▇'▇ proprietrary lifting systems
used in tilt-up and precast concrete construction. The Distribution Agreements
shall expressly state they will become effective as of the Closing Date.
10.02 Delivery of Financial Statements. Seller agrees to prepare and
deliver to Buyer a statement of Seller's assets and liabilities, including
footnotes regarding any material liabilities and contingencies in the Business,
and a statement of Seller's operating income, for each calendar month subsequent
to June 30, 1997, as soon as is practicable after the end of each such calendar
month (collectively, the "Monthly Financial Statements").
10.03 Delivery of Revised Receivables Schedule. On the Closing Date,
Seller shall deliver the revised schedule required pursuant to Section 4.11
hereof.
10.04 Transferred Employees.
(a) Concurrently with or immediately following the Closing, Buyer
will offer employment at will to all employees of Seller at compensation levels
generally comparable to those offered to such employees by Seller and benefits
generally comparable to those offered to current employees of Buyer. Employees
who accept such employment with Buyer shall be referred to as "Transferred
Employees." For all purposes, including, without limitation, for purposes of
eligibility, vesting and credited service under any employee benefit plans,
programs
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42
and policies, and fringe benefits offered by Buyer, Transferred Employees shall
be considered to have commenced employment with Buyer on the date such
Transferred Employees commenced employment with Seller.
(b) Seller shall retain liability for: (i) payment of all medical
and dental claims incurred by Transferred Employees prior to the Closing Date;
(ii) all benefits to be paid to Transferred Employees pursuant to the plans and
arrangements set forth in Section 4.18 of the Disclosure Schedule; (iii) any
severance claim made by any employee of Seller; (iv) any workers' compensation
claims made with respect to injuries occurring prior to the Closing Date,
regardless of when any such claim is filed; and (v) any claim made by any former
or current employee of Seller for salary, commissions, overtime pay, bonuses or
accrued but unused vacation pay during their employment tenure with Seller,
except, with respect to any such claim, to the extent that the costs thereof
have been counted as a current liability in the calculation of the Closing
Working Capital Balance pursuant to Section 2.02 hereof). Promptly after the
Closing Date, Seller shall pay its employees all outstanding salary,
commissions, overtime pay, bonuses and accrued but unused vacation pay to the
Closing Date.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.01 Survival of Representations and Warranties. Notwithstanding
any investigation made by or on behalf of any of the parties hereto or the
results of any such investigation and notwithstanding the participation of such
party in the Closing, the representations and warranties contained in Article IV
and Article V hereof shall survive the Closing for a period of one (1) year
following the Closing Date.
11.02 Indemnification by Seller.
(a) Subject to the limitations of Section 11.02(b), (c) and (d)
below, the Seller agrees to indemnify in full Buyer and its officers, directors,
employees, agents and stockholders (collectively, the "Buyer Indemnified
Parties") and hold them harmless against any loss, liability, deficiency,
damage, expense or cost (including reasonable legal expenses), whether or not
actually incurred (collectively, "Losses"), which Buyer Indemnified Parties may
suffer, sustain or become subject to, as a result of (i) any misrepresentation
in any of the representations and warranties of Seller contained in this
Agreement or in any exhibits, schedules, certificates or other documents
delivered or to be delivered by or on behalf of Seller pursuant to the terms of
this Agreement or otherwise referenced or incorporated in this Agreement
(collectively, the "Related Documents"), (ii) any breach of, or failure to
perform, any agreement of Seller contained in this Agreement or any of the
Related Documents,
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or (iii) any "Claims" (as defined in Section 11.04(a) hereof) or threatened
Claims against Buyer arising out of the actions or inactions of Seller with
respect to the Assets or the Business prior to the Closing (collectively, "Buyer
Losses").
(b) Seller shall be liable to Buyer Indemnified Parties for any
Buyer Losses only if (i) Buyer or another Buyer Indemnified Party delivers to
Seller written notice, setting forth in reasonable detail the identity, nature
and amount of Buyer Losses related to such claim or claims prior to the first
anniversary of the Closing Date and (ii) only to the extent that the aggregate
amount of all Buyer Losses at such time exceeds $100,000 (the "Basket Amount").
