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EXHIBIT 2.12
ASSET PURCHASE AGREEMENT
by and among
PERFECT FIT GLOVE CO., INC.
SCHAS CIRCULAR INDUSTRIES, INC.
X-PERT INDUSTRIAL PRODUCTS LIMITED
PERFECT INDUSTRIAL PRODUCTS, INC.
YADKIN LEASING COMPANY, INC.
XXXXX X. XXXXXX
XXXXXX X. XXXXXXX
XXXXXX XXXXXXXXX
and
BACOU USA SAFETY, INC.
Dated as of February 24, 1999
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TABLE OF CONTENTS
SECTION PAGE
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Preamble 1
Article I PURCHASE AND SALE 1
Article II DESCRIPTION OF ASSETS; EXCLUDED ASSETS 2
Section 2.01. Assets
Section 2.02. Excluded Assets
Article III ASSUMPTION OF LIABILITIES 2
Section 3.01. Assumed Liabilities
Section 3.02. Non-Assumed Liabilities
Article IV INSTRUMENTS OF TRANSFER AND ASSUMPTION 3
Section 4.01. Transfer Documents
Section 4.02. Assumption Documents
Article V PURCHASE PRICE; ALLOCATION 4
Section 5.01. Purchase Price
Section 5.02. Payment of Purchase Price
Section 5.03. Allocation of Purchase Price
Section 5.04. Purchase Price Adjustment
Section 5.05. Earnout
Article VI CLOSING 6
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Article VII SELLING GROUP'S REPRESENTATIONS 7
Section 7.01. Organization; Qualification
Section 7.02. Consents, Authorization, Execution and
Delivery of Agreement
Section 7.03. Subsidiaries and Interests in Other Companies
Section 7.04. Title to Assets; Condition of Assets.
Section 7.05. Real Property--Owned
Section 7.06. Real and Personal Property--Leased
Section 7.07. Existing Contracts
Section 7.08. Governmental Licenses
Section 7.09. Compliance with Laws.
Section 7.10. No Violation of Existing Agreements.
Section 7.11. Litigation and Legal Proceedings
Section 7.12. Environmental Compliance
Section 7.13. Employees
Section 7.14. Employee Benefits
Section 7.15. Tax Matters
Section 7.16. Financial Statements
Section 7.17. Customers/Agents/Suppliers
Section 7.18. Insurance
Section 7.19. Brokers
Section 7.20. Undisclosed Liabilities
Section 7.21. Proprietary Rights
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Section 7.22. Accounts Receivable and Bad Debts
Section 7.23. Certain Business Relationships with
Selling Group
Section 7.24. Warranty and Product Liability Claims
Section 7.25. Absence of Certain Business Practices
Section 7.26. Year 2000 Compatibility
Section 7.27. Disclosure
Article VIII PURCHASER'S REPRESENTATIONS 16
Section 8.01. Organization; Qualification
Section 8.02. Consents; Authorization; Execution and
Delivery of Agreement
Section 8.03. Brokers
Article IX CONDITIONS PRECEDENT TO PURCHASER'S
OBLIGATION TO CLOSE 17
Section 9.01. Accuracy of Representations and Warranties;
Performance of this Agreement
Section 9.02. Resolutions
Section 9.03. Incumbency Certificates
Section 9.04. Consents
Section 9.05. Due Diligence
Section 9.06. No Material Adverse Change
Section 9.07. Opinion of Counsel to Selling Group
Section 9.08. Closing Escrow Agreement
Section 9.09. Real Property
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Section 9.10. Employment Agreements
Section 9.11. HSR Act Notification
Section 9.12. Environmental Assessment
Section 9.13. Good Standing Certificates
Article X CONDITIONS PRECEDENT TO SELLING GROUP'S
OBLIGATION TO CLOSE 19
Section 10.01. Accuracy of Representations and Warranties;
Performance of this Agreement
Section 10.02. Directors' Resolutions
Section 10.03. Incumbency Certificate
Section 10.04. Opinion of Counsel to Purchaser
Section 10.05. HSR Act Notification
Section 10.06. Employment Agreements
Article XI CASUALTY LOSSES 20
Article XII INDEMNIFICATION 21
Section 12.01. Indemnification by Selling Group
Section 12.02. Indemnification by Purchaser
Section 12.03. Notice of Claims; Defense of Third Party
Section 12.04. Closing Escrow Agreement
Article XIII CONFIDENTIALITY, PRESS RELEASES 24
Section 13.01. Confidentiality
Section 13.02. Press Releases
Section 13.03. Required Disclosures
Article XIV BROKERS' FEES 24
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Article XV COVENANTS OF SELLING GROUP 25
Section 15.01. Conduct of Business
Section 15.02. No Solicitation
Section 15.03. Access and Information
Section 15.04. Financial Statements
Section 15.05. Use of Business Name
Section 15.06. Change of Selling Group Names
Section 15.07. Bank Accounts
Section 15.08. Payment to Alico
Section 15.09. Post-Closing Schedules
Article XVI MISCELLANEOUS 27
Section 16.01. Additional Instruments of Transfer
Section 16.02. Notices
Section 16.03. Expenses
Section 16.04. Transfer Taxes
Section 16.05. Collection Procedures
Section 16.06. Specific Performance
Section 16.07. Governing Law
Section 16.08. Assignment
Section 16.09. Successors and Assigns
Section 16.10. Amendments; Waivers
Section 16.11. Entire Agreement
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Section 16.12. Counterparts
Section 16.13. Severability
Section 16.14. Section Headings
Section 16.15. Interpretation
Section 16.16. Further Assurances
Section 16.17. Third Parties
Section 16.18. Mediation
Section 16.19. Arbitration
Section 16.20. Termination
DEFINED TERMS 35
SCHEDULES 38
EXHIBITS 64
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SCHEDULES
2.01 Itemized Assets to be Purchased
2.02 Excluded Assets
3.01 Assumed Liabilities
3.02 Non-Assumed Liabilities
5.03 Allocation of Purchase Price
7.02 Consents Needed
7.04(a) Liens
7.04(b) Building, Zoning Compliance
7.05 Owned Real Property
7.06 Leased Real Property
7.07 Existing Contracts
7.08 Governmental Licenses
7.09 Compliance with Laws
7.10 Violations of Existing Contracts
7.11 Litigation
7.12 Environmental Compliance
7.13 Employees
7.16(a)(i) Historical Financial Statements
7.16(a)(ii) Current Financial Statements
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7.16(c) Ordinary Business Practices--Financial Statements
7.16(d) Dividends or distributions--Financial Statements
7.17 Customers/Agents/Suppliers
7.21. Intellectual Property Rights
7.22 Accounts Receivable and Bad Debts
7.23 Affiliate Relationships
7.24(a) Warranties and Product Liability Claims
7.24(b) Incidents involving Personal Injury
7.25 Certain Business Practices
7.27 Other Disclosures
15.01(e) Compensation
15,01(f) Acts or Omissions
15.01(g) Dividends or Distributions
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EXHIBITS
4.01(a) Assignment and Xxxx of Sale
4.02 Assumption Agreement
5.02 Closing Escrow Agreement
5.05 Earnout Calculation
9.10(a) Employment Agreement with Xxxxxx X. Xxxxxxx
9.10(b) Employment Agreement with Xxxxx X. Xxxxxx
9.10(c) Employment Agreement with Xxxxxxx Xxxxx
9.10(d) Employment Agreement with Xxxxxx Xxxxxxxxx
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of February 24, 1999 by and among (i) Perfect Fit Glove Co., Inc., a New
York corporation ("PFG"), (ii) SCHAS Circular Industries, Inc., a North Carolina
corporation ("SCHAS"), (iii) X-Pert Industrial Products Limited, a New York
corporation ("X-PERT"), (iv) Perfect Industrial Products, Inc., a New York
corporation ("PIP") (PFG, SCHAS, X-Pert, and PIP, collectively "GLOVE SELLERS"),
(v) Xxxxx X. Xxxxxx, an individual residing in West Seneca, New York ("Xxxxxx")
and Xxxxxx X. Xxxxxxx, an individual residing in Orchard Park, New York
("Xxxxxxx") who together constitute the majority stockholders of PFG and all of
the stockholders of SCHAS and X-Pert, along with (vi) Xxxxxx Xxxxxxxxx, an
individual residing in Tonawanda, New York ("Xxxxxxxxx"), the sole shareholder
of PIP (collectively Xxxxxx, Xxxxxxx and Xxxxxxxxx, the "STOCKHOLDERS"), (vii)
Yadkin Leasing Company, Inc., a North Carolina corporation ("YADKIN") (the Glove
Sellers and Yadkin, collectively the "OPERATING COMPANIES" and the Operating
Companies and Stockholders, collectively "SELLING GROUP") and (viii) Bacou USA
Safety, Inc., a Delaware corporation ("PURCHASER").
WHEREAS, Glove Sellers manufacture and market protective gloves and
other related products in the United States and throughout the world ("GLOVE
BUSINESS"). Yadkin engages in leasing activities in connection with the Glove
Business in North Carolina ("Leasing Business"). Xxxxxx and Xxxxxxx own and
manage real property in Cheektowaga, New York and SCHAS leases property in
Wilkesboro, North Carolina relating to the Glove Business ("REAL ESTATE
BUSINESS") (the Glove Business, the Leasing Business and the Real Estate
Business, collectively the "BUSINESS"); and
WHEREAS, Purchaser desires to purchase from Selling Group, and Selling
Group desires to sell to Purchaser, substantially all of the assets and rights
of Selling Group relating to the Business, all subject to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements herein set forth and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE
Subject to the terms and conditions set forth in this Agreement,
Selling Group agrees to sell, convey, assign, transfer and deliver to Purchaser,
and Purchaser agrees to purchase from Selling Group at the Closing, all of
Selling Group's right, title and interest in and to the Assets, free and clear
of all debts, liabilities, obligations, and taxes other than Assumed
Liabilities, and free and clear of LIENS (other than Permitted Liens).
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ARTICLE II
DESCRIPTION OF ASSETS; EXCLUDED ASSETS
SECTION 2.01. ASSETS. The assets to be conveyed to Purchaser shall
include all real and personal tangible and intangible assets, properties and
rights owned by Selling Group of whatever description (including without
limitation, all permits and licenses, material agreements, contracts and leases
(provided that consents to assignment have been obtained to the extent required
by law or by the terms of such documents or that Purchaser has agreed to assume
the obligations thereunder post-Closing while consents are being obtained), real
property and personal property as set forth on Schedule 2.01 hereto), cash,
customer records, machinery, equipment, vehicles, computers and software,
furniture, fixtures, supplies, inventory and all other physical assets,
agreements, contracts and leases that are not deemed material, interests,
systems and documents regarding real property, Intellectual Property, credits
and other prepaid items, claims and rights of recovery, purchase orders,
accounts receivable, rights to xxxx and receive payment for products shipped
and/or services performed but unbilled or unpaid, advertising, marketing and
promotional materials, all rights to receive warranties, guarantees or
indemnification, and all goodwill as a going concern which relate in any way to
the ownership, use or operation of the Business, except assets specifically
excluded pursuant to Section 2.02 hereof as of the date hereof plus or minus
such assets acquired or disposed of in the ordinary course of business on or
prior to the Closing (collectively, the "ASSETS"). Such Assets shall be free and
clear of all Liens, other than Permitted Liens, as of the Closing.
SECTION 2.02. EXCLUDED ASSETS. The properties and assets specifically
listed and described in SCHEDULE 2.02 hereto which relate to the Business shall
not be included in the Assets, shall be retained by Selling Group and shall not
be sold, assigned or transferred to Purchaser (the "EXCLUDED ASSETS").
ARTICLE III
ASSUMPTION OF LIABILITIES
SECTION 3.01. ASSUMED LIABILITIES. At Closing, Purchaser shall assume
and agree to perform and discharge the following to the extent not previously
performed or discharged as of the Closing: (i) all obligations of Selling Group
which accrue and are to be performed from and after the Closing under those
permits and licenses, material agreements, contracts and leases either set forth
on SCHEDULE 2.01 attached hereto or those agreements, contracts and leases of a
non-material nature which are not required by this Agreement to be set forth on
SCHEDULE 2.01 (all of such assets referred to in item (i) being referred to
hereinafter as the "ASSUMED CONTRACTS"); (ii) all liabilities of Selling Group
as reflected on the Closing Date Balance Sheet; and (iii) such items as are set
forth on Schedule 3.01 (such items (i) through (ii) are collectively referred to
herein as the "ASSUMED LIABILITIES").
