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EXHIBIT 10.18
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made and entered into this
9th day of February, 1999 by and among XXXXX INCORPORATED, a Wisconsin
corporation ("Purchaser"), SEALEZE CORPORATION, a Virginia corporation
("Seller"), and XXXX X. XXXX (the "Shareholder").
RECITALS
Purchaser, Seller and the Shareholder acknowledge the
following:
A. Seller is engaged in the business of manufacturing and
selling strip brush products and related products to industrial and commercial
customers throughout the United States, Canada and other countries.
B. Seller desires to sell to Purchaser and Purchaser desires
to purchase and acquire from Seller all of the assets of Seller described below.
C. The Shareholder holds all of the outstanding stock of
Seller.
AGREEMENTS
In consideration of the recitals and mutual agreements which
follow, the parties agree as follows:
1. Transfer of Assets. Subject to the terms and conditions of
this Agreement, Seller agrees to sell and deliver to Purchaser and Purchaser
agrees to purchase and accept from Seller as the same shall exist on the Closing
Date (as defined in section 6), all of Seller's right, title and interest in and
to all of Seller's properties and rights of every kind and all of the operating
assets of Seller, wherever located and regardless of whether reflected on its
books, including, without limitation, Seller's business as a going concern and
the following assets, other than the Excluded Assets (as defined in section 2)
(collectively, the "Purchased Assets"):
1.01 Personal Property. All machinery, equipment,
leasehold improvements, tools, tooling, fixtures, furniture, furnishings and
other personal property and tangible assets, including, without limitation, the
personal property listed on Schedule 1.01.
1.02 Vehicles. Except as described in section 2, all
automobiles, trucks, trailers, automotive equipment and other owned vehicles, if
any, including, without limitation, the vehicles listed on Schedule 1.02
("Vehicles").
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1.03 Intangible Assets. All of Seller's right, title
and interest in and to all domestic and foreign patents, formulas, processes,
techniques, formulations, customer lists, supplier lists, operating records,
work orders, customer contracts, licenses, trade names, trademarks, service
marks, copyrights, government approvals, permits and authorizations (and
applications for any of the foregoing) and all technical know-how, trade
secrets, confidential information and other similar intangible assets,
including, without limitation, the use of the name "Sealeze" and all variations
of and logos associated with such name, the intangible assets described on
Schedule 1.03 and the goodwill associated with all of the foregoing
(collectively, the "Intangible Assets").
1.04 Leases. Leases of equipment and other tangible
personal property, which are described on Schedule 1.04, and all rights of
Seller thereunder ("Leases").
1.05 Contracts. Contracts or commitments entered into
by Seller, and all obligations and rights thereunder which are described on
Schedule 1.05 ("Contracts").
1.06 Prepaid Assets. All prepaid assets, including the
prepaid items listed on Schedule 1.06 (collectively, "Prepaid Assets").
1.07 Documents. Except for Seller's corporate minute
book and related corporate records, all records, computer software (including
without limitation the Telemagic software license, the TIW software license and
the SBT software license) and documents, books, supplier and customer lists,
work orders, copies of audit information and correspondence, drawings, copies of
financial information and all other documents used in connection with the
operation of Seller that are not exclusively personal to the Shareholder
("Documents").
1.08 Accounts Receivable. Except for the Excluded
Receivables (as defined in section 2.04), all trade and other accounts and notes
receivable and all notes, bonds and other evidences of indebtedness and rights
to receive payment from any person held by Seller, including the accounts
receivable listed on Schedule 1.08 ("Receivables").
1.09 Inventory. All inventories of raw materials,
work-in-process, finished goods, spare parts and supplies ("Inventory").
1.10 Licenses and Permits. Other than Seller's
business license from the County of Chesterfield, Virginia, all of Seller's
rights in all government licenses, permits and authorizations (and any
applications for any of the foregoing) held by Seller
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that are necessary for the operation of Seller's business, all of which are
listed on Schedule 1.10 ("Licenses and Permits").
1.11 Real Property. All right, title and interest of
Seller, whether in fee, lease or any other interest, in and to the real estate,
buildings, fixtures and improvements owned by Seller, including Seller's fee
ownership interest in the property legally described on Schedule 1.11 (the "Real
Property").
1.12 Claims. All claims or rights under insurance
policies owned by or obtained on behalf of Seller in respect of Purchased Assets
and Assumed Liabilities (as defined in section 3) and all causes of action,
judgments, claims and demands relating to the Purchased Assets and Assumed
Liabilities.
1.13 Employee Benefit Plans. All of Seller's rights in
employee benefit plans assumed by Purchaser as described in section 12.02 (the
"Employee Benefit Plans").
2. Assets Excluded From Sale. There shall be excluded
from this transfer the following assets of Seller (collectively, the "Excluded
Assets"):
2.01 Cash and Cash Equivalents. All of Seller's cash
and cash equivalents and marketable securities.
2.02 Tax Refunds. Any federal, state or local income
tax refunds or claims related to the operation of Seller on or prior to the
Closing Date.
2.03 Excluded Contracts. Any contracts or commitments
(the "Excluded Contracts") entered into by or on behalf of Seller, and all
obligations thereunder, which are not described on Schedule 1.05.
2.04 Accounts Receivable. All accounts receivable of
Seller listed on Schedule 2.04 (collectively the "Excluded Receivables").
2.05 Other Items. The automobile owned by Seller and
used by the Shareholder and the computer and desk located at the Shareholder's
home, all of which are further described on Schedule 2.05.
2.06 Insurance Policies. All casualty, liability or
other insurance policies owned by or obtained on behalf of Seller and all claims
or rights under any such insurance policies in respect of the Excluded
Liabilities (as defined in section 4) and the Excluded Assets.
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3. Assumption of Liabilities. As partial consideration
for the purchase of the Purchased Assets, Purchaser hereby assumes and agrees to
pay, perform and discharge to the extent not theretofore performed, paid or
discharged, the following liabilities and/or obligations of Seller as the same
shall exist on the Closing Date (collectively, the "Assumed Liabilities"):
3.01 Accounts Payable. All accounts payable which are
reflected on the statement of Operating Working Capital as of the Closing Date
(as defined in section 5.03).
3.02 Accrued Expenses. All accrued expenses which are
reflected on the statement of Operating Working Capital as of the Closing Date.
3.03 Products Liability. All liabilities and
obligations of Seller resulting from, arising out of or relating to product
liability claims ("Product Liability Claims") involving products manufactured by
Seller and shipped by Purchaser after the Closing Date.
3.04 Contracts and Leases. Subject to section 4, all
liabilities and/or obligations existing as of, arising after or to be performed
after the Closing Date under or with respect to the Contracts and Leases.
3.05 Employee Benefit Plans. All liabilities of Seller
with respect to Employee Benefit Plans assumed by Purchaser as described in
section 12.02.
4. Excluded Liabilities. Except as otherwise expressly
provided in section 3 of this Agreement, Purchaser shall not assume, pay,
perform or discharge, and the term "Assumed Liabilities" shall not include, and
Seller shall promptly pay and discharge when due, any debts, liabilities,
obligations or commitments of Seller, whether actual, contingent or accrued,
including without limitation the following (collectively, the "Excluded
Liabilities"):
4.01 Termination of Employees. Any claims made by any
employee of Seller as of the Closing Date who is not thereafter employed on or
after the Closing Date by Purchaser subject to Purchaser's obligations pursuant
to section 10.03.
4.02 Employment-Related Claims. To the extent not
accrued on the statement of Operating Working Capital as of the Closing Date,
the following claims relating to employees of Seller:
(a) all liabilities and obligations of Seller
incurred on or prior to the Closing Date resulting from workers' compensation
claims made on or prior to the Closing Date, and claims made on or before the
Closing Date for hospitalization or
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medical expenses. Neither Seller nor the Shareholder shall have any liability
with respect to post-Closing claims for hospitalization or medical expenses of
employees hired by Purchaser pursuant to section 10.03;
(b) all liabilities of Seller relating to
employee life insurance claims for deaths on or prior to the Closing Date;
(c) all liabilities and obligations of Seller
for any claim made on or prior to the Closing Date for short-term or long-term
disability; and
(d) except to the extent accrued on the
statement of Operating Working Capital as of the Closing Date, all liabilities
and obligations of Seller as of the Closing Date relating to employee
compensation.
4.03 Taxes. Except to the extent accrued on the
statement of Operating Working Capital as of the Closing Date, any liabilities
for taxes, including real estate, income, withholding, sales, use and other
taxes, incurred at any time by Seller or arising with respect to the Purchased
Assets on or before the Closing Date, including any deferred taxes.
4.04 Benefit Plans. Except as set forth in section 3,
any liability under any Pension Plan, Welfare Plan or Fringe Benefit Plan (as
defined in section 9.28) maintained or contributed to by Seller, including any
Simplified Employee Pension-Individual Retirement Account and any cafeteria
plan.
4.05 Excluded Contracts. Any obligations or
liabilities with respect to the Excluded Contracts.
4.06 Distribution Payable. The Distribution Payable as
Provision for Income Taxes described on Seller's financial statements, and any
obligation relating thereto.
5. Purchase Price.
5.01 Amount to Seller. Purchaser shall, in addition to
assuming the Assumed Liabilities, pay to Seller in the manner set forth below an
amount equal to (a) $18,600,000, less (b) the "Bonus Amount" as defined below,
plus (c) the amount by which the Operating Working Capital as of the Closing
Date exceeds the Operating Working Capital as of September 30, 1998 or minus (d)
the amount by which the Operating Working Capital as of the Closing Date is less
than the Operating Working Capital as of September 30, 1998, as the case may be
(the "Purchase Price"). The term "Operating Working Capital" as used herein
shall mean the excess of Seller's accounts receivable, inventory and prepaid
expenses over its accounts payable, accrued payroll and
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other accrued expenses. The Operating Working Capital as of September 30, 1998
is agreed to be $1,518,000 (as set forth on Schedule 5.01(a)), adjusted for
consistent accounting treatment with the statement of Operating Working Capital
as of the Closing Date. The Operating Working Capital shall be calculated as at
both September 30, 1998 and the Closing Date in accordance with section 5.03.
The "Bonus Amount" means the $181,018.53 ($167,609.75
in bonuses payable to certain of Seller's employees, plus 8% for payroll taxes
and other expenses), described in the memorandum set forth on Schedule 5.01(b)
(the "Bonus Memorandum"). Purchaser will pay the bonuses to the employees in
accordance with the terms of the Bonus Memorandum dated December 9, 1999.
Purchaser shall refund to Seller in immediately available funds, as an
adjustment to the Purchase Price, any bonus in respect of any such employee who
resigns or is terminated for cause on or before August 31, 1999; provided that
in no event shall such adjustment exceed $31,018.53.
