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Exhibit 10.4.1
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into on the 30th day of
November 1999, by, between and among X. X. XXXXXX SPAWN COMPANY, located at 000
Xxxx Xxxxx Xxxxxx, Xxxxxxx Xxxxxx, XX 00000 (hereinafter referred to as the
"Company"); XXXX X. XXXXXX, III, 000 Xxxx Xxxxx Xxxxxx, Xxxxxxx Xxxxxx, XX 00000
(hereinafter sometimes referred to as "Xxxxxx") (both the Company and Xxxxxx
together hereinafter referred to as "Seller") and WORTHINGTON HOLDINGS, INC.,
000 Xxxx Xxxxxx, X.X. Xxx 000, Xxxxxxxxx, XX 00000-0000 (hereinafter referred to
as "Worthington" or "Buyer").
BACKGROUND
WHEREAS, Seller owns and operates a business engaged in the
cultivation, production, packaging, sale and shipping of mushroom spawn and
related products (the "Business"); and
WHEREAS, the parties have executed a "Letter of Intent" dated
August 17, 1999 and accepted and agreed on August 25, 1999, the terms of which
are incorporated herein, except that, in the event of a conflict between the
terms of the "Letter of Intent" and the terms of this Agreement, the terms of
this Agreement shall control; and
WHEREAS, Seller desires to sell and Buyer desires to purchase
the assets of the Business in accordance with the terms and conditions of this
Agreement; and
WHEREAS, the Business uses and occupies two (2) parcels, the
main one being located in Kennett Township, Xxxxxxx County, Pennsylvania, and
designated tax parcel No.___, known as 000 Xxxx Xxxxx Xxxxxx, Xxxxxxx Square
(hereafter the "Principal Real Property") and the second one being located in
New Garden Township, Xxxxxxx County, Pennsylvania, and designated tax parcel
No._________, known as Newark Road at Railroad (hereafter the "Secondary Real
Property") respectively described in Exhibits "A" and "B"; and
WHEREAS, Xxxx X. Xxxxxx, III, owns (or is the equitable owner
of) both of the said parcels of real property and one autoclave located at the
Principal Real Property; and
WHEREAS, as an integral part of this transaction, Xxxx X.
Xxxxxx, III, desires to sell and Buyer desires to purchase the Principal Real
Property in accordance with the terms of this Agreement and the attached Exhibit
"C"; and
WHEREAS, Buyer wishes to have the opportunity to make an
arrangement to lease the Secondary Real Property; and
WHEREAS, Buyer wishes to have available the advice and
assistance of Xxxx X. Xxxxxx, III, for the benefit of the Business and wishes to
enter into a two-year employment agreement for such services; and
WHEREAS, the parties recognize that Xxxx X. Xxxxxx, III, may
be restricted from competing with Buyer for the period of up to five (5) years
from Closing.
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AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises herein
contained and the payments hereinafter provided, intending to be legally bound
hereby, and conditioned as set forth below, the parties do covenant and agree as
follows:
1. INCORPORATION OF BACKGROUND. The above Background is
incorporated herein by reference.
2. SALE AND PURCHASE OF ASSETS. At Closing, the Company shall
sell, transfer and assign to Buyer, and Buyer shall purchase, all of the
Company's right, title and interest in and to all of the assets of the Business,
including the personal property described herein (the "Assets"), all as adjusted
for changes occurring in the ordinary course of business as permitted hereunder
between this date and Closing, which Assets include:
a. All property and assets (except cash) of the Business of
every kind and description wherever located, including claims, rights and choses
in action, whether xxxxxx or inchoate, licenses, trademarks, technology, trade
names and including, but not limited to, the inventory, furniture, fixtures,
equipment and vehicles and assets described generally in the attached Exhibit
"D";
b. All rights under Seller's written contracts relating to the
Business, specifically identified herein and accepted in writing by Buyer at
Closing;
c. All accounts receivable as of the date of Closing;
d. All customer files, lists and records of the Business;
e. Such other assets, tangible or intangible, including
contract rights, agreements and licenses, oral or written, relating to the
Business; and
f. The telephone number, mailing address and all advertising
for the Business (including the obligation to pay for same).
3. TRANSFER OF REAL PROPERTY.
a. At Closing, Xxxx X. Xxxxxx, III, shall transfer and set
over to Buyer the Principal Real Property in accordance with the attached
Exhibit "C" relating to the sale thereof.
b. Xxxx X. Xxxxxx, III, shall make available the Secondary
Real Property (also known as "Plant No. 2" in Toughkenamon, Pennsylvania) for
lease by Buyer for additional consideration as the parties may agree, except
that this clause and any obligations arising hereunder shall terminate and be of
no force or effect unless such agreement is reached and put into writing among
the parties not later than Closing hereunder.