A Buyer Indemnified Party's failure to provide the detail required by clause (i)
of the preceding sentence shall not constitute either a breach of this Agreement
by the Buyer Indemnified Party or any basis for Seller to assert that the Buyer
Indemnified Party did not comply with the terms of this Section 11.02 sufficient
to cause the Buyer Indemnified Party to have waived its rights under this
Section 11.02, unless Seller demonstrates that its ability to defend against any
Claims with respect thereto has been materially adversely affected.
(c) The Seller will be obligated to indemnify the Buyer Indemnified
Parties from and against Buyer Losses only to the extent of the $750,000
represented by the Holdback and the Retention Amount.
(d) Notwithstanding anything to the contrary set forth in this
Section 11.02, Buyer shall not have the right to make any claim with respect to
a breach by Seller of Seller's representations set forth in Section 4.09
pertaining to inventory after the period ending six months from the Closing
Date.
11.03 Indemnification by Buyer.
(a) Subject to the limitations of Section 11.03(b) and (c) below,
Buyer agrees to indemnify in full the Seller, and its employees, agents and
general and limited partners (collectively, the "Seller Indemnified Parties")
and hold them harmless against any Losses which the Seller Indemnified Parties
may suffer, sustain or become subject to as a result of (i) any
misrepresentation in any of the representations and warranties of Buyer
contained in this Agreement or in any of the Related Documents, (ii) any breach
of, or failure to perform, any agreement of Buyer contained in this Agreement or
any of the Related Documents, (iii) any Claims or threatened Claims against
Seller arising out of the actions or inactions of Buyer with respect to the
Assets or the Business after the Closing, or (iv) any Claims or threatened
Claims against Seller by an employee of Seller arising out of any illegal
conduct by Buyer during the offer of employment to, and the employment by Buyer
of, the Transferred Employees contemplated by Section 10.04(a) hereof
(collectively, "Seller Losses").
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(b) Buyer shall be liable to the Seller Indemnified Parties for any
Seller Losses only if (i) Seller or another Seller Indemnified Party delivers to
Buyer written notice, setting forth in reasonable detail the identity, nature
and amount of Seller Losses related to such claim or claims prior to the third
anniversary of the Closing Date and (ii) only to the extent that the aggregate
amount of all Seller Losses at such time exceeds the Basket Amount. A Seller
Indemnified Party's failure to provide the detail required by clause (i) of the
preceding sentence shall not constitute either a breach of this Agreement by the
Seller Indemnified Party or any basis for Buyer to assert that the Seller
Indemnified Party did not comply with the terms of this Section 11.03 sufficient
to cause the Seller Indemnified Party to have waived its rights under this
Section 11.03, unless Buyer demonstrates that its ability to defend against any
Claims with respect thereto has been materially adversely affected.
(c) The Buyer will be obligated to indemnify the Seller Indemnified
Parties from and against Seller Losses in a maximum amount of $750,000 in the
aggregate, which maximum amount shall be decreased to $500,000 after the
six-month anniversary of the Closing Date.
