X.X. XXXXXXXX CO. INC.
XXXXXXX XXXXXXXX
(SELLER)
TO
WG APPAREL INC.
(BUYER)
ASSET PURCHASE AGREEMENT
AGREEMENT made October _ , 1996 between X.X. XXXXXXXX CO., INC. ("ECM"), a
Massachusetts corporation having an address at 00 Xxxxxx Xxxxxx, Xxxxxxxxx, XX
00000, Attn: Xxxxxxx Xxxxxxxx, President, XXXXXXX XXXXXXXX ("Xx. Xxxxxxxx"), an
individual having an address at (ECM and Xx. Xxxxxxxx, sometimes collectively,
the "Seller") and WG APPAREL, INC., a Delaware Corporation having an address at
000 Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000, Attn: Xxxx X. Xxxxxxx, Chairman
("Buyer").
RECITALS
WHEREAS, ECM operates a business manufacturing and selling abrasive cords
and tapes (the "Business"); and
WHEREAS, Xx. Xxxxxxxx owns all of the outstanding stock of ECM;
WHEREAS, Xx. Xxxxxxxx owns the real property commonly known as 00
Xxxxxx Xxxxxx, Xxxxxxxxx, XX (the "Real Property"), on which ECM operates the
Business, which Real Property is more particularly described on Exhibit A
hereto; and
WHEREAS, ECM desires to sell and Buyer desires to purchase certain of the
assets constituting the Business, and Xx. Xxxxxxxx desires to sell and Buyer
desires to purchase the Real Property.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises and agreements contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Sale of Business.
(A) ECM shall sell, assign, and transfer to Buyer, and Buyer shall
purchase, on the Closing Date (hereinafter defined), all of ECM's Business
Assets (hereinafter defined) and properties which are generally described in
ECM's June 30, 1996 Financial Statements prepared by Xxxxxxx X. Xxxxxxxx, CPA
with accompanying letter of Xx. Xxxxxxxx dated August 15, 1996 (the "Financial
Statements").
(B) The Business Assets shall consist of goodwill, notes, leasehold
improvements, security interests, inventories, raw materials, machinery,
equipment, furniture and fixtures, one (1) forklift, business records,
manufacturing processes, trademarks, trade names including without limitation
(Seller's corporate name, and the names "X.X. Xxxxxxxx", "X.X. Xxxxxxxx Co."),
intellectual property processes, tangible personal property which ECM owns or to
which it is entitled.
(C) The Business Assets shall specifically exclude accounts receivable,
cash, certificates of deposit, personal records and effects, corporate
governance records, autos, US Treasury Notes, office equipment and supplies at
Xx. Xxxxxxxx'x homes located in Massachusetts, Florida and Nova Scotia, accrued
interest income and brokerage accounts.
2. Sale of Real Property. Xx. Xxxxxxxx shall sell, assign and transfer to
Buyer, and Buyer shall purchase the Real Property, consisting of 1.32 acres and
more particularly described on Exhibit _, on the Closing Date.
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3. Purchase Price for business and Real Property.
(A) Buyer shall pay to ECM at Closing (hereinafter defined) in cash by
wire transfer of immediately available funds, the purchase price for the
Business Assets and the Real Property of Three Million ($3,000,000) Dollars.
(B) Buyer shall assume as of the Closing Date, ECM's Business liabilities
and obligations set forth on Schedule 3(B) attached hereto.
(C) The purchase price shall be allocated among the Business Assets and
the Real Property in the manner set forth in Exhibit B. The allocation shall be
binding on the parties hereto for all purposes, including federal income tax
purposes, and the parties agree not to take any contrary position in respect of
the price of any of the Business Assets or Real Property in any tax return, tax
proceeding, tax audit, or any documents filed by any of the parties with
federal, state or local authorities.
4. Inventory. ECM and Buyer agree to take a joint inventory of all of the
Business Assets, including without limitation physical assets, financial assets,
accounts payable, deposits, raw materials and spools of abrasive cords and tapes
(the "Inventory") by October 31, 1996 (the "Inventory Date") in a commercially
reasonable manner to be agreed upon by ECM and Buyer.