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SECTION 3.02. NON-ASSUMED LIABILITIES. Other than as may be required by
Section 12.01(d) hereof, Purchaser shall not be liable for any other
liabilities, debts, contracts, agreements, including without limitation any
contracts or agreements set forth on SCHEDULE 2.02, or other obligations of
Selling Group of any nature whatsoever, other than the Assumed Liabilities (the
"NON-ASSUMED LIABILITIES") AS SET FORTH ON SCHEDULE 3.01, including without
limitation the following Non-Assumed Liabilities: (a) liabilities and
obligations for federal, state, or local income taxes arising in connection with
the Business for periods ending on or prior to the Closing or arising as a
result of the transactions contemplated by this Agreement, (b) liabilities and
obligations, the existence of which constitutes a breach of any representation
or warranty made by any Selling Group member in this Agreement or in any
document delivered by it pursuant hereto, (c) liabilities and obligations
incurred in connection with the preparation of this Agreement, and the
consummation of the transactions contemplated hereby, except for reasonable
legal and accounting fees not to exceed $75,000 and reasonable accounting fees
for work performed by Xxxxxxxx & Company specifically requested by Purchaser
pursuant to Section 7.16(a)(iii) and (iv) of this Agreement, (d) liabilities and
obligations based upon tortious or illegal conduct, (e) except for that certain
agreement dated January, 1998 by and between SCHAS and Xxxxxx Xxxxxx, the
liabilities and obligations arising under any agreement with employees in the
nature of a golden parachute or similar payment, (f) except for such employment
terms as Purchaser may agree upon, any liabilities and obligations with respect
to those employees of any Selling Group member listed in SCHEDULE 3.02 (certain
family members), (g) any liabilities and obligations for any violation of any
Environmental Law in connection with the Business occurring prior to the Closing
Date, and (h) any environmental liabilities and obligations in connection with
the Business occurring prior to the Closing Date relating to the Assets, any of
which arise out of conduct which occurred or conditions which existed on or
before Closing, even if such liability, obligation, conduct or condition is
first discovered or a claim is first asserted after the Closing.
ARTICLE IV
INSTRUMENTS OF TRANSFER AND ASSUMPTION
SECTION 4.01. TRANSFER DOCUMENTS. (a) At the Closing, Selling Group
will deliver to Purchaser (i) one or more Bills of Sale in substantially the
form attached hereto as EXHIBIT 4.01 (a "XXXX OF SALE"), (ii) all such other
good and sufficient instruments of sale, transfer and conveyance, including,
without limitation, assignments of leases and deed(s) of real property, in such
form and including such matters as Purchaser shall reasonably request and as
shall be reasonably acceptable to Selling Group, as shall be effective to vest
in Purchaser all of Selling Group's right and title to, and interest in, the
Assets; and (iii) all contracts and commitments, instruments, books and records
(except as otherwise provided in Section 2.02 hereof) and other data included in
the Assets.
(b) Notwithstanding anything to the contrary in this
Agreement, this Agreement shall not constitute an agreement to assign or
transfer any Government Document or any claim, right or benefit arising
thereunder or resulting therefrom if an assignment or transfer or an attempt to
make such an assignment or transfer without the consent of a third party would
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constitute a breach or violation thereof or affect adversely the rights of
Purchaser or any Selling Group member thereunder; and any transfer or assignment
to Purchaser by any Selling Group member of any interest under any Government
Document that requires the consent of a third party shall be made subject to
such consent or approval being obtained. In the event any such consent or
approval is not obtained on or prior to the Closing Date, each Selling Group
member shall continue to use all reasonable efforts to obtain any such approval
or consent after the Closing Date until such time as such consent or approval
has been obtained, and each Selling Group member will cooperate with Purchaser
in any reasonable manner to provide that the Purchaser shall receive the
interest of any Government Document, including performance by each Selling Group
member, as the case may be, as agent, PROVIDED that Purchaser shall undertake to
pay or satisfy the corresponding liabilities for the enjoyment of such benefit
to the extent Purchaser would have been responsible therefor if such consent or
approval had been obtained.
SECTION 4.02. ASSUMPTION DOCUMENTS. At the Closing, Purchaser and
Selling Group will execute and deliver (a) an Assumption Agreement in
substantially the form attached hereto as EXHIBIT 4.02 (the "ASSUMPTION
AGREEMENT") and (b) all such other good and sufficient instruments of assumption
in such form and including such matters as Selling Group shall reasonably
request and as shall be reasonably acceptable to Purchaser in order to effect
the assumption of the Assumed Liabilities by Purchaser.
ARTICLE V
PURCHASE PRICE; ALLOCATION
SECTION 5.01. PURCHASE PRICE. The total purchase price for the Assets
shall be Thirty- Seven Million Eight Hundred Thousand Dollars ($37,800,000) PLUS
the assumption of the Assumed Liabilities as set forth in Section 3.01 , as
adjusted in accordance with the provisions of Section 5.04 (as adjusted, the
"PURCHASE PRICE").
SECTION 5.02. PAYMENT OF PURCHASE PRICE. The following portions of the
Purchase Price shall be payable by Purchaser at the Closing, as follows:
(a) By the wire transfer delivery of Thirty-Five Million Eight
Hundred Thousand Dollars ($35,800,000) in immediately available funds to such
bank account or accounts as per written instructions of Selling Group, given to
Purchaser at least five days prior to the Closing; and
(b) By the wire transfer delivery of Two Million Dollars
($2,000,000) (the "CLOSING ESCROW PAYMENT") to Marine Midland Bank as escrow
agent (the "CLOSING ESCROW AGENT") to be held, invested and disbursed pursuant
to the terms of the Closing Escrow Agreement substantially in the form of
EXHIBIT 5.02 hereto (the "CLOSING ESCROW AGREEMENT").
SECTION 5.03. ALLOCATION OF PURCHASE PRICE. The parties agree to
allocate the aggregate of the Purchase Price and the Assumed Liabilities
(collectively, the "AGGREGATE
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PURCHASE PRICE"), among the respective portions of the Business in accordance
with an allocation schedule to be prepared by Purchaser at its expense. Such
allocation schedule shall be prepared in accordance with the applicable
provisions of the Code and the allocation shall be determined according to the
procedures set forth in Schedule 5.03.
SECTION 5.04. PURCHASE PRICE ADJUSTMENT.
(a) Purchaser and Selling Group acknowledge that it will not be
possible to determine the Net Worth of the Operating Companies as of the Closing
Date until after the Closing. For purposes of the Closing, Purchaser and Selling
Group have estimated the Net Worth to be Nine Million Seven Hundred Twenty Two
Thousand Dollars ($9,722,000) (the "ESTIMATED NET WORTH"). Accordingly, within
approximately ninety (90) days after the Closing Date, Purchaser, at its
expense, shall cause Xxxxxxxx & Company accountants to prepare and deliver to
Selling Group combined audited financial statements (with all material
eliminations made) for PFG and SCHAS and the unaudited financial statements for
X-Pert, PIP and Yadkin for the period beginning on January 1, 1999 and ending on
the Closing Date prepared in accordance with GAAP consistent with past practice
(except for certain accruals and prepaid expenses set forth on Schedule 3.01)
(such financial statements, the "CLOSING DATE FINANCIAL STATEMENTS"). The
balance sheet included in such Closing Date Financial Statements (the "CLOSING
DATE BALANCE SHEET") shall identify Net Worth at the close of such period
("CLOSING DATE NET WORTH") as set forth in Section 7.16(a)(iv). The Excluded
Assets shall be deducted from the Closing Date Net Worth and the Non-Assumed
Liabilities shall be added to the Closing Date Net Worth to determine the
Deliverable Net Worth.
(b) Selling Group shall complete its review of the Closing Date
Financial Statements within sixty (60) days after its receipt thereof. If
Selling Group agrees with the Closing Date Financial Statements, or if Selling
Group does not object to the same within such sixty (60) day period, then the
Closing Date Financial Statements and Closing Date Net Worth reflected therein
shall be deemed final and adopted by Purchaser and Selling Group.
(c) If Selling Group believes that any amendment should be made to
the Closing Date Financial Statements, Selling Group shall give Purchaser
written notice of such proposed amendments, and the reasons therefor, within the
same sixty (60) day period. If Purchaser agrees with the proposed amendments,
these shall be made and the Closing Date Financial Statements, as amended, will
be deemed final and adopted by Purchaser and Selling Group. If any proposed
amendments are disputed by Purchaser, the parties shall negotiate in good faith
to resolve all disputed amendments.
(d) If, after a period of thirty (30) days following the date on
which Selling Group has given Purchaser written notice of any proposed
amendments to the Closing Date Financial Statements, any such amendments still
remain disputed, then the disputed items shall be referred to an independent
auditor, which shall be a nationally recognized accounting firm, to be mutually
agreed between Purchaser and Selling Group or selected by an arbitrator selected
by Purchaser and Selling Group. The independent auditor shall function as an
arbitrator whose decision shall be final and binding on the parties. The
independent auditor shall render a written decision
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which shall be based upon proper compliance with this Section 5.04. The fees and
expenses of the independent auditor shall be split equally by the parties,
unless the independent auditor shall determine that a party has acted in bad
faith with respect to any claim or defense, in which case the party which has
been determined to have acted in bad faith shall be obligated to pay all of the
fees and expenses.
(e) No later than ten (10) days after the Closing Date Financial
Statements have been adopted, as provided in Section 5.04(b), (c) or (d), as the
case may be, if the Estimated Net Worth exceeds the Closing Date Net Worth (the
"Net Worth Shortfall"), Purchaser shall instruct the Closing Escrow Agent to
promptly release and pay Purchaser the amount of the Net Worth Shortfall from
the first One Million Dollars ($1,000,000) of the Escrowed Funds (as such term
is defined in the Closing Escrow Agreements) and any remainder left over
reflecting the difference between One Million Dollars ($1,000,000) and the Net
Worth Shortfall shall be paid to Selling Group. Interest that has accrued on the
total $1,000,000 escrow deposit shall be allocated to the parties according to
the amounts paid to each party by the Closing Escrow Agent.
(f) No later than ten (10) days after the Closing Date Financial
Statements have been adopted, as provided in Section 5.04(b), (c) or (d), as the
case may be, if the Estimated Net Worth is less than the Closing Date Net Worth,
then Purchaser shall instruct the Closing Escrow Agent to promptly release and
pay Selling Group $1,000,000 of the Escrowed Funds, as well as all interest
income accrued thereon.
SECTION 5.05. EARNOUT. (a) In addition to the Purchase Price, Purchaser
shall pay Selling Group an earnout (the "Earnout") based on a comparison of the
actual consolidated cash flow of the Business ("EBITDA") for 1999 with a target
of $8,758,000 subject to such adjustments as agreed upon by the parties, all as
set forth in EXHIBIT 5.05.
(b) As and to the extent earned, the dollar value of the Earnout
shall be payable in cash to Selling Group as soon as practicable following the
determination of the EBITDA of the Operating Companies for 1999, which is
expected to be no later than February 29, 2000.
(c) For purposes of computing the Earnout, the EBITDA shall be
equal to the consolidated pro forma EBITDA earnings of the Operating Companies
for the period January 1 through December 31, 1999. To make this calculation,
Purchaser shall prepare, at its expense, a PRO FORMA consolidating income
statement for the Business of the Operating Companies for the period January 1
through December 31, 1999 in accordance with GAAP, such accounting principles to
be applied consistently with past practice (including certain accrued expenses
and liabilities set forth on Schedule 3.01).
ARTICLE VI
CLOSING
Subject to the terms and conditions hereof, the closing (the "Closing")
shall take place at the offices of Xxxxxxxx Xxxxx Xxxxxxxxx Xxxxxx & Xxxxx LLP,
0000 Xxxxxx Xxxxxxx Xxxxxx,
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Xxxxxxx, Xxx Xxxx 00000, on April 1, 1999 (or such other date as shall be agreed
upon by the parties (the "CLOSING DATE")). At Closing, each party shall deliver
or cause to be delivered to the other party the instruments of transfer and
assumption referenced in Article IV of this Agreement and the other deliveries
required hereunder and Purchaser shall deliver the Purchase Price as required
pursuant to Section 5.02.