5.02 Manner of Payment of the Purchase Price. At
Closing, Purchaser shall:
(a) assume the Assumed Liabilities; and
(b) pay to Seller $18,600,000, less the Bonus
Amount, in accordance with Seller's directions, through a bank wire transfer
(the "Cash Payment").
5.03 Post-Closing Adjustments.
(a) As soon as practicable but not later than 45
days after the Closing, Purchaser's independent certified public accountant
(PricewaterhouseCoopers) shall audit Seller to determine its Operating Working
Capital as of the Closing Date and prepare and deliver to the parties a proposed
statement of Seller's Operating Working Capital as of the Closing Date (the
"Proposed Closing Date Operating Working Capital"). The Proposed Closing Date
Operating Working Capital shall be prepared in accordance with generally
accepted accounting principles (except as set forth on Schedule 5.03 and as
otherwise agreed upon by the parties) and in accordance with the following:
(i) Seller's accounts receivable will
be valued at face amount less adjustment for [a] any known claims, price
adjustments or returns, and [b] uncollectibility. Seller's accounts receivable
at September 30, 1998 will be adjusted to reflect accounting treatment
consistent with the statement of Operating Working Capital as of Closing Date.
(ii) The valuation of Seller's
inventory will be based upon a physical inventory taken the day after the
Closing Date. Such inventory shall be
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observed by representatives of Purchaser and Seller. Appropriate adjustment for
slow-moving and obsolete inventory will be made in accordance with generally
accepted accounting principles. Seller's inventory at September 30, 1998 will be
adjusted to reflect accounting treatment consistent with the statement of
Operating Working Capital as of the Closing Date.
(iii) The difference in Seller's
prepaid expenses as of the Closing Date and as of September 30, 1998 has been
calculated as set forth on Schedule 5.03(iii) and shall be reflected in the
Operating Working Capital calculation.
(iv) Seller's accounts payable and
accrued payroll and other accrued expenses shall be calculated as of the Closing
Date. Seller's accounts payable and accrued payroll and other accrued expenses
at September 30, 1998 will be adjusted to reflect accounting treatment
consistent with the statement of Operating Working Capital as of the Closing
Date. Operating Working Capital shall not include any Excluded Assets or
Excluded Liabilities.
(v) The statement of Operating Working
Capital as of the Closing Date shall not include any assets and/or liability for
the Bonus Amount.
The independent certified public
accountants shall permit Purchaser, Seller and their designated representatives
or advisors to review all accounting records and all work papers and
computations used by them in the preparation of the Proposed Closing Date
Operating Working Capital. If Seller does not give notice of dispute to
Purchaser within 15 days of receiving the Proposed Closing Date Operating
Working Capital, the parties agree that the Proposed Closing Date Operating
Working Capital shall become the Operating Working Capital as of the Closing
Date. If Seller gives notice of dispute to Purchaser within such 15-day period,
Seller and Purchaser shall negotiate in good faith to resolve the dispute. If,
after 15 days from the date notice of dispute is given hereunder, Seller and
Purchaser cannot agree on the resolution of the dispute, the parties shall
designate an independent certified public accounting firm acceptable to
Purchaser and Seller to resolve the dispute, whose decision as to the Operating
Working Capital as of the Closing Date shall be conclusive and binding upon
Seller and Purchaser. The expenses pertaining to any dispute resolution
hereunder shall be shared equally by Seller and Purchaser.
(b) If, upon final determination of the
Operating Working Capital as of the Closing Date, the Operating Working Capital
as of the Closing Date is less than the Operating Working Capital as of
September 30, 1998, Seller shall pay to Purchaser the amount of such difference
plus interest from the Closing Date to the date of payment at the rate of 8% per
annum. If, upon final determination of the Operating Working Capital as of the
Closing Date, the Operating Working Capital as of the Closing Date is more than
the Operating Working Capital as of September 30, 1998, Purchaser
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shall pay to Seller the amount of such difference plus interest from the Closing
Date to the date of payment at the rate of 8% per annum. Any such amount shall
be paid by wire transfer within ten days of the final determination of the
Operating Working Capital as of the Closing Date.
5.04 Allocation of Purchase Price. The parties shall
allocate the Purchase Price to the assets in accordance with the following: (1)
working capital assets as reflected in the final determination of the Operating
Working Capital as of the Closing Date, (2) fixed assets equal to the tax net
book value of the assets as of the Closing Date, and (3) goodwill. The parties
are to report the federal, state and local income tax and other tax consequences
of the transactions contemplated by this Agreement in a manner consistent with
such allocation, including without limitation, the preparation and filing of
Form 8594 or any successor form.
6. Closing. The closing (the "Closing") of the transactions
pursuant to this Agreement shall take place on February 9, 1999 ("Closing Date")
at the offices of Hirschler, Fleischer, Xxxxxxxx, Xxx & Xxxxx, or such other
time and place as Seller and Purchaser may agree. The effective time of the
Closing shall be deemed to be 11:59 p.m. eastern daylight savings time on the
Closing Date.
7. Seller's and Shareholder's Obligations Prior to or at the
Closing.
7.01 Deliveries. Seller and the Shareholder hereby agree
that they shall, prior to or at the Closing, deliver or convey or cause to be
delivered or conveyed to Purchaser:
(a) A General Xxxx of Sale in substantially the form
of Exhibit A, duly executed by Seller.
(b) An assignment of Seller's rights, title and
interest in any assignable Licenses and Permits and originals (or copies if
originals are not available) of all Licenses and Permits, whether or not
assignable.
(c) An Assignment and Assumption of Contracts and
Leases in substantially the form of Exhibit B (the "Assignment and Assumption
Agreement"), duly executed by Seller.
(d) Duly executed titles to all Vehicles included in
the Purchased Assets, if any.
(e) The Documents.
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(f) The written opinion letter dated as of the
Closing Date of Hirschler, Fleischer, Xxxxxxxx, Xxx & Xxxxx, counsel for Seller
and the Shareholder, in substantially the form of Exhibit C.
(g) Certified copies of resolutions adopted by
Seller's Board of Directors and the Shareholder authorizing the sale of the
Purchased Assets to Purchaser in accordance with the terms hereof and the
execution, delivery and performance of this Agreement and all agreements
contemplated hereby.
(h) Duly executed assignments of the Intangible
Assets.
(i) A certificate of good standing for Seller issued
by the Secretary of State of the Commonwealth of Virginia dated within ten days
of the Closing Date.
(j) A written estoppel certificate from each lessor
of real property listed on Schedule 7.01(j), if any, and each party to each
Contract and Lease that requires by its terms or law such party's consent to
assignment to Purchaser, acknowledging and certifying that (a) such party is a
party to a lease or contract of a certain date; (b) the lease or contract has
not been amended or modified or, if it has, reciting the date and substance of
such modification; (c) the lease or contract is in full force and effect; (d) as
of the date of the certificate, Seller is not in default under the lease or
contract; and (e) that such party consents to the assignment of such lease or
contract to Purchaser in conjunction with the transactions contemplated by this
Agreement.
(k) Articles of Amendment to Seller's Articles of
Incorporation, changing Seller's name to eliminate the word "Sealeze."
(l) Employment and Consulting Agreement in
substantially the form of Exhibit D (the "Employment and Consulting Agreement"),
duly executed by Xxxx X. Xxxx.
(m) Special Warranty Deed, duly executed by Seller,
for the Real Property, free and clear of all liens and encumbrances, except
municipal and zoning ordinances, real estate taxes not yet due and payable and
other easements and restrictions of record which do not materially interfere
with the conduct of the operations currently conducted on the Real Property or
materially detract from the value of the Real Property as currently used,
together with (i) an assignment of Seller's right, title and interest in any
certificates, licenses, permits, authorizations or appraisals relating to the
Real Property, and (ii) a sworn affidavit stating Seller's FEIN and that Seller
is not a foreign person for purposes of section 1445 of the Internal Revenue
Code and Treasury Regulation section 1.1445-2T.
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(n) Releases of the UCC filings and the security
interest of Wachovia Bank (or any other lender) in any of the Purchased Assets.
(o) An executed copy of the Transfer Agreement
Relating to Employee Benefit Plans.
(p) The Schedules to this Agreement.
(q) Closing Certificate of the officers of Seller
certifying officer incumbency, etc.
(r) Such other instruments as Purchaser may
reasonably request to vest in Purchaser all of Seller's right, title and
interest in and to the Purchased Assets.
8. Purchaser's Obligations Prior to or at the Closing.
8.01 Deliveries. Purchaser hereby agrees that it shall,
prior to or at the Closing, deliver or cause to be delivered to Seller:
(a) A bank wire transfer in the amount of
$18,600,000, less the Bonus Amount, in accordance with Seller's instructions.
(b) The written opinion letter dated as of the
Closing Date of Reinhart, Boerner, Van Deuren, Xxxxxx & Xxxxxxxxxx, s.c.,
counsel for Purchaser, in substantially the form of Exhibit E.
(c) Certified copy of the resolutions adopted by
Purchaser's Board of Directors authorizing the purchase of the Purchased Assets
and the assumption of the Assumed Liabilities from Seller in accordance with
this Agreement and the execution, delivery and performance of this Agreement and
all agreements contemplated hereby.
(d) The Assignment and Assumption Agreement, duly
executed by Purchaser.
(e) The Employment and Consulting Agreement, duly
executed by Purchaser.
(f) Certificate of Status for Purchaser issued by the
Department of Financial Institutions of the State of Wisconsin dated within ten
days of the Closing Date.
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(g) A current survey dated within 30 days of Closing
of the Real Property prepared by duly licensed land surveyors acceptable to
Purchaser. For each parcel the survey shall: (i) show the boundaries of the
property; (ii) contain a proper and complete legal description of the property
and show the total number of acres in the property and the number of acres, if
any, located within dedicated streets and highways; (iii) show all dedicated
public streets providing access to the property and locate any areas of
restricted access; (iv) show all existing improvements (e.g., buildings,
driveways, powerlines and transformers and fences); (v) locate all recorded and
visible easements and rights of way; (vi) show the location of any easements
necessary to bring offsite improvements to the property; and (vii) show any
encroachments upon the property. The survey shall contain a certification
acceptable to Purchaser's counsel that the surveyor has surveyed the property
and shown all improvements and encroachments and that the surveyor's liability
extends to those who purchase, mortgage or guarantee title to the property
within at least one year from the date of the survey and such other ALTA
certification as are acceptable to the title insurance company selected by
Purchaser for removal of the surveyed exceptions in the title insurance policy.
Purchaser shall have until Closing to object any condition not permitted by this
Agreement.