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4. EMPLOYMENT AND NON-COMPETE AGREEMENT.
a. At Closing, the parties shall enter into an Employment
Agreement whereby Buyer agrees to hire Xxxx X. Xxxxxx, III, as an employee, and
Xxxx X. Xxxxxx, III, agrees to perform the tasks outlined therein, substantially
in the form attached hereto and incorporated by reference as Exhibit "E". Said
agreement shall be for a minimum period of two years from Closing, and shall
provide for payments by Buyer to Xxxxxx in the minimum amount of One Hundred
Twenty Thousand Dollars ($120,000.00) for the first year following Closing in
return for an average of three (3) weeks of work per month, and One Hundred
Thousand Dollars ($100,000.00) for the second year following Closing in return
for an average of two (2) weeks of work per month. Payments under the Employment
Agreement shall be made on at least a monthly basis. Xxxxxx shall also receive
standard employee benefits, expense reimbursements and other employee
perquisites.
b. The Employment Agreement shall provide that Xxxx X. Xxxxxx,
III, agrees that for a period of three (3) years from the end of the provision
of employment services, he will be prohibited from consulting or engaging in the
business of producing or selling mushroom spawn in any of Buyer's market areas
or in any of the market areas of Buyer's affiliated companies.
5. PURCHASE PRICE. As full consideration for the Assets of
Seller and the Principal Real Property, Buyer shall pay the purchase price of
FOUR MILLION SEVEN HUNDRED EIGHTY-FOUR THOUSAND DOLLARS ($4,784,000.00) (the
"Purchase Price") subject to adjustment as set forth hereinafter. The Purchase
Price shall be paid to the persons and in the allocations specified by Seller,
as follows:
a. FIFTY THOUSAND DOLLARS ($50,000.00) to counsel for Seller
and counsel for Buyer as joint Escrow Agents, already delivered in accordance
with the Letter of Intent, such monies to be held by Escrow Agents as security
for Buyer's performance hereunder and to be applied at Closing towards the
Purchase Price or, in case of default by Buyer, to be delivered to Seller,
without further liability or obligation upon Escrow Agents.
b. FOUR MILLION TWO HUNDRED THIRTY-FOUR THOUSAND DOLLARS
($4,234,000.00) to be paid at Closing by electronic funds transfer.
c. TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) shall be
payable in two (2) equal installments, the first ONE HUNDRED TWENTY-FIVE
THOUSAND DOLLARS ($125,000.00) to be due and payable on the first anniversary of
Closing, and the second ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($125,000.00)
to be due and payable on the second anniversary of Closing. The Buyer's
obligation to make such payments shall be secured by a security arrangement as
set forth in Paragraph 6. Buyer's obligations with respect to each such payment
shall be conditioned as follows (which condition shall be included in the
security document): Buyer shall be obligated to make the payments in full,
unless the post-Closing annual unit sales (including spawn and Quicknit) drop
below 75% of the unit sales of Seller (excluding unit sales to Giorgio Foods)
for the twelve-month period ending November 30, 1999. This condition shall not
be applicable if the unit sales losses are due to such causes as defective
products produced
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and sold by Buyer after Closing or to post-Closing price increases, customer
mergers, dispositions or shutdowns, or transfers of sales or customers to or
from Buyer or its affiliated companies.
d. Buyer shall be entitled to set-off against the two
installment payments any amounts owed to it by Seller pursuant to this Agreement
and related documents.
e. Buyer shall reimburse Seller for payments by Seller of any
federal or state income taxes levied by the taxing authorities against Seller
due to the imputation by the taxing authorities of interest on unpaid
installments referenced in paragraph 5(c) above.
f. The Purchase Price shall be allocated between the Company
and Xxxx X. Xxxxxx, III, as set forth on attached Exhibit "F", or as directed by
Seller at Closing. The allocation of the Purchase Price among the Assets shall
also be as set forth on Exhibit "F", or as the parties shall agree at Closing.
The parties hereto agree to report on all income tax returns the values as so
agreed.
g. An escrow in the amount of TWO HUNDRED FIFTY THOUSAND
DOLLARS ($250,000.00) shall be held by Escrow Agents in an interest bearing
account following Closing in order to protect Buyer from losses due to any
unassumed liabilities, misrepresentations, breaches, obsolete inventory,
uncollectible accounts receivable, and resolution of claims asserted by
customers alleging quality insufficiencies with respect to goods sold by Seller
prior to Closing. Purchase Price adjustments shall be accomplished within ninety
(90) days of Closing by a memorandum of Purchase Price adjustment, which shall
be executed by all parties hereto, and Escrow Agents shall thereafter disburse
the withheld funds in accordance with the memorandum. No other set-offs or
adjustments to Purchase Price, and none except as set forth on the memorandum,
shall be permitted.
6. SECURITY. As partial security for the indebtedness to
Seller set forth in Paragraph 5(c) of this Agreement, Buyer shall execute and
deliver a commitment (Exhibit "G") secured by the assets listed in Exhibit "D".