ARTICLE VII
SELLING GROUP'S REPRESENTATIONS
Each member of the Selling Group (except for Xxxxxx Xxxxxxxxx, who
makes these representations only as they may pertain to PIP), jointly and
severally represents and warrants (such representations and warranties to
survive the Closing as set forth herein) that:
SECTION 7.01. ORGANIZATION, QUALIFICATION. Each of the Operating
Companies is duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation and qualification, and each
corporate Selling Group member has all necessary corporate power and authority
and each individual Selling Group member has all necessary power and authority
to own and operate its or his properties and to carry on its or his business as
now being conducted or proposed to be conducted and to carry out the
transactions contemplated by this Agreement. Each Selling Group member has the
full power and authority to execute and deliver and, perform its or his
respective obligations under this Agreement and to undertake the transactions
contemplated hereby.
SECTION 7.02. CONSENTS, AUTHORIZATION, EXECUTION AND DELIVERY OF
AGREEMENT. Except as set forth on SCHEDULE 7.02 hereto, all necessary consents
and approvals have been obtained by each Selling Group member for the execution
and delivery of this Agreement. The execution, delivery and performance of this
Agreement by Selling Group and the transfer of the Assets to Purchaser have been
duly and validly authorized and approved by all necessary corporate and
stockholder action (with respect to the Operating Companies). This Agreement is
a valid and binding obligation of each Selling Group member, enforceable against
each such member in accordance with its terms except as enforceability may be
limited by applicable bankrupcty, insolvency, reorganization, arrangement or
similar laws affecting the rights of creditors generally and subject to the
discretion of courts to award equitable remedies.
SECTION 7.03. SUBSIDIARIES AND INTERESTS IN OTHER COMPANIES. The
Corporate Selling Group members have no subsidiaries, and the Selling Group
members do not own or control any shares or other securities of, or have any
other proprietary interest in, any corporation, partnership, limited liability
company, joint venture, business association or other Person related to the
Business (other than their ownership or control of another Selling Group
member).
SECTION 7.04. TITLE TO ASSETS; CONDITION OF ASSETS. (a) Each Selling
Group member has, and will convey or cause to be conveyed to Purchaser at
Closing, as the case may be, good and marketable title to the Assets owned by
it, free and clear of all Liens other than Permitted Liens. All Liens in effect
on the date hereof which are to be discharged at Closing are listed on
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SCHEDULE 7.04(a) hereto. The tangible personal property included among the
Assets is in good working condition and repair, reasonable wear and tear
excepted. The Assets constitute all of the assets which are used or useful in
the operation of the Business as it is currently being conducted by Selling
Group. Except as disclosed on SCHEDULE 7.23, no officer, director, stockholder,
partner or employee of any Selling Group member or any other Person, other than
a member of Selling Group, owns, leases or has any rights in any property, or
other assets used in or useful to the Business other than the Excluded Assets.
(b) Except as set forth on SCHEDULE 7.04(b), all of the buildings,
fixtures and improvements owned or leased by Selling Group, and all heating and
air conditioning equipment, plumbing, electrical and other mechanical facilities
and the roof, walls and other structural components of the real property which
are part of, or located in such buildings, or improvements that are owned or
leased by Selling Group, substantially comply with applicable zoning laws and
the building, health, fire and, subject to the limitations set forth in the
representations of Selling Group in Section 7.12, environmental protection codes
of all applicable governmental jurisdictions, have no structural defects and do
not require any repair other than routine maintenance and the repair of ordinary
wear and tear.
SECTION 7.05. REAL PROPERTY - OWNED.
(a) The Owned Real Property set forth on SCHEDULE 2.01 and the use
thereof are both in compliance with all applicable Real Property Laws, and no
Selling Group member has received any work orders or notice of any defect in the
construction or state of repair of any of the Owned Real Property or notice of
any violation or claimed violation of any Real Property Law or of any changes or
proposed changes to Real Property Laws which will adversely affect the current
use of any of the Owned Real Property. The Owned Real Property and their
continued use, occupancy and operation as currently used, occupied and operated
do not constitute a nonconforming use under any Real Property Law and the
continued existence, use, occupancy and operation of each Improvement, and the
right and ability to repair and/or rebuild such Improvement in the event of
casualty, is not dependent on any special permit, exception, approval or
variance. To the Knowledge of any Selling Group member, there is no pending or
anticipated change in any Real Property Law which would have an adverse effect
upon the ownership, alteration, use, occupancy or operation of any of the Owned
Real Property or any portion thereof, or upon the reconstruction of any
Improvement in the event of a casualty. No dispute currently exists with any
governmental entity with respect to any Real Property Law or the application
thereof to any of the Owned Real Property. There are no encroachments upon any
of the Owned Real Property and the Improvements situated upon such Owned Real
Property do not encroach upon or violate any rights or way, easements or the
lands of others. There are no violations of law or rule with respect to water
supply, sewage or waste disposal facilities. No portion of any of the Owned Real
Property has suffered any damage by fire or other casualty which has not
heretofore been completely repaired and restored to its original condition.
Except as set forth on SCHEDULE 7.05, no portion of any of the Owned Real
Property is located in a special flood hazard area as designated by federal
governmental authorities nor is any portion of the Owned Real Property subject
to conservation authority regulation.
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(b) No Selling Group member has received any notice of any special
assessment or condemnation from a governmental entity with respect to any of the
Owned Real Property.
(c) Except as set forth on SCHEDULE 7.05, no Selling Group member
owns, holds or is obligated under, or is a party to, any option, right of first
refusal or other contractual right to purchase, acquire, sell or dispose of all
or any part of the Owned Real Property or any interest therein and no Selling
Group member is a lessor, sublessor or grantor under any contract granting to
another Person any right to the possession, use, occupancy or enjoyment of all
or any part of the Owned Real Property or any interest therein.
SECTION 7.06. REAL AND PERSONAL PROPERTY - LEASED. Set forth on
SCHEDULE 2.01 are true and accurate listings of all real and personal property
leases to which a Selling Group member is a party setting forth (i) the name of
the lessor and (ii) with respect to the real property leases, a description of
the property leased. Except as set forth on SCHEDULE 7.06 all of the leases set
forth on such Schedules are in full force and effect and are valid, binding and
enforceable in accordance with their respective terms, (ii) all accrued and
currently payable rents and other payments required by such leases have been
paid, (iii) Selling Group and, to Selling Group's Knowledge, each other party
thereto have materially complied with all respective covenants and provisions of
such leases, (iv) neither Selling Group nor, to Selling Group's Knowledge, any
other party is in material default in any respect under any such leases, (v) no
party has asserted any defense, set off, or counter claim thereunder, (vi) no
waiver, indulgence or postponement of any obligations thereunder has been
granted by any party, and (vii) the validity or enforceability of any such lease
will be in no way affected by the sale of the Assets to Purchaser, provided all
required consents have been obtained from the other parties to such lease.
SECTION 7.07. EXISTING CONTRACTS. SCHEDULE 2.01 hereto set forth all
contracts, commitments and agreements (written and oral) (except those
terminable with notice provided in thirty (30) or fewer days) in effect on the
date hereof with Selling Group's customers, all leases to which a Selling Group
member is a party, and all other contracts, commitments and agreements (written
and oral) to which a Selling Group member is a party which relate to the
ownership of the Assets or the operation of the Business that are being assigned
to Purchaser (the "Existing Contracts"). Except as disclosed on SCHEDULE 7.07,
no officer, director, partner or employee of a Selling Group member or any
Person (other than Selling Group members) controlling, controlled by or
affiliated with or family member of any such officer, director or employee has
any contractual relationship relating to the ownership or operation of the
Business that is being sold, transferred or assigned to Purchaser. Selling Group
has heretofore delivered to Purchaser true and correct copies of the Existing
Contracts. Except as disclosed on SCHEDULE 7.07, Selling Group has no knowledge
of any material breach or threatened breach by the other parties to any Existing
Contracts. The Existing Contracts are in full force and effect and Selling Group
is in compliance with each of its respective material obligations under such
Existing Contracts. Except for the Existing Contracts, no Selling Group member
has entered into any other contract, commitment or agreement relating to the
ownership of the Assets or the operation of the Business, including, but not
limited to, leases or guaranty agreements. There are no claims by third parties
that a Selling Group member is required to enter into other agreements to enable
it to continue to own the Assets and operate the Business as it is presently
being operated.
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SECTION 7.08. GOVERNMENTAL LICENSES. Selling Group holds all
Authorizations which are required in connection with the ownership of the
Assets. All Authorizations are in full force and effect. Except as set forth on
SCHEDULE 7.08, the ownership of the Assets and the operation of the Business by
Selling Group are not subject to specific industry regulation or supervision by
any federal or state governmental unit.
SECTION 7.09. COMPLIANCE WITH LAWS. Except as set forth on Schedule
7.09, to the best of Selling Group's knowledge, it is currently complying with,
has complied with, and is not in default under or in violation of any statute,
law (including environmental or employment laws), ordinance, decree, order, rule
or regulation of any governmental body applicable to the Assets or the Business.
SECTION 7.10. NO VIOLATION OF EXISTING CONTRACTS. Except as set forth
on SCHEDULE 7.10, the execution, delivery and performance of this Agreement by
Selling Group and Selling Group's transfer of the Assets to Purchaser (i) will
not violate any provision of any law (ii) will not, with or without the giving
of notice or the passage of time, or both, conflict with or result in any breach
of any of the terms or conditions of, or constitute a default under any Existing
Contract, and (iii) will not result in the creation of any Lien upon the Assets
or the Business other than Permitted Liens.
SECTION 7.11. LITIGATION AND LEGAL PROCEEDINGS. There is no outstanding
judgment against any Selling Group member or any director, officer, partner or
stockholder of a Selling Group member affecting the Business or the Assets or
which questions the validity of any action taken or to be taken by a Selling
Group member pursuant to or in connection with the provisions of this Agreement.
Except as set forth on SCHEDULE 7.11, there is no litigation, proceeding or
investigation pending, or, to Selling Group's knowledge, threatened, against a
Selling Group member or any director, officer, partner or stockholder of a
Selling Group member affecting the Business or the Assets or which questions the
validity of any action taken or to be taken by Selling Group pursuant to or in
connection with the provisions of this Agreement. Except as set forth on
SCHEDULE 7.11, there are no proceedings pending to which a Selling Group member
or any director, officer, partner or stockholder of a Selling Group member is a
party or, to Selling Group's Knowledge, threatened, nor has Selling Group
received written notice of any demand by any governmental agency, utility or
other party, to terminate, modify or adversely change the terms and conditions
of any Selling Group member's rights with respect to the Authorizations or
Existing Contracts.
SECTION 7.12. ENVIRONMENTAL COMPLIANCE. Except as otherwise disclosed
in SCHEDULE 7.12 attached hereto, (a) any Hazardous Substance generated, used,
treated, stored, or disposed of during Selling Group's ownership, occupation or
use of the Assets or the Business has been and is being used, treated, stored or
disposed of in material compliance with all Environmental Laws, and; (b) Selling
Group has received no notice of any material violation of any applicable
Environmental Laws relative to the Assets or the Business. Based upon Selling
Group's information and belief, (y) no friable asbestos or polychlorinated
biphenyl, and no underground storage tank, is contained in or located on or
under any property or facility owned, occupied,
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used or leased by Selling Group, and (z) during Selling Group's ownership,
occupation or use of the Assets or the Business, there has never been a release
of any Hazardous Substances in, on, under, off or around any property or
facility used, occupied, owned or leased by Selling Group. All environmental
permits applicable to the Selling Group's use of the Owned Real Property and
Leased real property have been obtained, are in full force and effect and are
set forth on Schedule 7.12.
Except as otherwise disclosed in SCHEDULE 7.12 attached hereto, and to
the best of Selling Group's knowledge and belief, no Hazardous Substance has
been generated, stored, disposed of or released, except in accordance with
applicable Environmental Laws, in, on, under, off or around the land and
buildings comprising the main assembly plant in Cheektowaga, New York at any
time prior to the time that such plant was owned, occupied, used and/or leased
by the Selling Group.
SECTION 7.13. EMPLOYEES. SCHEDULE 7.13 sets forth a true and complete
list of the names and current salaries of all salaried employees of Selling
Group, and a list of average hourly pay rates for hourly employees, involved in
the operation of the Business. Except as set forth on SCHEDULE 7.13, such
employees are employees at will. Set forth on Schedule 7.13 is a list of
employees' accrued but unused vacation. Selling Group has withheld all amounts
required by law or agreement to be withheld by it from the wages, salaries and
other payments to its employees and is not liable for any arrears of wages or
any taxes for failure to comply with any of the foregoing. There are no
collective bargaining agreements covering any of the employees of Selling Group.
