1
Exhibit 10.10
ASSET PURCHASE AGREEMENT
------------------------
By and Among
OLYMPIC STEEL, INC.,
an Ohio corporation
("Buyer")
and
SOUTHEASTERN METAL PROCESSING, INC.,
a Georgia corporation
and
SOUTHEASTERN TRANS-SHIPPING REALTY,
a Georgia partnership
(collectively, "Seller")
and
XXXXX X. XXXXXXXX,
XXXX X. XXXXX,
XXXXX XXXXX,
and
XXXXXXX XXXXXX
("Shareholders")
May 30, 1997
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INDEX
Page
ARTICLE I
DEFINITIONS..............................................................................................2
ARTICLE II
SALE AND PURCHASE OF BUSINESS AND ASSETS.................................................................6
2.1 Business and Assets.............................................................................6
2.2 Assumption of Liabilities.......................................................................8
2.3 Purchase Price and Manner of Payment...........................................................11
2.4 Closing Date Statement; Purchase Price Adjustment..............................................13
2.5 Review of Audited Closing Statement by Seller..................................................13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER................................................................14
3.1 Ownership of Assets............................................................................14
3.2 Organization, Qualification, and Authority of Seller...........................................14
3.3 No Equity Interests............................................................................16
3.4 Title to Properties; Liens, Conditions of Properties...........................................16
A. Real Property.........................................................................16
B. Personal Property.....................................................................16
C. Leases................................................................................17
D. Liens.................................................................................17
3.5 Financial Statements...........................................................................17
3.6 Changes........................................................................................18
3.7 Absence of Undisclosed Liabilities.............................................................19
3.8 Accounts Receivable............................................................................20
3.9 Inventories....................................................................................20
3.10 Accounts or Trade Payable......................................................................20
3.11 Intellectual Property..........................................................................21
3.12 Customers and Sales............................................................................21
3.13 Contracts and Commitments......................................................................22
A. Sales Orders, Subcontracts, Bids and Proposals........................................22
B. Purchase Orders and Other Trade Obligations...........................................22
C. Personal Property Leases (as Lessee or Lessor) and Other
Contracts.............................................................................22
D. Copies, Consents and Binding Effect..........................................23
E. Updating. ..................................................................23
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F. Contracts Assumed by Buyer............................................................23
3.14 Litigation; Judgments and Consent Decrees......................................................24
3.15 Employee Relations.............................................................................24
3.16 Employee Benefits..............................................................................25
3.17 Compliance With Law/Governmental Authorizations................................................25
3.18 Environmental Matters..........................................................................26
A. In General. .........................................................................26
B. No Claims.............................................................................26
C. Absence of Events or Conditions.......................................................27
D. No Capital Expenditures Required For Compliance.......................................27
E. Certain Definitions...................................................................27
3.19 Payment of Taxes...............................................................................28
3.20 Transactions with Management...................................................................29
3.21 Insurance......................................................................................30
3.22 Agents and Employees...........................................................................30
3.23 No Default Under the Assumed Liabilities.......................................................30
3.24 Finder's Fee...................................................................................30
3.25 Full Disclosure of Representations.............................................................30
ARTICLE IV
COVENANTS OF SELLER.....................................................................................31
4.1 Conduct of Business............................................................................31
4.2 Assignment of Leases and Contracts.............................................................33
4.3 Breach of Representations, Warranties and Covenants............................................33
4.4 Consummation of Agreement......................................................................33
4.5 Cooperation....................................................................................34
4.6 Regulatory Filings.............................................................................34
4.7 Injunctions....................................................................................34
4.8 Taxes..........................................................................................34
4.9 Termination of Employment by Seller............................................................34
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER.................................................................35
5.1 Organization of Buyer..........................................................................35
5.2 Authority of Buyer.............................................................................35
5.3 Finder's Fee...................................................................................36
5.4 Litigation.....................................................................................36
ARTICLE VI
COVENANTS OF BUYER......................................................................................36
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6.1 Breach of Representations, Warranties and Covenants............................................36
6.2 Consummation of Agreement......................................................................36
6.3 Cooperation....................................................................................37
6.4 Regulatory Filings.............................................................................37
6.5 Injunctions....................................................................................37
6.6 Access to Records and Files....................................................................37
6.7 Offer of Employment............................................................................37
6.8 Olympic Medical Insurance Coverage ............................................................38
6.9 Redemption of Bonds............................................................................38
ARTICLE VII ACCOUNTS RECEIVABLE..................................................................................38
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF BUYER..................................................................39
8.1 Representations; Warranties; Covenants.........................................................39
8.2 Opinion of Seller's and Shareholders' Counsel..................................................39
8.3 Delivery of Schedules and Exhibits.............................................................39
8.4 Damage or Destruction..........................................................................39
8.5 No Material Adverse Change.....................................................................39
8.6 Consents.......................................................................................40
8.7 Injunctions....................................................................................40
8.8 Transfer of Real Property......................................................................40
8.9 Appraisal and Environmental Audit..............................................................40
8.10 Shareholder Non-Competition Agreement..........................................................40
ARTICLE IX CONDITIONS TO OBLIGATIONS OF SELLER AND SHAREHOLDERS..................................................41
9.1 Representations, Warranties, Covenants.........................................................41
9.2 Opinion of Buyer's Counsel.....................................................................41
9.3 Delivery of Documents..........................................................................41
9.4 Injunctions....................................................................................41
9.5 Transfer of Real Property......................................................................41
ARTICLE X INDEMNIFICATION........................................................................................42
10.1 Indemnification by Seller......................................................................42
10.2 Indemnification By Buyer.......................................................................44
10.3 Third Party Claim Against Buyer or Seller......................................................45
ARTICLE XI
TERMINATION.............................................................................................45
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11.1 Generally......................................................................................45
11.2 Right to Proceed...............................................................................46
ARTICLE XII
CLOSING OF TRANSACTION..................................................................................46
12.1 Closing........................................................................................46
12.2 Closing Certificate............................................................................46
12.3 Closing Documents..............................................................................46
A. Documents to be provided by Seller....................................................46
B. Documents to be provided by Buyer.....................................................48
12.4 Risk of Loss...................................................................................49
ARTICLE XIII
MISCELLANEOUS...........................................................................................49
13.1 Binding Effect.................................................................................49
13.2 Recitals; Exhibits and Schedules...............................................................49
13.3 Governing Law..................................................................................49
13.4 Notices........................................................................................49
13.5 Further Assurances.............................................................................51
13.6 Entire Agreement...............................................................................51
13.7 Waivers........................................................................................51
13.8 Headings.......................................................................................51
13.9 Severability...................................................................................51
13.10 Counterparts...................................................................................51
13.11 Public Announcement............................................................................52
13.12 Time of the Essence............................................................................52
13.13 Arbitration....................................................................................52
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EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Audited Closing Statement
Exhibit C Audited Purchase Price Reconciliation
Exhibit D December 1996 Interim Financial Statements
Exhibit E Real Property Purchase Agreement
Exhibit F General Assignment and Xxxx of Sale
Exhibit G Purchase Price Allocation
Exhibit H Non-Competition Agreement
Exhibit I Shareholder Guarantee
Exhibit J Closing Certificate
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ASSET PURCHASE AGREEMENT
------------------------
THIS AGREEMENT (the "Agreement") made and entered May 30, 1997, by and
among OLYMPIC STEEL, INC., an Ohio corporation ("Buyer"), SOUTHEASTERN METAL
PROCESSING, INC., a Georgia corporation ("Southeastern"), SOUTHEASTERN
TRANS-SHIPPING REALTY, a Georgia partnership (the "Partnership") (Southeastern
and the Partnership are sometimes hereinafter collectively and individually
referred to as "Seller"), XXXXX X. XXXXXXXX ("Xxxxxxxx"), XXXX X. XXXXX
("Xxxxx"), XXXXX XXXXX ("Xxxxx"), and XXXXXXX XXXXXX ("Miniea") [Kirkland,
James, Flint and Miniea are sometimes hereinafter collectively referred to as
the "Shareholders" and individually as a "Shareholder"] is to evidence the
following agreements and understandings:
W I T N E S S E T H:
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WHEREAS, Southeastern operates a toll processing steel service center
(the "Business") in Winder, Georgia on the Real Property (hereinafter defined)
and utilizes certain real estate, improvements, and equipment that is owned by
the Partnership;
WHEREAS, Seller desires to sell, and Buyer desires to purchase,
substantially all of Seller's assets, business, and properties whether real,
personal or mixed and wherever located, and Buyer is willing to assume only
those specified liabilities of Seller delineated herein, upon the terms and
conditions hereinafter set forth;
WHEREAS, the Real Property will be purchased from the Partnership
pursuant to the terms of a Real Property Purchase Agreement;
WHEREAS, the Shareholders own all of the issued and outstanding capital
stock of Southeastern and all of the interests in the Partnership and, as such,
directly and materially benefit from the consummation of the transactions
described in this Agreement;
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WHEREAS, to induce Buyer to purchase the Assets, Southeastern and each
of the Shareholders will enter into Non-Competition Agreements and Guarantees.
NOW THEREFORE, in exchange for the mutual promises contained herein and
for other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
"Affiliate" when used with respect to Seller or the Shareholders
includes, but is not limited to: (1) the spouse or child of any Shareholder; (2)
any corporation, partnership, trust, or other entity (whether or not
incorporated), directly or indirectly, through one or more intermediaries, that
is controlled by, or under common control with, Seller or any Shareholder; (3)
any officer, director, or employee of Seller, or his spouse or child; (4) any
person who is a member in any relationship or similar form of unincorporated
business association with any person or entity referred to above; and (5) any
entity required to be aggregated with any entity referred to above under Code
Sections 414(b), (c) and (m).
"Assumed Liabilities" shall have the meaning ascribed in Section 2.2
hereto.
"Audited Closing Statement" means the closing balance sheet of Seller,
solely with respect to the Assets and Assumed Liabilities, as of the Closing
Date, prepared in accordance with this Agreement in the form of EXHIBIT "B" and
as audited by Xxxxxx Xxxxxxxx LLP or another independent certified public
accountant mutually satisfactory to the parties.
"Audited Net Book Value" means each Seller's historical cost of the
Assets owned by such Seller, less depreciation and amortization, determined, in
the case of Southeastern, in accordance with GAAP (hereinafter defined),
consistently applied and, in the case of the Partnership in the manner utilized
by the Partnership in filing its tax returns and in a manner consistently
applied, less the value of the Assumed Liabilities, each as shown on the Audited
Closing Statement.
"Audited Purchase Price Reconciliation" means the purchase price
reconciliation in the form of EXHIBIT "C", as audited by Xxxxxx Xxxxxxxx LLP.
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"Buyer's Product Liability Obligations" means any claims for product
liability (whether for bodily injury or death or property loss or damage or
otherwise) arising from any occurrence on and after the Effective Date.
"Closing Date" or "Effective Date" means the date upon which the
closing of the transaction contemplated hereby ("Closing") will be deemed to
occur, which shall be June 1, 1997 or such other date as the parties may agree.
"Closing Statement" means the Estimated and Final Closing Statements,
collectively, prepared in accordance with this Agreement, in the form of EXHIBIT
"B".
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985.
"Code" means the Internal Revenue Code of 1986, as amended to date.
"Confidential Information" means confidential processes, testing
procedures, devices, formulae, computer software, computer programs and data
bases, drawings, blueprints, sketches, records, development data and reports,
engineering data and reports, plant designs, quality control specifications,
cost analyses, flow charts, process sheets, "know how", memoranda, customer
lists, supplier lists, or other confidential information relating to technical
matters, and confidential information relating to sales, financial structure,
pricing and marketing data, personnel data, and other information of like
nature, including, without limitation, such items which qualify as "trade
secrets" under the Uniform Trade Secrets Act, as adopted in the State of
Georgia.
"Contracts" shall mean all contracts listed on EXHIBIT "3.13A THROUGH
3.13C" and all contracts of Seller that, due to their size or term, are not
required in Section 3.13 to be listed on EXHIBIT "3.13A through 3.13C".
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means The Fifth Third Bank of Northeastern Ohio, Inc.,
or another financial institution mutually satisfactory to the parties pursuant
to the escrow agreement to be entered into among the Escrow Agent, Buyer and
Seller on the Closing Date (the "Escrow Agreement"), the form of which is to be
attached hereto upon the execution of this Agreement as EXHIBIT "A".
"Estimated Closing Statement" means the estimated closing balance sheet
of Seller (modified to reflect only the Assets and Assumed Liabilities) as of a
date not more than five (5) days prior to
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the Closing Date, as prepared by Seller in accordance with this Agreement to be
delivered to Buyer on the Closing Date, in the form attached hereto as EXHIBIT
"B".
"Estimated Net Book Value" means each Seller's historical cost of the
Assets owned by such Seller less depreciation and amortization determined in
accordance with GAAP, consistently applied by such Seller, less the value of the
Assumed Liabilities, each as shown on the Estimated Closing Statement.
"Estimated Purchase Price Reconciliation" means the purchase price
reconciliation prepared by Seller in accordance with this Agreement and
delivered to Buyer on the second business day preceding the Closing Date, in the
form attached hereto as EXHIBIT "C".
"GAAP" means generally accepted accounting principles.
"Injunction" means any injunction, decree or similar order which
prohibits the consummation of the transaction contemplated by this Agreement.
"Intellectual Property" means: all Trade Secrets, patents, patent
applications, trade names, trademarks, and service marks (whether registered or
unregistered) and all copyrights (registered or unregistered), and all similar
items licensed or owned by Seller and used in connection with the Business.
"Interim Financial Statements" means the unaudited balance sheets of
Southeastern as of December 31, 1996, and as of March 31, 1997, respectively,
and the unaudited accompanying statements of cash flow and income for the three
(3) months then ended as prepared by Southeastern and attached as EXHIBIT "D".