Seller agrees that the security interests granted to Seller herein shall be
subordinate to the security interests granted to a third-party lender by Buyer.
7. LIABILITIES. Under no circumstances shall Buyer be deemed
to have assumed or agreed to pay, perform or discharge any liability of Seller
other than the payment and performance obligations set forth under the steam
autoclave equipment lease agreement with The First National Bank of West
Xxxxxxx, dated June 21, 1999.
8. CLOSING. Settlement and Closing shall occur on or before
November 30, 1999 (which may be extended by the parties until December 31,
1999), time being of the essence, at which time title and possession of the
Assets and the Principal Real Property shall be transferred, conveyed, and
delivered to Buyer. If Settlement and Closing have not occurred by December 31,
1999 for any reason whatsoever, this Agreement shall terminate and be of no
effect and the provisions herein regarding the return or disclosure of
information and material shall apply absolutely.
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9. DUE DILIGENCE AND BUYER'S CONDITIONS OF CLOSING. The
obligations of Buyer hereunder to purchase the Assets and close hereunder shall
be subject to the satisfaction of the following conditions:
a. Buyer and its agents and representatives shall have access
to the records, personnel, and real property of the Seller in a manner and at
such times as the parties shall agree, and in such a way as not to interfere
with the Business and operations of Seller. Each and every person associated
with or acting on behalf of Buyer shall be subject to the existing
Confidentiality Agreement executed by Buyer and incorporated herein as Exhibit
"J".
b. Buyer shall have received from counsel for the Seller, a
favorable opinion dated as of Closing, in form and substance satisfactory to
Buyer and its counsel, to the effect that, to the best of his or their
knowledge, and without special investigation:
(i) The Company is a duly organized and validly existing
corporation in good standing under the laws of the State of
Pennsylvania;
(ii) The Company has the corporate power to carry on its
business as and where such business is now being conducted;
(iii) No provision of the Articles of Incorporation or bylaws
of the Company or, to the best of Seller's knowledge, no provision of
any contract, agreement, or other instrument to which it is a party
prevents Seller from delivering good title to the Assets to Buyer in the
manner contemplated hereby or otherwise prohibit or would be breached by
the consummation of the transactions contemplated herein;
(iv) The Company and Xxxx X. Xxxxxx, III, have full power,
legal right and authority to enter into, execute and deliver this
Agreement and to consummate the transactions contemplated herein or have
made adequate arrangements for the proper execution of documents by
others to give full effect to this Agreement; and this Agreement has
been duly executed and delivered by the Company and Xxxx X. Xxxxxx, III,
and is a valid and legally binding obligation of each of them,
enforceable in accordance with its terms, except as its validity and
enforceability may be limited by bankruptcy, insolvency, or similar laws
of general application affecting the enforcement of creditors' rights
generally; and
(v) Seller's counsel has no knowledge of any litigation,
proceeding, or governmental investigation (whether state or federal) or
labor dispute or labor trouble pending or threatened against or relating
to Seller or its properties, Assets or Business.
c. No action or proceeding shall have been instituted before
any court, agency or other governmental body to restrain or prohibit the
transactions contemplated hereby.
d. The representations and warranties of Seller contained in
this Agreement shall be true and correct in all respects as of Closing, with the
same effect as though such representations
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and warranties had been made on such date. All of the covenants and agreements
of Seller to be performed on or before Closing pursuant to the terms hereof,
shall have been duly performed.
e. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Buyer and its counsel,
and Buyer shall have received copies of all of such documents and other evidence
as Buyer and its counsel may reasonably request in order to establish the
consummation of such transactions.
f. There shall have been no material adverse change or damage
to the premises, the Assets or the Business of Seller.
g. Seller shall have delivered to Buyer the executed
Noncompete Agreement in the form attached hereto as Exhibit "I".
h. Closing on the Principal Real Property agreement set forth
in Exhibit "C" shall occur contemporaneously with this Closing.
10. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants the following to be true on the date of this Agreement
and at Closing, and, except where specifically noted, such representations and
warranties shall survive for a period of two (2) years following Closing:
a. Xxxx X. Xxxxxx, III, is the sole shareholder of the
Company.
b. Seller owns (and/or will be able to convey) the Assets free
and clear of all claims, liens, mortgages, security interests, encumbrances and
demands of any nature, except such liens or encumbrances as are disclosed on
Schedule 10(b). Except for the Secondary Real Property, no other material real
or personal property is used directly in the Business.
c. No condemnation proceedings are proposed or pending, to
Seller's best knowledge, so as to threaten or affect the real property.
d. All equipment leases are in full force and effect and there
is no breach or default nor has there been any occurrence or event which with
notice or the lapse of time or both will become a breach or default under any
such leases by Seller and Seller covenants not to allow any breach or default to
occur prior to Closing. All leases are assignable by Seller to Buyer without
consent.
e. X. X. Xxxxxx Spawn Company is a corporation duly existing,
qualified and in good standing under the laws of the State of Pennsylvania and
is and shall be duly empowered to execute this Agreement and to do any and all
things required or desirable for consummation of all transactions contemplated
hereby. Seller has full corporate power and authority to own or lease its
properties or carry on its business as such properties are now and have been
owned or leased in such businesses now being and having been conducted.