Selling Group has not breached or otherwise failed to comply with any provision
of any collective bargaining agreement or other labor union contract applicable
to any of its employees. No consent of any union (or similar group or
organization) is required in connection with the consummation of the
transactions contemplated hereby. There are no pending, or, to Selling Group's
Knowledge threatened or anticipated, and to the best knowledge of Selling Group,
there is no factual basis for, any (a) employment discrimination (including age,
sex, racial or handicap discrimination) charges or complaints against or
involving Selling Group, before any federal, state, or local board, department,
commission or agency or (b) unfair labor practice charges or complaints,
disputes or grievances affecting Selling Group. There are no pending, or, to
Selling Group's Knowledge, threatened or anticipated (a) union representation
petitions respecting the employees of Selling Group, (b) efforts being made to
organize any of the employees of Selling Group, or (c) strikes, slow downs, work
stoppages, or lockouts or threats affecting Selling Group.
SECTION 7.14. EMPLOYEE BENEFITS. (a) Each "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) that any member of Selling Group
maintains or contributes to and has ever maintained or contributed to with
respect to the Business is named as follows: the Perfect Fit Glove Co., Inc.
401(k) Plan (the "401(k) Plan" and the Perfect Fit Glove Co., Inc.
Profit-Sharing Plan and Trust (the "Profit Sharing Plan") (both collectively,
the "Retirement Plans"). No member of Selling Group, nor any trade or business
(whether or not incorporated) which is, or was at any relevant time, aggregated
with each Operating Company pursuant to Section 414(b), (c), (m) or (o) of the
Code, maintains or contributes to, has ever maintained or contributed to, or had
an obligation to maintain or contribute to, any multi-employer plan within
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the meaning of Section 4001(3) of ERISA or to any "employee pension benefit
plan" that is subject to Title IV of ERISA or the minimum funding requirements
of Section 412 of the Code and Section 302 of ERISA.
(b) (i) With respect to the Retirement Plans, no liability
currently exists for Selling Group for any breach of fiduciary duty under Title
I of ERISA and no event has occurred and no condition exists, which could
subject Selling Group to any liability or breach of fiduciary duty under Title I
of ERISA; (ii) with respect to the Retirement Plans, there is no liability under
Title IV of ERISA.
SECTION 7.15. TAX MATTERS. Except as set forth on SCHEDULE 7.15, (a)
each Selling Group member has timely filed all Tax (as defined below) returns
and statements which it is required to file; (b) all such returns are materially
complete and accurate and disclose all Taxes required to be paid for the periods
covered thereby; (c) no Selling Group member has waived any statute of
limitations in respect of Taxes or agreed to an extension of time with respect
to a Tax assessment or deficiency; (d) no assessment of any additional Taxes for
periods for which returns have been filed has been asserted and no basis exists
therefor; (e) to Selling Group's knowledge, there are no unresolved questions or
claims raised by any Taxing authority concerning the Tax liability of any
Selling Group member, (f) all Taxes which Selling Group members are required by
law to withhold or to collect for payment have been duly withheld and collected,
and have been paid and (g) each of Glove Sellers (except PIP and X-Pert) has
made a valid election to be taxed as an "S Corporation" (as defined in Section
1361 of the Code) and will be classified for Federal income tax purposes as an S
Corporation for the period from the date of its election through the Closing
Date. Each Selling Group member has paid all Taxes due prior to the date hereof
and will pay when due (or contest in good faith by appropriate proceedings) all
Taxes which may become due on or before the Closing Date.
SECTION 7.16. FINANCIAL STATEMENTS.
(a) (i) Purchaser has heretofore been furnished with true
and complete copies of the preliminary unaudited balance sheet of PFG
as of September 30, 1997 and September 30, 1998 and for SCHAS as of
December 31, 1997 and September 30, 1998 and the related statements of
income and retained earnings for the years (or periods, as the case may
be) then ended, and the combined balance sheet of the Operating
Companies as of December 4, 1998 (the "Base Period")(the "Base Period
Financial Statements"), each of such balance sheet and income statement
being attached hereto as SCHEDULE 7.16(a)(i), (THE "HISTORICAL
FINANCIAL STATEMENTS"). From and after the Base Period, the
Stockholders have not taken any dividends, distributions or withdrawals
from any of the Operating Companies except to pay salaries and rent in
the normal course of business or to pay income taxes on account of
their position as stockholders of the following S Corporations: PFG and
SCHAS
(ii) Not less than one (1) week prior to the Closing, at
Selling Group's cost, Purchaser shall be furnished with the audited
balance sheet of PFG as of
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September 30, 1998 and for SCHAS as of December 31, 1998 and the
related statements of income and retained earnings and cash flows for
the year then ended prepared in accordance with generally accepted
accounting principles consistent with past practices (except for
certain accruals and prepaid expenses set forth on Schedule 3.01 and a
review of opening inventory) as set forth on Schedule 7.16(a)(ii)
(collectively, the "Current Financial Statements");
(iii) On or before July 1, 1999, at Purchaser's cost,
Purchaser will be furnished with the audited balance sheet of PFG as of
December 31, 1998 and March 31, 1999 and SCHAS as of March 31, 1999 and
the related statements of income and retained earnings and cash flows
for the period then ended prepared in accordance with generally
accepted accounting principles consistent with past practice; and
(iv) On or before July 1, 1999, at Purchaser's cost,
Purchaser will be furnished with a Schedule of the combined companies
comprising the Business of Selling Group in substantially the same form
as the Base Period Financial Statements setting forth combined Closing
Date Net Worth of Selling Group.
(b) Each of the Historical and Current Financial Statements
delivered under Section 7.16 (a)(i) and (ii) hereof was prepared in accordance
with GAAP applied on a basis consistent with prior periods and past practices
and, with respect to the Current Financial Statements, subject to usual and
customary year-end adjustments and except for the omission of certain footnotes
and other presentation items required by GAAP with respect to audited financial
statements; each of the balance sheets included in such Historical and Current
Financial Statements fairly presents in all material respects the financial
condition of Selling Group, as at the close of business on the date thereof; and
each of the statements of income included in such Historical and Current
Financial Statements fairly presents in all material respects the results of
operations of Selling Group, for the fiscal period then ended.
(c) Except as set forth on SCHEDULE 7.16(c) since December 31,
1998, Selling Group has not, except in the ordinary course of business
consistent with past practice:
(i) sold, assigned or transferred any of its Assets
(except for the Excluded Assets or for assets sold or disposed of and
replaced by other assets of comparable use and value) or canceled any
material debts or material claims;
(ii) waived any material rights, whether or not in the
ordinary course of business;
(iii) entered into any other transaction, or entered into
any transaction with any officer, director, partner or shareholder of a
Selling Group member, or any affiliate or family member of any such
Person;
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(iv) suffered any material damage, destruction or casualty
loss with respect to the Assets, whether or not covered by insurance;
(v) obligated itself or the Business to give free or
reduced price goods to customers or distributors with respect to the
Business; or
(vi) entered into any agreement or understanding to do any
of the foregoing.
(d) Except as set forth on Schedule 7.16(d), since December 4,
1998, PFG, SCHAS, X-Pert and PIP and since December 31, 1998, Yadkin, and
Xxxxxxx and Xxxxxx as owners of the Owned Real Property, have not made any
dividend or distribution of any of the Assets to any officer, director or
shareholder of a Selling Group member or any affiliate or family member of such
officer, director or shareholder.
SECTION 7.17. CUSTOMERS/AGENTS/SUPPLIERS. SCHEDULE 7.17 attached hereto
sets forth a true, accurate, and complete list of (a) the names of the top
twenty-five (25) customers and distributors receiving goods from Selling Group
(ranked by dollars) during 1998 , (b) the names of all agents and
representatives who service customers on behalf of Selling Group, if any, and
(c) the names of the top ten (10) suppliers of raw materials, supplies or other
goods or services to Selling Group (ranked by dollars) in connection with the
Business, during 1998.
SECTION 7.18. INSURANCE. Selling Group has delivered previously to
Purchaser all policies of title, liability, fire, worker's compensation and
other forms of insurance (including bonds) which insure against risks and
liabilities to an extent and in a manner customary in the industry and which are
reasonably adequate to provide coverage against risks of a nature to which
Selling Group would normally be exposed in the operation of the Business. All
such insurance policies and binders are in full force and effect. Selling Group
has complied in all material respects with each of such insurance policies and
binders and has not failed to give any notice or present any claim thereunder in
a due and timely manner. To the best of Selling Group's knowledge, there are no
outstanding unpaid claims under any of such insurance policies or binders and
Selling Group has not received any notice of cancellation or non-renewal of any
such policy or binder. To Selling Group's knowledge, there is no inaccuracy in
any application for such policies or binders which would reasonably be expected
to materially adversely affect coverage thereunder. No insurance carrier has
canceled or reduced any insurance coverage for Selling Group or has given any
notice or other indication of its intention to cancel or reduce any such
coverage in the past five years.
SECTION 7.19. BROKERS. Selling Group has not engaged any agent, broker
or other person acting pursuant to the express or implied authority of Selling
Group which is or may be entitled to a commission or broker or finder's fee in
connection with the transactions contemplated by this Agreement or otherwise
with respect to the sale of the Assets or the Business.
SECTION 7.20. UNDISCLOSED LIABILITIES. Selling Group has no liabilities
or obligations of any nature, whether absolute, accrued, contingent or
otherwise, which are not reflected or
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reserved against on the Current Financial Statements, except for non-material
liabilities and obligations that have arisen in the ordinary and usual course of
business and consistent with past practice (none of which results from, arises
out of, relates to, is in the nature of, or is caused by any breach of contract,
breach of warranty, tort, infringement or violation of law) and except for
liabilities and obligations directly related to the transactions contemplated
hereby, as set forth on the Schedules hereto.
SECTION 7.21. PROPRIETARY RIGHTS. Except as set forth on SCHEDULE 7.21,
Selling Group lawfully possesses, and the Assets will include, all Intellectual
Property rights that are used or useful in the conduct of the Business. Except
as set forth on Schedule 7.21, none of the Intellectual Property rights owned by
Selling Group infringes upon the rights of any third party. Except as set forth
on SCHEDULE 7.21, Selling Group does pay any royalty to any Person with respect
to any of the Intellectual Property rights, Selling Group does not receive
royalties with respect thereto and Selling Group has not licensed or sublicensed
any of the Intellectual Property rights to any Person.
SECTION 7.22. ACCOUNTS RECEIVABLE AND BAD DEBTS. Except for a mortgage
note in the approximate face amount of $133,000 involving real property on South
Park Avenue, Buffalo, New York, all notes and accounts receivable of Selling
Group shown on the Current Financial Statements or thereafter acquired were or
(to the extent not heretofore collected) are valid and genuine, were acquired in
the ordinary course of business and are subject to no asserted counterclaims,
defenses or setoffs (subject to reserves for bad debts as will be taken into
account in the determination of Current Assets at Closing in accordance with
Section 5.04). SCHEDULE 7.22 attached hereto sets forth a true, materially
complete and accurate list of all such reserves and a list of the accounts
receivable and the aging of such customer receivables as of February 22, 1999.
SECTION 7.23. CERTAIN BUSINESS RELATIONSHIPS WITH SELLING GROUP. Except
as set forth in SCHEDULE 7.23 attached hereto, none of the officers, directors
or stockholders of a Selling Group member, its affiliates or family members, has
been involved in any business arrangement or relationship with a Selling Group
member within the past 12 months.
SECTION 7.24. WARRANTY AND PRODUCT LIABILITY CLAIMS.
(a) Except as disclosed on SCHEDULE 7.24(a), there are no written
warranties or guaranties, expressed or implied, with respect to any products
manufactured or sold or services rendered in connection with the Business, and
no claims are pending or asserted or, to the Knowledge of Selling Group,
threatened that any product of Selling Group was defective or caused any injury
or harm to any Person or property, including all such claims or allegations
relating to returns, express or implied warranty violations, failure to warn or
similar matters. To the Knowledge of each member of Selling Group, no Person has
any basis upon which to make any such claims. All pending or, to the Knowledge
of any Selling Group member, threatened or asserted claims set forth on SCHEDULE
7.24(a) are covered by insurance and are not subject to any deductibles other
than the amount of the deductible set forth opposite such claim on such
Schedule. There are no statements, citations or decisions specifically directed
to Selling Group
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by any governmental entity stating that any product manufactured, marketed or
distributed at any time by any Selling Group member is defective or unsafe or
fails to meet any standards promulgated by any such governmental entity. There
have been no recalls with respect to any product manufactured, marketed or
distributed within the past five (5) years by any Selling Group member with a
value greater than $10,000 and to the knowledge of Selling Group, no such recall
is threatened.