"IRB Loan" means, collectively, the indebtedness of Seller evidenced by
Industrial Revenue Bonds in the original aggregate amount of $3,700,000 issued
as of October 1, 1994 by Xxxxxx-Xxxxxx Industrial Building Authority which has a
current outstanding principal balance of approximately $3,100,000, and is
secured by an irrevocable standby letter of credit issued by Wachovia Bank of
Georgia, N.A. ("Bank").
"Knowledge" means, as applied to Seller, the actual knowledge of any
Shareholder and Xxxxxx Xxxxxx, Plant Manager, and as applied to Buyer, the
actual knowledge of the executive officers of Buyer.
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"1996 Financial Statements" means the audited balance sheet of
Southeastern as of September 30, 1996 and the related statement of income and
retained earnings and statement of cash flows for the year ended September 30,
1996 as audited by Xxxx Xxxxxx & Co., certified public accountants, together
with the unaudited balance sheet of the Partnership as of December 31, 1996 and
the related statements of income and cash flow for the year ended December 31,
1996.
"Non-Competition Agreement" means, collectively, agreements to be
executed by Seller and Kirkland, James, Flint and Miniea, respectively, each of
whom is a Shareholder of Seller.
"Permitted Encumbrances" means: (i) liens arising under the IRB Loan;
(ii) liens for taxes and assessments not yet due and payable as of the Closing
Date; (iii) workers or unemployment liens arising in the ordinary course of
business securing amounts which are not yet due and payable as of the Closing
Date; (iv) mechanic's, materialmen's, vendor's and similar statutory liens
arising in the ordinary course of business for amounts which are not yet due and
payable as of the Closing Date; and (v) the Permitted Exceptions, if any,
described in Section 5 of the Real Property Purchase Agreement.
"Plan" or "Plans" means each pension, profit-sharing, cafeteria,
medical reimbursement, 401(k), retirement, deferred compensation, stock option,
incentive, vacation, hospitalization, medical, disability or life insurance,
severance, termination, bonus or other employee benefit plan, contract,
arrangement, or understanding of Seller or any person, corporation, partnership,
or other entity required to be aggregated with, or treated as the same employer
as, Seller under ERISA or the Code (an "ERISA Affiliate"), whether or not
covered by ERISA or qualified within the meaning of Section 401(a) of the Code,
and whether single-employer or multi-employer. The Plans shall include, but are
not limited to the Southeastern Metal Processing, Inc. Profit Sharing Plan.
"Purchase Price Reconciliation" means the Estimated and Final Purchase
Price Reconciliation, collectively, prepared in accordance with this Agreement,
and in the form of EXHIBIT "C".
"Real Property" means all of the land and buildings owned by the
Partnership, including, but not limited to, the property located at 000 Xxxxxxxx
Xxxxxxx, Xxxxxx, Xxxxxxx, at which Southeastern operates the Business and as
more fully described in the Real Property Purchase Agreement, but specifically
excluding the Spartanburg Property.
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"Real Property Purchase Agreement" means the Real Property Purchase
Agreement the form of which is attached hereto as EXHIBIT "E" pursuant to which
Buyer shall purchase the Real Property from the Partnership.
"Seller's Product Liability Obligations" means any claims for product
liability (whether for bodily injury or death or property loss or damage or
otherwise) arising from any occurrence before the Effective Date.
"Seller's Warranty Claims" means all warranty or other contract claims
by Seller whether implied, express or otherwise, or refunds against third party
manufacturers, vendors, carriers or utilities.
"Spartanburg Property" means the property located at 00 Xxxxxxx Xxxx,
Xxxxxxxxxxx, Xxxxx Xxxxxxxx and which is the subject of an Agreement dated
February 11, 1997 by and between Seller and Industrial Metal Products, Inc.
(the "Spartanburg Agreement").
"Term Loan" means, collectively, the indebtedness of Seller evidenced
by a Consolidation, Restatement and Modification of Real Estate Note issued by
the Partnership in favor of Bank dated January 10, 1996 in the original
principal amount of $2,640,094.09, which has a current outstanding balance of
$2,484,304.03 (inclusive of interest through May 30, 1997) are secured by
certain Assets and the personal guaranties of the Shareholders.
"WARN" means the Worker Adjustment Retraining Notification Act of 1988.
ARTICLE II
SALE AND PURCHASE OF BUSINESS AND ASSETS
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2.1 BUSINESS AND ASSETS.
--------------------
A. Subject to the terms and conditions of this Agreement, Seller agrees
to sell, convey, transfer, assign, and deliver to Buyer, and Buyer agrees to
purchase from Seller, free and clear of all mortgages, security interests,
liens, charges and other encumbrances, all of the Business, rights, properties
and assets (other than the Excluded Assets identified in Section 2.1C below), of
every kind, character, and description, whether tangible, intangible, real,
personal, or mixed and wherever located, including, without limitation, all of
the right, title and interest of Seller in and to the assets described below
(collectively, the "Assets"):
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(i) All assets and other rights listed as assets of Seller on the 1996
Financial Statements; all assets acquired by Seller in the ordinary course of
business on or after October 1, 1996 through the Closing Date and all other
property and rights listed as assets of Seller in the Exhibits and Schedules to
this Agreement, except: (a) inventory disposed of by Seller and plant and office
supplies consumed by Seller, each in the ordinary course of business, or (b)
those assets otherwise specifically excluded by this Agreement;
(ii) All of the fixed assets of Seller wherever located, including, but
not limited to, all processing equipment, cranes and office equipment;
(iii) All prepaid expenses, customer deposits and advances, and all
rebates, refunds or rights to discounts not yet earned or received by Seller
excluding prepaid assets relating to health and pension assets as set forth
below;
(iv) All accounts receivable of Seller collected within ninety (90)
days following the Closing Date (the "90-Day Period");
(v) Those funds deposited by Seller into a sinking fund deposit account
maintained with First-Citizens Bank & Trust Company, as Trustee, in connection
with the IRB Loan (approximately $75,000 as of the date of this Agreement)
(collectively, the "Sinking Fund Deposit");
(vi) Inventory including, but not limited to, raw materials and
supplies, scrap steel, side cut steel, and lumber;
(vii) All right and interest of Seller in and to the Real Property,
excluding the Spartanburg Property;
(viii) All Seller's Warranty Claims;
(ix) All Intellectual Property;
(x) All books, accounts, and records of Seller with respect to the
current fiscal year and each of the past five (5) fiscal years, including,
without limitation, all files, correspondence, credit and sales records,
warranty records, import and export records, employment records and any
confidential information reduced to writing and all other records (except
Seller's minute books, seal, stock records, income tax returns and those records
the disclosure of which is expressly prohibited by law);
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(xii) The goodwill and going concern value of Seller and all of
Seller's right, title and interest, if any, to the names "Southeastern Metal"
and "Southeastern Metal Processing" as all or part of a trade, fictitious, or
corporate name; and
(xiii) All other rights, properties, assets and goodwill, if any, of
Seller related to the Business, real or personal, tangible or intangible, of
every kind whatsoever and wherever situated.
B. The Assets constituting personal property, including mixed or
fixtures, and whether located on or attached to the Real Property shall be
conveyed to Buyer by execution and delivery of a General Assignment and Xxxx of
Sale in the form attached hereto as EXHIBIT "F".
C. Notwithstanding anything herein to the contrary, Seller is not
selling and Buyer is not purchasing the following assets (the "Excluded Assets")
of Seller: (i) cash, bank accounts, deposits (other than the Sinking Fund
Deposit) and securities, and cash equivalents; (ii) receivables from any of the
Shareholders or any Affiliate thereof; (iii) rights, claims and causes of action
regarding Contracts not assumed by Buyer; (iv) receivables of Seller that remain
uncollected as of the ninetieth (90th) day following the Closing Date; (v)
prepaid expenses which do not provide a benefit to Buyer as identified on
EXHIBIT "E" attached hereto; (vi) S corporation tax deposits; (vii) insurance
policies and rights with respect thereto; (viii) all rights and assets related
to the Plans; (ix) all rights and interest in and to the Spartanburg Property;
and (x) all rights under this Agreement and the transactions relative thereto.
2.2 ASSUMPTION OF LIABILITIES.
-------------------------
A. Buyer and Seller agree that, except as provided in Section 2.2B
hereof, Buyer is not purchasing, assuming, or accepting any debts, liabilities
or obligations whatsoever of Seller, contingent or non-contingent, liquidated or
unliquidated, asserted or unasserted (the "Excluded Liabilities"), all of which
remain the debts, liabilities, and obligations of Seller.
B. At the Closing, Buyer will assume only the following obligations of
Seller (the "Assumed Liabilities"):
(i) Obligations under purchase orders, commitments or contracts
identified on EXHIBIT "3.13B", as updated through the Effective Date pursuant to
Section 3.13E;
(ii) All sales orders, commitments or contracts with customers
identified on EXHIBIT "3.13A", as updated through the Effective Date pursuant to
Section 3.13E;
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(iii) All of Seller's other Contracts listed on EXHIBIT "3.13C", which
Buyer has reviewed, approved, and elected to assume (in Buyer's sole and
absolute discretion) excluding those agreements, if any, listed on the Schedule
of Unassumed Contracts attached hereto as EXHIBIT "3.13F";
(iv) All trade payables identified and recorded on the Audited Closing
Statement;
(v) The IRB Loan, to the extent identified and recorded on the Audited
Closing Statement but expressly excluding any penalty or premium arising out of:
(a) the assumption by Buyer of the IRB Loan, or (b) the prepayment of the IRB
Loan, in whole or in part, on the Closing Date;
(vi) The Term Loan, to the extent identified and recorded on the
Audited Closing Statement but expressly excluding any penalty or premium arising
out of the assumption by Buyer of the Term Loan, or (b) the prepayment of the
Term Loan, in whole or in part, on the Closing Date;
(vii) Accrued real estate taxes and personal property taxes payable
each of which shall be recorded on the Audited Closing Statement; and
(viii) Accrued vacation pay but solely to the extent identified and
recorded on the Audited Closing Statement (the "Vacation Accrual").
Buyer agrees to use its reasonable efforts and to cooperate with Seller
to obtain following the Closing, in connection with the assumption of the IRB
Loan and the Term Loan, a release of Seller and Shareholders from their
respective guaranties, in forms and substance reasonably satisfactory to Seller
and the Shareholders.
C. The assumption of Assumed Liabilities by Buyer hereunder shall not
enlarge any rights of third parties under contracts or arrangements with Seller.
Nothing herein shall prevent Buyer from contesting in good faith with any third
party any of the Assumed Liabilities; PROVIDED, HOWEVER, that Buyer's right to
contest any of the Assumed Liabilities shall not diminish or otherwise affect
Seller's right to indemnification under Section 10.2 arising out of Buyer's
failure to pay any of the Assumed Liabilities.
D. Except as expressly provided in Section 2.2B, Buyer is not assuming
any of the following obligations of Seller, all of which remain the debts,
liabilities, and obligations of Seller:
(i) LITIGATION OR CLAIMS. Any litigation or claims arising out of
Seller's operations prior to the Effective Date;
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(ii) TAX LIABILITIES. Any tax liability (including interest and
penalties) arising out of or accrued with respect to Seller's operations prior
to the Effective Date or with respect to the sale of the Assets pursuant to this
Agreement (including, but not limited to, real property transfer taxes);
(iii) LIABILITY AS EMPLOYER. Any liability for or obligation to provide
salary, accrued holiday pay, vacation pay (other than the Vacation Accrual
specifically assumed by Buyer pursuant to Section 2.2B.(viii)), sick pay, profit
sharing or bonuses, severance pay, retirement benefits, health insurance,
worker's compensation or other benefits arising out of or accrued with respect
to the employment of any person by Seller prior to the Effective Date;
(iv) PRE-CLOSING LIABILITIES UNDER CONTRACTS. Other than those
liabilities and obligations quantified and recorded on the Audited Closing
Statement, any liability or obligation of Seller or its Affiliates arising or
accrued prior to the Effective Date under any Contract;
(v) OPERATIONS. Any liability or obligation arising from or accrued
with respect to ownership, possession or use of the Assets or the operation of
the Business prior to the Effective Date;
(vi) UNASSUMED CONTRACTS. Any liability or obligation of Seller under
any Contract not expressly assumed by Buyer;
(vii) LIABILITIES TO SHAREHOLDERS OR AFFILIATES. Any liability or
obligation (whether monetary or non-monetary) to any Shareholder or any
Affiliate of a Shareholder, whether arising under any written or oral agreement,
understanding, or contract or otherwise;
(viii) PLAN LIABILITIES. Any liability for, or obligation to provide,
benefits, contributions or other funding, or withdrawal premiums or payments
under any Plan;
(ix) SPARTANBURG AGREEMENT. All liabilities and obligations of Seller
under the Spartanburg Agreement; and
(x) LIABILITIES NOT INCLUDED IN AUDITED CLOSING STATEMENT. Any
liability not included in the Audited Closing Statement.
E. BULK SALES WAIVER. The parties hereto understand and agree that the
transfer which in the subject matter of this Agreement is subject to the
provisions of Section 11-6 of the Official Code of Georgia Annotated, Uniform
Commercial Code (Bulk Transfers) ["Bulk Sales Law"] and
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that Buyer is not assuming any debts of Seller in connection with this
Agreement, except for the Assumed Liabilities specified in Section 2.2B.
Buyer hereby waives compliance by Seller with the Bulk Sales Law;
PROVIDED, HOWEVER, that such waiver does not, as between Buyer and Seller,
relieve Seller of any of the Unassumed Liabilities or relieve Buyer of any of
the Assumed Liabilities.