(h) A title insurance commitment, ALTA Form B-1970
issued by a title company acceptable to Purchaser, agreeing to issue to
Purchaser, upon recording of the deed described in this Agreement, an owner's
policy in an amount acceptable to Purchaser and showing title to the Real
Property to be in the condition called for by this Agreement, subject only to
financial encumbrances which shall be discharged by Seller at or before Closing
and containing such endorsements as Purchaser or Purchaser's lenders may
require. Purchaser shall have until Closing to object to any condition of title
not permitted by this Agreement.
(i) An executed copy of the Transfer Agreement
Relating to Employee Benefit Plans.
(j) Closing Certificate of the officers of Purchaser
certifying officer incumbency, etc.
9. Representations and Warranties of Seller and the
Shareholder. Seller and the Shareholder, jointly and severally, hereby represent
and warrant to Purchaser that the following statements are true as of the
Closing Date:
9.01 Corporate Organization. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia. Seller has the corporate power and authority to own
its property and carry on its business as now conducted. Seller is not licensed
or qualified to do business in any other state or jurisdiction and is not
required to be licensed or qualified in any other state or jurisdiction.
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9.02 Authority. Seller has all necessary corporate power to
execute and deliver this Agreement and to consummate the transactions provided
for herein. The execution and delivery of this Agreement by Seller and the
performance by it of the obligations to be performed hereunder have been duly
authorized by all necessary and appropriate corporate action. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby do not and will not conflict with, or result in a breach of, or
constitute a default under the terms or conditions of Seller's Articles of
Incorporation or By-Laws, any court or administrative order or process, any
agreement or instrument to which Seller or the Shareholder is a party or by
which Seller or the Shareholder is bound or any statute or regulation of any
governmental agency. This Agreement and all documents contemplated hereby are
valid and binding obligations of Seller and the Shareholder enforceable in
accordance with their terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and subject to
general principles of equity. The Shareholder owns all of the issued and
outstanding capital stock of Seller.
9.03 Financial Statements. Schedule 9.03 contains copies of
(a) the unaudited balance sheets of Seller as of September 30, 1998 and as of
each year end, December 31, 1994 through December 31, 1997; and (b) unaudited
statements of income of Seller for each such period. The September 30, 1998
balance sheet shall hereinafter be referred to as the "Balance Sheet" and
September 30, 1998 shall hereinafter be referred to as the "Balance Sheet Date."
Each such balance sheet and income statement (x) was prepared in accordance with
Seller's books of account and records; (y) is true and correct in all material
respects and presents fairly the financial position of Seller as of the date
specified and the results of its operations for the period then ended; and (z)
except as described on Schedule 9.03, has been prepared in accordance with
generally accepted accounting principles consistently applied by Seller. Such
statements of income do not contain any items of special or nonrecurring income
or any other income not earned in the ordinary course of business except as
expressly specified therein, and such financial statements include all
adjustments, which consist only of normal recurring accruals (the effect of
which will not, individually or in the aggregate, be materially adverse),
necessary for such fair representation. Seller's books of account, as well as
its minute books and stock records, are complete and correct in all material
respects.
9.04 Liabilities. To Seller's and the Shareholder's knowledge,
Seller has no liabilities, direct or contingent, absolute, known or unknown, or
any outstanding evidence of indebtedness, except (a) as reflected on the Balance
Sheet; (b) liabilities incurred in the ordinary course of business since the
Balance Sheet Date, consistent with Seller's prior practice and which, in the
aggregate, do not result in any material adverse change in the financial
condition of Purchaser's business or the
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Purchased Assets from that set forth on the Balance Sheet; and (c) as reflected
on Schedule 9.04. None of such liabilities were incurred other than in the
ordinary course of business. To Seller's and the Shareholder's knowledge, there
are no material defaults under any terms or conditions of any indebtedness,
liability, Contract, Lease or obligation of Seller assumed by Purchaser, or
circumstances which form the basis for the assertion of any such default other
than as specified in (a), (b) or (c) hereof.
9.05 Accounts Receivable. All of the Receivables reflected on
the Balance Sheet arose in the ordinary course of business and represent amounts
payable by a buyer for goods actually sold or services actually performed, and
to Seller's and the Shareholder's knowledge, are not subject to any
counterclaims or setoffs except as set forth on Schedule 9.05 and are current
except as set forth on Schedule 9.05. Receivables arising after the Balance
Sheet Date have arisen in the ordinary course of business, represent amounts
payable by a buyer for goods actually sold or services actually performed and to
Seller's and the Shareholder's knowledge, are not subject to any counterclaims
or setoffs except as set forth on Schedule 9.05.
9.06 Inventory. The value at which the Inventory is carried on
the Balance Sheet reflects the customary inventory valuation policy consistently
applied by Seller of stating inventory on the current cost of material valuation
method of accounting for inventory. To Seller's and the Shareholder's knowledge,
the Inventory is in good condition and usable and salable in the ordinary course
of business consistent with past practice. Inventory has been acquired only in
the ordinary course of business. No Inventory has been consigned to others.
Seller owns the Inventory free and clear of any liens or encumbrances.
9.07 Business Changes. Except as set forth on Schedule 9.07,
since the Balance Sheet Date, there has not been:
(a) any material adverse change in the condition
(financial or other) or in the operations, business, properties or assets of, or
material damage, destruction or loss (whether or not covered by insurance)
affecting Seller or the Purchased Assets;
(b) any sale, lease, abandonment or other disposition of
any material equipment or other operating property comprising the Purchased
Assets which causes any material adverse impact upon Seller except for
dispositions of Inventory in the ordinary course of business;
(c) any transfer of the Purchased Assets by Seller to any
shareholder, officer, director, employee or affiliate of Seller or any other
transfer of Purchased Assets outside of the ordinary course of business;
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(d) any extraordinary increase in compensation of any
officer, director or employee (including, without limitation, any extraordinary
increase pursuant to any bonus, pension, profit sharing or other plan or
commitment) or the adoption of any new benefit program, plan or other
arrangement for officers, directors or employees which would have a material
adverse impact on Seller's business other than the Bonus Amounts, or, to
Seller's and the Shareholder's knowledge, any material deviation from the
ordinary and usual course by Seller in the conduct of its business;
(e) any material change in accounting methods or
practices followed by Seller, including changes to amortization or depreciation
policies or write-downs in the value of any Inventory or Receivables;
(f) any material increase in any obligations or
liabilities (whether absolute, accrued, contingent or otherwise and whether due
or to become due), except items incurred in the ordinary course of business and
generally consistent with past practice;
(g) any mortgage, pledge or creation of any lien,
charge, security interest or other encumbrance on any of the Purchased Assets
(except those created in the ordinary course of business and generally
consistent with past practice and identified on Schedule 9.07(g));
(h) any contract for the sale of Seller's business,
or any part thereof or for the purchase of another business, whether by merger,
consolidation, exchange of stock or otherwise (other than negotiations with
respect to this Agreement);
(i) any written or, to Seller's and the Shareholder's
knowledge, oral notice (i) that any customer of Seller which accounted for 5% or
more of Seller's total net sales for the prior 12 months may terminate its
relationship with Seller or (ii) of termination or potential termination of any
other contract, lease or relationship which individually or in the aggregate has
a material adverse effect upon Seller's business or the Purchased Assets; or
(j) any encounter with any labor union organizing
activity, any actual or threatened employee strikes, work stoppages, slow downs
or lockouts or any material change in the relationships with its employees,
agents, customers or suppliers.
9.08 Real Property Owned and Leased. The Real Property is
the only real property owned or leased or otherwise utilized in connection with
Seller's business or to which Seller has any right, title or interest. Except
for the Real Property, Seller does not own a fee interest in any real estate.
Seller is not a party to any lease or similar agreement under which Seller is a
lessor or sublessor of or makes available for use by any third party any real
property owned or leased by Seller or any portion of premises
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otherwise occupied by Seller. Except for items 2 through 11 of Schedule B-II of
title commitment #ST 99100169 Fourth Reissue issued by Old Republic National
Title Insurance Company, Seller has good and marketable fee title to the Real
Property, free and clear of all mortgages, liens, security interests, easements,
covenants, rights of way and other encumbrances or restrictions of any nature
whatsoever. Notwithstanding the foregoing, Seller and the Shareholder represent
and warrant without exception that Chesterfield County does not have any right
of first refusal or option to purchase the Real Property nor is the Real
Property subject to any right of reverter in favor of Chesterfield County
pursuant to (i) those certain Protective Covenants, Conditions and Restrictions
For the Chesterfield Airport Industrial Park, recorded in the Clerk's Office,
Circuit Court, Chesterfield County, Virginia (the "Clerk's Office"), in Deed
Book 1778, page 1764; (ii) a Real Estate Agreement dated January 27, 1988,
contained in a Deed recorded in the Clerk's Office in Deed Book 1925, page 1179,
and rerecorded in the Clerk's Office in Deed Book 1964, page 1084; (iii) a March
10, 1988 First Amendment to Real Estate Agreement dated January 27, 1988 and
recorded in the Clerk's Office in Deed Book 1964, page 1106; and (iv) contained
in a Deed recorded in Deed Book 1925, page 1179 (collectively, the "Real Estate
Documents") with respect to the transfer of Real Property from Seller to
Purchaser. Seller is not a lessee or sublessee under any lease of real property.
9.09 Condition of Real Property. To Seller's and the
Shareholder's knowledge, there are no structural or nonstructural defects in any
of the buildings or other improvements situated on the Real Property and all
building systems, structures, fixtures and improvements owned, leased or used by
Seller are in all material respects in good condition and working order
(reasonable wear and tear excepted). Seller and the Shareholder have no notice
or knowledge that aggregate capital expenditures in excess of $10,000 on the
Real Property will be necessary in the next 12 months to carry on the business
of Seller as it is presently conducted nor are any such expenditures planned.
9.10 Floodplain. Except as described on Schedule 9.10 or in
the survey described in section 8.01(g), to Seller's and the Shareholder's
knowledge, no part of the Real Property is located on or contains a
governmentally-recognized floodplain, flood prone area, flood risk area, wetland
or similarly restricted area.
9.11 Access. To Seller's and the Shareholder's knowledge and
except as described in the survey described in section 8.01(g), there is full
and free vehicular access to and from public highways and roads to the Real
Property and all utility companies providing utilities to the Real Property have
adequate rights of access to provide the services necessary for the conduct of
the business now conducted upon the Real Property and neither Seller nor the
Shareholder has knowledge of any fact or condition that could result in
termination or limitation of such access.
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9.12 Building Code Compliance. Neither Seller nor the
Shareholder has notice or knowledge of any government agency or court order
requiring repairs, alterations or corrections of any existing conditions in the
Real Property. To Seller's and the Shareholder's knowledge, the Real Property
complies in all material respects with all federal, state and municipal laws,
ordinances, orders, regulations and requirements.