(b) SCHEDULE 7.24(b) sets forth all incidents involving personal
injury since January 1, 1995 that have alleged to have been, or that, to the
Knowledge of any Selling Group member, could be alleged to have been, caused by
any product manufactured or sold by a Selling Group member or by any services
rendered by a Selling Group member, regardless of whether a claim therefor has
been asserted or threatened against any Person.
SECTION 7.25. ABSENCE OF CERTAIN BUSINESS PRACTICES. Except as set
forth on SCHEDULE 7.25, no Selling Group member, any officer, employee or agent
of any Selling Group member, or any other person acting on their behalf, has,
directly or indirectly, within the past five years given or agreed to give any
gift or similar benefit to any customer, supplier, governmental employee or
other person who is or may be in a position to help or hinder the Business (or
assist any Selling Group member in connection with any actual or proposed
transaction relating to the Business) (i) which subjected or might have
subjected any Selling Group member to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) which if not given in
the past, might have had a Material Adverse Effect, (iii) which if not continued
in the future, might have a Material Adverse Effect or subject any Selling Group
member to suit or penalty in any private or governmental litigation or
proceeding, (iv) for any of the purposes described in Section 162(c) of the Code
or (v) for the purpose of establishing or maintaining any concealed fund or
concealed bank account.
SECTION 7.26. YEAR 2000 COMPATIBILITY. To the Knowledge of each Selling
Group member, all of the computer-based systems of each Selling Group member
will have been upgraded on or before September 30, 1999 at a cost of not more
than $10,000 so that such systems operating and effectively processing data for
dates on and after January 1, 2000, including without limitation the processing,
accepting, calculating, storing and outputting of times or dates on or after
such date and any time periods determined or to be determined based on such
times or dates.
SECTION 7.27. DISCLOSURE. Except as set forth on Schedule 7.27, no
provision of this Agreement relating to Selling Group, the Business or the
Assets or any other document, Schedule, Exhibit or other information furnished
by Selling Group to Purchaser in connection with the execution, delivery and
performance of this Agreement, or the consummation of the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated in
order to make the statement, in light of the circumstances in which it is made,
not misleading. In connection with the preparation of this Agreement and the
documents, descriptions, opinions, certificates, Exhibits, Schedules or written
material prepared by Selling Group and appended hereto or delivered or to be
delivered hereunder, Selling Group agrees it will disclose to Purchaser any fact
known to
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Selling Group which Selling Group knows or believes would adversely affect
Purchaser's decision to proceed with the execution of this Agreement. There is
no fact now known to Selling Group relating to the Business or Assets which in
Selling Group's reasonable opinion adversely affects the condition of the
Assets, or the ownership, operation or financial condition of the Business which
has not been disclosed to Purchaser or set forth in the Exhibits or Schedules
attached hereto. All Schedules attached hereto are accurate and complete as of
the date hereof.
ARTICLE VIII
PURCHASER'S REPRESENTATIONS
Purchaser hereby represents and warrants that:
SECTION 8.01. ORGANIZATION; QUALIFICATION. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Purchaser has all corporate power and authority to (i) own
and operate its properties, (ii) carry on its business as it is now being
conducted, and (iii) carry out the transactions contemplated by this Agreement
and to own and operate the Assets and the Business, subject to obtaining all
necessary consents required for the transfer by Selling Group of the Assets, if
any.
SECTION 8.02. CONSENTS; AUTHORIZATION; EXECUTION AND DELIVERY OF
AGREEMENT. All necessary consents and approvals have been obtained by Purchaser
for the execution and delivery of this Agreement. The execution and delivery of
this Agreement by Purchaser has been duly and validly authorized and approved by
all necessary corporate action. Purchaser has full power and authority to
execute and deliver and perform its obligations under this Agreement. This
Agreement is a valid and binding obligation of Purchaser, enforceable against it
in accordance with its terms.
SECTION 8.03. BROKERS. Purchaser has not engaged any agent, broker or
other person acting pursuant to the express or implied authority of Purchaser
which is or may be entitled to a commission or broker or finder's fee in
connection with the transactions contemplated by this Agreement or otherwise
with respect to the sale of the Assets or the Business.
ARTICLE IX
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
The obligation of Purchaser under this Agreement with respect to the
purchase and sale of the Assets shall be subject to the fulfillment on or prior
to the Closing of each of the following conditions, any of which may be waived
in writing by Purchaser:
SECTION 9.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE
OF THIS AGREEMENT. All of the representations and warranties made by Selling
Group in this Agreement shall be true and correct at and as of the Closing.
Selling Group shall have complied with and performed all of the agreements and
covenants required by this Agreement to be performed or
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complied with by it on or prior to the Closing. Purchaser shall have been
furnished with a certificate executed by the President of each of the Operating
Companies dated as of the Closing, certifying to the fulfillment of the
foregoing conditions.
SECTION 9.02. RESOLUTIONS. The Operating Companies shall deliver to
Purchaser copies of the resolutions of the board of directors and stockholders
of each (including a unanimous written consent of the stockholders of PFG)
authorizing the execution, delivery and performance of this Agreement and all
instruments and documents to be delivered in connection herewith and the
transactions contemplated hereby, duly certified by an officer of each Operating
Company.
SECTION 9.03. INCUMBENCY CERTIFICATES. Purchaser shall have received a
certificate or certificates of an officer of each Operating Company, certifying
as to the genuineness of the signatures of officers of each of the Operating
Companies authorized to take certain actions or execute any certificate,
document, instrument or agreement to be delivered pursuant to this Agreement,
which incumbency certificate shall include the true signatures of such officers.
Purchaser shall have received a certificate of the Stockholders, certifying that
they are, as the case may be, the sole owners of the Operating Companies and the
Owned Real Property.
SECTION 9.04. CONSENTS. Selling Group shall have delivered to Purchaser
such instruments, consents and approvals of third parties (the form and
substance of which shall be reasonably satisfactory to Purchaser) as are
reasonably necessary to assign to Purchaser without modification thereof, as of
the Closing, the Assets and the Assumed Contracts, and Purchaser shall have
obtained all Authorizations reasonably necessary for the consummation of the
transactions contemplated by this Agreement.
SECTION 9.05. DUE DILIGENCE. Purchaser and its agents and
representatives shall have conducted a satisfactory legal, tax, accounting,
environmental, regulatory and business due diligence review of the Assets and
the Business including, without limitation, the Business properties, and
customers, the results of which shall be satisfactory to the Purchaser. If as a
result of such due diligence review, Purchaser decides to terminate the
Agreement or believes that a material change must be made to the Agreement, then
Purchaser shall notify Selling Group of such determination within thirty (30)
days after the execution of the Agreement or ten (10) days after receipt of
final Schedules, as the case may be. Without limiting the generality of the
foregoing, Purchaser shall be satisfied that the Assets constitute all assets
and property necessary to operate the Business as Purchaser contemplates. If,
during the course of its due diligence review, Purchaser obtains knowledge of a
clear and material breach by Selling Group of any of the Selling Group's
representations set forth herein (but not including knowledge of facts that may
lead to a material breach), Purchaser shall provide the information upon which
such knowledge is based to Selling Group.
SECTION 9.06. NO MATERIAL ADVERSE CHANGE. There shall not have been any
material adverse change in the financial condition, assets, business, properties
or prospects of the Business or Assets, from December 4, 1998 to the Closing.
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SECTION 9.07. OPINION OF COUNSEL TO SELLING GROUP. Purchaser shall have
been furnished with an opinion of Xxxxxxxx Xxxxx Xxxxxxxxx Xxxxxx & Xxxxx LLP,
counsel to Selling Group, dated as of the Closing and addressed to Purchaser,
and to any institution designated by Purchaser which has provided financing in
connection with the transactions contemplated by this Agreement, in a form to be
mutually agreed upon.
SECTION 9.08. CLOSING ESCROW AGREEMENT. Selling Group shall have
executed and delivered the Closing Escrow Agreement to Purchaser.
SECTION 9.09. REAL AND PERSONAL PROPERTY. Selling Group shall have
delivered to the Purchaser:
(a) the Assignment and Xxxx of Sale assigning to Purchaser all of
Selling Group's right, title and interest in and to the
Existing Contracts, Intellectual Property and all other
agreements and instruments constituting the Assets, dated as
of the Closing Date;
(b) the Assumption Agreement;
(c) an assignment of lease, dated as of the Closing Date, with
respect to each Lease, in form reasonably satisfactory to
Purchaser, together with any necessary transfer declarations
or other filings;
(d) certificates of title to all motor vehicles included in the
Assets to be transferred to Purchaser hereunder, duly endorsed
for transfer to Purchaser as of the Closing date;
(e) a tax and title search which covers the Owned Real Property,
fully guaranteed by a title insurance corporation licensed
under Article 64 of the Insurance Law. The first set-out of
the search shall be the first recorded source of title in the
County Clerk's Office. The last continuation of the search
shall be dated after the date hereof. Selling Group shall also
provide local tax certificates where not covered by the
search.
(f) a survey of the Owned Real Property prepared by a professional
who is licensed or otherwise authorized under the New York
Education Law to practice land surveying ("Surveyor"). The
survey shall be dated within four years prior to the Closing
Date (provided that any such survey includes the current
configuration of the buildings thereon and subject to any
requirement imposed by any lender to Purchaser), be prepared
according to Bar Association of Erie County standards and
shall show the Owned Real Property and location of all
buildings, other structures and improvements affecting it,
along with Selling Group's affidavit of discharge.
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(g) Subject to the rights of the Erie County XXX, good and
marketable title to the Owned Real Property in fee simple,
free and clear of all liens and encumbrances, except as stated
in this Agreement. Purchaser will accept the Owner Real
Property subject to (i) restrictions of record, provided they
do not conflict with the present improvements or uses, or
intended uses or intended improvements (as defined in
Paragraph 13 of the Bar Association of Erie County Contract)
and have not been violated, unless their enforcement is barred
by law; (ii) easements and rights-of-way of record for water
lines, sanitary sewer lines, drainage, gas pipeline,
electrical lines and telephone lines, provided they are or may
be used to service the Owned Real Property and provided the
present improvements, or intended uses or intended
improvements are or will not be on the easements or rights of
way;
(h) title insurance in such form and substance as set forth in the
Erie County Bar Association Real Estate Contract;
(i) cure of any title defects to which Purchaser shall have
objected within ten (10) days of receipt of written notice
from Purchaser of such objection;
(h) a Warranty Deed with lien covenant, together with such
documentation reasonably necessary for Selling Group to comply
with this Agreement.
(k) such other documents or instruments as may be reasonably
necessary to give effect to the intent of this Agreement.
SECTION 9.10. EMPLOYMENT AGREEMENTS. Each of Xxxxxxx, Xxxxxx and
Xxxxxxx Xxxxx ("Alico") shall have entered into an Employment Agreement with
Purchaser according to the terms as set forth in EXHIBITS 9.10(a), (b) AND (c),
respectively (which exhibits shall be attached to this Agreement prior to
Closing).
SECTION 9.11. HSR ACT NOTIFICATION. The applicable waiting period and
the extensions thereof shall have expired or have been terminated pursuant to
the Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of 1976, as amended (the "HSR
Act").
SECTION 9.12. ENVIRONMENTAL ASSESSMENT. Purchaser shall have conducted
a Phase I environmental assessment (which shall include a record and site
investigation and analysis), at the expense of Selling Group (such expense to be
reimbursed by Purchaser upon the Closing), and as reasonably warranted by the
results of such Phase I assessment, a Phase II assessment, of the Owned Real
Property and all leased real property and the results of such environmental
assessment shall be satisfactory to Purchaser in its sole discretion.
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Section 9.13. GOOD STANDING CERTIFICATES. Selling Group shall have
provided to Purchaser, with respect to each corporate member of Selling Group, a
good standing certificate issued by the Secretary of State of the state of
incorporation of each such member, and a tax good standing certificate or
franchise tax report showing all reports filed and all franchise taxes paid
issued by the taxing authority of the state in which each such member has its
principal business offices.