2.3 PURCHASE PRICE AND MANNER OF PAYMENT.
------------------------------------
A. On the Closing Date, upon the satisfaction of the terms and
conditions contained herein, Seller shall sell, assign and convey the Assets to
Buyer, and Buyer shall purchase the Assets.
B. The purchase price (the "Purchase Price") for the Assets shall be an
amount equal to the aggregate of: (i) Eleven Million Five Hundred Thousand
Dollars ($11,500,000); (ii) the total Assumed Liabilities reflected on the
Audited Closing Statement; and (iii) the excess (deficit) of Audited Net Book
Value over (under) Two Million Five Hundred Thousand Dollars ($2,500,000).
C. The Purchase Price shall be adjusted as follows:
(1) If the Audited Net Book Value is less than Two Million Five Hundred
Thousand Dollars ($2,500,000) then the cash portion of the Purchase Price shall
be reduced by the difference between the Audited Net Book Value and Two Million
Five Hundred Thousand Dollars ($2,500,000).
(2) If the Audited Net Book Value is greater than Two Million Five
Hundred Thousand Dollars ($2,500,000) then the cash portion of the Purchase
Price shall be increased by the difference between the Audited Net Book Value
and Two Million Five Hundred Thousand Dollars ($2,500,000).
D. The Purchase Price will be paid by Buyer as follows:
(1) On the Closing Date, Buyer will deliver to Seller cash, in
immediately available federal funds by wire transfer, equal to the Estimated
Purchase Price (the "Estimated Purchase Price") as shown on the Estimated
Purchase Price Reconciliation LESS Seven Hundred Seventy-Five Thousand Dollars
($775,000); PROVIDED, HOWEVER, that any cash necessary to release the security
interests, liens or other encumbrances on the Assets (other than the security
interests and liens respecting Assumed Liabilities), with the written consent of
Seller (which will not be unreasonably withheld or delayed) shall be paid
directly to the applicable secured creditors of Seller.
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(2) On the Closing Date, Buyer will wire transfer, in immediately
available federal funds, Five Hundred Seventy Five Thousand Dollars ($575,000)
(the "Escrow Amount"), to the Escrow Agent, to be held (the "Escrow") by such
Escrow Agent in accordance with the terms of the Escrow Agreement attached
hereto as EXHIBIT "A". All disbursements from the Escrow shall be made in
accordance with the terms of the Escrow Agreement.
(3) After the Audited Closing Statement has been prepared, if the sum
of the final Purchase Price plus Two Hundred Thousand ($200,000) is equal to or
greater than the Estimated Purchase Price, then Buyer shall immediately pay
Seller by wire transfer, in immediately available federal funds, the difference,
less the Escrow Amount. If the final Purchase Price less the Escrow Amount, is
more than Two Hundred Thousand Dollars ($200,000) less than the Estimated
Purchase Price, then Seller shall immediately pay Buyer the difference and Buyer
shall be entitled to retain the Two Hundred Thousand Dollars ($200,000) holdback
amount.
E. The parties hereto covenant and agree that the Purchase Price shall
be allocated as provided on EXHIBIT "G". All parties to this Agreement covenant
and agree with each other that for purposes of all local, state, federal or
other income tax returns filed by them, they will reflect the foregoing
allocation, and further agree that each shall utilize such allocation when
filing an Asset Acquisition Statement, Form 8594, with the Internal Revenue
Service.
F. It is the intention of the parties that the computation of the
Purchase Price Reconciliation is merely a method to determine the final Purchase
Price in accordance with Section 2.3 hereof, and is not intended to, nor shall
it be deemed to, affect Buyer's or Seller's obligations hereunder.
G. Real estate taxes, installments of special assessments, if any, and
personal property taxes, if any, with respect to the Real Property and personal
property to be conveyed to Buyer pursuant hereto shall be prorated through the
Effective Date and shall be included as accrued liabilities in the Estimated
Closing Statement as appropriate; PROVIDED, HOWEVER, such taxes shall be
adjusted between the parties hereto from time to time after the determination of
the Audited Closing Statement when such amounts become fixed, if the amounts
accrued on the Estimated Closing Statement differ from such fixed amounts.
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2.4 CLOSING DATE STATEMENT; PURCHASE PRICE ADJUSTMENT.
-------------------------------------------------
A. As soon as practicable following the Closing Date (and in no event
later than 60 days after the Closing Date), Buyer shall prepare or cause to be
prepared the Audited Closing Statement showing the Assets and the Assumed
Liabilities as of the Closing Date. The Audited Closing Statement shall be based
upon the books and records of Seller and prepared in accordance with GAAP (other
than with respect to the recordation of the Partnership's depreciation and
amortization expenses) applied on a basis consistent with the 1996 Financial
Statements, except that: (i) accounts receivable shall be determined in
accordance with Section 2.4B, and (ii) the Audited Net Book Value of any Assets
owned by the Partnership shall be reflected on the Audited Closing Statement
using the same accounting methods and calculated on the same basis as were used
by the Partnership in preparing the 1996 Partnership Financial Statements
(defined in Section 3.5) and shall not be revalued using any different method.
The parties further agree that: (i) the "cut to length" processing equipment
line owned by Seller and presently located at 000 Xxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxx, shall be valued for purposes of this Agreement at the amount set
forth in the 1996 Financial Statements; (ii) the Vacation Accrual shall be
valued for purposes of this Agreement at "zero" liability, consistent with
Southeastern's past practices; and (iii) all scrap steel, side cut steel and
lumber shall be valued for purposes of this Agreement at "zero", consistent with
Seller's past practices.
B. Seller's accounts receivable for purposes of the Audited Closing
Statement shall be based on the actual funds collected in the ninety (90) day
period commencing with the Closing Date (the "90-Day Period"). Buyer shall use
its reasonable efforts to collect all Accounts Receivable. When Buyer delivers a
preliminary Audited Closing Statement to Seller, such statement will reflect
Accounts Receivable as the sum of trade receivables collected through such date
and an estimate of sums to be collected through the 90-Day Period. The Final
Audited Closing Statement will reflect the actual sum of funds collected.
2.5 REVIEW OF AUDITED CLOSING STATEMENT BY SELLER. Following receipt of
the Audited Closing Statement, Seller will be afforded a period of sixty (60)
days to review the Audited Closing Statement. At or before the end of that
period, but not prior to Buyer's delivery to Seller of its statement of
receivables collected through the 90-Day Period, which statement is due by the
ninety-
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fifth (95th) day following the Closing, Seller will either: (i) accept the
Audited Closing Statement in its entirety, as adjusted to reflect receivables
collected, or (ii) deliver to Buyer written notice and a detailed written
explanation of those items in the Audited Closing Statement that Seller
disputes. Items not affected by any such dispute will be deemed to be as set
forth on the Audited Closing Statement and the Audited Closing Statement shall
be final as to such undisputed items. Within a further period of fourteen (14)
days from the end of the review period, the parties will attempt to resolve in
good faith any disputed items. Failing such resolution, the unresolved disputed
items will be referred to a nationally-recognized firm of certified public
accountants mutually acceptable to the parties. The parties shall share equally
the cost of the certified public accountants determining the disputed items
unless the independent certified public accountants shall direct otherwise based
on the relative merits of the positions of the parties. Each party shall pay for
its own certified public accountants. The resolution of the disputed items, as
determined by the certified public accountants, shall be binding on the parties
hereto and non-appealable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
In order to induce Buyer to purchase the Assets hereunder, Seller
hereby makes the following representations and warranties, each of which shall
be true and correct on the execution hereof except as otherwise specified
herein, and will be true and correct on the Closing Date.
3.1 OWNERSHIP OF ASSETS. Seller is or on the Closing Date will be, the
owner of the Assets, and Seller shall transfer the Assets to Buyer, free and
clear of any mortgages, pledges, equities, liens, charges, encumbrances,
covenants, conditions, or other restrictions, except for the Permitted
Encumbrances. All Assets located on the Real Property are owned by Seller or are
leased by Seller pursuant to the valid and subsisting leases described in
EXHIBIT "3.4C".
3.2 ORGANIZATION, QUALIFICATION, AND AUTHORITY OF SELLER.
A. Southeastern is a corporation duly organized, validly existing and
in good standing under the laws of the State of Georgia. Southeastern is not
required to be qualified to do business as a foreign corporation in any
jurisdiction. The Partnership is a partnership duly organized and validly
existing under the laws of the State of Georgia. The Partnership is not required
to be
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qualified to do business as a foreign partnership in any jurisdiction. Each
Seller has full power and authority to own or lease its properties and to
conduct its businesses in the manner and the places where such properties are
owned or leased and such business is conducted. Seller possesses all permits and
licenses from state, local, or Federal agencies or subdivisions necessary to
operate the Business, all of which are in full force and effect and a list of
which is attached hereto upon execution as EXHIBIT "3.2", all of which are
transferable and shall be transferred to Buyer hereunder except as disclosed on
EXHIBIT "3.2".
B. As of the Closing Date, the execution and delivery of this
Agreement, and the performance of the obligations by Seller under this
Agreement: (i) will not violate, contravene, be in conflict with, result in a
breach of or constitute (with or without notice or lapse of time or both) a
default under: (a) any provision of law; (b) any order, rule or regulation of
any court, arbitrator or other agency of government to which Seller is a party;
(c) any provision of the Articles of Incorporation or Bylaws of Southeastern or
the Partnership Agreement of the Partnership; and (d) any material lease,
indenture, agreement or other instrument to which Seller or its properties or
assets is or may be bound; and (ii) will not result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon the
Assets except as may arise under the Bulk Sales Law.
C. Seller has the right, power, legal capacity, and authority to enter
into and perform its obligations under this Agreement, and except as listed on
the "List of Consents Required" attached hereto as EXHIBIT "3.2C", no consent,
approval or authorization of, or registration, declaration, or filing with any
governmental authority (federal, state, or local, domestic or foreign), lending
institution or other third party is required in connection with the execution
and delivery by Seller of this Agreement or its performance of, or compliance
with, the terms, provisions, and conditions hereof.
D. All necessary corporate actions of the Board of Directors and
Shareholders of Southeastern have been taken to authorize Southeastern to
execute and deliver this Agreement and the other documents contemplated hereby.
All of the partners of the Partnership have authorized the Partnership to
execute and deliver this Agreement, the Real Property Purchase Agreement, and
the other documents contemplated hereby and thereby. This Agreement and each
related document
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constitute the valid and binding obligations of Seller, each enforceable in
accordance with its respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights or by general principles of equity.
E. The Shareholders own all of the issued and outstanding capital stock
of Seller. The Shareholders also own all of the issued and outstanding interests
in the Partnership.
3.3 NO EQUITY INTERESTS. Seller does not own or hold (directly or
indirectly) any equity or debt interest in any corporations, joint ventures,
partnerships, business associations, trusts, or other firms or entities, other
than as a creditor in the ordinary course of business.
3.4 TITLE TO PROPERTIES; LIENS, CONDITIONS OF PROPERTIES.
A. REAL PROPERTY. The representations and warranties of Seller
contained in the Real Property Purchase Agreement are true and correct and are
incorporated herein by reference. Seller does not own or lease real property
except for the Real Property and Seller is not a party to any agreement (other
than the Spartanburg Agreement) to acquire real property or any interest
therein.
B. PERSONAL PROPERTY. Attached hereto as EXHIBIT "3.4B" is the Schedule
of Personal Property (which Exhibit shall be furnished separately to Buyer upon
the execution hereof, initialed by the parties hereto and deemed delivered
hereunder) that lists all items of machinery, equipment, tooling, dies, cranes
and all other tangible personal property (excluding inventory) owned by, in the
possession of, or used by Seller on the date of execution which have an original
cost to Seller in excess of $1,500 for any single item. Each item of processing
equipment included among the Assets is and on the Closing Date will be in good
condition and repair, ordinary wear and tear excepted, with no known defects,
and fully usable in the ordinary course of business except as specifically
described in EXHIBIT "3.4". All other tangible Assets are, and on the Closing
Date will be, in the aggregate, in reasonable operating condition, ordinary wear
and tear excepted, with no known defects. As of the Closing Date and except for
such personal property subject to the leases listed on the Schedule of Leases,
Seller will have good title to all of its personal property free and clear of
all liens and encumbrances whatsoever, except for Permitted Encumbrances. Except
for the cut-to-length line in storage in Sharon, Pennsylvania, all personal
property owned or leased by Seller and used or usable in the Business is located
on the Real Property.
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C. LEASES. All the leases under which Seller leases personal property
are described in the schedule of leases ("Schedule of Leases") attached hereto
as EXHIBIT "3.4C". Except as set forth in EXHIBIT "3.4C", all of Seller's leases
of personal property that Buyer is assuming pursuant to this Agreement are
valid, subsisting and assignable and no monetary default or material
non-monetary default (or event with which the passage of time will constitute a
default) exists thereunder. The sublease between Southeastern and the
Partnership relating to certain of Seller's equipment shall be canceled on the
Closing Date.
D. LIENS. Attached hereto as EXHIBIT "3.4D" is the schedule of liens
("Schedule of Liens") which lists all liens, conditional sales agreements,
security interests, pledges, charges, or mortgages to which Seller is a party
(as debtor or secured party), or by which the Assets are owned. All of such
liens to which Seller is a party as debtor will be satisfied or released on or
before the Closing Date, except for the Permitted Encumbrances. Except as
disclosed on such Exhibit, none of the Assets is subject to any mortgage,
pledge, lien, conditional sales agreement, security agreement, encumbrance, or
other charge. Seller is not in monetary default or material non-monetary default
(nor is there an event with which the passage of time will constitute a default)
under any such contract, agreement, document or instrument giving rise to or
evidencing a Permitted Encumbrance.