9.13 Zoning. To Seller's and the Shareholder's knowledge and
except as set forth on Schedule 9.13, the current use and improvements on the
Real Property are permitted under the governing zoning laws and ordinances and
are not nonconforming or a special use or special exception. Neither Seller nor
the Shareholder has notice or knowledge of any contemplated change in this
zoning classification.
9.14 Planned Public Improvements and Special Assessments.
Neither Seller nor the Shareholder has notice or knowledge of any planned or
contemplated public improvements that may result in special assessments against
the Real Property or otherwise materially affect the availability of utility
service or access to the Real Property. There are currently no special
assessments affecting the Real Property.
9.15 Insurance. A summary of the insurance Seller maintains
is set forth in Schedule 9.15. All premiums on policies due to the date hereof
have been paid. Seller has not, within the last three fiscal years, had any
application for insurance rejected or any insurance policy canceled or
withdrawn.
9.16 Compliance with Law. Except as disclosed in Schedule
9.16, to Seller's and the Shareholder's knowledge, the operation of its business
and the use of the Purchased Assets and the Real Property are not in default
under or in violation of any applicable federal, state or local laws or
ordinances or any order, rule or regulation of any federal, state or local
agency or body, including, without limitation, any criminal laws, zoning and
building codes, energy, safety, health, employment-related, antitrust, wage and
hour laws, orders, rules or regulations, applicable to Seller, the Real Property
or the Purchased Assets, which, in Seller's and the Shareholder's reasonable
opinion, would have a material adverse impact on Seller's business.
9.17 Environmental Disclosures.
(a) Schedule 9.17 lists with expiration dates all
permits, licenses, approvals and consents issued by or received from foreign,
federal, interstate, state or local government agencies (including local
sewerage districts) relating to Environmental Laws or Hazardous Substances (the
"Environmental Permits") which are held by Seller or otherwise relate to the
Real Property or the business of Seller.
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(b) Schedule 9.17 describes (i) the storage, use,
generation, disposal, release, emission, dispersal, spilling, leaking, dumping,
or migration of Hazardous Substances by Seller at the Real Property during the
period Seller owned or occupied the Real Property and (ii) any storage, use,
generation, disposal, release, emission, dispersal, spilling, leaking, dumping,
or migration of Hazardous Substances at the Real Property prior to the period
Seller owned or occupied the Real Property.
(c) Schedule 9.17 lists all above-ground or below-
ground storage tanks on the Real Property and identifies all products and
materials ever to have been stored in such tanks.
For purposes of this Agreement, the term "Environmental
Laws" shall mean all foreign, federal, interstate, state and local laws,
including statutes, rules, regulations, other governmental orders, guidances,
restrictions, ordinances and requirements, all contractual obligations and all
common law relating to the discharge, disposal, release, emission, dispersal,
spilling, leaking, dumping, or migration of Hazardous Substances, air
pollutants, water pollutants or process waste water or the disposal of solid or
hazardous waste or otherwise relating to the environment, or hazardous
substances or employee health and safety, including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Solid Waste Disposal Act, the Clean Air Act, the Water Pollution Control
Act, the Oil Pollution Prevention Act, the Resource Conservation and Recovery
Act of 1976, the Superfund Amendments and Reauthorization Act, the Occupational
Safety and Health Act of 1970, the Toxic Substances Control Act, the Hazardous
Materials Transportation Act (all the same as may have been amended), rules and
regulations of the U.S. Environmental Protection Agency, rules and regulations
of the U.S. Nuclear Regulatory Agency, rules and regulations of the U.S.
Department of Transportation, state environmental protection statutes, and rules
and regulations of any state or local department of environmental or natural
resources or any state or local environmental protection agency now or hereafter
in effect. The term "Hazardous Substances" shall mean all hazardous and toxic
substances, wastes and materials, any pollutants or contaminants (including,
without limitation, petroleum products, asbestos and raw materials which include
hazardous constituents), fumes, soot, smoke, acids, alkalis, chemicals, liquids,
gases, vapors, wastes and materials and any other similar substances or
materials which are regulated under, or as to which liability may be imposed as
of the date hereof under, Environmental Laws.
9.18 Environmental Regulation. Except as disclosed on
Schedule 9.18:
(a) The Environmental Permits constitute all
permits, licenses, approvals and consents from foreign, federal, interstate,
state or local government agencies relating to Environmental Laws or Hazardous
Substances required
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for the conduct of the business of Seller and the use or the operation of the
Real Property in compliance with Environmental Laws. Seller is in material
compliance with each Environmental Permit and the Environmental Permits are each
in full force and effect. Neither Seller nor the Shareholder has received any
notice, written or, to the Seller's or Shareholder's knowledge, oral, of any
violation of any Environmental Permit and no proceeding for the suspension,
revocation or cancellation of any Environmental Permit is pending or, to
Seller's and the Shareholder's knowledge, threatened. No plan, application,
report, certificate or other document filed with or furnished to any government
agency by Seller in connection with any Environmental Law or Environmental
Permit contained any untrue statement of material fact or omitted any statement
of material fact necessary to make the statements made not misleading.
(b) Seller has duly filed with government agencies
all reports, returns and other filings required to be filed with respect to the
Real Property under Environmental Laws and the Environmental Permits and has
made available to Purchaser complete copies of all environmental filings
described in this subparagraph.
(c) Seller's business and the Real Property have
been and are being operated in all material respects in accordance with all
Environmental Laws and Environmental Permits. Neither Seller nor the Shareholder
has received any notice nor does Seller or the Shareholder have any knowledge
that Seller's business or the Real Property are not in compliance with, or are
subject to liability under any Environmental Laws and Environmental Permits.
(d) There are no actions, suits, claims,
investigations or proceedings, either judicial or administrative, or
governmental or administrative investigations pending or, to the best of
Seller's and the Shareholder's knowledge, threatened against Seller, its
business or the Real Property which in any case asserts or alleges (i) Seller or
the Real Property violated any Environmental Law; (ii) Seller or the Real
Property violated or are in default with respect to any Environmental Permit or
any order, writ, judgment, variance, award or decree of any foreign, federal,
interstate, state or local governmental authority; (iii) Seller is required to
clean up or take an investigation, remedial or other response action or
otherwise has liability or must bear costs (including any third party toxic tort
liability) with respect to the generation, storage, treatment, recycling,
disposal, discharge or other release or threatened release of any Hazardous
Substance on the Real Property or elsewhere; or (iv) Seller is required to
contribute to the cost of any past, present or future clean up or remedial or
other response action which arises out of or is related to the generation,
storage, treatment, recycling, disposal, discharge or other release or
threatened release of any Hazardous Substance by Seller. Seller and the Real
Property are not subject to any judgment, stipulation, order, decree or
agreement arising under Environmental Laws.
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(e) Except as set forth on Schedule 9.18(e), (i)
no Hazardous Substances have been generated, stored, treated, recycled or
disposed of (intentionally or unintentionally), nor have Seller or the
Shareholder arranged for disposal of Hazardous Substances, on, under, from or at
the Real Property or any other facility or property, including any offsite
disposal facility and/or such generation, storage, treatment, recycling or
disposal or arrangement for disposal will not result in any requirement for
investigation or cleanup or any liability (contingent or otherwise) under any
Environmental Law; (ii) there has been no release or threatened release of any
Hazardous Substance at, on, under or from the Real Property or any other
facility or property owned or operated at any time by Seller and/or such release
or threatened release will not result in any requirement for investigation or
cleanup or any liability (contingent or otherwise) under any Environmental Law
(and the Real Property is not contaminated with any Hazardous Substances); (iii)
for so long as Seller has owned the Real Property, there have not been nor are
there now any materials containing asbestos or PCBs on the Real Property; and
(iv) to Seller's and the Shareholder's knowledge, there have been no activities
on the Real Property or any other facility owned or operated at any time by
Seller which would subject Purchaser or any subsequent owner, lessee, occupant
or operator of the Real Property to damages, penalties, injunctive relief or
cleanup costs or any other liability under any Environmental Law, common law
theory of liability or any other theory of liability. Except as set forth on
Schedule 9.18 and except as set forth in the Environmental Report issued to
Purchaser by Virginia Geotechnical Services, P.C. dated February 4,1999 (the
"Environmental Report"), to Seller's and the Shareholder's knowledge, no
property adjacent to the Real Property has ever been used for the treatment,
recycling or disposal (intentional or unintentional) of Hazardous Substances nor
has there been a release or threatened release of any Hazardous Substances from
such adjacent property and/or will not subject the Purchaser to damages,
penalties, injunctive relief, cleanup costs or any other liability under
Environmental Law, common law theory of liability or any other theory of
liability. All treatment, storage, recycling or disposal of Hazardous Substances
has been conducted off the Real Property and in material compliance with all
Environmental Laws and Environmental Permits and/or will not subject the
Purchaser to damages, penalties, injunctive relief, cleanup costs or any other
liability under Environmental Law, common law theory of liability or any other
theory of liability. Seller and the Shareholder have provided Purchaser and its
representatives with full access to the Real Property and have provided
Purchaser with copies of all environmental reports relating thereto in their
possession.
(f) Except as described on Schedule 9.18(f) or in
the Environmental Report, to Seller's and the Shareholder's knowledge, there are
no wetlands on the Real Property and Seller is in material compliance with any
applicable wetlands requirements and laws. To Seller's and the Shareholder's
knowledge, and except as described in the Environmental Report, Seller and the
Real Property are in material compliance with all applicable requirements of the
Chesterfield County Preservation Ordinance.
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9.19 Title to the Purchased Assets. Except as
specifically disclosed on Schedule 9.19 and as set forth in Section 9.08 with
respect to the Real Property, Seller has good and marketable title to (or
interest in with respect to Leases and Contracts) all of the Purchased Assets,
(including without limitation licenses to the Telemagic software, the TIW
software and the SBT software) free and clear of all security interests, title
retention agreements, liens, mortgages, encumbrances and restrictions. Except
for the Excluded Assets, the Purchased Assets and the property subject to the
Leases constitute all of the property used in the operation of Seller's
business. Seller is conveying or assigning to Purchaser all of its right, title
and interest in and to the Purchased Assets.
9.20 Personal Property Leased. Schedule 1.04 sets
forth a list of all machinery, equipment, Vehicles and other tangible personal
property used in the operation of Seller which is covered by a lease to which
Seller is a party and which comprise part of the Purchased Assets.
9.21 Condition of the Purchased Assets. Except as
set forth in the schedules to this Agreement, no written or, to Seller's and the
Shareholder's knowledge, oral notice from any governmental body or other person
has been served upon Seller or the Shareholder or upon any of the Purchased
Assets or other assets leased, occupied or operated by Seller claiming any
violation of any law, ordinance, code, rule or regulation or requiring, or
calling attention to the need for, any work, repairs, construction, alterations
or installation on or in connection with such property with respect to which
Seller has not complied. Except as set forth on Schedule 9.21, to Seller's and
the Shareholder's knowledge, no material maintenance is needed with respect to
the Purchased Assets. To Seller's and the Shareholder's knowledge, except as set
forth on Schedule 9.21, the Purchased Assets are in all respects in good
condition and working order (reasonable wear and tear excepted), and are all
located on the Real Property.