11.04 Method of Asserting Claims. As used herein, an "Indemnified
Party" shall refer to a "Buyer Indemnified Party" or "Seller Indemnified Party,"
as applicable, the "Notifying Party" shall refer to the party hereto whose
Indemnified Parties are entitled to indemnification hereunder, and the
"Indemnifying Party" shall refer to the party hereto obligated to indemnify such
Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or administrative,
instituted by any third party for the liability or the costs or expenses of
which are Losses (any such third party action or proceeding being referred to as
a "Claim"), the Notifying Party shall give the Indemnifying Party prompt notice
thereof. The failure to give such notice shall not affect any Indemnified
Party's ability to seek reimbursement unless such failure has materially and
adversely affected the Indemnifying Party's ability to defend successfully a
Claim. The Indemnifying Party shall be entitled to contest and defend such
Claim; provided, that the Indemnifying Party (i) has a reasonable basis for
concluding that such defense may be successful and (ii) diligently contests and
defends such Claim. Notice of the intention so to contest and defend shall be
given by the Indemnifying Party to the Notifying Party within 20 business days
after the Notifying Party's notice of such Claim (but, in all events, at least
five business days prior to the date that an answer to such Claim is due to be
filed). Such contest and defense shall be conducted by reputable attorneys
employed by the Indemnifying Party. The Notifying Party shall be entitled at any
time, at its own cost and expense (which expense shall not constitute a Loss
unless the Notifying Party reasonably determines that the Indemnifying Party is
not adequately representing or, because of a conflict of interest, may not
adequately
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represent, any interests of the Indemnified Parties, and only to the extent that
such expenses are reasonable), to participate in such contest and defense and to
be represented by attorneys of its or their own choosing. If the Notifying Party
elects to participate in such defense, the Notifying Party will cooperate with
the Indemnifying Party in the conduct of such defense. Neither the Notifying
Party nor the Indemnifying Party may concede, settle or compromise any Claim
without the consent of the other party, which consents will not be unreasonably
withheld. Notwithstanding the foregoing, (i) if a Claim seeks equitable relief
or (ii) if the subject matter of a Claim relates to the ongoing business of any
of the Indemnified Parties, which Claim, if decided against any of the
Indemnified Parties, would materially adversely affect the ongoing business or
reputation of any of the Indemnified Parties, then, in each such case, the
Indemnified Parties alone shall be entitled to contest, defend and settle such
Claim in the first instance and, if the Indemnified Parties do not contest,
defend or settle such Claim, the Indemnifying Party shall then have the right to
contest and defend (but not settle) such Claim.
(b) In the event any Indemnified Party should have a claim against
any Indemnifying Party that does not involve a Claim, the Notifying Party shall
deliver a notice of such claim with reasonable promptness to the Indemnifying
Party. If the Indemnifying Party notifies the Notifying Party that it does not
dispute the claim described in such notice or fails to notify the Notifying
Party within 30 days after delivery of such notice by the Notifying Party
whether the Indemnifying Party disputes the claim described in such notice, the
Loss in the amount specified in the Notifying Party's notice will be
conclusively deemed a liability of the Indemnifying Party and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified Party on demand.
(c) After the Closing, the rights set forth in this Article XI shall
be each party's sole and exclusive remedies against the other party hereto for
misrepresentations or breaches of covenants contained in this Agreement and the
Related Documents.
(d) Any indemnification payable under this Article XI shall be, to
the extent permitted by law, an adjustment to purchase price.
ARTICLE XII
MISCELLANEOUS
12.01 Press Releases and Announcements. Prior to the Closing Date,
subject to the exceptions described below, neither party hereto shall issue any
press release (or make any other public announcement) related to this Agreement
or the transactions contemplated hereby or make any announcement to the
employees, customers or suppliers of Seller without prior written approval of
the other party
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46
hereto, except as may be necessary, in the opinion of counsel to the party
seeking to make disclosure, to comply with the requirements of this Agreement or
applicable law. If any such press release or public announcement is so required,
the party making such disclosure shall consult with the other party prior to
making such disclosure, and the parties shall use all reasonable efforts, acting
in good faith, to agree upon a text for such disclosure which is satisfactory to
both parties. Seller acknowledges that Buyer has filed a registration statement
with the Securities and Exchange Commission in connection with its initial
public offering of equity securities (the "Registration Statement").
Accordingly, notwithstanding the foregoing, Seller hereby consents to Buyer
including in its Registration Statement such information relating to the
Business and the transactions contemplated by this Agreement as Buyer deems
appropriate, in its sole discretion.