3.5 FINANCIAL STATEMENTS.
A. Attached hereto as EXHIBIT "3.5" are the 1996 Financial Statements.
The foregoing financial statements present fairly in all material respects: (i)
the financial position of Southeastern as of September 30, 1996 and September
30, 1995 and the results of Southeastern's operations and its cash flows for the
periods from October 1, 1994 through September 30, 1995 and from October 1, 1995
through September 30, 1996, in conformity with GAAP consistently applied, and
(ii) the financial position of the Partnership as of December 31, 1996 and
December 31, 1995 and the results of operations and cash flow for each of the
years in the two (2) year period ended December 31, 1996, in conformity with
GAAP consistently applied (the "1996 Partnership Financial Statements").
B. Attached to EXHIBIT "3.5" is all correspondence from accounting
firms received since October 1, 1994 with respect to the recommendations for
improvements in accounting procedures, practices and internal controls of
Seller.
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C. Attached hereto as EXHIBIT "3.5C" are the Interim Financial
Statements of Southeastern. The foregoing financial statements present fairly in
all material respects the financial position of Southeastern as of December 31,
1996 and as of March 31, 1997, respectively, and the results of Southeastern's
operations and its cash flows for the three (3) month periods ended December 31,
1996 in conformity with and on a consistent basis with the 1996 Financial
Statements, except for the absence of notes and normal year-end adjustments.
Since March 31, 1997, there have been no asset dispositions or obligations
incurred other than in the ordinary course of business.
D. To be attached hereto as EXHIBIT "3.5D" on the Closing Date is the
Estimated Closing Statement of Seller. The Estimated Closing Statement will be
prepared in accordance with the form attached hereto as EXHIBIT "B" and with
this Agreement and will present Seller's best estimate of the financial position
of Seller at the Closing Date as relates only to the Assets and the Assumed
Liabilities.
E. To be attached hereto as EXHIBIT "3.5E" on the Closing Date is the
Estimated Purchase Price Reconciliation. The Estimated Purchase Price
Reconciliation will be prepared in accordance with the form attached hereto as
EXHIBIT "C" and with this Agreement. The Estimated Purchase Price Reconciliation
will be Seller's best estimate of the Purchase Price Reconciliation and will be
based upon the Estimated Closing Statement.
3.6 CHANGES.
-------
A. Since March 31, 1997, there has been no material adverse change in
the financial condition, operating results, assets, operations, employee
relations, supplier relations, customer relations or business prospects of
Seller other than economic or industry trends affecting the economy or industry
as a whole.
B. Since March 31, 1997, Seller has not:
(i) borrowed any amount or incurred or become subject to any material
liabilities, except current liabilities incurred in the ordinary course of
business, borrowings under established credit facilities, and liabilities under
contracts entered into in the ordinary course of business or specifically
disclosed and permitted under this Agreement;
(ii) mortgaged, pledged or subjected to any lien, charge or any other
encumbrance, any portion of the Assets, except for Permitted Encumbrances;
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(iii) sold, assigned or transferred any of the Assets, except in the
ordinary course of business, or canceled without fair consideration any material
debts or claims owing to or held by Seller;
(iv) sold, assigned, transferred, abandoned or permitted to lapse any
patents, trademark registrations, trade name registrations, copyright
registrations, material Confidential Information or other material intangible
assets, or disclosed any material Trade Secrets or other material proprietary
confidential information, to any person other than Buyer;
(v) made or granted any bonus or any wage or salary increase to any
employee or group of employees except in the ordinary course of business;
(vi) made or granted any increase in any Plan (except in accordance
with past custom and practice), or amended or terminated any existing Plan or
adopted any new Plan;
(vii) made any capital expenditures or commitments therefor that
aggregate in excess of Twenty-Five Thousand Dollars ($25,000), except as set
forth on EXHIBIT "3.6B";
(viii) made any loans or advances to, or guarantees for the benefit of,
any persons, except for advances made to employees for expenses in the ordinary
course of business;
(ix) entered into any labor agreement or commitment;
(x) suffered the loss or termination of services of any managerial
employee of Southeastern or other key employee of Southeastern;
(xi) intentionally waived any rights of material value, not in the
ordinary course of business or consistent with past practice;
(xii) suffered any material damage, destruction or casualty loss to the
Assets, whether or not covered by insurance;
(xiii) agreed, whether in writing or otherwise to do any of the
foregoing; or
(xiv) entered into any material transaction other than in the
ordinary course of business or conducted the Business other than in the ordinary
course.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. To Seller's knowledge, Seller
has no liabilities of any nature (including, without limitation, liabilities as
guarantor or otherwise with respect to obligations of others, or liabilities for
taxes due or then accrued or to become due) except as will be
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expressly disclosed on the Final Closing Statement or in this Agreement or the
Exhibits attached hereto.
3.8 ACCOUNTS RECEIVABLE. All of Seller's account receivables have
arisen from valid sales in the ordinary course of business and are valid and
enforceable claims against the respective account debtors. To Seller's
knowledge, none of Seller's accounts receivable are subject to any set-off,
defense, counterclaim, or credits for returns, discounts (other than normal cash
discounts in the ordinary course of business and which are not, individually or
in the aggregate, excessive), volume rebates, or any other credit offered by or
through Seller. The parties acknowledge and understand that the foregoing
representation and warranty is not intended to be, and shall not be construed
as, a guaranty of collectibility, nor shall it give rise to any additional
claims against Seller in the event certain of Seller's accounts receivable are
not collected following the Closing; Buyer's and Seller's rights and obligations
with respect to the uncollectibility of such receivables shall be governed
exclusively by the provisions of Sections 2.1A(iv) and 2.2C(iv) of this
Agreement.
Attached as EXHIBIT "3.8" will be the closing schedule of receivables
("Closing Schedule of Receivables"). The Closing Schedule of Receivables will
reflect a full and complete list of all customer receivables of Seller as of the
Closing Date, reflecting as to each receivable the debtor's name and address,
the amount owed thereunder, and the age of such receivable.
3.9 INVENTORIES. All inventory on the Real Property or elsewhere
belonging to Seller's customers are properly recorded on the books and records
of Seller and, to Seller's knowledge, such recorded amounts agree with the
amounts claimed by the customers on their books and records. Seller knows of no
claims by any customer for missing inventory or damage to inventory held by
Seller for a customer's account.
3.10 ACCOUNTS OR TRADE PAYABLE. All of Seller's payable accounts have
arisen from valid purchases in the ordinary course of business and are valid and
enforceable claims against Seller. Seller has paid and will continue to pay to
the Closing Date its payables in accordance with its usual and customary terms
and practices. Attached hereto as EXHIBIT "3.10 " will be the Closing Schedule
of Accounts Payable. The Closing Schedule of Accounts Payable will be reflected
on the Audited Closing Statement and will reflect a full and complete list of
all accounts payable of Seller as of the
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Closing Date, reflecting as to each account the creditor's name, the amount owed
thereunder, and the age or date of such payable.
3.11 INTELLECTUAL PROPERTY.
---------------------
To Seller's knowledge, Seller possesses the exclusive right to use the
trade name Southeastern Metal Processing in Georgia in connection with the
Business. Seller has no knowledge of others using the name "Southeastern Metal
Processing", or any similar name in the Business in other jurisdictions. Except
for "Southeastern Metal Processing", Seller owns, uses or holds no trade names,
trademarks, service marks, or copyrights. Seller has not received any
notification, and has no knowledge, that it has infringed, nor is now
infringing, on any trade name, trademark, service xxxx, or copyright belonging
to any other person, firm, or corporation. Seller owns, or holds adequate
licenses or other rights to use all trademarks, service marks, trade names, and
copyrights necessary for the business of Seller as now conducted. Seller does
not own, use, or hold any patents, inventions, industrial models, designs or
applications for patents (foreign and domestic). To the best of its knowledge,
Seller is not infringing and has not infringed on any patent or other right
belonging to any person, firm, or corporation nor has Seller received notice of
any infringement. Except for computer software under license, all of the
Intellectual Property used by Seller in connection with the Business is owned by
Seller and will be assigned to Buyer pursuant to this Agreement. No Shareholder
or any Affiliate has any interest, beneficial, equitable or otherwise in the
Intellectual Property.
Seller is the owner of or has the right to use and will transfer the
right to use all Trade Secrets required for the processing, distribution and
marketing of the Products and services, free and clear of any claims, liens,
encumbrances, restrictions, rights, or legal or equitable claims of others. To
Seller's knowledge, Seller is not using, or in any way making use of, without
authorization or legal right to use the same, any confidential information,
trade secrets or customer lists of any third party, including without
limitation, any former employer of any present or past employee of Seller. There
are no suits pending or to the best of Seller's knowledge threatened with
respect to any Trade Secrets.
3.12 CUSTOMERS AND SALES. The complete customer list of Seller is
attached hereto as EXHIBIT "3.12" initialed by the parties hereto, and deemed
delivered hereunder. Seller has not
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received any deposits, payments on account or similar payment with respect to
any of its contracts, and no such deposits, payments on account or similar
payments are due or owing to Seller. Except as disclosed on EXHIBIT "3.12"
attached hereto, Seller has not been notified, and is not otherwise aware, that
any of its customers to whom the Seller has sold products or services in the
aggregate amount of One Hundred Thousand Dollars ($100,000) during the twelve
(12) months preceding the Closing, has ceased or intends to cease, purchasing
from Seller or has materially adversely altered or intends to materially
adversely alter the amount of business that it is presently doing with Seller.
3.13 CONTRACTS AND COMMITMENTS.
A. SALES ORDERS, SUBCONTRACTS, BIDS AND PROPOSALS.
(i) Set forth on EXHIBIT "3.13A" attached hereto is a true and complete
list and description of each individual outstanding sales order, sales contract,
subcontract, bid or sales proposal of Seller as of the date of this Agreement,
including the customer and the shipping date. Each sales, order, sales contract,
subcontract, bid or sales proposal identified on EXHIBIT "3.13A" has been
accepted, delivered or incurred in the ordinary course of business.
(ii) Except as set forth on EXHIBIT "3.13A", Seller is not under any
liability or obligation with respect to the return of inventory or merchandise
in the possession of customers.
B. PURCHASE ORDERS AND OTHER TRADE OBLIGATIONS.
-------------------------------------------
Set forth on EXHIBIT "13.3B" attached hereto is a true and complete list of each
individual outstanding purchase order and purchase commitment of Seller as of
the date of this Agreement. Each purchase order and purchase commitment of
Seller identified on EXHIBIT "3.13B" has been incurred in the ordinary course of
business. No purchase contracts or commitments of Seller continue for a period
of more than six (6) months or, in Seller's reasonable opinion, are in excess of
the normal, ordinary and usual requirements of business (as conducted by Seller)
or at any excessive price.
C. PERSONAL PROPERTY LEASES (AS LESSEE OR LESSOR) AND OTHER
--------------------------------------------------------
CONTRACTS.
---------
EXHIBIT "13.3C " contains a true and complete list of all personal
property leases, warehouse agreements, licensing agreements, sales
representative agreements, and any other contracts and commitments (other than
purchase orders and sales orders, loan agreements, labor and employment
agreements or employee benefit plans or agreements) with respect to the Business
as of the date of
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this Agreement that are not cancelable on thirty (30) days or less notice
without any further obligation thereunder or which involve a total liability on
the part of Seller thereunder exceeding Ten Thousand Dollars ($10,000) per
contract or lease.
D. COPIES, CONSENTS AND BINDING EFFECT.
-----------------------------------
True and correct copies, or written summaries, if oral, of all the
leases, contracts, commitments, agreements, understandings or other obligations,
written and oral, relating to Seller, the Business or the Assets and listed on
EXHIBITS "3.13A - 3.13C" have been delivered to Buyer. Seller is not in monetary
default or material non-monetary default (whether with the giving of notice, the
passage of time or both) under any of the contracts, leases, agreements, or
other commitments or obligations listed on such Exhibits. Each such contract,
lease, agreement or other commitment is a legal, valid and binding obligation of
Seller and, to Seller's knowledge, of the other parties thereto, enforceable
against Seller in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights or as limited by general principles
of equity. The execution of this Agreement and the consummation of the
transactions contemplated hereby will not give rise to a right of termination by
any party thereto except as set forth in EXHIBIT 3.13D. EXHIBIT 3.13D sets forth
the parties to the agreements on EXHIBITS 3.13A through 3.13C whose consents are
necessary to the assignments of such agreements to Buyer. Except as set forth on
EXHIBIT 3.13D, Seller has no knowledge of any default by it under any of the
contracts or other agreements listed on EXHIBITS 3.13A-C.
E. UPDATING. Seller shall update and revise EXHIBITS "3.13A - 3.13C "
up to and including the Effective Date.
F. CONTRACTS ASSUMED BY BUYER.
--------------------------
Except as expressly set forth on EXHIBIT "3.13F" , the Schedule of
Unassumed Contracts, Buyer will assume pursuant to Section 2.2 all of the
contracts, leases and commitments shown on EXHIBITS "3.13A - 3.13C" and all
similar type agreements that are not required to be scheduled due to the fact
that they are cancelable on thirty (30) days or less notice without further
obligation thereunder or which involve a total liability of Seller of less than
Ten Thousand Dollars ($10,000) per contract.
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3.14 LITIGATION; JUDGMENTS AND CONSENT DECREES. Except as disclosed on
EXHIBIT "3.14" attached hereto, no litigation is pending or, to the best of
Seller's knowledge, threatened against Seller and no litigation is pending or
threatened by Seller. EXHIBIT "3.14" also sets forth all product liability
claims, workers' compensation, unemployment compensation, and all age, race,
religion or other discrimination claims, whether such claims were dismissed,
settled, or otherwise resolved, against Seller since January 1, 1994. The
responses of all law firms to the annual audit request sent by management of
Seller since January 1, 1994 are attached to EXHIBIT "3.14". Seller is not
subject to any judgment, ruling, injunction, order or agreement with any court,
arbitrator or regulatory authority restricting or adversely affecting the
conduct of the Business or Seller's ownership of the Assets.