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f. The execution and performance of this Agreement and the
documents necessary to close have been and will be duly authorized by all
requisite corporate proceedings by Seller, including the approval of the
Company's board of directors and stockholders and, when so delivered, constitute
a legal and binding obligation.
g. Execution and delivery of this Agreement and consummation
of the transactions contemplated hereby do not conflict with or result in a
breach of any of the terms, provisions, or conditions of the Company's
Certificate of Incorporation, bylaws, or any statute, regulation or court or
administrative order or process applicable or any agreement, lease or other
agreement or instrument to which Seller is a party, or by which it is bound; nor
does execution of this Agreement and consummation of the transactions
contemplated hereby constitute a default thereunder.
h. All approvals or orders necessary, reasonable and helpful
for the authorization, execution and delivery of this Agreement and related
documents by Seller and/or the consummation by Seller of the transactions
contemplated hereby and thereby have been or will be obtained by Seller prior to
Closing and true, correct and complete copies of each furnished to Buyer,
including without limitation all consents required or advisable in connection
with the assignment or transfer of any contracts to Buyer by Seller.
i. The Assets shall be operated and maintained in accordance
with Seller's normal operating standards until Closing, except for reasonable
wear and tear incurred in the normal course of the Business.
j. Seller shall not sell, dispose of, transfer or encumber any
of the Assets after the execution of this Agreement except in the regular course
of the Business.
k. Seller holds all necessary licenses and permits to operate
the Business and all such licenses and permits are listed on Schedule 10(k).
l. The Company has furnished or will furnish to Buyer its
financial statements for the years ended 1997 and 1998, and its financial
statements for the period ended March 31, 1999. Such financial statements will
be correct in all material respects and will have been prepared in accordance
with the books and records of the Company (which books and records properly and
accurately reflect the transactions and activities of the Company). There are no
liabilities of the Company, contingent or otherwise, which are not disclosed by
or reflected fully in such financial statements and disclosed in a schedule
provided to Seller by Buyer.
m. Since the date of its most recent financial statement
referred to in paragraph l, above, except as disclosed in this Agreement, Seller
has not:
(i) Entered into any transaction out of the ordinary course
of business;
(ii) Had any change in its financial condition, assets,
business or customer list, other than changes in the ordinary course of
business, none of which changes have been materially adverse;
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(iii) Suffered any fire, riot, explosion, earthquake,
windstorm, strike or other labor trouble, lockout, flood, act of God or
of the public enemy, casualty, condemnation, confiscation, requisition,
embargo, activity of the Armed Forces of the United States, revocation
of license or right to do business, cancellation or modification of
contracts by governmental authority, government regulation or order
restricting the operation of its business, cancellation or modification
of any franchise, right, contract, license or agreement or any other
event which has materially and adversely affected its business,
operations, properties or assets;
(iv) Had any material change in the accounting principles and
practices heretofore followed by the Company; or
(v) Entered into any sale or transfer of any of the Assets
or any disposition of any of its intangible assets.
n. All accounts receivable reflected on the Balance Sheet are,
and all accounts and notes receivable subsequently accruing to Closing will be:
(i) Valid, genuine and subsisting;
(ii) Subject to no known defenses, setoffs or counterclaims;
(iii) Current and collectible;
(iv) Due and payable in full on or before sixty (60) days of
Closing; and
(v) Fully collectible within one hundred and twenty (120)
days after Closing.
o. Except as set forth in Schedule 10(o), all federal, state,
local and foreign tax and information returns required to be filed by or on
behalf of Seller have been timely filed or requests for extensions have been
timely filed, granted and have not expired. All taxes shown on filed returns
have been paid. There is no audit examination, deficiency, refund, litigation or
matter in controversy with respect to which an adjustment to any tax item has
been asserted or proposed. All taxes, interest, additions and penalties which
are material in amount and which are due with respect to periods prior to
Closing have been paid or adequately reserved for. Seller has not executed an
extension or waiver of any statute of limitations on the assessment or
collection of any tax due that is currently in effect. The representation in
this paragraph 10(o) shall survive Closing for a period of six (6) years.
p. No purchase commitment for materials, supplies, component
parts or other items of inventory to which Seller is a party, is in excess of
normal, ordinary, usual and current requirements of its business or at a price
in excess of the current reasonable market price.