9.22 Contracts. Except for the Leases and
Contracts described on Schedules 1.04 and 1.05, Seller does not have any written
or, to Seller's and the Shareholder's knowledge, oral commitments, leases or
contracts. All of the Leases and Contracts are legally valid and binding and in
full force and effect with respect to the parties thereto and neither Seller
nor, to Seller's or the Shareholder's knowledge, any of the other parties to any
of the Leases or Contracts is in material default thereof. Seller and the
Shareholder have no knowledge of any claimed breach of any of the Leases or
Contracts or of the occurrence of any event which, after the passage of time or
the giving of notice or both, would constitute a material default by Seller or
any other party to any Lease or Contract. None of the rights of Seller under the
Leases or Contracts, subject to any requirement pursuant to the terms and
conditions thereof to obtain consent, will be impaired by the consummation of
the transactions contemplated by this Agreement and all of the rights of Seller
thereunder will be enforceable by Purchaser after Closing
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without the consent or agreement of any other party (except for consents
delivered by Seller at Closing). Seller has delivered to Purchaser copies or
descriptions of all the Leases and Contracts, all of which are true and complete
and include all amendments or modifications. All of the Contracts and Leases
were entered into in the ordinary course of business.
9.23 Litigation and Proceedings. Except as set forth on
Schedule 9.23, Seller and the Shareholder have no knowledge of and have received
no notice of any suit, action or legal, administrative, arbitration or other
proceeding, Product Liability Claim, unemployment or termination of employment
claim, employment compensation claim, environmental claim, infringement claim,
claim for breach of contract or lease, or material accident pending against
Seller that affects the Purchased Assets or Assumed Liabilities and, to Seller's
and the Shareholder's knowledge, Seller is not under investigation with respect
to any charge concerning violation of any law or administrative regulations,
federal, local or state, and, to Seller's and the Shareholder's knowledge, no
set of facts or circumstances exist or have existed which would constitute a
basis for any such action, proceeding, investigation, suit or arbitration.
Except as set forth on Schedule 9.23, Seller is not now under any judgment,
order, injunction or decree of any court, administrative agency or other
governmental authority which would have a material adverse effect on Seller.
9.24 Restrictions on Personnel. Except as set forth on
Schedule 9.24, to Seller's and the Shareholder's knowledge, no officer or
employee of Seller (hereinafter referred to as the Employees) has entered into,
in his or her capacity as an individual, any agreement which is now in effect
with any person, corporation, partnership or business organization (other than
Seller) requiring such Employee to assign to any such person or entity any
interest in any invention or trade secrets or to keep confidential any trade
secrets or containing any prohibition or restriction of competition or
solicitation of customers.
9.25 Employee Compensation. Schedule 9.25 sets forth
the name of each Employee who is employed under a written employment agreement.
9.26 Employment Policies. Seller has provided to
Purchaser all of Seller's written employment policies presently in effect for
the Employees. To Seller's and the Shareholder's knowledge, there are no
employment policies not in writing.
9.27 Taxes. Except as set forth on Schedule 9.27, all
federal, state, county and local income, excise, sales, use, gross receipts, ad
valorem payroll and other taxes, fees and assessments imposed on Seller and all
federal and state payroll taxes withheld by Seller, all in relation to the
operation of Seller prior to the Closing Date or as a result of the transactions
contemplated hereby (except as responsibility for taxes as a result of the
transactions contemplated hereby may be allocated to Purchaser under
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section 16.05), have been or will be duly, timely and fully reported, paid and
discharged by Seller.
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9.28 Employee Benefit Plans.
(a) Schedule 9.28 lists all "employee pension
benefit plans," as such term is defined in section 3(2) of the Employee
Retirement Income Security Act of 1974 ("ERISA") without regard to any
exemptions from any requirements thereunder issued by the United States
Department of Labor in regulations or otherwise, maintained, sponsored or
contributed to by Seller (the "Pension Plans"). The term "Pension Plan" shall
also include any terminated employee pension benefit plan previously maintained,
sponsored or contributed to by Seller which, as of the Closing Date, has not
distributed all of its assets in full satisfaction of accrued benefits.
(b) Seller has made available to Purchaser true
and complete copies of (i) the documents governing each of the Pension Plans as
in effect on the Closing Date; (ii) the most recent annual report prepared and
filed on the appropriate Internal Revenue Service Form 5500 series, including
all required attachments, for each of the Pension Plans subject to such
reporting requirements; and (iii) the most recent determination letter issued by
the Internal Revenue Service concerning the qualification of any Pension Plan
pursuant to section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
(c) None of the assets of Seller are subject to
any lien, constructive or otherwise, arising under ERISA section 4068.
(d) All Pension Plans constitute "qualified" plans
within the meaning of Code section 401(a) or simplified employee pensions
within the meaning of Code section 408(k) and the plans' respective trusts are
tax exempt pursuant to Code section 501(a) or Code section 408(e)(i).
(e) Schedule 9.28 lists all "employee welfare
benefit plans," as defined in ERISA section 3(1), without regard to any
exemptions from any requirements thereunder issued by the United States
Department of Labor in regulations or otherwise, maintained, sponsored or
contributed to by Seller (the "Welfare Plans"). The term "Welfare Plans" shall
also include any terminated employee welfare benefit plan previously maintained,
sponsored or contributed to by Seller which, as of the Closing Date, has not
distributed all of its assets and/or satisfied all of its obligations.
(f) Seller has made available to Purchaser true
and complete copies of the documents governing each of the Welfare Plans as in
effect on the Closing Date.
(g) Schedule 9.28 lists all plans or programs to
provide fringe benefits to Seller's employees (other than Pension Plans and
Welfare Plans), including, but not limited to, vacation, sick leave, severance
pay, nonqualified deferred
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compensation plans and other insurance plans or related benefits (the "Fringe
Benefit Plans"). The term "Fringe Benefit Plan" shall include the trusts and
other funding vehicles relating to the Fringe Benefit Plans. The term "Fringe
Benefit Plan" shall also include any terminated fringe benefit plan previously
maintained, sponsored or contributed to by Seller which, as of the Closing Date,
has not distributed all of its assets and/or satisfied all of its obligations.
(h) Seller has made available to Purchaser true
and complete copies of the documents governing each Fringe Benefit Plan.
(i) Except as set forth on Schedule 9.28, Seller
has no direct or indirect, formal or informal, plan, fund or program to change
any Pension Plan, Welfare Plan or Fringe Benefit Plan that would affect any
employee whose employment with Seller has terminated as a result of this
Agreement. Seller has made no material modification, within the meaning of ERISA
section 102 and the regulations thereunder, to any existing Pension Plan or
Welfare Plan which is not set forth in the Pension Plan or Welfare Plan
documents provided to Purchaser.
(j) For purposes of this section 9.28, "Seller"
shall include the Seller and all members of any controlled group of corporations
(within the meaning of Code section 414(b), relevant Treasury Regulations and
Pension Benefit Guaranty Corporation regulations issued pursuant to ERISA
section 4001), any group of trades or businesses under common control (within
the meaning of Code section 414(c), relevant Treasury Regulations and Pension
Benefit Guaranty Corporation regulations issued pursuant to ERISA section 4001)
and any affiliated service group (within the meaning of Code section 414(m) and
relevant Treasury Regulations and proposed Treasury Regulations) of which Seller
is a member.
(k) Except as disclosed on Schedule 9.28, Seller
has never been obligated to contribute to any multiemployer plan within the
meaning of ERISA section 3(37).
(l) To the knowledge of Seller and the
Shareholder, the Pension Plans, the Welfare Plans and the Fringe Benefit Plans
have been administered in all respects in compliance with the applicable
requirements of ERISA, the Code, the plan document and all other applicable
rules, regulations and laws. The Pension Plans meet all applicable requirements,
in form and in operation, for favorable tax treatment under the Code. There are
no outstanding issues relating back to the Pension Plans, Welfare Plans and
Fringe Benefit Plans pending before the Internal Revenue Service, Department of
Labor, or the Pension Benefit Guaranty Corporation ("PBGC"). Each Pension Plan
has been amended to conform to applicable law, including the Tax Reform Act of
1986, the Omnibus Reconciliation Act of 1989, Unemployment Compensation
Amendments of 1992 and the Omnibus Reconciliation Act of 1993. To Seller's or
the Shareholder's
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knowledge, with respect to each Pension Plan, Welfare Plan and Fringe Benefit
Plan, all reporting and disclosure requirements have been met for all years.
(m) All required contributions pursuant to the
Pension Plans, Welfare Plans and Fringe Benefit Plans for all periods prior to
the Closing Date have been made or will be made or are adequately reflected as
accruals in accordance with generally accepted accounting principles on the
Seller's financial statements prior to the Closing Date.
(n) There are no pending or, to the knowledge of
Seller or the Shareholder, threatened claims, lawsuits or arbitrations which
have been inserted or instituted against the Pension Plans, Welfare Plans or
Fringe Benefit Plans or any fiduciaries thereof with respect to their duties to
the Pension Plans, Welfare Plans or Fringe Benefit Plans, including the assets
of any trusts under any Pension Plans, Welfare Plans or Fringe Benefit Plans.
(o) With respect to each Pension Plan, Welfare
Plan and Fringe Benefit Plan other than the Simplified Employee
Pension-Individual Retirement Accounts, the Seller has furnished to the
Purchaser written descriptions including administrative procedures that have
been adopted that may have established a precedent upon which participants,
beneficiaries, or alternate payees may rely. Except as disclosed on Schedule
9.28, to Seller's or the Shareholder's knowledge, no representations or
communications with respect to participation, eligibility for benefits, vesting,
benefit accrual or coverage under the Pension Plans, Welfare Plans or Fringe
Benefit Plans have been made to the Seller's employees other than those which
are in accordance with the terms of such Pension Plans, Welfare Plans or Fringe
Benefit Plans in effect immediately prior to the Closing Date.
(p) With respect to any Welfare Plan which is a
"group health plan" as defined in Code section 4980B, the Seller, to Seller's or
the Shareholder's knowledge, has complied with the continuation coverage
requirements of Code section 4980B for any periods prior to the Closing Date.
(q) With respect to each Pension Plan, Welfare
Plan and Fringe Benefit Plan other than the Simplified Employee
Pension-Individual Retirement Accounts, the Seller has furnished to the
Purchaser copies of any investment management agreements, fiduciary insurance
policies, fidelity bonds, rules, regulations or policies of the Trustees or any
committee thereunder, all of which are true and complete.