3.15 EMPLOYEE RELATIONS.
------------------
Except as disclosed in EXHIBIT "3.15" there has not been, since January
1, 1994, nor to Seller's knowledge is there currently threatened, any
grievances, arbitrations, unfair labor charges or practices filed against Seller
with the National Labor Relations Board or any comparable federal, state or
local board, agency or commission, or any claims, including but not limited to
any claims brought before the Equal Employment Opportunity Commission or under
any act, local, state, federal civil rights laws or any other law, rule or
regulation relating to employment. Since January 1, 1994, to Seller's knowledge,
Seller has complied with all laws relating to the employment of labor,
including, but not limited to, any provisions thereof relating to equal
employment opportunities, civil rights, working conditions, wages, hours, COBRA,
WARN, and the payment of social security and similar taxes, and is not liable
for any arrearage of wages or any taxes or penalties for failure to comply with
any of the foregoing. Seller is not a party to any collective bargaining
agreement with respect to the Business. No unions or other collective bargaining
units have been, or are required to be, certified or recognized by Seller as
representing its employees, and no union organized efforts exist with respect to
any employees of Seller.
Seller represents and warrants that Seller has taken all actions
necessary, including but not limited to any notice required to be given to its
employees, local, state or federal government agencies, to comply with COBRA and
any similar local or state laws applicable to the transactions contemplated by
this Agreement. Copies of all such notices have been delivered to Buyer.
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Notwithstanding the foregoing, due to Buyer's commitment contained in Section
6.7 hereof, Seller is not obligated to comply with WARN or any similar state law
due to the transactions contemplated by this Agreement.
3.16 EMPLOYEE BENEFITS.
-----------------
Set forth on EXHIBIT "3.16" is a list of each Plan. Except as set forth
on Exhibit "3.16", the Company does not maintain or contribute to any "employee
benefit plan" (as defined in ERISA) or any other profit sharing, incentive
bonus, deferred compensation, welfare, pension, retirement, severance, holiday,
vacation, tuition reimbursement, health benefit or other similar plan, program,
agreement, arrangement or practice. To Seller's knowledge, Seller has no
liability with respect to any Plan except as provided for in its financial
statements. Seller and each Plan identified on Exhibit "3.16" are in compliance
in all material respects with ERISA, the Internal Revenue Code of 1986, as
amended (the "Code"), and the rules and regulations promulgated thereunder.
Without limiting the generality of the foregoing, there have been no prohibited
transactions (as defined in ERISA) or breaches of the duties imposed by ERISA
upon fiduciaries of the Plans such that Seller could incur any material
liability in respect thereof, and all filings with governmental authorities and
all notices to participants in such plans required by ERISA, the Code and the
rules and regulations promulgated thereunder to be made or given have been
timely made or given in all material respects. There are no suits or claims
pending or, to Seller's knowledge, threatened against Seller or any Plan, and to
Seller knowledge, there is no basis for any such suit or claim. Except with
respect to vested or accrued benefits of participants under the Plans, Seller
has reserved all rights necessary to amend or terminate, on a prospective basis,
each of the Plans without the consent of any other person. Seller will deliver
or make available to Buyer, upon request, true, complete and correct copies of
all Plans, trust agreements, Plan amendments, Plan descriptions and other Plan
documents with respect to the Plans.
To Seller's knowledge, all group health plans of Seller and any ERISA
Affiliate have been operated in material compliance with the group health plan
continuation coverage requirements of Section 162(i) (as in effect immediately
prior to the Technical and Miscellaneous Revenue Act of 1988) and 4980B of the
Code to the extent such requirements are applicable.
3.17 COMPLIANCE WITH LAW/GOVERNMENTAL AUTHORIZATIONS.
-----------------------------------------------
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A. Seller has complied, and has conducted its business in accordance
with all applicable statutes, laws, regulations, rules and other requirements of
all federal, state and local governmental authorities having jurisdiction over
Seller applicable to the Assets or the Business other than statutes, laws,
regulations and other requirements relating to tax, employment, employee benefit
and environmental matters (which are the subject of specific representations and
warranties hereunder), except where the failure to so comply has not had and
will not have a material adverse effect on the Business as presently conducted
by Seller.
B. The "total assets" of Seller, as such phrase is defined and
interpreted under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements of 1976, as
amended, and the Rules and regulations promulgated thereunder (collectively, the
"HSR Act") are less than Ten Million Dollars ($10,000,000) and Seller is the
"ultimate parent entity" of the "acquired person", as each such term is defined
and interpreted under the HSR Act. Consequently, the jurisdictional requirement
for applicability of the HSR Act, as set forth in Section 7A(a)(2)(B) of the HSR
Act, is not satisfied. Seller acknowledges and understands that Buyer is relying
on the accuracy of the foregoing representation and warranty and based upon the
foregoing representation and warranty, Buyer is not filing a Premerger
Notification Form with the Federal Trade Commission and the United States
Department of Justice pursuant to the HSR Act.
3.18 ENVIRONMENTAL MATTERS.
---------------------
A. IN GENERAL. Seller is in full compliance with all applicable
Environmental Laws (as defined below), which compliance includes, but is not
limited to, the possession by Seller of all permits and other governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof, except where the failure to so comply has not
had and will not have a material adverse effect on the Business. Seller has
received no communication (written or oral), whether from a governmental
authority, citizens' group, employee or otherwise, that alleges that Seller is
not in such full compliance, and there are no circumstances that may prevent or
interfere with such full compliance in the future. All governmental
authorizations currently held by Seller pursuant to the Environmental Laws are
identified on EXHIBIT "3.18".
B. NO CLAIMS. There is no Environmental Claim (as defined below)
pending or, to Sellers' knowledge, threatened against Seller or, to the
knowledge of Seller, against any person or
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entity whose liability for any Environmental Claim Seller has or may have
retained or assumed either contractually or by operation of law. To Seller's
knowledge, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge, generation, treatment, storage, management, disposal or
arrangement for disposal of any Materials of Environmental Concern (as defined
below), that would reasonably be expected to form the basis of any Environmental
Claim against Seller or any Affiliate or, to Seller knowledge, against any
person or entity whose liability for any such Environmental Claim Seller has or
may have retained or assumed either contractually or by operation of law.
C. ABSENCE OF EVENTS OR CONDITIONS. Without in any way limiting the
generality of the foregoing, to Seller's knowledge: (i) Seller does not treat,
store, dispose or arrange for the storage, treatment or disposal of Materials of
Environmental Concern, whether on or under the Real Property or at an off-site
location, except in compliance with Environmental Laws, (ii) there are no
underground storage tanks, and the capacity and contents of such tanks, located
now or in the past on property owned, leased or controlled by Seller, (iii)
there is no asbestos contained in or forming part of any building, building
component, structure or office space owned, leased or controlled by Seller, (iv)
no polychlorinated biphenyls (PCBs) are or have been used, stored, treated or
disposed of at any property owned, leased or controlled by Seller, (v) neither
Seller, any predecessor owner of the Real Property or other party has filed any
notice under any federal law or under any law of the State of Georgia reporting
a spill or release of Materials of Environmental Concern into the environment
at, on, into or from the Real Estate; (vi) no lien asserting any claim or
liability in favor of any governmental entity for (A) any liability under
federal or state environmental laws or regulations, or (B) damages arising from
or costs incurred by such governmental entity in response to a release of
Materials of Environmental Concern into the environment is presently pending
against or attached to the Real Property.
D. NO CAPITAL EXPENDITURES REQUIRED FOR COMPLIANCE. To Seller's
knowledge, no capital or other expenditures are required to bring the Assets or
Seller into compliance with any currently applicable Environmental Laws.
E. CERTAIN DEFINITIONS. For purposes of this Section , the following
definitions apply:
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"Environmental Claim" means any claim, action, cause of action,
investigation, demand or notice (written or oral) by any person or entity
alleging potential liability (including, without limitation, potential liability
for or requirement to incur investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from (i) the presence, or
release or threatened release into the environmental, of any Materials of
Environmental Concern at any location, whether or not owned or operated by
Seller or (ii) circumstances forming the basis of any violation, or alleged
violation, of or any claim pursuant to any Environmental Law.
"Environmental Laws" means all federal, state, local and foreign laws
and regulations relating to pollution, protection of human health or safety, or
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including, without limitation,
The Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA) 42 U.S.C. Sections 9601 ET SEQ. The Resource Conservation and Recovery
Act (RCRA), 42 U.S.C. Sections 6901 ET SEQ., The Federal Water Pollution Control
Act (FWPCA), 33 U.S.C. Sections 1251 ET SEQ., The Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1802 ET SEQ., The Toxic Substances
Control Act, 15 U.S.C. Sections 2601 ET SEQ., The Clean Air Act, 42 U.S.C.
Sections 7401 ET SEQ., regulations promulgated thereunder, state, county,
municipal or local counterparts of the foregoing federal laws and regulations,
and any other applicable federal, state, county, municipal, local or other laws
and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
"Materials of Environmental Concern" means chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products,
including, without limitation, any hazardous substances, wastes or materials as
defined by any Environmental Laws or any substances regulated by any
Environmental Law.
3.19 PAYMENT OF TAXES.
----------------
Seller has filed and will continue to file all applicable Federal,
state, regional and/or local income, excise or franchise tax and informational
returns, real estate and personal property tax
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returns, sales and use tax returns, F.I.C.A. returns, Workers Compensation
returns and other tax and informational returns required to be filed by it and
has paid all taxes owing by Seller, including both the employee and employer
portion of the F.I.C.A. taxes, income, excise, and franchise taxes, and workers
compensation premiums, except taxes which have not yet accrued or otherwise
become due and payable and except as may, in the future, be contested in good
faith proceedings. Neither the Internal Revenue Service nor any other taxing
authority is now asserting or to the best of Seller's knowledge, threatening to
assert against Seller any deficiency, claim or assessment for additional taxes
or interest thereon or penalties in connection therewith.
Seller has not executed or filed with the Internal Revenue Service or
any other taxing authority (whether domestic or foreign) any agreement extending
the period for assessment or collection of income taxes, nor is Seller a party
to any pending action or proceeding, nor to the best of Seller's knowledge is
any action or proceeding threatened, by any governmental authority for
assessment or collection of taxes. Except as set forth in EXHIBIT "3.19", no
claims for assessment or collection of taxes (other than taxes based upon or
measured by the income of Seller) has been asserted against Seller in respect of
the Assets or the Business within the past three (3) years, and Seller does not
know of any proposed tax assessment against Seller.
Seller and its Shareholders have made a valid S election pursuant to
Section 1362 of the Code and such election has not been revoked or otherwise
terminated. The Internal Revenue Service has not challenged and is not
challenging the S election.
3.20 TRANSACTIONS WITH MANAGEMENT. Except as set forth on EXHIBIT
"3.20", there are and there will be no contracts, leases, loans, commitments,
transactions, arrangements or other understandings, oral or written, between
Seller, its Shareholders and any Affiliate (excluding any employee of Seller who
is not an officer or director of Seller or a Shareholder, his spouse or child).
Except as set forth on EXHIBIT "3.20", Seller has no accounts with or loans to,
or from, its Shareholders or any Affiliate. Except as set forth on EXHIBIT
"3.20", neither Seller, its Shareholders nor any Affiliate (except for ownership
interests in publicly traded companies whose shares are traded on a national
stock exchange or over-the-counter markets and excluding any employee of Seller
who is not an officer or director of Seller or a Shareholder, his spouse or
child) has any direct or indirect interest in any competitor, supplier, or
customer of Seller or in any party from, or to,
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whom Seller leases any real or personal property or in any other person with
whom Seller is doing business.
3.21 INSURANCE. Attached hereto as EXHIBIT "3.21", is the Schedule of
Insurance, which lists all insurance policies and arrangements of Seller,
including the name of the insurer, the insured, the beneficiary, the policy
number, the amount of the coverage, and the dates of commencement and
termination. Seller has not been refused any insurance with respect to its
assets or operations, nor has its coverage been limited, by any insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance since January 1, 1994.
Seller, since January 1, 1994, has maintained insurance for product
liability in a principal amount not less than One Million Dollars ($1,000,000)
per occurrence and in the aggregate of Five Million Dollars ($5,000,000) through
the Closing Date. Seller has maintained and now maintains (and paid all premiums
thereon when due) product liability insurance on an "occurrence basis."
3.22 AGENTS AND EMPLOYEES. To be attached hereto as EXHIBIT "3.22" at
the Closing is a complete list of the names and addresses of all sales
representatives, employees, agents, independent consultants (excluding attorneys
and accountants), and contractors of Seller stating the rates of compensation
payable to each of them. Except as otherwise noted on EXHIBIT "3.22", no
employee of Seller is subject to any confidentiality, non-disclosure or
non-compete agreement with Seller or to the best of Seller's knowledge, any
other company.
3.23 NO DEFAULT UNDER THE ASSUMED LIABILITIES. No event has occurred
within the last twelve (12) months, or which with the passage of time will
occur, which constitutes a default or an event of default under any of the
Assumed Liabilities. Seller has fulfilled and will continue to fulfill all of
its obligations, and has made and will continue to make all payments due
thereunder to the date of Closing, and is in full compliance with all of
Seller's obligations thereunder.
3.24 FINDER'S FEE. Neither Seller nor its Shareholders has incurred or
become liable for any broker's commission or finder's fee relating to, or in
connection with, the transactions contemplated by this Agreement or taken any
action whatsoever to cause Buyer to incur or become liable for any such
commission or fee.