q. To the best of Seller's knowledge, each of the contracts
and agreements to which Seller is a party is a valid and binding obligation of
the parties thereto in accordance with its
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terms and conditions. To the best of Seller's knowledge, no party to any such
contract or agreement is in default with respect to any term or condition
thereof, nor has any event occurred which, through the passage of time or the
giving of notice, or both, would constitute a default thereunder or would cause
the acceleration of any obligation of any party thereto or the creation of a
lien or encumbrance upon any asset of Seller being transferred hereunder.
r. Set forth on Schedule 10(r) is a list of all assigned
contracts, agreements, insurance agreements and understandings requiring
payments in excess of $5,000 per year. Other than these, there are no
agreements, contracts, commitments or instruments which are material to or
binding upon the Business or to which the Assets are subject.
s. All intellectual property owned, used or licensed by Seller
is free and clear of liens, claims, security interests and restrictions. No
intellectual property owned, used or licensed by Seller infringes any rights
owned or held by any other person. No person or entity is infringing the rights
of Seller to any intellectual property. No product or service sold by Seller
violates or infringes any intellectual property right owned or held by any other
person or entity.
t. To the best of Seller's knowledge, Seller is not in
violation of nor has it received a notice of any violation or potential
violation of any applicable law, ordinance or regulation regarding the
protection of the environment and, to Seller's best knowledge, no basis exists
for any claim of any such violation by Seller, Buyer or in connection with the
Assets. Except as disclosed on Schedule 10(t), there has been no release of
hazardous material in, on, under or affecting any such property during the
period of Seller's ownership, leasing, or operation. Prior to the period of
Seller's ownership, leasing or operation of any of Seller's properties, to the
knowledge of Seller, there was no release of hazardous material in, on, under or
affecting any such property. The representations in this paragraph 10(t) shall
survive Closing for a period of three (3) years.
u. Except as set forth on Schedule 10(u) Seller is not a party
to or bound by any employment agreement or any collective bargaining or other
labor agreement or any pension, stock option, stock purchase, savings, profit
sharing, deferred compensation, retainer, consultant, bonus, group insurance or
other incentive or welfare contract, plan or arrangement relating to the
Business. Seller has (and upon consummation of the transactions contemplated by
this Agreement will have) no liability with respect to the applicable provisions
of the Employee Retirement Income Security Act of 1974, as amended, ("ERISA"),
any other similar federal or state statute or under the plans to the Pension
Benefit Guarantee Corporation. Seller has complied in all material respects with
the reporting and disclosure requirements of ERISA. Except as disclosed on
Schedule 10(u), Seller is not in violation of any rules and regulations of the
U.S. Immigration and Naturalization Service.
v. Seller maintains policies of insurance with coverages and
limits customary in its business and has not received any notice of default
under or cancellation of any such policies and has paid or financed all premiums
due thereon with respect to the business represented by the Assets covering all
periods up to and including Closing.
w. There is no suit, claim, action, or proceedings now pending
or threatened before any court, administrative or regulatory body or any
governmental agency, nor is Seller aware of any grounds therefor, to which
Seller is a party or which may result in any judgment, order,
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decree, liability or other determination that will or could have any material
adverse effect upon the Business or conditions, financial or otherwise, of
Seller. No such judgment, order or decree has been entered against Seller nor
any such liability incurred that has, or could have, such effect. There is no
claim, action or proceeding now pending or threatened before any court,
administrative or regulatory body or any governmental agency, that will or could
prevent or hamper the consummation of the transactions contemplated by this
Agreement.
x. On information and belief, no representation or warranty by
Seller, or in any certificate, exhibit, schedule, or other document furnished or
to be furnished by Seller pursuant thereto, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained therein not misleading.
11. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer makes the
following representations and warranties to Seller as an inducement to enter
into and consummate this Agreement as contemplated herein:
a. Buyer is a corporation duly existing, qualified and in good
standing under the laws of the State of Pennsylvania and is and shall be duly
empowered to execute this Agreement and to do any and all things required or
desirable for consummation of all transactions contemplated thereby.
b. The execution and performance of this Agreement and the
documents necessary to close have been and will be duly authorized by all
requisite corporate proceedings by Buyer, including the approval of Buyer's
board of directors and shareholders and, when so delivered, constitute a legal
and binding obligation. Buyer is not bound by or subject to any contractual or
other obligation that would be violated by Buyer's execution or performance of
this Agreement.
c. Execution and delivery of this Agreement and consummation
of the transactions contemplated hereby do not conflict with or result in a
breach of any of the terms, provisions or conditions of Buyer's Certificate of
Incorporation, bylaws or any statute, regulation or court or administrative
order or process applicable or any agreement, lease or other agreement or
instrument to which Buyer is a party, or by which it is bound, nor does
execution of this Agreement and consummation of the transactions contemplated
hereby constitute a default thereunder.
d. Buyer has entered into no contract that will interfere with
Buyer's ability to consummate this transaction as contemplated herein.
e. There is no litigation, proceeding, or governmental
investigation pending or, so far as is known to Buyer, threatened, against or
relating to Buyer or Buyer's business or the transactions contemplated by this
Agreement, nor is there any basis known to Buyer for such action.
f. No representation or warranty by Buyer in this Agreement or
any statement or certificate furnished or to be furnished to Seller pursuant
hereto or in connection with the transactions contemplated hereby contains or
will contain any untrue statement of material fact or omits or will omit any
material fact.