12.02 Expenses; Sales Tax. Except as otherwise expressly provided
for herein, Seller and Buyer will pay all of their own expenses (including
attorneys' and accountants' fees, in connection with the negotiation of this
Agreement, the performance of their respective obligations hereunder and the
consummation of the transactions contemplated by this Agreement (whether
consummated or not). Seller and Buyer agree to each pay one-half of any sales
tax due as a result of the sale of the Assets contemplated by this Agreement.
12.03 Further Assurances. Seller agrees that, on and after the
Closing Date, it shall take all appropriate action and execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the provisions hereof, including, without
limitation, putting Buyer in possession and operating control of the Assets and
transferring all Permits and Environmental Permits to Buyer that are
transferable.
12.04 Cooperation and Exchange of Information. Buyer and Seller
shall provide each other with such cooperation and information as either of them
reasonably may request of the other in filing any Tax return, amended return or
claim for refund, determining a liability for Taxes or a right to a refund of
Taxes or in conducting any audit or proceeding in respect of Taxes. Such
cooperation and information shall include providing copies of relevant Tax
returns or portions thereof, together with accompanying schedules and related
work papers and documents relating to rulings or other determinations by Taxing
authorities. Each party shall make its employees available on a mutually
convenient basis to provide explanation of any documents or information provided
hereunder. The Seller upon written request by the Buyer, will provide to the
Buyer such factual information reasonably necessary for filing Tax returns, Tax
planning and contesting any Tax audit that the Seller possesses as the Buyer may
reasonably request with respect to the Assets (which information the Seller
agrees to maintain and preserve for so long as it may be needed by the Buyer).
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12.05 Amendment and Waiver. This Agreement may not be amended or
waived except in a writing executed by the party against which such amendment or
waiver is sought to be enforced. No course of dealing between or among any
persons having any interest in this Agreement will be deemed effective to modify
or amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
12.06 Notices. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when personally delivered or
three business days after being mailed by first class U.S. mail, return receipt
requested, or when receipt is acknowledged, if sent by facsimile, telecopy or
other electronic transmission device. Notices, demands and communications to
Buyer and Seller will, unless another address is specified in writing, be sent
to the address indicated below:
Notices to Buyer: with a copy to:
White Cap Industries, Inc. ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
KRG Capital Partners
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇
▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Notices to Seller: with a copy to:
▇▇▇▇▇ Concrete Accessories ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Two Embarcadero Center, Suite 2930 ▇▇▇▇ & Rabkin
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Three Embarcadero Center, 7th Floor
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
12.07 Specific Performance. Seller hereby acknowledges that any
breach of this Agreement by Seller would cause Buyer irreparable harm and that a
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48
remedy at law for such breach would be inadequate. Seller therefore hereby
agrees that, in addition, to any other available remedy at law or in equity,
injunctive relief and specific performance may be granted in any proceeding
commenced by Buyer to enforce this Agreement without the necessity of proof that
any other remedy at law is inadequate.
12.08 Assignment. This Agreement and all of the provisions hereof
will be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by
either party hereto (except by Buyer to (i) an affiliate that is wholly-owned
by, or wholly-owns, Buyer, or (ii) Buyer's lenders if requested by such lenders
for security of Buyer's obligations to such lenders) without the prior written
consent of the other party hereto.
12.09 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
12.10 Complete Agreement. This Agreement and the Exhibits hereto,
the Disclosure Schedule and the other documents referred to herein contain the
complete agreement between the parties and supersede any prior understandings,
agreements or representations by or between the parties, written or oral, which
may have related to the subject matter hereof in any way.
12.11 Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
12.12 Governing Law. The internal law, without regard to conflicts
of law principles, of the State of California will govern all questions
concerning the construction, validity and interpretation of this Agreement and
the performance of the obligations imposed by this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
WHITE CAP INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: PRESIDENT
▇▇▇▇▇ CONCRETE ACCESSORIES, L.P.
By: BCA, LLC
By:
---------------------------------
Name:
Title:
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50
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
WHITE CAP INDUSTRIES, INC.
By:
---------------------------------
Name:
Title:
▇▇▇▇▇ CONCRETE ACCESSORIES, L.P.
By: BCA, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman of the Board
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