ARTICLE X
CONDITIONS PRECEDENT TO
SELLING GROUP'S OBLIGATION TO CLOSE
The obligations of Selling Group under this Agreement with respect to
the sale of the Assets shall be subject to the fulfillment on or prior to the
Closing of each of the following conditions, any of which may be waived in
writing by Selling Group:
SECTION 10.01. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE
OF THIS AGREEMENT. All of the representations and warranties by Purchaser
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing. Purchaser shall have complied with and performed in
all material respects all of the agreements and covenants required by this
Agreement to be performed and complied with by it on or prior to the Closing.
Selling Group shall have been furnished with a certificate of an officer of
Purchaser, dated as of the Closing, certifying to the fulfillment of the
foregoing conditions.
SECTION 10.02. DIRECTORS' RESOLUTIONS. Purchaser shall deliver to
Selling Group copies of the resolutions of its Board of Directors authorizing
the execution, delivery and performance of this Agreement and all instruments
and documents to be delivered in connection herewith and the transactions
contemplated hereby, duly certified by an authorized officer of Purchaser.
SECTION 10.03. INCUMBENCY CERTIFICATE. Selling Group shall have
received a certificate of a secretary of Purchaser, certifying as to the
genuineness of the signatures of representatives of Purchaser authorized to take
certain actions or execute any certificate, document, instrument or agreement to
be delivered pursuant to this Agreement, which incumbency certificate shall
include the true signatures of such representatives.
SECTION 10.04. OPINION OF COUNSEL TO PURCHASER. Selling Group shall
have been furnished with an opinion of Xxxxxxx & Xxxxxx, LLP, counsel to
Purchaser, dated as of the Closing and addressed to Selling Group in a form TO
BE MUTUALLY AGREED UPON.
SECTION 10.05. HSR ACT NOTIFICATION. The applicable waiting period and
the extensions thereof shall have expired or have been terminated pursuant to
the HSR Act.
SECTION 10.06. EMPLOYMENT AGREEMENTS. Each of Hoerner,Stucke, Alico and
Xxxxxxxxx shall have entered into an Employment Agreement with Purchaser
according to the terms as set
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forth on EXHIBITS 9.10(a), (b), (c) AND (d), respectively (which exhibits shall
be attached hereto prior to the Closing).
ARTICLE XI
CASUALTY LOSSES
In the event that there shall have been suffered between the date
hereof and Closing any casualty loss relating to the Assets that becomes known
to any member of Selling Group, Stockholders will promptly notify Purchaser in
such event. Selling Group shall, at its option, (i) repair, rebuild or replace
the portion of the Assets damaged, destroyed or lost prior to the Closing Date,
or (ii) assign to Purchaser at Closing all claims to insurance proceeds or other
rights of Selling Group against third parties arising from such casualty loss
(the "Claims"); provided, however, that if such insurance proceeds are or will
not be sufficient in Purchaser's reasonable judgment to cover the entire
casualty loss, then Selling Group shall pay the difference at Closing to the
extent any Claim is not assignable; provided further, however, that if the
amount payable by Selling Group would exceed $50,000, then Selling Group may
elect not to pay such difference at Closing, in which event Purchaser may
terminate this Agreement without further liability to either party. Such Claim
may be pursued by Purchaser, for its own account and benefit, in the name of
such Selling Group member.
ARTICLE XII
INDEMNIFICATION
SECTION 12.01. INDEMNIFICATION BY SELLING GROUP. (a) After the Closing,
Selling Group (except for Xxxxxxxxx who shall provide such indemnification only
for Losses incurred by Purchaser relating to PIP) agrees on a joint and several
basis to indemnify and to hold Purchaser, its shareholders, officers, directors,
employees and agents harmless from and against and in respect of any Losses by
Purchaser arising from or related to:
(i) Any liability not specifically and expressly assumed
by the Purchaser, including without limitation any Non-Assumed
Liability, whether or not known or asserted at or prior to Closing,
relating to or arising from the ownership, operation, control or sale
of the Business or any of the Assets or any other state of facts which
existed at or prior to Closing;
(ii) Any misrepresentation or breach of warranty in any
representation or warranty of Selling Group in this Agreement, the
Schedules or Exhibits hereto, the Closing Escrow Agreement, the Xxxx of
Sale, the Assumption Agreement or in any closing certificate delivered
by a Selling Group member to Purchaser pursuant to Article IX hereof;
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(iii) Any breach or non-fulfillment of any covenant or
agreement on the part of a Selling Group member under this Agreement to
be performed on or following the Closing Date;
(iv) All reasonable costs and expenses (including
reasonable attorneys' fees) incurred by Purchaser in connection with
any action, suit, proceeding, demand, assessment or judgment incident
to any of the matters Purchaser is indemnified against by Selling Group
in this Agreement;
(v) Unless reflected on the Balance Sheet of the
Operating Companies, all Losses related to any product liability claim
relating to product sold, shipped, or manufactured by Selling Group
prior to the Closing; and
(vi) Unless reflected on the Balance Sheet of the
Operating Companies, all Losses related to any product warranty claim
relating to product sold, shipped, or manufactured by Selling Group
prior to the Closing.
(b) In addition and subject to the terms of this Article
XII, Selling Group agrees on a joint and several basis to indemnify Purchaser
against and hold it harmless from any and all Losses which Purchaser may incur
by reason of the failure (if any) of Selling Group to comply with the bulk
transfers article of the Uniform Commercial Code of New York and North Carolina.
(c) The indemnification obligations of Selling Group as
provided herein shall only be with respect to indemnification claims made by
Purchaser within eighteen (18) months after the Closing; provided, however, the
indemnification obligations of Selling Group with respect to Losses incurred by
Purchaser relating to:
(i) fraud (which is intentional) or intentional
misrepresentation; or
(ii) a breach of Section 7.15 (Tax Matters)
shall survive until thirty (30) days after the expiration of the applicable
statute of limitations (including any extension thereof); the indemnification
obligations of Selling Group with respect to Losses incurred by Purchaser
relating to a breach of Section 7.12 shall survive for a period of ten (10)
years after the Closing Date; and the indemnification obligations of Selling
Group with respect to Losses incurred by Purchaser relating to a breach of
Section 7.01 shall survive without limitation.
(d) Notwithstanding any of the above, (i) Purchaser shall
only be entitled to payment or reimbursement by Selling Group of its Losses
pursuant to this Section 12.01 if the aggregate amount of all its Losses is at
least $75,000 (which shall not include any Purchase Price Adjustment made
pursuant to Section 5.04), in which event Purchaser shall be entitled to payment
of all Losses; and (ii) Selling Group shall not be required to make payments to
Purchaser pursuant to this Section 12.01 to the extent that the aggregate of all
amounts paid to
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Purchaser shall exceed the sum of $1,000,000, except that there
shall be no limitation on Selling Group's liability to Purchaser for Losses
incurred by Purchaser relating to intentional fraud or misrepresentation, or a
breach of Section 7.01 or 7.15 hereof and the limitation for amounts paid to
Purchaser with respect to Losses incurred arising out of a breach of Section
7.12 shall not exceed the sum of $2,000,000.
SECTION 12.02. INDEMNIFICATION BY PURCHASER. (a) After the Closing,
Purchaser agrees to indemnify and to hold Selling Group, and its directors,
officers, stockholders, employees, representatives and agents harmless from and
against and in respect of any Losses incurred by Selling Group from:
(i) All liabilities and obligations of Purchaser, and all
claims and demands made in respect thereof relating to or arising from,
Purchaser's ownership, operation or control of the Assets or the
Business after the Closing, including on account of the Assumed
Liabilities;
(ii) Any misrepresentation or breach of warranty in, or
omission from, any representation or warranty of Purchaser, in this
Agreement, the Schedules or Exhibits hereto, including the Closing
Escrow Agreement, the Assumption Agreement or in any closing
certificate delivered by Purchaser to Selling Group pursuant to Article
X hereof;
(iii) Any breach or non-fulfillment of any covenant or
agreement on the part of Purchaser under this Agreement to be performed
on or following the Closing Date; and
(iv) All costs and expenses (including reasonable
attorneys' fees) incurred by Selling Group in connection with any
action, suit, proceeding, demand, assessment or judgment incident to
any of the matters Selling Group is indemnified against by Purchaser in
this Agreement.
(b) The indemnification obligations of Purchaser as provided
herein shall only be with respect to indemnification claims made by Selling
Group within nine (9) months after the Closing.
SECTION 12.03. NOTICE OF CLAIMS; DEFENSE OF THIRD PARTY. A party
claiming indemnification under this Article XII (the "ASSERTING PARTY") must
notify (in writing, in reasonable detail and within a reasonable period of time
after the Asserting Party becomes aware of such claim) the party from which
indemnification is sought (the "DEFENDING PARTY") of the nature and basis of
such claim for indemnification. If such claim relates to a THIRD PARTY CLAIM,
the Defending Party and the Asserting Party shall decide which party will assume
and control the defense of the Third Party Claim at its own expense with counsel
selected by the Defending Party from and after such time as the Defending Party
unconditionally agrees in writing that the Defending Party shall be obligated
under the terms of its indemnity hereunder in connection with such Third Party
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Claim Such agreement shall not be deemed an admission of liability as against
any such third party.
If the Defending Party does agree in writing or assume the defense as
set forth above, the Third Party Claim pursuant to this Section 12.03, the
Asserting Party shall have the right (i) to control the defense thereof and
(ii), if the Asserting Party shall have notified the Defending Party of the
Asserting Party's intention to negotiate a settlement of the Third Party Claim
(at the Defending Party's expense to the extent the matter is determined to be
subject to this indemnification), which notice shall include the material terms
of any proposed settlement in reasonable detail, to settle the Third Party Claim
(at the Defending Party's expense to the extent the matter is determined to be
subject to indemnification hereunder) on terms not materially inconsistent with
those set forth in such notice, unless the Defending Party shall have notified
the Asserting Party in writing of the Defending Party's election to assume
liability for and the defense of the Third Party Claim pursuant to this Section
12.03 within ten days after receipt of such notice, and the Defending Party
promptly thereafter shall have taken appropriate action to implement such
defense. The Asserting Party shall not be entitled to settle any such Third
Party Claim pursuant to the preceding sentence unless such settlement includes
an unconditional release of the Defending Party by the Third party claimant on
account thereof, PROVIDED that such requirement shall be deemed waived to the
extent that the Defending Party does not undertake to provide and promptly
execute and, concurrently with delivery of any such release, deliver a
corresponding release of the third party claimant with respect to such Third
Party Claim. The Asserting Party and the Defending Party shall use all
reasonable efforts to cooperate fully with respect to the defense and settlement
of any Third Party Claim covered by this Article XII.
SECTION 12.04. CLOSING ESCROW AGREEMENT. The obligation of Selling
Group to indemnify Purchaser for Losses arising from or related to the matters
described in Section 12.01 shall be secured by the amounts held pursuant to the
Closing Escrow Agreement, the form of which is set forth in EXHIBIT 5.02.
ARTICLE XIII
CONFIDENTIALITY, PRESS RELEASES
SECTION 13.01. CONFIDENTIALITY. Each party shall treat the confidential
information of the other with the same degree of confidentiality and security as
it does its own confidential information.
SECTION 13.02. PRESS RELEASES. No press release or public disclosure,
either written or oral, of the existence or terms of this Agreement shall be
made by a Selling Group member without the prior written consent of Purchaser.
To the extent consistent with federal or state securities laws, Purchaser shall
provide Selling Group with a draft of its proposed Press Release concerning any
aspect of this Agreement and the transaction contemplated hereby for comment by
Selling Group.
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SECTION 13.03. REQUIRED DISCLOSURES. This Article XIII shall not be
construed to prohibit any party from making any disclosures to any governmental
authority that it is required to make by law or from filing this Agreement with,
or disclosing the terms of this Agreement to, any institutional lender to such
party, or to prohibit a Selling Group member, Purchaser or any of their
affiliates from disclosing to its investors, partners, accountants, auditors,
attorneys, parent company and broker/dealers such terms of this transaction as
are customarily disclosed to them in connection with the sale or acquisition of
a business; PROVIDED, HOWEVER, that any such party shall be informed of the
confidential nature of such information and shall agree to keep such information
confidential; and PROVIDED, HOWEVER, that each party shall provide to the other
reasonable advance copies of any public release except where the provision of
such advance notice is not permissible.