3.25 FULL DISCLOSURE OF REPRESENTATIONS. To Seller's knowledge, no
representation, covenant, or warranty by Seller and no statement, Schedule or
Exhibit furnished to Buyer pursuant
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hereto, omits or will omit to state a material fact necessary to make any
representations, covenants, and/or warranties of Seller under this Agreement not
misleading.
ARTICLE IV
COVENANTS OF SELLER
-------------------
In order to induce Buyer to enter into this Agreement and perform its
obligations hereunder, Seller hereby makes the covenants and agreements set
forth in this ARTICLE IV.
4.1 CONDUCT OF BUSINESS. Between the date of this Agreement and the
Closing, Seller will do the following unless Buyer shall otherwise consent in
writing:
A. Conduct the Business only in the ordinary course and refrain from
changing or introducing any method of management or operations or entering into
any material transaction except in the ordinary course of business and
consistent with prior practices;
B. Without limiting the generality of the preceding Section 4.1A,
refrain from the following:
(i) making any purchase, sale, transfer, assignment, or disposition of
any asset or property or waiving any right of material value, other than in the
ordinary course of business;
(ii) mortgaging, pledging, subjecting to a lien or otherwise
encumbering any of its properties or the Assets except Permitted Encumbrances;
(iii) incurring any contingent liability as a guarantor or otherwise
with respect to the obligations of others;
(iv) incurring any other contingent or fixed obligations or liabilities
except those that are usual and normal in the ordinary course of business;
(v) making sales on other than Seller's current terms and conditions
with respect to such customer (including price and terms of payment) and in the
ordinary course of business;
(vi) borrowing any amount or incurring or becoming subject to any
material liabilities, except normal borrowings under its existing credit
facilities, other current liabilities incurred in the ordinary course of
business and liabilities under contracts entered into in the ordinary course of
business;
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(vii) discharging or satisfying any material lien or encumbrance or
paying any material liability, other than current liabilities paid in the
ordinary course of business;
(viii) canceling without fair consideration any material debts or
claims owing to or held by it;
(ix) granting any bonus or any wage or salary increase to any employee,
officer or shareholder or group of employees other than pursuant to any
contractual obligation specifically disclosed in this Agreement or any Exhibit
to this Agreement.
(x) granting any increase in any employee benefit plan or arrangement
(except in accordance with past custom and practice), or amending or terminating
any existing employee benefit plan or arrangement or adopting any new employee
benefit plan or arrangement (except as required by law);
(xi) making any capital expenditures or commitments therefor that
aggregate in excess of Twenty-Five Thousand Dollars ($25,000);
(xii) making any loans or advances to, or guarantees for the benefit
of, any persons, except for advances made to employees for expenses in the
ordinary course of business; or
(xiv) entering into any new labor agreement or commitment.
C. Use its best efforts to keep intact its business organization, to
retain its present officers and employees (other than such officers and
employees, if any, who have been advised by Buyer or Seller that Buyer as of the
Closing Date will not be extending an offer of employment thereto) and to
preserve the goodwill of all suppliers, customers, and others having business
relations with it;
D. Have in effect and maintain at all times all insurance of the kind,
in the amount, and with the insurers set forth in the Schedule of Insurance
heretofore delivered to Buyer;
E. Permit Buyer and its authorized representatives to have at
reasonable times upon reasonable notice to Seller full access to all of Seller's
properties, assets, records, contracts, and documents, and furnish to Buyer or
its authorized representative such financial and other information as Buyer may
from time to time reasonably request including but not limited to, monthly
interim financial statements within ten (10) days following the end of the
month; PROVIDED, HOWEVER, that
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Buyer shall not initiate any contact with Seller's customers for the purpose of
evaluating the Business without in each case first obtaining the consent of
Seller.
F. Not merge with or consolidate with any other corporation or acquire
all or substantially all of the business or other assets of any other person,
firm, associate, or corporation;
G. Not take any action, or omit to take any action, which, to Seller's
knowledge, would cause a breach of or default under any of Seller's material
contracts, leases, or commitments; and
H. Notify Buyer promptly of any material adverse event or material
change in the Business or affairs of Seller.
4.2 ASSIGNMENT OF LEASES AND CONTRACTS. Prior to Closing, Buyer shall
notify Seller of those leases and contracts that Buyer elects to assume which
assumed contracts shall include but not be limited to those listed in on EXHIBIT
"3.13A through C". Seller and Buyer shall take all steps reasonably requested by
the other in order to facilitate and expedite the assignment to Buyer at the
closing of all leases, contracts, and agreements which Buyer elects to assume.
Such steps shall include efforts to obtain the other parties' consent to such
assignment if required by the appropriate instrument or document. Buyer agrees
to pay all reasonable costs and expenses (including bond counsel fees but
expressly excluding IRB prepayment fees, if any) which directly relate to the
assumption by Buyer of the IRB Loan and the Lease between the Partnership and
the Xxxxxx-Xxxxxx Industrial Building Authority; all other costs and expenses
incurred pursuant to this Section 4.2 shall be borne by Seller.
4.3 BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS. Between the
date hereof and the Closing, promptly upon the occurrence of, or promptly upon
Seller becoming aware of the impending or threatened occurrence of, any event
which would cause or constitute a breach, or would have caused or constituted a
breach had such event occurred or been known to Seller prior to the date hereof,
of any of the representations, warranties or covenants of Seller contained in
this Agreement, Seller shall give detailed written notice thereof to Buyer and
shall use its best efforts to prevent or promptly remedy the same.
4.4 CONSUMMATION OF AGREEMENT. Seller shall use its best efforts to
perform and fulfill all conditions and obligations on its part to be performed
and fulfilled under this Agreement.
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4.5 COOPERATION. Seller shall use its best efforts to cause the Closing
to occur on May 30, 1997 and shall not undertake any course of action
inconsistent with such intended result.
4.6 REGULATORY FILINGS. Seller shall promptly take all actions
necessary to make each filing it is required to make with any governmental
agency or authority as a condition to or consequence of the consummation of this
Agreement, and shall use its best efforts to assist Buyer in making such
required filings.
4.7 INJUNCTIONS. If any United States court having jurisdiction over
Seller issues or otherwise promulgates any Injunction, Seller shall use its best
efforts to have such Injunction dissolved or otherwise eliminated as promptly as
possible; PROVIDED, HOWEVER, that the foregoing provision shall not require
Seller to take any action other than to pursue the litigation diligently and in
good faith.
4.8 TAXES. Seller covenants and agrees that it will prepare and file
all tax returns required to be filed by it including without limitation payroll,
workers compensation, state and federal unemployment tax returns and pay all
amounts due thereunder.
4.9 TERMINATION OF EMPLOYMENT BY SELLER. Seller shall terminate the
employment of all of the employees of the Business immediately prior to the
effective time of the transaction contemplated by this Agreement on the Closing
Date, so that at the effective time, Seller shall employ no one in the Business.
Seller shall submit to Buyer for approval (which shall not be unreasonably
withheld or delayed) any form of letter or memorandum notifying employees of the
Business that their employment with Seller is being terminated. Seller shall
bear all resulting liabilities, if any, caused by or arising from such
termination, including, but not limited to:
(i) severance pay;
(ii) accrued wages or vacation pay;
(iii) sick leave;
(iv) unemployment compensation;
(v) claims for back pay and/or reinstatement;
(vi) claims for contributions or benefits under the provisions of any
Plan;
(vii) claims asserting the right to participate in any medical
insurance program under COBRA or comparable state law;
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(viii) any funding or withdrawal liability relating to any Plan; and
(ix) any and all claims arising out of employment on or prior to the
Closing Date.
Seller hereby agrees that it will not notify, promise, represent,
advise or otherwise communicate to any employee that Buyer is obligated to hire
or will hire any or all such employees or otherwise make any offer of employment
on behalf of Buyer, without Buyer's prior written consent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer, in order to induce Seller to sell the Assets to Buyer hereunder,
hereby makes the following representations and warranties, each of which shall
be true and correct on the execution hereof except as otherwise specified herein
and will be true and correct on the Closing Date.
5.1 ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Ohio with
full corporate power to own or lease its properties and to conduct its business.
Buyer, as of the Closing Date, will be qualified to do business as a foreign
corporation in Georgia.
5.2 AUTHORITY OF BUYER.
------------------
A. All necessary action, corporate or otherwise, has been taken by
Buyer to authorize the execution, delivery, and performance of this Agreement
and the other documents contemplated hereby.
B. The execution and delivery of this Agreement, and the performance of
the obligations by Buyer under this Agreement will not violate, contravene, be
in conflict with, result in a breach of or constitute (with or without notice or
lapse of time or both) a default under: (i) any provision of law; (ii) any
order, rule or regulation of any court, arbitrator or other agency of
government; (iii) any provision of the Articles of Incorporation or Code of
Regulations of Buyer; or (iv) any lease, indenture, agreement or other
instrument to which Buyer or its properties or assets is or may be bound.
C. Buyer has the right, power, legal capacity, and authority to enter
into and to and perform its obligations under this Agreement, and no consent,
approval or authorization of, or
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registration, declaration, or filing with any governmental authority (federal,
state or local, domestic or foreign), collective bargaining unit, lending
institution or other third party is required in connection with the execution
and delivery by Buyer of this Agreement or its performance of, or compliance
with, the terms, provisions and conditions hereof.
D. This Agreement constitutes the valid and binding obligation of Buyer
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights or by general principles of equity.
5.3 FINDER'S FEE. Buyer has not incurred nor become liable for any
broker's commission or finder's fee relating to, or in connection with, the
transactions contemplated by this Agreement or taken any action whatsoever to
cause Seller to incur or become liable for any such commission or fee.
5.4 LITIGATION. No litigation is pending or, to the best of Buyer's
knowledge, threatened against Buyer which could prevent it from entering into,
or performing its obligations under, this Agreement.
ARTICLE VI
COVENANTS OF BUYER
------------------
Buyer, in order to induce Seller to enter into this Agreement and to
perform the obligations hereunder, hereby makes the covenants and agreements set
forth in this ARTICLE VI.
6.1 BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS. Between the
date hereof and the Closing, promptly upon the occurrence of, or promptly upon
Buyer becoming aware of the impending or threatened occurrence of, any event
which would cause or constitute a breach, or would have caused or constituted a
breach had such event occurred or been known to Buyer prior to the date hereof,
of any of the representations, warranties or covenants of Buyer contained in
this Agreement, Buyer shall give detailed written notice thereof to Seller and
shall use its best efforts to prevent or promptly remedy the same.
6.2 CONSUMMATION OF AGREEMENT. Buyer shall use its best efforts to
perform and fulfill all conditions and obligations on its part to be performed
and fulfilled under this Agreement.
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6.3 COOPERATION. Buyer shall use its best efforts to cause the Closing
to occur on May 30, 1997, and shall not undertake any course of action
inconsistent with such intended result.
6.4 REGULATORY FILINGS. Buyer shall promptly take all actions necessary
to make each filing it is required to make with any governmental agency or
authority as a condition to or consequence of the consummation of this
Agreement, including without limitation the filings required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, if applicable, and shall
use its best efforts to assist Seller in making such required filings.
6.5 INJUNCTIONS. If any United States court having jurisdiction over
Buyer issues or otherwise promulgates any Injunction, Buyer shall use its best
efforts to have such Injunction dissolved or otherwise eliminated as promptly as
possible, PROVIDED, HOWEVER, that the foregoing provision shall not require
Buyer to dispose of any of its assets or business or to agree to any restriction
on its ownership, acquisition or disposition of assets or the conduct of its
business or take any action other than to pursue the litigation diligently and
in good faith.
6.6 ACCESS TO RECORDS AND FILES. For a period of six (6) years after
the Closing Date, Buyer shall preserve and grant to Seller reasonable access to,
and the right to make copies and extracts of, such books, accounts, records, and
other similar information (including the information referred to in Section
2.1(x) hereof) transferred to Buyer pursuant to the terms of this Agreement, for
any reasonable purposes of Seller. Notwithstanding the foregoing, at any time
which is at least three (3) years following the Closing Date, Buyer shall have
the right to destroy any of such books, accounts, records, and other similar
information that do not pertain to tax or accounting matters provided that Buyer
gives Seller at least forty-five (45) days advance written notice of Buyer's
intent to destroy. During such forty-five (45) day period, Seller shall have the
right to copy at its sole expense or to take possession of all or any part of
the books, accounts, records, or other similar information to be destroyed.
6.7 OFFER OF EMPLOYMENT. Buyer represents and covenants that it will
offer employment to substantially all of the former employees of Seller engaged
in the Business so as to avoid a "mass layoff" or "plant closing" as defined in
WARN, and consequently, any requirement by Seller to comply with the notice
provisions of WARN. Buyer represents and covenants it will not at any time
within sixty-five (65) days (or such longer period provided by applicable law)
after the Closing Date engage in a "mass layoff" or "plant closing" as these
terms are defined in WARN or any similar
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conduct in violation of applicable state law. Further, Buyer agrees to credit
service by each employee of Seller for purposes of determining any future
benefits which may be owing to any of Seller's employees who accept Buyer's
offer for employment and who are eligible to participate in Buyer's vacation
plan, severance plan, or any other employee benefit plan sponsored by Buyer.
Nothing contained in this Section 6.7 or elsewhere in this Agreement is intended
to prevent Buyer from operating the Business consistent with past practice in
connection with temporary layoff of employees.
6.8 OLYMPIC MEDICAL INSURANCE COVERAGE. As of the Closing Date, active
employees of Seller: (i) who are currently participating in Seller's group
health insurance plan, and (ii) who become employees of Buyer as of the Closing
Date, shall become eligible for participation, subject to any limitations for
preexisting condition, in a group health plan (as defined for purposes of
Section 4980B of the Code) established and maintained by Buyer for the general
benefit of its employees and their dependents, so that Seller shall not be
required to provide continued health coverage under Part 6 of Title I of ERISA
4980B of the Code to any employee of Seller, or any qualified beneficiary (as
defined for purposes of Section 4980B of the Code) with respect to any employee
of Seller, who becomes covered under such plan. Buyer is not assuming pursuant
to this Agreement any obligation of Seller to provide health insurance
continuation coverage to employees of Seller that are not hired by Buyer.