(r) Except as disclosed on Schedule 9.28, to the
knowledge of Seller and the Shareholder, since December 31, 1974, no fiduciary
of the Pension Plans or Welfare Plans other than the Simplified Employee
Pension-Individual Retirement Accounts has engaged in any "prohibited
transaction"" (as defined in ERISA
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section 406 or Code section 4975) nor has any fiduciary breached any fiduciary
responsibility, as described in Part IV of Title I of ERISA with respect to such
Pension Plans or Welfare Plans.
(s) Except as disclosed in Schedule 9.28, no
Welfare Plan or Fringe Benefit Plan other than the Simplified Employee
Pension-Individual Retirement Accounts provides any form of post-retirement
health benefits to retired employees of the Seller, other than benefits required
to be provided pursuant to Code section 4980B.
9.29 Labor Matters.
(a) There are no union collective bargaining
agreements, letters of understanding, agreements modifying same or other labor
contracts. Except as disclosed on Schedule 9.29, Seller is not a party to any
pending arbitration or grievance proceeding or other claim relating to any
contract or laws regarding employment practices nor, to Seller's and the
Shareholder's knowledge, is any such action threatened.
(b) Seller is not bound by nor does it have
knowledge of any court, administrative agency, arbitration, tribunal, commission
or board decree, judgment, decision, agreement or settlement relating to (i) any
collective bargaining agreements or other labor or employment agreements
(including, without limitation, the wages, hours or other terms or conditions of
employment contained therein); (ii) unfair labor practices; (iii) union
representation proceedings or attempts to organize a collective bargaining unit;
(iv) employment discrimination (v) wrongful discharge; (vi) wage/hour matters;
(vii) unemployment compensation; (viii) worker's compensation; (ix) occupational
safety and health, safe work place or employee right-to-know laws; (x)
affirmative action, government contracts or contract compliance laws; (xi)
immigration laws; (xii) employment-related tort, or retaliation claims; (xiii)
laws governing an employee's right to continued coverage under a group health
insurance plan; (xiv) plant closing and mass lay-off laws; (xv) family and
medical leave laws; (xvi) noncompete, confidentiality or trade secret
agreements; or (xvii) any other labor or employment-related claim which may in
any way materially and adversely affect Seller or the Purchased Assets. Except
as set forth on Schedule 9.29, Seller and the Shareholder have no notice nor
knowledge of any such pending or threatened employment-related claim, charge or
investigation, or, by or on behalf of current or former employees of Seller, or
applicants for employment with Seller, or of any current investigation by any
government agency relating to employment or safety issues pertaining to Seller.
(c) Seller has made all required payments that are
due and payable to the appropriate governmental authorities with respect to
applicable unemployment compensation reserve accounts for its employees in the
Commonwealth of Virginia. Seller has no regular, full-time employees except in
Virginia.
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(d) Except as disclosed on Schedule 9.29, there is
no pending or threatened charge, complaint or petition by, against or involving
Seller before the National Labor Relations Board or any state or local agency
and no labor strike, slowdown or work stoppage, other material labor trouble,
material labor, grievance or representation question is pending, or to Seller's
or the Shareholder's knowledge, threatened against Seller.
(e) Prior to the Closing Date, Seller shall have
given notice to each of its employees that effective as of the Closing Date such
employees no longer will be employees of Seller and as of Closing shall become
employees of Purchaser, and shall furnish such employees and appropriate
governmental authorities such other notice as may be required by and in
accordance with applicable laws and regulations, including, without limitation,
any applicable plant closing or mass lay-off laws.
(f) Nothing contained in this Agreement shall
confer upon any of the Seller's employees any rights or remedies of any nature
or kind whatsoever, including, without limitation, any right to employment or
continued employment for any specified period.
9.30 Disclosure and Reliance. Disclosures made by
Seller and the Shareholder in any schedule to this Agreement shall be deemed to
be a disclosure with respect to all representations, warranties and covenants
set forth herein. However, all disclosures must be sufficiently complete such
that the related warranty or representation contained in this Agreement does not
contain any untrue statement or fact or omit to state any fact required to make
the statements therein contained not materially misleading under the
circumstances existing as of the date hereof. No warranty or representation by
Seller or the Shareholder contained in this Agreement contains or will contain
any untrue statement of fact or omits or will omit to state any fact required to
make the statements therein contained not materially misleading under the
circumstances existing as of the date hereof.
9.31 Intangible Assets. Schedule 1.03 contains a true
and complete list of all patents, invention disclosures, trademarks, trade
names, service marks and licenses owned by Seller and all pending applications
and applications to be filed therefor. Except as set forth on Schedule 9.31, all
Intangible Assets are fully assignable and are being transferred hereunder free
and clear of any adverse claims or interests. Except as set forth on Schedule
9.31, no licenses or agreements have been granted or entered into by Seller
relating to any of the Intangible Assets. Except for the Intangible Assets, in
Seller's and the Shareholder's reasonable judgment, no other patents,
trademarks, trade names, service marks, copyrights, computer software, trade
secrets, licenses or applications therefor are necessary for the operation of
Seller's business as
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currently conducted. Except as set forth on Schedule 9.31, to Seller's and the
Shareholder's knowledge, the operation of Seller and the use of its products by
customers have not involved any infringement or misappropriation, and Seller and
the Shareholder have no notice or knowledge of, (a) any claim against Seller for
infringement of any patents, trademarks, trade names, service marks, copyrights
or licenses of others; or (b) the misappropriation of the trade secrets of
others.
9.32 Letters of Credit. There exist no outstanding
letters of credit used by Seller in the operation of its business, including
letters of credit delivered by third parties for Seller's benefit.
9.33 Unlawful Payments. To Seller's and the
Shareholder's knowledge, no payments of cash or other consideration have been
made to any person, entity or government by Seller or on Seller's behalf with
respect to operation of its business by any agent, employee, officer, director,
shareholder or other person or entity which were unlawful under the laws of the
United States or any state or other government having appropriate jurisdiction.
9.34 Disabled Employees. To Seller's and the
Shareholder's knowledge, no Employee was eligible for long-term disability but
had not been certified as such as of the Closing Date. Except as set forth on
Schedule 9.34, no Employee was, as of the Closing Date, on medical leave.
9.35 Subsidiaries. Seller has no subsidiaries. Seller
has no interest, direct or indirect, and has no commitment to purchase any
interest, direct or indirect, in any other corporation, partnership, joint
venture or other business enterprise or entity. Seller's business has not been
conducted through any direct or indirect subsidiary or affiliate of Seller or
any shareholder of Seller.
9.36 Government License and Regulation. Seller has all
domestic and foreign governmental licenses and permits necessary to conduct its
business and own and use the Purchased Assets, and such licenses and permits are
in full force and effect. Except as set forth on Schedule 9.36, all rights of
Seller under such licenses and permits are transferable to Purchaser solely upon
the assignment of such licenses and permits by Seller to Purchaser hereunder,
and will be exercisable by Purchaser after the consummation of the transactions
contemplated by this Agreement. No proceeding is pending or, to Seller's and the
Shareholder's knowledge, threatened regarding the revocation or limitation of
any governmental license or permit and there is no basis or grounds for any such
revocation or limitation.
9.37 Employment Contracts. Except as set forth on
Schedule 9.37, Seller has no employment contract with any person, nor any
contract with any Employee involving termination, retirement or termination pay,
deferred compensation, profit
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sharing or pension plans, employee benefit plans or other employee benefits or
post-employment benefits of any kind. Schedule 9.37 lists (a) the names, job
descriptions and total compensation of each director, employee or consultant of
Seller; (b) the fringe benefits currently furnished to such persons and (c) all
loans, leases and other financial arrangements to or from Seller with any
Employee, officer, director or consultant.
9.38 Year 2000 Compliance. Seller's Telemagic
telemarketing software ("Telemagic") will correctly recognize, calculate, sort,
store, display and otherwise process data involving dates prior to, during and
after the year 2000 A.D., including but not limited to correct processing of
leap years, and the operation and functionality of Telemagic shall in no way be
materially adversely affected by the approach, occurrence or passing of the
calendar date January 1, 2000 ("Year 2000 Compliant"). Seller has verified that
Telemagic is Year 2000 Compliant either by appropriate and adequate testing
using scenarios spanning dates prior to and after the year 2000 A.D. or by
receipt of a written warranty, which is by its terms assignable to Purchaser, a
copy of which is attached to Schedule 9.38, from the developer of Telemagic
warranting that Telemagic is Year 2000 Compliant and providing adequate remedies
in the event of a breach of such warranty.
9.39 Assets and Sales. Assuming that the Purchase Price
payable by Purchaser to Seller under this Agreement is not determinative in
calculating total assets under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, neither Seller nor, as Seller's "ultimate parent entity," the
Shareholder, has total assets or annual net sales of $10,000,000 or more. The
Shareholder has no regularly prepared financial statement showing total assets
or annual net sales of $10,000,000 or more.
10. Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to Seller that:
10.01 Corporate Organization. Purchaser is a
corporation duly organized and validly existing under the laws of the State of
Wisconsin and, based solely on a certificate of the Department of Financial
Institutions of the State of Wisconsin (the "Department"), (a) has filed with
the Department during its most recently completed report year of the required
annual report; (b) is not the subject of a proceeding under Wisconsin Statutes
section 180.1421 to cause its administrative dissolution; (c) no determination
has been made by the Department that grounds exist for such action; (d) no
filing has been made with the Department of a decree of dissolution with respect
to Purchaser; and (e) Articles of Dissolution of Purchaser have not been filed
with the Department. Purchaser has the corporate power and authority to own its
property and carry on its business. Purchaser is duly licensed and qualified to
do business and is in good standing in the Commonwealth of Virginia.
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10.02 Authority. Purchaser has all necessary corporate
power to execute and deliver this Agreement and to consummate the transactions
provided for herein. The execution and delivery of this Agreement by Purchaser
and the performance by it of its obligations to be performed hereunder have been
duly authorized by all necessary and appropriate corporate action. The execution
and delivery of this Agreement, and the consummation of the transactions
contemplated hereby do not and will not conflict with, or result in a breach of,
or constitute a default under, the terms or conditions of Purchaser's Articles
of Incorporation or By-Laws or any court or administrative order or process, any
agreement or instrument to which Purchaser is a party or by which it is bound or
by any statute or regulation of any governmental agency. This Agreement and the
documents contemplated hereby are valid and binding obligations of Purchaser
enforceable in accordance with their terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and
subject to general principles of equity.
10.03 Hiring of Employees. As soon as practicable on or
after the Closing Date, Purchaser shall give notice to each of Seller's
employees that effective as of the Closing Date such employees shall be at-will
employees of Purchaser.