ARTICLE XIV
BROKERS' FEES
Each party represents and warrants to the other that it shall be solely
responsible for the payment of any fee or commission due to any broker or finder
it has engaged with respect to this transaction and the other party hereto shall
be indemnified for any liability with respect to such payment pursuant to
Article XII of this Agreement.
ARTICLE XV
COVENANTS OF SELLING GROUP
SECTION 15.01. CONDUCT OF BUSINESS. From the date hereof to the Closing
Date, except as expressly permitted or required by this Agreement or as
otherwise consented to by the Purchaser in writing, each Selling Group member
shall:
(a) carry on the Business in, and only in, the ordinary
course, in substantially the same manner as heretofore conducted, and use all
reasonable efforts to preserve intact its present business organization,
maintain its properties in good operating condition and repair, keep available
the services of its present officers and significant employees, and preserve its
relationship with customers, suppliers and others having business dealings with
it, to the end that its goodwill and going business shall be in all material
respects unimpaired following the Closing;
(b) pay accounts payable and other obligations of the Business
when they become due and payable in the ordinary course of business consistent
with prior practice;
(c) perform in all material respects all of its obligations
under all Assumed Contracts and other agreements and instruments relating to or
affecting the Business or the Assets, and comply in all material respects with
all laws applicable to it, the Assets or the Business;
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(d) not enter into or assume any material agreement, contract
or instrument relating to the Business, or enter into or permit any material
amendment, supplement, waiver or other modification in respect thereof outside
of the normal course of business;
(e) except as set forth on SCHEDULE 15.01(e), not grant (or
commit to grant) any increase in the compensation (including incentive or bonus
compensation) of any employee employed in the operation of the Business or
institute, adopt or amend (or commit to institute, adopt or amend) any
compensation or benefit plan, policy, program or arrangement or collective
bargaining agreement applicable to any such employee. (Set forth on Schedule
15.01(e) (to be provided no later than Closing) is a comparison of Compensation
paid to each employee of Selling Group as of August 31, 1998 with such
compensation as of February 28, 1999); and
(f) except as set forth on Schedule 15.01(f), not take any
action or omit to take any action, which action or omission would result in a
breach of any of the representations and warranties set forth in Section
7.16(c);
(g) expect as set forth on Schedule 15.01(g), make no
dividends or distributions from PFG to Xxxxxxx, Xxxxxx or any entity owned or
controlled by Xxxxxxx or Xxxxxx except for normal and customary salary payments
in the ordinary course of business, or any dividends necessary to make required
income tax payments of Xxxxxxx or Xxxxxx because of their position as
stockholders of "S" Corporations: PFG and SCHAS. For any such dividends or
distributions paid to Xxxxxxx and/or Xxxxxx for tax payments, a certification
shall be provided to Purchaser by Xxxxxxxx & Company that such dividend was paid
only for the purpose of such tax payment. To the extent that any other such
withdrawals, dividends or disbursements are made, the Selling Group shall
replenish the Net Worth or a deduction to the Purchase Price of such amount
shall be made.
SECTION 15.02. NO SOLICITATION. During the period beginning upon
execution of this Agreement up to and including the Closing, no Selling Group
member or any Person acting on its or his behalf shall (i) solicit or encourage
any inquiries or proposals for, or enter into any discussions with respect to,
the acquisition of any properties and assets held for use in connection with,
necessary for the conduct of, or otherwise material to, the Business or (ii)
furnish or cause to be furnished any non-public information concerning the
Business to any Person (other than Purchaser and its agents and
representatives), other than in the ordinary course of business or pursuant to
law and after prior written notice to Purchaser. No Selling Group member shall
sell, transfer or otherwise dispose of, grant any option or proxy to any Person
with respect to, create any Lien upon, or transfer any interest in, any Asset,
other than in the ordinary course of business and consistent with this
Agreement.
SECTION 15.03. ACCESS AND INFORMATION.
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(a) So long as this Agreement remains in effect, each Selling Group
member will give Purchaser and its Advisors all reasonable access during normal
business hours to, and furnish them with all documents, records, work papers and
information with respect to, all of such Person's properties, assets, books,
contracts, commitments, reports and records relating to the Business. In
addition, each Selling Group member will permit Purchaser and its Advisors
reasonable access to such personnel of Selling Group during normal business
hours as may be necessary or useful to Purchaser, provided that access shall
have been approved by each Selling Group member, in its review of the
properties, assets and business affairs of the Business and the above-mentioned
documents, records and information. Selling Group will keep Purchaser generally
informed as to the affairs of the Business.
(b) Selling Group will cause each Selling Group member to transfer to
Purchaser at the Closing all books and records relating to the Business
although, to the extent necessary for any Selling Group member to respond to any
legal inquiry or deal with any tax matter, Purchaser shall, on and after the
Closing, allow such Selling Group member reasonable access to the necessary
books and records for such purpose, which right shall survive the Closing for a
period of seven years.
SECTION 15.04. FINANCIAL STATEMENTS. Until the Closing, on or before
the 21st day of each month, each Selling Group member shall deliver to Purchaser
monthly trial balances of the Business (without adjustment) as at and for the
monthly period ending the last day of the preceding month (the "SUBSEQUENT
MONTHLY TRIAL BALANCES"), which shall include a balance sheet and statement of
income. At the time that the Subsequent Monthly Trial Balances are delivered to
Purchaser, each Selling Group member shall by such delivery be deemed to have
made the representations and warranties to the Purchaser with respect to such
Subsequent Monthly Trial Balances set forth in Section 7.16.
SECTION 15.05. USE OF BUSINESS NAME. Other than in connection with
their employment with Purchaser, after the Closing, no Selling Group member
will, directly or indirectly, use or do business, or assist any third party in
using or doing business, under the names and marks "Perfect Fit Glove", "SCHAS
Circular Industries", "X-Pert Industrial Products", "Perfect Industrial
Products", "Yadkin Leasing Company", (or any other name confusingly similar to
such name and xxxx).
Section 15.06. CHANGE OF SELLING GROUP NAMES. Immediately after the
Closing, Selling Group shall change the name of PFG, SCHAS, X-Pert, PIP and
Yadkin to MERIAWNY, INC., MATTWNY, INC., JOEYWNY, INC., ANDREAWNY, INC. and
MICHAELWNY, INC., respectively.
SECTION 15.07. BANK ACCOUNTS. At least two weeks prior to the Closing
each Selling Group member shall deliver to Purchaser a list setting forth all
banks and other financial institutions with which Selling Group maintains an
account or a safe deposit box, showing the account numbers of all such accounts
and the names of the persons authorized as signatories thereon or to act or deal
in connection therewith. Selling Group shall cooperate with Purchaser
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and shall execute all necessary documentation to effect fully any changes
desired, as of the Closing, by Purchaser in the persons authorized as
signatories thereon or to act or deal in connection therewith.
SECTION 15.08. PAYMENT TO ALICO. At the Closing, Selling Group shall
make a payment to Alico of $800,000 (less applicable withholdings) in connection
with his execution of an employment agreement with Purchaser.
SECTION 15.09. POST-CLOSING SCHEDULES. Selling Group hereby agrees to
deliver the Schedules called for in Sections 7.16(a)(iii) and (iv) on a timely
basis and Selling Group hereby agrees to provide a representation at the time of
such delivery as to the financial statements delivered pursuant to Section
7.16(a)(iii) that is comparable to the representations made by Selling Group in
Section 7.16(b) with respect to the financial statements delivered pursuant to
Section 7.16(a)(i) and (ii).
ARTICLE XVI
MISCELLANEOUS
SECTION 16.01. ADDITIONAL INSTRUMENTS OF TRANSFER. (a) From time to
time after the Closing, each party shall, if requested by another party, make,
execute and deliver such additional assignments, bills of sale, deeds and other
instruments, as may be reasonably necessary or proper to carry out the specific
provisions of this Agreement, including transfer to Purchaser of all of Selling
Group's right, title and interest in and to the Assets. Such efforts and
assistance shall be at the cost of the requesting party.
(b) Anything in this Agreement to the contrary
notwithstanding, Selling Group is not obligated to sell, assign, transfer or
convey to Purchaser any of its Interests without first obtaining all necessary
approvals, consents or waivers. To the extent any of the approvals, consents or
waivers required pursuant to Section 9.04 have not been obtained by Selling
Group as of the Closing and Purchaser elects to proceed with the Closing,
Selling Group shall, for the remaining term of such Interest, use its
commercially reasonable efforts to (i) obtain the consent of any such third
party; (ii) cooperate with Purchaser in any reasonable and lawful arrangements
designed to provide the benefits (including, without limitation, the payment to
Purchaser of any monies received by a Selling Group member in connection
therewith) of such Interest to Purchaser so long as Purchaser performs all
obligations with respect to the Interest (and the payment of all expenses in
connection therewith); and (iii) enforce, at the request of Purchaser and at the
expense and for the account of Purchaser, any rights of Selling Group arising
from such Interest against such issuer thereof or the other party or parties
thereto (including the right to elect to terminate any such Interest in
accordance with the terms thereof upon the request of Purchaser); PROVIDED,
HOWEVER, that neither Purchaser nor Selling Group shall be obligated to pay any
consideration or other sums therefor (except for filing fees and other ordinary
administrative charges and except as set forth above) to the third party, or to
commence any proceedings against the third party, from whom such approval,
consent or waiver is requested.
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SECTION 16.02. NOTICES. All notices and other communications required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given if delivered, sent by recognized overnight delivery service
or registered or certified mail, return receipt requested, postage prepaid, to
the following addresses:
(i) If to Purchaser:
Bacou USA Safety, Inc.
00 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Major, Esq.
with a required copy to:
Xxxxxxx & Xxxxxx, LLP
0000 XxxxXxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxxx X.X. Xxxxx, III Esq.
(ii) If to Selling Group Member:
Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxx Xxxx, XX 00000
and
Xxxxx X. Xxxxxx
00 Xxxx Xxxx Xxxx
Xxxx Xxxxxx, XX 00000
with a required copy to:
Xxxxxxxx Xxxxx Xxxxxxxxx Xxxxxx & Xxxxx LLP
0000 Xxxxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Notices delivered personally shall be effective upon delivery against
receipt. Notices delivered by overnight delivery service shall be effective when
received. Notices delivered by registered or certified mail shall be effective
on the date set forth on the receipt of registered or certified mail, or 72
hours after mailing, whichever is earlier.
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SECTION 16.03. EXPENSES. Each party shall bear its own expenses and
costs incurred in connection with the preparation of this Agreement and the
consummation of the transactions contemplated hereby, except that Purchaser has
agreed to assume and pay on the Closing Date up to $75,000 in reasonable
professional fees incurred by Selling Group in connection with such transactions
as are set forth on the Closing Date Financial Statements or as set forth on
Schedule 3.01. Purchaser shall pay Xxxxxxxx & Company directly for the
reasonable cost of preparing the financial statements of Selling Group pursuant
to Section 7.16(iii) and (iv).
SECTION 16.04. TRANSFER TAXES. Selling Group shall be liable to pay the
transfer taxes imposed in connection with sale of the Owned Real Property to
Purchaser hereunder. Purchaser shall bear all use, sales and transfer taxes, if
any, imposed in connection with the sale and delivery of the Assets (other than
the Owned Real Property) acquired by Purchaser under this Agreement.
Notwithstanding anything else to the contrary set forth in this Section 16.04,
Purchaser shall in no event be responsible in any manner for the payment of any
Taxes on any income or gain which any Selling Group member may realize as a
result of the sale of the Assets or otherwise related to the transactions
contemplated by this Agreement.
SECTION 16.05. COLLECTION PROCEDURES. From and after the Closing,
Purchaser shall have the right and authority, at its expense, to collect for its
account all items to which it is entitled as provided in this Agreement and to
endorse with the name of the appropriate Selling Group member any checks or
drafts received on account of any such items.
SECTION 16.06. SPECIFIC PERFORMANCE. The parties recognize and
acknowledge that in the event a Selling Group member shall fail to perform any
of its material obligations under the terms of this Agreement, money damages
alone will not be adequate to compensate Purchaser. The parties, therefore,
agree and acknowledge that in the event a Selling Group member fails to perform
such obligation under this Agreement prior to Closing, Purchaser shall be
entitled, in addition to any action for monetary damages and in addition to any
other rights and remedies on account of such failure, to specific performance of
the terms of this Agreement and of the covenants and obligations hereunder.
SECTION 16.07. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without
application of principles of conflicts of law).