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00. REPRESENTATIONS TO SURVIVE CLOSING. All of the
representations and warranties contained herein (including all statements
contained in any exhibit or certificate or other instrument delivered by or on
behalf of Seller or Buyer pursuant to this Agreement or in connection with the
transactions contemplated by it) are a material part of the consideration for
the sale of the Assets and the inducement for Buyer to buy the Assets and Seller
to sell the Assets. For the purposes of each representation and warranty
contained herein, Seller and Buyer are materially relying upon the
representations of each other.
13. INDEMNITY.
a. Seller agrees to indemnify and hold harmless Buyer, Buyer's
affiliates and their respective officers, directors, shareholders, agents and
employees, and each person, if any, who controls or may control Buyer within the
meaning of the Securities Act of 1933, as amended, from and against all claims,
liabilities, losses, costs, damages and expenses arising out of or sustained by
Buyer by reason of:
(i) Any material breach of any representation, warranty or
covenant of Seller contained herein or in any agreement, certificate,
document, schedule or exhibit relating to or delivered pursuant hereto;
(ii) Any inaccurate representation made by Seller in or under
this Agreement;
(iii) Breach of any of the warranties made by Seller in or
under this Agreement;
(iv) Breach or default in the performance by Seller of any of
the covenants to be performed under this Agreement; or
(v) Any debts, liabilities or obligations of Seller whether
accrued, absolute, contingent or otherwise, except for those matters
with respect to which Buyer has expressly agreed to become liable
pursuant to Paragraph 7 hereof.
b. Buyer shall indemnify, defend, and hold Seller harmless
from any and all claims, debts, demands, judgments, actions, or causes of action
asserted against Seller, which arise from any event or occurrence subsequent to
Closing and/or which relate to Buyer's operation of the Business after Closing.
14. LIMITATIONS ON INDEMNIFICATION.
a. Seller's obligation to indemnify Buyer hereunder shall be
applicable only after and to the extent that the aggregate amount of all damages
asserted by Buyer under indemnifiable claims exceeds $25,000.
b. Buyer's obligation to indemnify Seller hereunder shall be
applicable only after and to the extent that the aggregate amount of all damages
asserted by Seller under indemnifiable claims exceeds $25,000.
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c. The amount of any payment or reimbursement of damages by an
indemnifying party shall be net of:
(i) A reasonable estimate of the present value of any tax
benefits realized or reasonably expected to be realized by the
indemnified party by reason of the facts and circumstances giving rise
to the indemnifying party's liability (after taking into consideration
the tax effect of the receipt by the indemnified party of the
indemnification payment); and
(ii) Any insurance proceeds received by the indemnified party
in connection with the facts giving rise to the right of
indemnification. The parties agree to use their best efforts to make
claims on and pursue recovery with respect to all insurance on account
of such matters.
15. OPERATION PENDING CLOSING. During the period from the date
hereof to Closing:
a. Seller shall:
(i) Conduct the Business according to the ordinary and usual
course and use Seller's best efforts to maintain and preserve the
organization of the Business, its employees and relationships with
suppliers, customers and others; and
(ii) Inform Buyer in writing from time to time of the
development of any material matters relating to the Business, including,
without limitation, any adverse changes in the results of operation or
financial position of the Business or any litigation, proceeding or
government investigation instituted or threatened against Seller
relating to the Business or the occurrence of any factor that might give
rise to any litigation, proceeding or investigation as aforesaid.
b. Seller shall not, without the prior written consent of
Buyer:
(i) Mortgage, pledge or subject any of the Assets to liens,
security interests or other obligations or encumbrance;
(ii) Sell or otherwise transfer any of the Assets other than
the sale of inventory in the ordinary course;
(iii) Enter into any contract or agreement relating to the
Business not in the usual ordinary course or terminate or make any
material change in any contracts or agreements relating to the Business;
or
(iv) Increase or agree to increase in any manner the
compensation of any of the employees of the Business or commit the
Business to any pension, retirement or profit sharing plan or agreement
or employment agreement with or for the benefit of any employee or other
person.