5. Closing. The closing of title as to the transfer of the Real Property
and Business Assets (the "Closing") shall occur fifteen (15) days after the
Inventory Date. However, Seller acknowledges that Buyer may adjourn the Closing
Date up to December 31, 1996, if such adjournment is necessary in connection
with Buyer's Financing (as said term is hereinafter defined). Buyer shall
provide Seller with two (2) weeks written notice of the Closing Date. The
Closing shall take place at the offices of Xxxxxxxx, Xxxxxxx & Xxxxxxx, 000
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
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6. Access. From the date of this Agreement up to the Closing, Seller shall
give Buyer and its representatives reasonable access during normal business
hours to the Real Property and the Business Assets, other than its intellectual
property processes. During such period Seller shall furnish Buyer with all
information which Buyer may reasonably request. After the Closing Buyer shall
give Seller sufficient access to business records for purposes of preparing its
tax returns.
7. Seller's or Xx. Xxxxxxxx'x Representations and Warranties.
(A) Seller represents and warrants to Buyer as follows:
(a) DULY organized corporations. ECM is a corporation duly
organized, validly existing, and in good standing under the laws of the
Commonwealth of Massachusetts, and has its sole place of business at 00 Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx.
(b) Financial statements. The Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis and are true, complete, and correct, and accurately reflect
Seller's financial condition at the respective dates shown.
(c) Inventory. The inventory shown on the Financial Statements, is
shown at the lower of cost or market. The inventory to be conducted on the
Inventory Date is to be shown in the same manner. As of the Closing Date,
inventory will consist of readily salable goods and merchandise, but will not
include items below standard quality or in disrepair, nonsalable, or products
not in conformity with Seller's existing standards.
(d) Litigation. No suits, governmental proceedings or litigation are
pending, or to Seller's knowledge threatened against Seller or their properties
which might materially adversely affect Seller's financial condition, business,
or property or the Real Property.
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(e) Employment contract. There are no written contracts of
employment between Seller and any officer or other employee.
(f) Corporate books and records. Seller's operational business
records which have been provided to Buyer for inspection are true, correct, and
complete, and contain no material omission with respect to Seller's business,
operations, or status.
(g) Accounts. ECM shall, from the date of this Agreement to the
Closing Date, make payment on all accounts payable in the ordinary course of
business and in accordance with its past customs and practices and without any
delay, acceleration or discounting of same other than as is consistent with
existing ECM practices.
(h) No Change. The business of ECU has not materially changed since
June 30, 1996. If any of the foregoing representations are materially untrue as
of the Closing Date, ECU shall notify Buyer in writing.
(B) Buyer's representations and warranties. Buyer represents and warrants
as follows:
(a) DULY organized corporation. It is a corporation duly organized,
validly existing and in good standing under the laws of Delaware.
(b) Authority. Buyer has all necessary corporate authority to
perform its obligations hereunder.
8. Transfer of Real Property.
Xx. Xxxxxxxx shall convey to Buyer good and marketable title to the Real
Property at Closing. Such title is to be insurable by a recognized title
insurance company licensed to do business in the Commonwealth of Massachusetts
at its usual insurance premium rates. Buyer
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shall have conducted, at its own cost and expense, a title search with respect
to the Real Property and shall be responsible, at its sole cost and expense, for
obtaining said title insurance.
(a) There shall be adjusted between the parties and apportioned as
of the date of Closing, unpaid or prepaid real estate taxes with respect to the
Real Property, water and sewer rents, utility charges, and all other charges
constituting a lien or encumbrance upon the Real Property.
(b) If the Real Property is affected by an assessment for municipal
improvements as of Closing, all unpaid installments of such assessment shall be
paid and satisfied by Seller.
9. Conditions to Buyer's obligations. Buyer's obligations under this
Agreement are, at its option, subject to the following conditions:
(a) Representations and warranties. Seller's representations and
warranties contained in this Agreement, shall be true and correct as of the
Closing in all material respects.
(b) Seller's Performance. Seller has performed and complied with all
of its agreements and conditions under this Agreement.