6.9 REDEMPTION OF BONDS. Since, as a result of the Transaction,
interest on the Xxxxxx-Xxxxxx Industrial Building Authority Tax-Exempt
Adjustable Mode Industrial Development Revenue Bonds (Southeastern Metal
Processing, Inc. Project) Series 1994, originally issued in the aggregate
principal amount of $3,700,000 (the "Bonds") issued in connection with the IRB
Loan may be deemed to have become taxable as a result of the exceeding the $10
million limitation imposed by Section 144 of the Code, Buyer agrees to cause
the Bonds to be redeemed as soon as practicable, as determined by Bond counsel,
but in any event by no later than July 14, 1997. Alternatively, if feasible, in
the opinion of Bond counsel, Buyer will have the Bonds reissued as, or
refinanced by, taxable bonds, at Buyer's risk and expense.
ARTICLE VII
ACCOUNTS RECEIVABLE
-------------------
Seller agrees that Buyer, after the Closing Date through the 90-Day
Period, shall have the right and authority to collect the receivables and to
endorse, without recourse and without warranties of any kind, the name of Seller
on any checks or other negotiable instruments or evidences of indebtedness
received by Buyer on account of such receivables. Through the 90-Day Period, all
amounts collected by Buyer from payments by a customer that do not designate to
which receivable such payment is to be applied shall be applied to the oldest
outstanding receivable from such customer. Through the 90-Day Period, all
amounts paid by customers against a specific invoice shall be credited against
such invoice. Following the 90-Day Period, Buyer shall remit to Seller any
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amount collected by Buyer in respect of accounts receivable not purchased by
Buyer as part of the Assets, net of any chargebacks, credits or other deductions
claimed by the account debtor against such Excluded Asset.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
----------------------------------
Buyer's obligations to consummate this Agreement and the transaction
contemplated hereby are subject to the fulfillment, prior to or at the Closing,
of the following conditions precedent:
8.1 REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the
representations, warranties and covenants of Seller contained herein shall be
true and correct in all material respects as though made on and as of the date
hereof and the Closing Date. Seller shall, on or before the Closing, have
performed all of its obligations hereunder which by the terms hereof are to be
performed on or before the Closing. Seller shall have delivered to Buyer an
officer's certificate of Seller dated as of the Closing Date to the foregoing
effect.
8.2 OPINION OF SELLER'S AND SHAREHOLDERS' COUNSEL. At the Closing,
Buyer shall have received from Powell, Goldstein, Xxxxxx & Xxxxxx LLP, counsel
for Seller and Shareholders, an opinion dated as of the date of the Closing, in
the form attached hereto prior to Closing as EXHIBIT "8.2".
8.3 DELIVERY OF SCHEDULES AND EXHIBITS. Seller shall have delivered to
Buyer all of the Exhibits and Schedules required to be delivered by Seller on or
before the Closing Date, in form and substance reasonably satisfactory to Buyer.
8.4 DAMAGE OR DESTRUCTION. There shall not have been any material
adverse damage to or destruction of the Assets (whether or not covered by
insurance).
8.5 NO MATERIAL ADVERSE CHANGE. Since the date of execution, there have
not been:
(i) any material adverse change in the financial condition of
Seller;
(ii) any labor dispute with respect to employees of Seller who
render services to Seller, other than routine grievance matters that
are not in the aggregate, material, except such disputes as arise from
this Agreement and the performance of Seller's obligations hereunder;
and
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(iii) any other event or condition that materially and
adversely affects the Assets or the conduct of Seller's Business.
Seller shall deliver to Buyer at Closing, an officer's certificate to the
foregoing effect.
8.6 CONSENTS. Seller shall have received all consents necessary to
transfer the Assets to Buyer hereunder and to permit Buyer to assume the
obligations Buyer is assuming pursuant to the Assignment and Assumption of
Contracts, including, in particular, the consents of the Issuer of the IRB and
the Bank and a bond counsel's opinion on the assignment of the IRB.
8.7 INJUNCTIONS. There shall not be in effect any Injunctions.
8.8 TRANSFER OF REAL PROPERTY. The Closing contemplated hereunder and
the Closing contemplated under the Real Property Purchase Agreement shall occur
simultaneously and each of the conditions precedent described in Section 21 of
the Real Property Purchase Agreement shall have been satisfied. Such conditions
include, without limitation, delivery by Seller of: (i) an "as built" survey
with respect to the Real Property, including buildings, improvements and
appurtenances included in the Assets, and (ii) an ALTA 1970-B title policy
issued by Chicago Title Insurance Company or another insurance company
reasonably satisfactory to Buyer.
8.9 APPRAISAL AND ENVIRONMENTAL AUDIT. Buyer, at its expense, shall
have received and approved in its sole and absolute discretion an appraisal of
the Assets and the environmental audit conducted with respect to the Real
Property. In the event any "Level I" Site Assessment Report conducted with
respect to the Real Property recommends that additional ("Level II")
environmental testing be conducted with respect to the Real Property, and the
results of such "Level II" environmental audit shall be satisfactory to Buyer,
in its sole and absolute discretion.
8.10 SHAREHOLDER NON-COMPETITION AGREEMENTS. Buyer shall have obtained
the Non- Competition Agreements, substantially in the form of EXHIBIT "H"
attached hereto from each of the Shareholders.
8.11 GUARANTEES. Each of the Shareholders shall execute personal
guarantees, substantially in the form of EXHIBIT "I" hereto, with respect to the
representations, warranties and covenants of Seller.
8.12 CANCELLATION OF SUBLEASE. The sublease between the Partnership, as
lessor, and Southeastern, as lessee, shall be terminated. There shall also be
terminated all other contractual
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obligations between Southeastern and the Partnership, or either such party, and
an Affiliate relating to the Assets or the Business.
8.13 OFF-SITE "CUT-TO-LENGTH" PROCESSING EQUIPMENT. Buyer shall have
examined the cut-to-length processing equipment presently stored at 000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxx and shall have received a letter from the owner of
said facility, in form and substance reasonably satisfactory to Buyer,
confirming Seller's ownership of such equipment.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SELLER AND SHAREHOLDERS
----------------------------------------------------
Seller's and Shareholders' obligations to consummate this Agreement and
the transactions contemplated hereby are subject to the fulfillment, prior to or
at the Closing, of the following conditions precedent:
9.1 REPRESENTATIONS, WARRANTIES, COVENANTS. Each of the
representations, warranties and covenants of Buyer contained in ARTICLE V, and
the covenants contained in ARTICLE VI, shall be true and correct in all material
respects as though made on and as of the Closing Date. Buyer shall, on or before
the Closing, have performed all of its obligations hereunder which by the terms
hereof are to be performed on or before the Closing. Buyer shall have delivered
to Seller an officer's certificate of Buyer dated as of the Closing Date to the
foregoing effect.
9.2 OPINION OF BUYER'S COUNSEL. At the Closing, Seller shall have
received from Kahn, Kleinman, Xxxxxxxx & Xxxxxx Co., L.P.A., counsel for Buyer,
an opinion dated as of the Date of Closing, in the form attached hereto as
EXHIBIT "9.2".
9.3 DELIVERY OF DOCUMENTS. All documents to be delivered by Buyer
pursuant to this Agreement shall have been executed and delivered to Seller in
form and substance satisfactory to Seller in its sole and absolute discretion.
9.4 INJUNCTIONS. There shall not be in effect any Injunctions.
9.5 TRANSFER OF REAL PROPERTY. The Closing contemplated hereunder and
the Closing contemplated under the Real Property Purchase Agreement shall occur
simultaneously.
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ARTICLE X
INDEMNIFICATION
---------------
10.1 INDEMNIFICATION BY SELLER.
-------------------------
A. Subject to the limitations contained in Section 10.1B and 10.1C,
Seller hereby agrees to indemnify, defend and hold harmless Buyer and its
directors, officers, employees, agents and assigns at all times from and after
the date of this Agreement and the Closing Date, against, and in respect of any
and all damage, loss, deficiency, cost and/or expense, including attorneys or
accountants fees arising from or relating to:
(i) any misrepresentation, omission, breach of warranty, representation
or covenant, or non-fulfillment of any obligation on the part of Seller under
this Agreement, any certificate, Schedule or Exhibit, or other instrument
furnished to Buyer in connection with this Agreement;
(ii) except for the obligations assumed by Buyer under Section 2.2 the
activities, operations, debts, liabilities, chooses in action or claims of any
nature, absolute or contingent (including, but not limited to obligations for
taxes and interest and penalties thereon) of Seller;
(iii) Seller's failure to comply with the provisions of the Bulk Sales
Act of any state in the United States (except to the extent that such losses,
costs, expenses and damages result solely from Buyer's failure to pay Seller's
trade payables being assumed by Buyer as part of the Assumed Liabilities);
(iv) any claims, violations or alleged violations by Seller of any
laws, statutes, codes, ordinances, rules, or regulations whether foreign, state,
federal, or local, including but not limited to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, OSHA, COBRA and WARN;
(v) the filing (or failure to file) or payment (or non-payment) of any
taxes by Seller, pursuant to any federal, state, local, or foreign income tax,
excise or franchise tax, ad valorem, sales and use tax, payroll tax, and/or
F.I.C.A. taxes or any deficiencies in any taxes payable by or on behalf of
Seller or its Shareholders;
(vi) any and all claims, grievances or arbitrations and/or judgments
for unfair labor practices for acts committed by Seller before the Closing Date
whether filed prior to, on, or after the
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Closing Date with the National Labor Relations Board or any comparable federal,
state, or local board, agency, or commission, or any state or federal court;
(vii) any liabilities of Seller not expressly assumed by Buyer
hereunder;
(viii) the infringement or alleged infringement by Seller of any
patent, Trade Secret, trademark, trade name, service xxxx, copyright right, or
proprietary interest of others;
(ix) any and all suits, actions, liabilities, losses, obligations,
penalties or claims arising under or resulting from any Plan, whether or not
imposed or arising prior to the Closing Date, including, without limitation, any
suit, action, liability, loss, obligation, penalty or claim arising out of the
allegation or imposition of successor employer status upon Buyer;
(x) Seller's Product Liability Obligation;
(xi) any and all actions, suits, proceedings, demands, assessments,
penalties, fines, judgments, costs and legal and other expenses incident to any
of the foregoing.
B. Seller's indemnity obligations under this Section 10.1 and the
Shareholders' Guarantees shall be Buyer's only and exclusive remedies for any
breach of a representation, warranty or covenant under this Agreement or any of
the Exhibits or Schedules to this Agreement or the Real Estate Purchase
Agreement. However, nothing herein shall limit Buyer's equitable rights with
respect to any fraud by Seller or the Shareholders arising out of the
transaction contemplated by this Agreement.
(i) The indemnity obligation of Seller contained in this Section 10.1
shall expire twelve (12) months after the Closing Date except for indemnity
obligations arising out of a breach by Seller of any representation and warranty
contained in Sections 3.1, 3.2 (other than 3.2B(i)(d) and 3.2C), 3.4D, 3.18 and
3.19 (the "Excluded Claims"), which shall extend for a period of three (3) years
following the Closing Date. The foregoing limitations shall not apply with
respect to those pending claims for indemnification for which written notice was
given by Buyer to Seller within the applicable time period.
(ii) Seller will have no liability under Section 10.1 with respect to
any individual claim, or series of related claims of less than One Thousand
Dollars ($1,000). In no event will Seller's liability for indemnification under
this Section 10.1 exceed the amount deposited under the Escrow Agreement, except
that this limitation shall not apply to the Excluded Claims or to claims arising
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out of Seller's failure to pay when due any liabilities of Seller which are not
Assumed Liabilities hereunder.
10.2 INDEMNIFICATION BY BUYER.
------------------------
A. Buyer agrees to indemnify, defend, and hold harmless Seller and its
directors, officers, shareholders, employees, agents, and assigns at all times
from and after the date of this Agreement against, and in respect of, any and
all damage, loss, deficiency, cost, and/or expense, including attorneys' or
accountants' fees arising from or relating to:
(i) a breach of any representation, warranty, covenant or agreement on
the part of Buyer under this Agreement or under any document executed and
delivered by Buyer in connection herewith;
(ii) Buyer's Product Liability Obligation;
(iii) the failure of Buyer to pay or perform any of the Assumed
Liabilities;
(iv) any claims, violations or alleged violations by Buyer of any laws,
statutes, codes, ordinances, rules, or regulations whether foreign, state,
federal, or local, including but not limited to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, OSHA, COBRA, ERISA and WARN
which arise from any conduct or act of Buyer occurring on or after the Closing
Date; and
(v) any and all actions, suits, proceedings, demands, assessments,
penalties, fines, judgments, costs and legal and other expenses incident to any
of the foregoing.
B. Buyer's indemnity obligation under this Section 10.2 shall be
Seller's only and exclusive remedies for any breach or representation warranty
or covenant by Buyer under this Agreement or any of the Exhibits or Schedules of
this Agreement, or the Real Estate Purchase Agreement. However, nothing herein
shall limit Seller's equitable rights with respect to any fraud by Buyer arising
out of the transaction contemplated by this Agreement.
C. The indemnity obligations in this Section shall expire three (3)
years after the Closing Date except for those pending claims for indemnification
for which written notice was given by Seller to Buyer within three (3) years
after the Closing Date.