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c. Seller shall afford to Buyer and its counsel, auditors, and
authorized representatives full access to all personnel, properties, records and
documents of the Business and shall furnish such financial and other information
with respect to the Business, its personnel and property as Buyer may reasonably
require, except that such access shall not be disruptive to Seller's normal
Business operation.
d. Except as otherwise provided in this Agreement, all
revenues, profits, losses and liabilities resulting from the ownership or
operation of the Business and the Assets before Closing shall accrue to and be
the responsibility of Seller. All revenues, profit, losses and liabilities
resulting from the ownership or operation of the Assets after Closing shall
accrue to and be the responsibility of Buyer. Seller shall keep the Assets
adequately insured against fire and casualty until Closing. Buyer shall show
continuing evidence that the Assets are adequately insured against fire and
casualty after Closing until all obligations to Seller have been satisfied.
Prior to Closing, all risk of loss shall be borne by Seller; after Closing, all
risk of loss shall be borne by Buyer.
e. Seller will cause all property owned or leased by it to be
insured against all ordinary and insurable risks and will operate, maintain and
repair all its property in a careful, prudent and efficient manner.
f. Each party to this Agreement hereby covenants and agrees to
furnish all information and to make all filings required by any statute or
governmental regulation.
16. EXPENSES.
a. Buyer shall pay for any intangible tax on notes, mortgages
or security agreements. Xxxx X. Xxxxxx, III, and Buyer shall each pay one-half
of any realty transfer tax. Sales taxes shall be paid and collected as provided
by law and any real estate taxes shall be proportioned on the taxing authority's
fiscal year.
b. Notwithstanding the above, each of the parties to this
Agreement shall pay its own expenses in connection with this Agreement and the
transactions contemplated thereby, including the fees and expenses of counsel,
certified public accountants or other professionals.
17. CONFLICT. Closing of this transaction and the transfer of
the Assets of the Business are contingent upon the simultaneous Closing on the
real property owned by Xxxx X. Xxxxxx, III, in accordance with the sale
agreement attached as Exhibit "C", together with the execution of title transfer
documents for the autoclave owned by Xxxxxx. Closing of said sale agreement is
also contingent upon the Closing of this transaction.
18. PAYMENT OF PURCHASE PRICE AND SUBSEQUENT SALE.
a. Buyer will furnish all of the funds for the transactions
contemplated herein and the Purchase Price (other than funds supplied by
institutional lenders) and such funds will not be from sources that are
described in 18 U.S.C. sections 1956 and 1957 as funds or property derived from
"specified unlawful activity" and Buyer agrees to execute and deliver to Seller
a Certificate of
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Corporate Entity Structure and Ownership, attached to this Agreement as Exhibit
"K", at Closing, if requested by Seller.
b. Buyer has no agreement, either written or oral, to sell,
transfer or convey the Assets, or any interest therein (other than liens or
security interests that may be granted pursuant to Buyer's borrowing
arrangements), to any third party within the twelve-month period following
Closing and Buyer has no present intent to immediately offer the Assets for sale
after Closing.
19. TERMINATION. This Agreement may be terminated at any time
prior to Closing by:
a. Mutual consent of Buyer and Seller; or
b. Buyer if any of the conditions of Seller's obligation to
close have not been met at or before the Closing and have not been waived by
Buyer.
In the event of a termination of this Agreement pursuant to
the provisions of this paragraph, all escrows and other deposits by Buyer shall
be immediately returned to Buyer and this Agreement shall become void and have
no effect, subject only to any post-termination obligations with respect to
confidentiality or the return of information or documents; provided, however,
that if any party hereto willfully fails to perform its obligations herein, any
other party may seek any available legal or equitable remedies in addition to
those provided herein.
20. DEFAULT. If Buyer breaches or otherwise fails to perform
under this Agreement, Seller may demand and receive from the Escrow Agents all
monies paid on account, and Seller may exercise any right it has including, but
not limited to, bringing an action for specific performance, damages or other
relief.
If Seller breaches this Agreement, Buyer's remedy shall be
the return of the escrow deposit, the reimbursement of any out-of-pocket
expenses from the date of the Agreement until the date of such breach and, in
addition, Buyer may exercise any other right it has including, but not limited
to, bringing an action for specific performance, damages or other relief.
21. NOTICE. Notice required or permitted hereunder shall be in
writing and shall be delivered by hand or deposited in the United States mail
addressed to Company, X.X. XXXXXX SPAWN COMPANY, INC., at 000 Xxxx Xxxxx Xxxxxx,
XX Xxx 000, Xxxxxxx Xxxxxx, XX 00000, with a copy to Xxxxxxxx X. X'Xxxxxxx,
Esquire, at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx, XX 00000; and to Buyer,
WORTHINGTON HOLDINGS, INC., at 000 Xxxx Xxxxxx, XX Xxx 000, Xxxxxxxxx, XX 00000.
22. ASSIGNMENT. Except with the express written consent of the
other party hereto, this Agreement shall not be assignable or otherwise
transferred in whole or in part. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective successors and assigns.