(c) Casualty. There has not been from the date hereof to the Closing
Date any damage, destruction, or loss (regardless of whether covered by
insurance) exceeding $5,000, or any other event materially and adversely
affecting the Business.
(d) Opinion Letter. Buyer has received an opinion of Xxxxxx
Xxxxxxxxx, Esq., co-counsel for Seller, dated as of the Closing date, in form
and substance satisfactory to Buyer, to the effect that: (i) Seller's corporate
existence is valid and in good standing in; and (ii) all corporate and other
proceedings required to be taken by or on the part of Seller to authorize it
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to carry out this Agreement and to issue and deliver the instruments referred to
herein have been duly and properly taken.
(e) Buyer's Financing. The Buyer shall have received at or prior to
the Closing immediately available financing sufficient -to consummate the
purchase of the Business and Real Property, such financing to be upon terms and
conditions reasonably satisfactory to Buyer ("Buyer's Financing").
(f) Inventory Value. The inventory value as of the Inventory Date
shall be no less than $320,000. In the event the inventory value is less than
$320,000, the purchase price shall be adjusted dollar for dollar by the amount
of such shortfall, but in no event shall the inventory value be less than
$300,000 or the purchase price adjusted more than $20,000.
(g) No chances. Until the Closing date, Seller will not, except with
Buyer's prior written consent, conduct its business except in the regular and
ordinary course.
(h) Change of Corporate Name. Seller shall as of the Closing Date
change Seller's corporate name so that Seller's corporate name after the Closing
will not include the names "X.X. Xxxxxxxx" or "X.X. Xxxxxxxx Co.".
10. Seller' obligations at Closing. At the Closing, or thereafter as
herein required, Seller shall deliver to Buyer the following:
(a) Conveyances. Bills of sale, assignments, consents, deeds, and
all other instruments of transfer and documents that are necessary or
appropriate under this Agreement.
(b) Written Formula. Written formulae and instructions for the
manufacture of all abrasive cords and tape produced by Seller.
(c) Additional documents. From time to time at Buyer's request and
expense (whether at or after the Closing and without further consideration) all
further
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instruments of conveyance and transfer that are reasonably required. Seller
shall take all other action that Buyer reasonably may request to convey and
transfer more effectively to Buyer all of the property to be sold to it, and
shall assist Buyer at Buyer's expense in the collection or reduction to
possession of such property.
(d) Corporate resolutions. Certified copies of resolutions of ECM's
directors and shareholders authorizing the transactions set forth in this
agreement.
(e) Books and records. All of Seller's books and records relating to
the Business, Business Assets and Real Property other than those specifically
excluded by the terms of this Agreement.
(f) Corporate Name Change Certificate. Certified copy of the
Secretary of the Commonwealth of Massachusetts as to the change in corporate
name.
11. Restrictive covenant. Xx. Xxxxxxxx shall not, directly or indirectly,
as owner, partner, shareholder, or any other capacity, engage in a business
similar to the one involved in this transaction anywhere where Buyer or its
assigns is then conducting the business of the Business, for a period of five
(5) years from the date of the Closing. Xx. Xxxxxxxx shall also not disclose to
anyone but Buyer the process related to the Business or the manufacture of
abrasive cords and tapes. Because the breach or anticipated breach of these
restrictive covenants will result in immediate and irreparable injury to Buyer
for which it will not have an adequate remedy at law, Seller agrees that Buyer
shall be entitled to xxx in equity to enjoin such breach or anticipated breach
and to seek all legal and equitable remedies to which it is entitled. If a court
of competent jurisdiction determines that the restrictions contained in this
paragraph are too broad to be enforced, it may modify such provisions to the
extent necessary to permit their enforceability.
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12. Buyer's obligations at Closing. At the Closing, Buyer shall deliver to
Seller:
(a) Purchase Price. The total purchase price provided for in
paragraph 2.
(b) Corporate resolutions. Certified copies of resolutions of
Buyer's directors authorizing the transactions set forth in this agreement.