SECTION 16.08. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (by merger or other operation of law or otherwise) without the
prior written consent of the other party, which consent will not be unreasonably
withheld, except that Purchaser shall have the right to assign its rights,
interests and obligations under this Agreement after the Closing to any
affiliate thereof or to any institutional lender, provided that Purchaser shall
remain liable for its obligations hereunder.
SECTION 16.09. SUCCESSORS AND ASSIGNS. All agreements made and entered
into in connection with this transaction shall be binding upon and inure to the
benefit of the parties hereto, their successors and permitted assigns.
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SECTION 16.10. AMENDMENTS; WAIVERS. No alteration, modification or
change of this Agreement shall be valid except by an agreement in writing
executed by the parties hereto. No failure or delay by any party hereto in
exercising any right, power or privilege hereunder (and no course of dealing
between or among any of the parties) shall operate as a waiver of any such
right, power or privilege. No waiver of any default on any one occasion shall
constitute a waiver of any subsequent or other default. No single or partial
exercise of any such right, power or privilege shall preclude the further or
full exercise thereof.
SECTION 16.11. ENTIRE AGREEMENT. This Agreement merges all previous
negotiations and agreements between the parties hereto, either verbal or
written, and constitutes the entire agreement and understanding between the
parties with respect to the subject matter of this Agreement.
SECTION 16.12. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which when so executed shall be an original, but all
of which together shall constitute one agreement. Facsimile signatures shall be
deemed original signatures.
SECTION 16.13. SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law, but only
as long as the continued validity, legality and enforceability of such provision
or application does not materially (a) alter the terms of this Agreement, (b)
diminish the benefits of this Agreement or (c) increase the burdens of this
Agreement, for any person.
SECTION 16.14. SECTION HEADINGS. The Section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
SECTION 16.15. INTERPRETATION. As both parties have participated in the
drafting of this Agreement, any ambiguity shall not be construed against either
party as the drafter.
SECTION 16.16. FURTHER ASSURANCES. (a) For a period of twelve (12)
months after Closing, Selling Group agrees to provide to Purchaser from time to
time any information that Selling Group possesses with respect to the operation
of the Business and Assets prior to the Closing which the Purchaser reasonably
requests in the future in connection with the Purchaser's financing efforts now
or in the future.
(b) With respect to the 401(k) Plan and the Profit Sharing Plans, it is
Purchaser's intention to elect, within ninety (90) days after Closing, after
thorough review of each such Plans, and after consultation with Selling Group,
and subject to legal compliance, either to cause the Operating Companies to
terminate each Plan and distribute the assets thereof to the Participants
therein, or to allow the Participants to rollover their assets in such Plan into
Purchaser's retirement plan.
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(c) Upon the Closing, all employees of the Operating Companies shall be
offered employment with Purchaser in positions comparable to their current
positions as employees of the applicable division or subsidiary of Purchaser.
Except for Messrs. Hoerner, Stucke, Xxxxxxxxx and Alico, during the terms of
their employment contracts, all such employees will be employees at will of
Purchaser. The employees of the Operating Companies who elect to accept
Purchaser's offer of employment will retain their years of seniority with the
Operating Companies in their employment with Purchaser for purposes of vacation,
health benefits and retirement plan eligibility and vesting. Notwithstanding the
above, Purchaser makes no commitment of future employment to any employee of the
Operating Companies nor is Purchaser making any commitment that it will not make
future changes in job assignments, employment structure or compensation. Within
12 months after Closing, Purchaser shall have completed a review of Selling
Group's benefit and welfare plans and shall convert such plans to Purchaser's
plans. In such process, Purchaser shall make its best efforts to retain the
general level of benefits of Selling Group employees.
SECTION 16.17. THIRD PARTIES. Nothing herein, expressed or implied, is
intended to or shall confer on any person other than the parties hereto any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 16.18. MEDIATION. In the event of any dispute between the
parties hereto prior to any such party initiating Arbitration proceedings
pursuant to Section 16.19, the parties shall endeavor to mediate such dispute
for a period of 60 days. To assist in such mediation, the parties may elect to
retain the services of a professional mediator experienced in Alternative
Dispute Resolution among commercial parties, the costs of which shall be borne
equally by the parties to the dispute. If, at the conclusion of such mediation
period (as extended by mutual agreement of the parties), the dispute has not
been resolved to the mutual satisfaction of the parties, then any party may
initiate Arbitration proceedings, as appropriate.
SECTION 16.19. ARBITRATION. In the event that Mediation proceedings
shall not have resulted in the settlement of disputes among the parties, the
parties shall initiate Arbitration proceedings. The parties shall select one (1)
arbitrator in accordance with the laws of New York and the rules, regulations
and procedures of the American Arbitration Association (the "AAA") except with
respect to the selection of the arbitrator which shall be as provided in this
Section 16.19. The Purchaser and the Selling Group agree to appoint the
arbitrator within thirty (30) days of receipt of notice from one party to the
other parties setting forth a description of the claim and dispute and
requesting that the arbitrator be appointed. If the parties fail to select an
arbitrator within such thirty-day period, any party hereto may instruct the AAA
to appoint an arbitrator. Judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof. The site of the arbitration
shall be New York, New York. The arbitrators shall award reimbursement of
attorneys' fees and other costs of arbitration to the prevailing party, in such
manner as the arbitrators shall deem appropriate. In addition, the losing party
shall reimburse the prevailing party for attorneys' fees and disbursements and
court costs incurred by the prevailing party in successfully seeking any
preliminary equitable relief or judicially enforcing any arbitration award.
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SECTION 16.20. TERMINATION. At any time prior to the Closing, this
Agreement may be terminated (a) by the written consent of Selling Group and
Purchaser, (b) by Purchaser if there has been a material misrepresentation,
breach of warranty or breach of covenant by any Selling Group member in its
representations, warranties and covenants set forth herein, (c) by all Selling
Group members if there has been a material misrepresentation, breach of warranty
or breach of covenant by Purchaser in its representations, warranties and
covenants set forth herein, (d) by Purchaser if the conditions stated in Article
IX have not been satisfied at or prior to the Closing Date or (e) by Selling
Group if the conditions stated in Article X have not been satisfied at or prior
to the Closing Date.
IN WITNESS WHEREOF, each of the parties hereto has caused this Asset
Purchase Agreement to be executed by its duly authorized representative as of
the day and year first above written.
SELLING GROUP:
PERFECT FIT GLOVE CO., INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxx, President
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Xxxxx X. Xxxxxx, Vice President
SCHAS CIRCULAR INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxx, President
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Xxxxx X. Xxxxxx, Vice President
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X-PERT INDUSTRIAL PRODUCTS LIMITED
By: /s/ Xxxxx x Xxxxxx
---------------------------------------
Xxxxx X. Xxxxxx, President
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxx, Vice President
PERFECT INDUSTRIAL PRODUCTS, INC.
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------------
Xxxxxx Xxxxxxxxx, President and Secretary
YADKIN LEASING COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
President
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Vice President
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STOCKHOLDERS:
/s/ Xxxxx X. Xxxxxx
-------------------------------------------
Xxxxx X. Xxxxxx, Individually
/s/ Xxxxxx X. Xxxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxxx, Individually
/s/ Xxxxxx Xxxxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxxxx, Individually
(with respect to his interest in PIP only)
PURCHASER:
BACOU USA SAFETY, INC.
By: /s/ Xxxxxx Xxxxxx
---------------------------------------
Xxxxxx Xxxxxx, Chairman, President and
Chief Executive Officer
By: /s/ Xxxxxx X. Xxxx
---------------------------------------
Xxxxxx X. Xxxx, Vice Chairman,
Treasurer and Secretary
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DEFINED TERMS
"ADVISORS" means the lenders, investors, accountants, counsel, consultants,
employees and agents of each party to this Agreement.
"AUTHORIZATIONS" shall include all licenses, consents, permits, approvals and
authorizations of public and governmental bodies.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. ss. 9601 et seq.).
"CODE" means the Internal Revenue Code of 1986, as amended.
"EBITDA" means the earnings of the Operating Companies before adjustments for
interest, taxes, depreciation and amortization.
"ENVIRONMENTAL LAWS" means each of the following statutes and all regulations
promulgated thereunder as well as any and all comparable State statutes and
regulations in the form in which all such statutes and regulations exist on the
date that this Agreement is executed (as updated to the Closing Date): CERCLA;
the Federal Water Pollution Control Act, 33 U.S.C. ss. 1251, et seq.; the Clean
Air Act, 42 U.S.C. ss. 7401 et seq.; RCRA; the Safe Drinking Water Act, 42
U.S.C. ss. 3300(f), et seq.; and the Toxic Substances Control Act, 15 U.S.C. ss.
2601, et seq.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"GOVERNMENT DOCUMENT" means any governmental approval, instrument, contract,
lease, permit or other agreement or arrangement.
"HAZARDOUS SUBSTANCE" means any substance which, as of the date of this
Agreement, is listed as hazardous or toxic in the regulations implementing
CERCLA or RCRA or listed as a hazardous substance under any applicable state
environmental laws, or any substance which has been determined by regulation,
ruling or otherwise by any agency or court to be a hazardous or toxic substance
regulated under federal or state law, and shall include petroleum and petroleum
products.
"INTELLECTUAL PROPERTY" means all of the following, along with all related
income, royalties, damages and payments, if any, due or payable as of the
Closing Date or thereafter: inventions, trademarks, service marks, trade dress,
trade names, patents, logos and registrations and applications for a
registration thereof together with all of the goodwill associated therewith,
copyrights and copyrightable works and registrations and applications for the
registration thereof, computer software, data, data bases, documentation
thereof, trade secrets and other confidential
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information, other intellectual property rights and intangible embodiments
thereof (in whatever form or medium); together with all books, records, drawings
and other indicia.
"KNOWLEDGE" with respect to the Selling Group means the actual knowledge of any
officer or managerial employee regarding that subject matter which is the usual
and customary responsibility of such person, as the case may be, in each case
after due inquiry and investigation.
"LIENS" means any and all security interests, liens, pledges, charges, rights of
third parties and encumbrances of every kind.
"LOSSES" means any losses, damages, costs, expenses (including costs of
investigations and reasonable attorney fees), suits, demands, judgments and
diminutions in value suffered or incurred by any Indemnified Party. All Losses
shall be computed net of the Present Value (at Purchaser's then marginal
borrowing cost) of the actual income tax effect (if any) resulting therefrom to
Purchaser and of any insurance coverage with respect thereto.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, any effect that is,
or series of related effects that are, in the aggregate, materially adverse to
the business, assets, properties, condition (financial or otherwise) or
prospects of such Person.
"NET WORTH" means net worth of Selling Group as determined in accordance with
GAAP as consistently applied with past practices, less the value of any Excluded
Asset and any Non-Assumed Liability.
"OWNED REAL PROPERTY" means all real property owned by Selling Group on or prior
to the date hereof which is set forth on SCHEDULE 2.01.
"PERMITTED LIENS" means (i) any Lien for taxes and assessments not yet past due
or otherwise being contested in good faith and for which appropriate reserves
have been established and reflected on the Closing Date Balance Sheet (as such
term is defined in Section 5.04), (ii) any Lien affecting real property that
does not interfere with the use by Selling Group of the property subject thereto
or affected thereby (including any easements, rights of way, restrictions,
installations of public utilities, minor title imperfections and restrictions,
reservations in land patents, zoning ordinances or other similar Liens), and
(iii) as to leaseholds, interests of the lessors thereof and Liens affecting the
interests of such lessors.
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"PERSON" means any individual, partnership, corporation, person or entity.
"RCRA" means the Resource Conservation and Recovery Act of 1976, as amended (42
U.S.C. ss. 6901, et seq.).
"REAL PROPERTY LAWS" means all applicable laws,, zoning or use ordinances,
rules, regulations and legal requirements.
TAX" or "TAXES" means all taxes, charges, fees, levies, imposts and other
assessments including all income, sales, use, goods and services, value added,
capital, capital gains, alternative net worth, transfer, profits, withholding,
payroll, employer health, excise, real property and personal property taxes, and
any other taxes, customs duties, stamp duties, fees, assessments or similar
charges in the nature of a tax, together with any interest, fines and penalties
imposed by any governmental authority (including federal, state, provincial,
municipal and foreign governmental authorities), and whether disputed or not.
"THIRD PARTY CLAIM" means a claim, suit, litigation or other action by a third
party against the Asserting Party or any fixed or contingent liability to a
third party.
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