10.04 Bonus Amount. Purchaser shall pay the Bonus
Amount to employees in accordance with section 5.01 and Schedule 5.01(b).
10.05 Warranties True and Correct. No warranty or
representation by Purchaser contained in this Agreement contains or will contain
any materially untrue statement of fact or omits or will omit to state any
material fact required to make the statements therein contained not misleading
under the circumstances existing as of the date hereof.
10.06 Purchaser's Knowledge. Nothing has come to
Purchaser's attention during the course of Purchaser's due diligence that is, or
in Purchaser's reasonable judgment is likely to result in, a breach of any of
Seller's or the Shareholder's representations and warranties made in this
Agreement except for matters disclosed in this Agreement or the Schedules
hereto.
11. Mutual Covenants.
11.01 Books and Records. The parties agree that, for the
purpose of this section, the "Access Period" is defined as the longer of (a) a
period of five years following the Closing Date or (b) the period of time
beginning on the Closing Date and ending on the date on which taxes may no
longer be assessed under the applicable statutes of limitation, including the
period of waivers or extensions thereof. Seller and the Shareholder hereby
covenant and agree to maintain in a reasonably accessible place,
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during the Access Period, the books and records not delivered to Purchaser
hereunder relating to Seller wherever located and to provide copies of such
books and records to Purchaser or its representative upon Purchaser's reasonable
request at Purchaser's expense. Seller and the Shareholder agree to notify
Purchaser prior to disposing of any such books and records and, upon request
made within sixty days after receipt of such notice, to deliver such books and
records to Purchaser at Purchaser's expense. With respect to the books and
records delivered to Purchaser hereunder (including the Documents), Purchaser
hereby covenants and agrees to give Seller and the Shareholder the same access
for the same time period and agrees to give Seller and the Shareholder the same
notice and right in the event of any proposed disposition of such books and
records.
11.02 Litigation Assistance. With respect to any claim
relating to Seller's business which is not assumed by Purchaser hereunder,
Purchaser agrees to fully cooperate and assist Seller in defending such claim or
lawsuit at Seller's sole expense. Such cooperation and assistance shall include
providing personnel (experienced in litigation matters) to assist in the
production of documents and to participate in consultations, depositions and
trial, to the same extent as if Purchaser was defending such claim or lawsuit.
Upon written request, Seller shall reimburse Purchaser for all reasonable
out-of-pocket expenses actually incurred by Purchaser (including regular rates
of salary, wages and traveling expenses) solely for purposes of providing the
cooperation and assistance required hereunder. With respect to any claim
relating to Seller which is assumed by Purchaser hereunder, Seller and the
Shareholder agree to give Purchaser the same assistance on the same terms and
under the same conditions.
11.03 Reporting Assistance. Purchaser agrees to
cooperate and timely assist Seller in preparing information for various
authorities after the Closing Date on the condition that such information
relates to the purchase contemplated by this Agreement or the Purchased Assets.
This information includes, but is not limited to, accounting and tax workbooks,
responses to audit requests, other filings to tax authorities (e.g., payroll,
property, sales and use taxes and other information necessary to comply with
federal, state and local laws). Seller shall reimburse Purchaser, upon written
request, for all reasonable out-of-pocket expenses actually incurred by
Purchaser (including regular rates of salary, wages and traveling expenses)
solely for purposes of providing the cooperation and assistance required
hereunder. Seller and the Shareholder agree to provide the same reporting
assistance to Purchaser on the same terms and under the same conditions.
12. Covenants and Agreements of Seller.
12.01 Employee Benefits. Seller shall pay promptly when
due severance pay, vacation pay, termination compensation and other benefits
payable to
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employees of Seller due on or prior to the Closing Date or payable by Seller in
relation to Seller's termination of the employment of any employees on or prior
to the Closing Date.
12.02 Seller's Benefit Plans. Seller agrees that
Purchaser shall assume no responsibility to maintain or provide benefits
pursuant to any Pension Plan, Welfare Plan or Fringe Benefit Plan, including,
without limitation, any plan to provide medical or health benefits to retired
employees of Seller, that is not specifically assumed or listed as not to be
assumed, by Purchaser hereunder as set forth on Schedule 12.02. Purchaser shall
become the successor sponsor only of any Pension Plans, Welfare Plans or Fringe
Benefit Plans which are listed as assumed on Schedule 12.02. Except for such
amounts that are included on the statement of Operating Working Capital as of
the Closing Date, Seller shall remain responsible for the benefits, including,
without limitation, benefits provided pursuant to any Pension Plan, Welfare Plan
or Fringe Benefit Plan, with respect to any employee of Seller on paid or unpaid
leave of absence, worker's compensation, short-term disability or long-term
disability as of the Closing Date. Seller agrees to forward to Purchaser any of
the following amounts that were actually paid to or withheld by Seller prior to
the Closing Date: (a) cafeteria plan deferrals, (b) employee withholdings or
payments for health, dental or COBRA premiums, and (c) Pension Plan employee
deferrals. Seller also agrees to pay Purchaser for its pro-rata share of any
employer payments to Pension Plans that are required under the terms of such
plans as in effect on the Closing Date, disregarding any hours of service
requirements for employer contributions.
12.03 Account Debtors. If Seller or the Shareholder
receives any payment from an account debtor with respect to a Receivable, it
shall promptly remit the payment to Purchaser. Purchaser is authorized to
endorse any instrument of payment to Seller or the Shareholder pursuant to its
rights hereunder. If Purchaser receives any payments from an account debtor with
respect to an Excluded Receivable, it shall promptly remit the payment to
Seller. If any Receivables written off in the post Closing adjustment under
Section 5.03 are subsequently collected, Purchaser shall promptly remit such
payment(s) to Seller or its successor.
13. Indemnification by Seller and the Shareholder.
13.01 Generally. Notwithstanding the Closing, Seller and
its successors and the Shareholder, jointly and severally, agree to indemnify,
defend and hold Purchaser and its directors, officers, employees, agents,
shareholders, successors and assigns harmless from and against any damage,
liability, loss, cost or deficiency (including, but not limited to, reasonable
attorneys' fees, punitive damages and other costs and expenses incident to
proceedings or investigations or the defense or settlement of any claim)
("Purchaser's Damages") arising out of, resulting from or relating to:
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(a) any inaccuracy in or breach of a representation or
warranty of Seller or the Shareholder pursuant to this Agreement, including
schedules and certificates delivered pursuant hereto that is (i) made in
ss.9.01, 9.02, 9.03, 9.08, 9.29, or 9.35, or (ii) the breach of which relates
solely to the Purchased Assets or the Assumed Liabilities;
(b) any failure of Seller or the Shareholder to duly
perform any term, provision, covenant or agreement to be performed by Seller or
the Shareholder pursuant to this Agreement which failure does not give rise to
indemnification pursuant to ss.13.01(a); and
(c) any and all accrued, contingent or other
liabilities, debts, obligations and commitments of Seller not expressly assumed
by Purchaser pursuant to this Agreement, including, but not limited to, Excluded
Liabilities, brokerage fees, expenses referred to in section 16.05, any bulk
sales liability referred to in section 16.06 and any sales or use tax
liabilities arising out of or relating to the conduct of Seller prior to the
Closing Date or as a result of the transactions contemplated hereby.
The representations and warranties of Seller and the
Shareholder shall survive for a period of 12 months after Closing, or such
longer period as specified herein. The representations and warranties in
sections 9.01, 9.02 and 9.19 shall survive indefinitely. Seller's and the
Shareholder's obligation to indemnify Purchaser with respect to a particular
claim under section 9 shall extend beyond the applicable period set forth above
if Purchaser, acting in good faith, asserts such claim within the applicable
period.
13.02 Procedure. Purchaser shall give Seller and the
Shareholder prompt notice in writing of any written claim, demand, assessment,
action, suit or proceeding to which the indemnity set forth in this section
applies ("Notice of Claim"). If such claim or demand is evidenced by a court
pleading, Purchaser shall give Notice of Claim within ten days of receipt of
such pleading. If such claim or demand is evidenced by some other writing or
notice from a third party, Purchaser shall give Notice of Claim within ten days
of the date it receives a notice of such claim.
Purchaser shall furnish to Seller and the Shareholder in
reasonable detail such information as Purchaser may have with respect to such
claim or demand (including, without limitation, copies of any summons,
complaints or other pleadings which may have been served on Purchaser or its
agents and any written claim, demand, invoice, billing or other document
evidencing the same). Failure to give timely notice of a matter which may give
rise to an indemnification claim shall not affect the rights of Purchaser to
collect such claims from Seller and/or the Shareholder so long as such failure
to so notify does not materially adversely affect the Seller's or the
Shareholder's ability to defend such claim against a third party.
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If Purchaser's request for indemnification arises from
the claim of a third party, the written notice shall permit Seller or the
Shareholder to assume control of the defense of such claim or any litigation
resulting from such claim. Failure by Seller or the Shareholder to so notify
Purchaser of its or their election to defend a complaint by a third party within
ten days shall be a waiver by Seller and the Shareholder of its or their right
to respond to such complaint and within ten days after notice thereof shall be a
waiver by Seller and the Shareholder of its or their right to assume control of
the defense of such claim or litigation. If Seller or the Shareholder assumes
control of the defense of such claim or litigation resulting therefrom, Seller
or the Shareholder shall take all reasonable steps necessary in the defense or
settlement of such claim or litigation resulting therefrom, and Seller and the
Shareholder shall hold Purchaser harmless from and against all damages arising
out of or resulting from any settlement approved by Seller or the Shareholder or
any judgment in connection with such claim or litigation. Notwithstanding
Seller's or the Shareholder's assumption of the defense of such third-party
claim or demand, Purchaser shall have the right to participate in the defense of
such third-party claim or demand at its own expense. Seller and the Shareholder
shall not, in the defense of such claim or litigation, consent to entry of any
judgment or enter into any settlement, except in either case with a written
consent of Purchaser, which consent shall not be unreasonably withheld, delayed
or conditioned. Purchaser shall furnish Seller and the Shareholder in reasonable
detail all information Purchaser may have with respect to any such third-party
claim and shall make available to Seller and the Shareholder and their
representatives all records and other similar materials which are reasonably
required in the defense of such third-party claim and shall otherwise cooperate
with and assist Seller and the Shareholder in the defense of such third-party
claim. If Seller or the Shareholder do not assume control of the defense of any
such third-party claim or litigation resulting therefrom, Purchaser may defend
against such claim or litigation in such manner as it may reasonably deem
appropriate, and Seller and the Shareholder shall indemnify Purchaser from any
damages and reasonable costs indemnifiable under this section incurred in
connection therewith.