13. Casualty prior to Closing. If before the Closing the Business Assets
or Real Property are damaged in an amount exceeding $100,000, Buyer may
terminate this Agreement without liability or waive the diminution in value and
close under this Agreement, buying the property "as is", in which event Buyer
shall be entitled to receive the proceeds of any insurance paid by reason of
such loss or damage.
14. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of both parties and their respective legal representatives, successors,
and permitted assigns. Wherever in this Agreement Seller is an obligated party,
such obligations shall be deemed to be the joint and several obligations of ECM
and Xx. Xxxxxxxx.
15. Entire Agreement; Modification. This Agreement sets forth the entire
understanding of the parties. It may not be amended or terminated except by an
instrument executed by both parties.
16. Exhibits. All exhibits and schedule referred to in this Agreement are
attached hereto and incorporated herein by reference.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but each of which shall
constitute one and the same agreement.
18. Notices. All notices, statements, payments, or other documents
required by this Agreement shall be in writing and sent by Federal Express or
registered mail, postage prepaid,
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addressed as to the parties, as set forth in the beginning of this Agreement,
with simultaneous copies delivered to:
To the Seller: Xxxxxx Xxxxxx, Esq.
Xxxxxxxx, Xxxxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
To the Buyer: Xxxxx X. Xxxxxx, Esq.
waters, McPherson, McNeill, P.C.
000 Xxxxxxxx Xxx Xxxxxxxx, Xxx Xxxxxx 00000
19. Non-waiver. No delay or failure by either party to exercise any right
hereunder, and no partial or single exercise of any such right, shall constitute
a waiver of that or any other right, unless otherwise expressly provided herein.
20. Headings. Headings in this Agreement are for reference and convenience
only and shall not be used to interpret or construe its provisions.
21. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
22. Post Closing Consultation. For a period following the Closing Date
through the completion of "one manufacturing cycle", (which for purposes of this
section is defined as, the period of -time required for the manufacturing of an
approximately one year's supply of abrasive cord and tape and which in no event
shall exceed three (3) months from the date of the Closing), Xx. Xxxxxxxx shall
be available (health permitting), without additional charge or compensation, at
the Real Property during normal work hours of normal work days of the Business
to assist in an orderly transition of the Business and all manufacturing
processes and know how, from Seller to Buyer. In addition, during the same
period, Xx. Xxxxxxxx shall use his best efforts to make available his assistant,
Xxxxx Xxxx, for post-closing consultation.
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23. No Assignment. This Agreement is not assignable except by Buyer to any
of its subsidiaries or affiliates.
24. Expenses. The parties agree that they shall each be responsible for
their own fees and expenses incurred by them in connection with this transaction
including without limitation, all fees of counsel and accountants.
25. Golf Cart Access. Xx. Xxxxxxxx shall be permitted to cross-over the
Real Property after the Closing Date in his golf cart to visit the adjoining
property where his daughter resides. Xx. Xxxxxxxx'x golf cart access shall be
terminated upon the earlier to occur of the sale of his daughter's property or
the sale by Buyer of the Real Property.
In witness whereof the parties have caused this Agreement to be duly
executed and their corporate seals affixed as of the day and year first above
written.
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SELLER:
X.X. XXXXXXXX CO., INC.
_____________________________________
BY: XXXXXXX X. XXXXXXXX, PRESIDENT
_____________________________________
XXXXXXX X. XXXXXXXX, individually
BUYER:
WG APPAREL,
_____________________________________
XXXX X. XXXXXXX, Chairman
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EXHIBIT A
METES AND BOUNDS
DESCRIPTION OF REAL PROPERTY
Lot B as shown on a plan entitled "Middleton, Mass., Subdivision of Land
owned by: Xxxxxxx X. Xxxxxxxx" by Xxxx Land Surveyors dated March 12, 1990 and
recorded on Plan Book 261/31. (Subdivision Map attached hereto.)
The Metes and Bounds description will be delivered as part of the deed by
Seller at Closing.
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EXHIBIT B
ALLOCATION OF PURCHASE PRICE
Land and Building $500,000
Inventory $535,000
Equipment $100,000
Technology & Know-How 922,500
Goodwill $942,500
----------
$3,000,000
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