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10.3 THIRD PARTY CLAIM AGAINST BUYER OR SELLER. If any claim is made by
a third party against Buyer or Seller which would result in a right to
indemnification hereunder ("Indemnified Party"), then the Indemnified Party
shall give prompt written notice to the other party ("Indemnifying Party")
stating in reasonable detail the nature of the claim and attaching a copy of the
claim. Within ten (10) business days after receipt of such notice, the
Indemnifying Party shall notify the Indemnified Party whether or not it intends
to undertake the defense of the claim. If the Indemnifying Party undertakes the
defense of the claim, the Indemnifying Party shall select counsel reasonably
satisfactory to the Indemnified Party and after such selection, any additional
attorneys' fees incurred by the Indemnified Party shall not be subject to
indemnification hereunder; PROVIDED, HOWEVER, that the Indemnified Party may
participate, at its own expense, in the defense of the claim. If the
Indemnifying Party fails to undertake the defense of the claim within said ten
(10) day period, the Indemnified Party shall undertake the defense thereof, in
which case all costs and expenses relating to the defense including but not
limited to reasonable attorneys' fees incurred by the Indemnified Party shall be
the obligation of the Indemnifying Party subject to indemnification by the
Indemnifying Party hereunder.
ARTICLE XI
TERMINATION
-----------
11.1 GENERALLY. This Agreement may be terminated on or before the
Closing Date:
(i) by the mutual written consent of Seller and Buyer;
(ii) by Buyer, if there has been a material violation or breach by
Seller of any of Seller's agreements, representations or warranties contained in
this Agreement which has not been waived in writing;
(iii) by Seller, if there has been a material violation or breach by
Buyer of any of Buyer's agreements, representations or warranties contained in
this Agreement which has not been waived in writing; or
(iv) by either party in the event the Closing has not occurred by
August 31, 1997.
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11.2 RIGHT TO PROCEED. Anything in this Agreement to the contrary
notwithstanding, if any of the conditions specified in ARTICLE VII hereof have
not been satisfied, Buyer shall have the right to waive one or more conditions
precedent and proceed with the transactions contemplated hereby without waiving
any of its other rights hereunder, and if any of the conditions specified in
ARTICLE VIII hereof have not been satisfied, Seller shall have the right to
waive one or more conditions precedent and proceed with the transactions
contemplated hereby without waiving any of its other rights hereunder; PROVIDED,
HOWEVER, that if a party shall so elect to proceed, such party shall not
thereafter attempt to hold the other party responsible for damages, liabilities,
losses, or expenses resulting from the condition or conditions waived and such
other party shall not be responsible for such damage, liabilities, losses or
expenses.
ARTICLE XII
CLOSING OF TRANSACTION
----------------------
12.1 CLOSING. The Closing shall take place at the offices of Powell,
Goldstein, Xxxxxx & Xxxxxx LLP, Sixteenth Floor, One Ninety Xxx Xxxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxx 00000 at 10:00 a.m. local time on May 30, 1997.
12.2 CLOSING CERTIFICATE. Upon Closing, the parties shall execute a
certificate in the form attached hereto as EXHIBIT "J" confirming the time of
Closing (the "Closing Certificate") and such Closing shall be deemed effective
as of 12:01 a.m. Eastern Daylight Time on the Closing Date.
12.3 CLOSING DOCUMENTS.
A. DOCUMENTS TO BE PROVIDED BY SELLER. At the Closing, Seller shall
deliver to Buyer the following, authorizing the execution and delivery of this
Agreement and all other documents being entered into by Southeastern, the
Partnership or the Shareholders related to, or arising from, this Agreement:
(1) General Assignment and Xxxx of Sale;
(2) All books and records of Seller (except the minute books, seal,
stock records and income tax returns), pertaining to the Assets, including but
not limited to original documents of all contracts or leases being assumed by
Buyer hereunder;
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(3) A certificate of the Secretary of Southeastern containing: (i) a
certified copy of the Articles of Incorporation of Southeastern; (ii) a copy of
the Bylaws of Southeastern and (iii) resolutions of the directors and
Shareholders authorizing the execution and delivery of this Agreement and the
other documents being entered into by Southeastern;
(4) Certificate of Good Standing of Southeastern from the Secretary of
State of the State of Georgia dated not more than fifteen (15) days before the
Closing Date;
(5) Certified copy of Certificate of Partnership of the Partnership
from the Xxxxxx County (Georgia) Recorder dated not more than fifteen (15) days
before the Closing Date;
(6) Estimated Closing Statement; and
(7) Updated Schedule of Contracts;
(8) Closing Schedule of Accounts Payable (to be provided within thirty
(30) days following the Closing Date);
(9) Schedule of Agents and Employees;
(10) Opinion of Seller's Counsel;
(11) Executed Real Property Purchase Agreement, all applicable deeds,
and all other documents and instruments to be delivered to Buyer pursuant to the
Real Property Purchase Agreement;
(12) Consent to Assignment and Assumption from Bank and First-Citizens
Bank & Trust Company, as Trustee under the IRB Loan documents, all lessors and
others from whom consent is required;
(13) Copies of Partnership Authorization executed by the partners of
the Partnership authorizing the execution and delivery of this Agreement, the
Real Property Purchase Agreement and all other documents being entered into by
the Partnership related to, or arising from, this Agreement;
(14) Valid, recordable releases of and UCC termination statements with
respect to all UCC liens, charges, or encumbrances against the Assets, excluding
those liens related to the IRB Loan;
(15) Payoff and Release from Bank with respect to the Term Loan;
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(16) Certificate from Seller representing that: (i) all conditions
precedent to the Closing have been satisfied; (ii) the representations and
warranties of Seller are true in all material respects; and (iii) no material
adverse event has occurred between the execution of the Agreement and the
Closing Date;
(17) Amended Articles of Incorporation for Seller, changing Seller's
corporate name to delete the words "Southeastern Metal Processing" therefrom,
together with a check to the Georgia Secretary of State and such other documents
as shall permit Buyer to file (on Seller's behalf) such Amended Articles of
Incorporation;
(18) Executed Non-Competition Agreement from each Shareholder;
(19) Executed Guaranty from the Shareholders;
(20) Executed Escrow Agreement;
(21) Executed Consent to Use of Name;
(22) Such other documents which Buyer reasonably deems necessary to
effectuate the transactions contemplated by this Agreement.
B. DOCUMENTS TO BE PROVIDED BY BUYER. At the Closing, Buyer shall
deliver to Seller the following:
(1) Certified checks or wire transfer of immediately available federal
funds for the cash amount due under the Estimated Purchase Price Reconciliation;
(2) Certified Resolutions of the Board of Directors of Buyer
authorizing the execution and delivery of the Agreement;
(3) Opinion of Buyer's Counsel;
(4) Assignment and Assumption of Contracts;
(5) Purchase Price Allocation;
(6) Certificate from Buyer representing that: (i) all conditions
precedent to the Closing have been satisfied; and (ii) the representations and
warranties of Buyer are true;;
(7) Executed Escrow Agreement;
(8) Such other documents which Seller reasonably deems necessary to
effectuate the transactions contemplated by this Agreement.
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12.4 RISK OF LOSS. Risk of Loss with respect to the Assets shall pass
to Buyer effective as of 12:01 a.m. local time on the Closing Date.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1 BINDING EFFECT. This Agreement shall be binding upon, and the
benefit thereof shall inure to the parties hereto and their respective
successors and assigns, including the Shareholders after any liquidation of
Seller; provided, however, that this Agreement may not be assigned by either
party without the prior written consent of the other, except in connection with
the sale of substantially all the assets of Buyer (which in either case shall
not relieve Buyer of liability) or except to the Shareholders in any liquidation
of Seller (which shall not relieve Seller of liability). Notwithstanding
anything in the preceding sentence or elsewhere in this Agreement to the
contrary, Buyer may assign all or a portion of its rights hereunder and delegate
all or a portion of its obligations hereunder to a wholly-owned subsidiary or
other entity wholly or substantially owned or controlled by Buyer; PROVIDED,
HOWEVER, that notwithstanding any such assignment, Buyer shall remain directly
and primarily liable for each of its obligations under this Agreement as if no
such assignment had been made.
13.2 RECITALS; EXHIBITS AND SCHEDULES. The recitals contained at the
beginning of this Agreement, and all Schedules and Exhibits attached hereto
shall be deemed an integral part of this Agreement and shall be incorporated
herein by reference. The Exhibits and Schedules hereto shall be delivered
separately upon execution hereof or on the Closing Date, as applicable, and
initialed by the parties hereto and shall be deemed delivered under this
Agreement.
13.3 GOVERNING LAW. This Agreement is made and entered into, and shall
be governed by, and construed in accordance with, the laws of the State of Ohio.
13.4 NOTICES. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be either: (1) personally delivered; (2)
mailed by certified mail, return receipt requested; or (3) overnight courier
addressed as follows:
To Buyer: Xxxxxxx X. Xxxxxx, President
Olympic Steel, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxx Xxxxxxx, Xxxx 00000
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With copy to: Xxxx X. Xxxxxxxxxxx, Esq.
Kahn, Kleinman, Xxxxxxxx &
Xxxxxx Co., L.P.A.
Xxx Xxxxx xx Xxxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000
To Seller: Xxxxx X. Xxxxxxxx, President
Southeastern Trans-shipping, Inc.
0000 Xxxxxxxxxx
Xxxxxxxxxxxxx, Xxxxxxx 00000
With copy to: Xxxxxx X. XxXxxxx, Esq.
Powell, Goldstein, Xxxxxx & Xxxxxx LLP
Sixteenth Floor
One Ninety Xxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
To Xxxxxxxx: Xxxxx X. Xxxxxxxx
0000 Xxxxxxxxxx
Xxxxxxxxxxxxx, Xxxxxxx 00000
To Xxxxx: Xxxx X. Xxxxx
0000 Xxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
To Flint: Xxxxx Xxxxx
0000 Xxxxxxx Xxxxxxxx
Xxxxxxxxxxx, Xxxxxxx 00000
To Miniea: Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxx 00000
With copy to: Xxxxxxx Xxxxx, Esq.
Xxxxxxxxx & Xxxxx
Xxxxx 0000
0 Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
or to such other address as either party notifies the other by
certified mail. Notice shall be deemed given when personally delivered or when
deposited in the United States mail or with the overnight courier.
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13.5 FURTHER ASSURANCES. Buyer, Seller and Shareholders each agree that
they will, at any time and from time to time, do, execute, acknowledge and
deliver all such further acts, deeds, assignments, transfers, conveyances,
powers of attorneys and assurances as may be reasonably required for the better
assigning, transferring, granting, conveying, or assuring to Buyer, or its
successors or assigns, any or all of the Assets.
13.6 ENTIRE AGREEMENT. Except for: (i) other agreements or instruments
executed by the parties hereto in connection herewith, (ii) the obligations of
Buyer set forth in a Confidentiality Agreement dated March 21, 1997, and this
Agreement, together with its Exhibits, constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, negotiations, and discussions
whether oral or written.
13.7 WAIVERS. No waiver of any of the provisions of this Agreement
shall constitute a waiver of any other provisions (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
13.8 HEADINGS. Section, paragraph and subparagraph headings are not to
be considered part of this Agreement; they are included solely for convenience
and are not intended to be full or accurate descriptions of the contents hereof.
13.9 SEVERABILITY. All clauses of this Agreement are distinct and
severable and if any clause shall be held to be invalid or illegal, that shall
not effect the validity or legality of the remainder of the Agreement.
13.10 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original for all purposes,
but all of which shall constitute one and the same instrument.
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13.11 PUBLIC ANNOUNCEMENT. Except as otherwise may be required by
applicable law, all public notices and all other publicity concerning the
negotiation and consummation of the transaction contemplated by the parties
hereto shall be released or communicated jointly through the Closing Date.
13.12 TIME OF THE ESSENCE. Time is of the essence in the performance of
the terms and conditions of this Agreement.
13.13 ARBITRATION. Any dispute arising between the parties hereto shall
be resolved by arbitration in Atlanta, Georgia (or such other location as
otherwise agreed) in accordance with the Rules of the American Arbitration
Association, and the award of the arbitrator(s) shall be final and binding upon
the parties. In the event a demand for arbitration is filed pursuant hereto, the
parties shall have the same rights to discovery under the Georgia Rules of Civil
Procedure as if the dispute had been filed as an original action in a Georgia
Court of original jurisdiction, and any Court located in Atlanta, Georgia or
elsewhere shall have jurisdiction and shall be authorized to enforce said rights
as if the entire dispute were pending before said Court. All parties consent,
agree and submit to non-exclusive Georgia personal jurisdiction. Each of the
parties waives any defense of inconvenient forum to the maintenance of an action
in the above-referenced courts in Georgia.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
SOUTHEASTERN METAL OLYMPIC STEEL, INC.
PROCESSING, INC.
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ R. Xxxxx Xxxxxxxxxxxx
-------------------------------- ----------------------------
Xxxxx X. Xxxxxxxx, President R. Xxxxx Xxxxxxxxxxxx,
Chief Financial Officer
SOUTHEASTERN TRANS-SHIPPING
REALTY
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxx, Partner
And by: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx, Partner
And by: /s/ Xxxxx Xxxxx
-----------------------------
Xxxxx Xxxxx, Partner
And by: /s/ Xxxxxxx Xxxxxx
-----------------------------
Xxxxxxx Xxxxxx, Partner
/s/ Xxxxx X. Xxxxxxxx
------------------------------------
XXXXX X. XXXXXXXX, individually
/s/ Xxxx X. Xxxxx
------------------------------------
XXXX X. XXXXX, individually
/s/ Xxxxx Xxxxx
------------------------------------
XXXXX XXXXX, individually
/s/ Xxxxxxx Xxxxxx
------------------------------------
XXXXXXX XXXXXX, individually
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