13.03 Limitations. Except for Seller's and the Shareholder's
obligations to indemnify Purchaser under subsections 13.01(b) and (c) of this
Agreement, no indemnification with respect to representations and warranties in
this Agreement shall be payable by Seller or the Shareholder to Purchaser unless
and until Purchaser's Damages exceed an amount equal to 1% of the Purchase
Price, as adjusted pursuant to section 5.03. At such time that Purchaser's
Damages exceed such amount, Seller and the Shareholder shall be liable to
Purchaser for all of Purchaser's Damages incurred thereafter. No indemnification
under section 13.01 of this Agreement shall be payable by Seller or the
Shareholder to Purchaser in excess of an amount equal to 10% of the Purchase
Price, as adjusted pursuant to section 5.03. Purchaser shall be entitled to
recover any amounts owed to Purchaser pursuant to this section directly from
Seller or the Shareholder upon demand. The limitations set forth in this section
13.03 shall not apply
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to (a) the representations and warranties in sections 9.01, 9.02 and 9.19; (b)
liabilities for income taxes described in ss.4.03 and the Distribution Payable
described in ss.4.06; or (c) actions based on Seller's or the Shareholder's
fraudulent (i) conduct, (ii) misrepresentation, (iii) omission; provided,
however, neither Seller nor the Shareholder shall have any indemnification
obligation for amounts reimbursed or paid to Purchaser under applicable
insurance policies or other forms of reimbursement to Purchaser.
(b) If Chesterfield County asserts a right of first
refusal or option or if the Real Property is subject to a right of reverter in
favor of Chesterfield County arising under the Real Estate Documents, the Seller
or the Shareholder shall have the right to attempt to have Chesterfield County
waive or otherwise not assert such rights. Such right to cure by Seller or the
Shareholder shall exist for so long as Purchaser is able to operate from the
Real Property at no additional cost or penalty to Purchaser, and provided that
such attempt to cure does not adversely affect Purchaser's disposition of the
Real Estate. Additionally, Purchaser agrees to make timely a claim under the
title insurance policy referenced in Section 9.08 and prosecute such claim to
completion with respect to any claim asserted by Chesterfield County relating to
a right of first refusal, option or right of reverter arising under the Real
Estate Documents from the transfer of the Real Property from Seller to
Purchaser. To the extent that the Purchaser incurs Purchaser's Damages in excess
of amounts recovered by the Purchaser under the title policy referenced in
Section 9.08, the Seller and the Shareholder, jointly and severally, shall
indemnify the Purchaser for one-half of such excess Purchaser Damages up to, but
not in excess of, 10% of the Purchase Price. The Seller's and the Shareholder's
indemnification obligation with respect to such excess Purchaser's Damages shall
expire, and be of no further force and effect, three (3) years from the date
hereof.
14. Indemnification by Purchaser.
14.01 Generally. Notwithstanding the Closing, Purchaser
and its successors agree to indemnify, defend and hold Seller and the
Shareholder, and Seller's directors, officers, employees, agents, shareholder,
successors and assigns harmless from and against any damage, liability, loss,
cost or deficiency (including, but not limited to, reasonable attorneys' fees,
punitive damages and other costs and expenses incident to proceedings or
investigations or the defense or settlement of any claim) ("Seller's Damages")
arising out of, resulting from or relating to:
(a) any inaccuracy in or breach of a
representation or warranty of Purchaser pursuant to this Agreement, including
certificates and schedules delivered pursuant hereto;
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(b) any failure of Purchaser to duly perform or
satisfy the Assumed Liabilities or duly perform any term, provision, covenant or
agreement to be performed by Purchaser pursuant to this Agreement; and
(c) subject to the terms of this Agreement, any
liability or obligation arising out of events which occur after the Closing Date
with respect to Purchaser's business, including, but not limited to,
post-Closing Date violations by Purchaser of law or regulations.
Purchaser's representations and warranties to
Seller and the Shareholder shall survive Closing for a period of 12 months.
14.02 Procedure. The procedural rules set forth in
section 13.02 shall apply with respect to indemnification by Purchaser;
provided, however, that the parties' obligations under section 13.02 shall be
reversed, as appropriate.
15. Covenant Not to Compete.
15.01 Noncompetition. Within the United States, Canada,
the United Kingdom, Germany, The Netherlands, Brazil, Mexico, Portugal, Sweden,
France, China and/or Romania, neither Seller nor the Shareholder shall, directly
or indirectly, during the five-year period beginning on the Closing Date and
ending on the anniversary thereof in calendar year 2004 (the "Restricted
Period"), engage or assist in the manufacture or sale of any products that are
the same as or of a type substantially similar to products currently
manufactured by Seller.
15.02 Confidentiality. During the Restricted Period,
Seller and the Shareholder shall keep secret and retain in strictest confidence
and shall not use for the benefit of Seller, the Shareholder or others any and
all confidential matters of Seller's business as of the Closing Date, including,
without limitation, trade secrets of Seller and shall not disclose such
confidential matters to anyone other than Purchaser without the express written
consent of Purchaser or as required by law, except for such confidential matters
that (a) are or become generally available to the public other than as a result
of a disclosure by Seller or the Shareholder; or (b) become available to Seller
or the Shareholder on a nonconfidential basis from a source other than Purchaser
or any of its representatives, provided that such source is not bound by a
confidentiality agreement with, or other contractual, legal or fiduciary
obligation of confidentiality to, Purchaser or any other party with respect to
such information.
15.03 Employees. During the Restricted Period, Seller
and the Shareholder shall not, directly or indirectly, encourage to leave the
employment of Purchaser or in any way solicit for employment any person who is
employed by Purchaser immediately after the Closing Date.
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16. Provisions of General Applicability.
16.01 General. This Agreement may be amended only by an
agreement in writing signed by the parties hereto. This Agreement shall be
governed by and subject to the laws of the Commonwealth of Virginia without
reference to choice of law provisions thereof. The failure of any party to
insist, in any one or more instances, upon performance of any of the terms and
conditions of this Agreement shall not be construed as a waiver or
relinquishment of any rights granted hereunder or of the future performance of
any such term, covenant or condition. In the event of any controversy concerning
the rights or obligations under this Agreement, such rights or obligations shall
be enforceable in a court of equity by a decree of specific performance. Such
remedy shall, however, be cumulative and nonexclusive. If any provision, clause
or part of this Agreement, or the application thereof under certain
circumstances, is held invalid, the remainder of this Agreement, or the
application of each provision, clause or part under other circumstances, shall
not be affected thereby, and any court of competent jurisdiction may so modify
the objectionable portion as to make it valid, reasonable and enforceable.
Without limiting the foregoing, the court shall have the right to sever and/or
modify entire provisions, subprovisions, phrases, terms and/or words.
16.02 Further Assurances. Upon reasonable request, from
time to time, each party agrees that it shall (or direct its employees to, if
applicable) execute and deliver all documents, make all rightful oaths, testify
in any proceedings and do all other acts which may be necessary or desirable in
the reasonable opinion of the other party to protect or record the right or
title of Purchaser to the Purchased Assets or to aid in the prosecution or
defense of any rights arising therefrom, all without further consideration.
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16.03 Notices. Any notice to be given hereunder shall
be deemed given and sufficient if in writing and delivered or mailed by
registered or certified mail, in the case of Seller or the Shareholder, to:
Xx. Xxxx X. Xxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
with a copy to:
Hirschler, Fleischer, Xxxxxxxx, Xxx & Xxxxx
000 Xxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
and, in the case of Purchaser, to:
Xxxxx Incorporated
000 Xxxx Xxxxxxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Chairman
with a copy to:
Reinhart, Boerner, Van Deuren, Xxxxxx & Rieselbach, s.c.
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
X.X. Xxx 000000
Xxxxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
16.04 Benefit. This Agreement shall be binding upon and
inure to the benefit of and shall be enforceable by Purchaser, Seller, the
Shareholder and their respective successors and assigns. This Agreement may not
be assigned without the written consent of the other party or parties hereto.
16.05 Expenses. All expenses incurred by Seller, the
Shareholder or Purchaser in connection with the transactions contemplated
hereby, including, without limitation, legal, accounting and brokerage fees
shall be the responsibility of and for the account of the party which ordered
the particular service or incurred the particular expense, except as provided
herein. Purchaser, Seller and the Shareholder represent and warrant to each
other that there are no brokerage or finder's fees in connection with the
transactions contemplated hereby resulting from any actions taken by them,
except for the
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fees payable to Xxxxxx Xxxxxxxx & Co., for which Seller and the Shareholder
shall be solely liable, and the parties hereby indemnify, save and hold each
other harmless from and against claims by any other broker or finder for a fee
or expense which is based in any way on an agreement, arrangement or
understanding made or alleged to have been made by them related to the
transactions contemplated hereby. Any and all (a) federal, state, local or other
taxes, arising out of, resulting from or relating to Seller's sale of the
Purchased Assets, including taxes based on income and transfer (except as set
forth below), sales, use and gross receipts taxes, and (b) 50% of the costs of
the survey and title insurance shall be paid by and for the account of Seller
and the Shareholder as the case may be. Seller and the Shareholder shall be
jointly and severally liable for such amounts. Seller and the Shareholder shall
be jointly and severally responsible for and shall pay as and when due any
applicable grantor's tax. Purchaser shall be responsible for and shall pay as
and when due any applicable state and local record taxes, 50% of the costs of
the survey and title insurance and the costs of the Environmental Report.
16.06 Bulk Sales. Seller and the Shareholder hereby
indemnify, defend and hold Purchaser harmless from any and all liabilities,
losses, costs, damages or expenses (including, without limitation, reasonable
attorneys' fees) arising out of or relating to claims asserted against Purchaser
under the Virginia Bulk Sales Law or any other applicable bulk sales law.
16.07 Entire Agreement. This Agreement and the
schedules and other documents to be delivered pursuant hereto constitute the
entire agreement among the parties hereto and there are no agreements,
representations or warranties which are not set forth herein. All prior
negotiations, agreements and understandings are superseded hereby.
16.08 Public Announcement. Except as required by law,
no public announcement of the transactions contemplated hereby shall be made by
way of press release, disclosure to the trade or otherwise except with the
mutual approval of the parties.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day, month and year first above written.
XXXXX INCORPORATED
BY /s/ Xxxx Xxxxx
----------------------------------
Its
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SEALEZE CORPORATION
BY /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx, President
SHAREHOLDER:
/s/ Xxxx X. Xxxx
--------------------------------------
Xxxx X. Xxxx
Exhibits
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A. General Xxxx of Sale.
B. Assignment and Assumption Agreement.
C. Legal Opinion of Hirschler, Fleischer, Xxxxxxxx, Xxx & Xxxxx.
D. Employment and Consulting Agreement.
E. Legal Opinion of Reinhart, Boerner, Van Deuren, Xxxxxx & Rieselbach, s.c.
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