Notwithstanding the foregoing, Buyer shall have the right to have the real
property described in Exhibit "A" and the other assets acquired hereunder
conveyed to a related third person or entity; provided, however, that any
assignment shall not discharge assignor's liability or
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obligation to any other party to this Agreement, and all assignees must
specifically acknowledge that said assignees shall assume all obligations and
liabilities of this Agreement. If Seller consents to an assignment of this
Agreement, or any interest therein, an express condition of that assignment
shall be that the assignee must execute the Certificate of Entity Structure and
Ownership.
23. BROKERAGE. Seller and Buyer represent that there is no
broker or agent involved in effecting this transaction. Seller and Buyer hereby
agree to indemnify and hold each other harmless for any liability or claim for
the payment of any commission, including interest and attorneys' fees, arising
from the conduct of the other party. These representations are made as part of
the consideration of this transaction. This paragraph shall survive the passage
of title and delivery of the deed and other documents of conveyance.
24. HEADINGS. All headings used herein are for convenience and
reference only and shall not be deemed to have any substantive effect.
25. ENTIRE AGREEMENT. This Agreement, along with the Purchase
and Sale Agreement executed by the parties contemporaneously herewith and the
exhibits and documents delivered pursuant hereto, constitute the entire contract
between the parties hereto, pertaining to the subject matter hereof and
supersede all prior and contemporaneous agreements, understandings, negotiations
and discussions, whether written or oral, of the parties; and there are no
representations, warranties or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein or therein. No supplement, modification or waiver of this Agreement shall
be binding unless executed in writing by the parties to be bound thereby. A
breach of this Agreement shall be deemed to be a breach of the sale agreement
executed contemporaneously herewith and vice versa.
26. FURTHER INSTRUMENTS AND ACTIONS. Each party shall deliver
any further instruments and take any further action that may be reasonably
requested by the other in order to carry out the provisions and purposes of this
Agreement.
27. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Pennsylvania.
28. SELLER'S CLOSING OBLIGATIONS. At Closing, Seller shall
deliver to Buyer the following documents:
a. Executed deeds, assignments, consents, bills of sale,
certificates of title, and other documents or instruments of transfer and which
shall contain full warranties of title as shall be effective to vest in Buyer
all of Seller's right, title and interest in and to all of the Assets being
conveyed hereunder, free and clear of all liens, charges, encumbrances and
restrictions;
b. All contracts, files, commitments and rights pertaining to
the Business and other data relating to its operations;
c. Certificate of Good Standing for the Company;
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d. Resolution of the Board of Directors of the Company, along
with a Certificate of Incumbency of Directors and Officers, authorizing
execution, delivery and performance of this Agreement and all documents required
for Closing;
e. Certified copy of Minutes of Shareholders' meetings of the
Company authorizing the entry and completion of all transactions hereunder;
f. Transfer of all permits, licenses and use rights of the
Business;
g. Closing Statement; and
h. Opinion of Seller's counsel.
29. BUYER'S CLOSING OBLIGATIONS. At Closing, Buyer shall
deliver to Seller:
a. Payment of the sums due pursuant to this Agreement;
b. Certificate of Good Standing for Worthington Holdings,
Inc.;
c. Resolution of Board of Directors of Buyer, along with a
Certificate of Incumbency of Directors and Officers, authorizing execution,
delivery and performance of this Agreement and all documents required for
Closing;
d. Certified copy of Minutes of Shareholders' meeting of Buyer
authorizing the entry and completion of all transactions hereunder;
e. Execution of all agreements executed by Seller that require
Buyer's agreement and execution;
f. Execution of security documents;
g. Closing statement; and
h. Any other documents, drafts, etc., required to give effect
to the transaction.
30. PRE-CLOSING OBLIGATIONS. At least ten (10) days prior to
Closing, the parties will arrange for the obtaining of any clearances or notices
to the Pennsylvania Department of Revenue, Pennsylvania Department of Labor and
Industry or other required notices.
31. NON-MARKETING AGREEMENT. During the pendency of this
Agreement and until such time as the Agreement is terminated by Closing or by
mutual abandonment or by reason of failure of a condition or by reason of a
breach by Buyer, no person acting on behalf of the Company or Xxxx X. Xxxxxx,
III, shall offer the shares, Assets or Business for sale or for negotiations
regarding a sale to or with any person other than an affiliate of Buyer.
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00. NO PUBLICITY AGREEMENT. During the pendency of this
Agreement, neither party, without the permission of the other, shall release any
publicity or make any announcement with respect to the transaction contemplated
herein, and each party shall use its best efforts to keep information and
knowledge about the transaction limited only to those with the need to know.
IN WITNESS WHEREOF, and intending to be legally bound, the
undersigned have executed this Agreement as of the date first written above.
ATTEST: SELLER:
X.X. XXXXXX SPAWN COMPANY
/s/ Xxxx X. Xxxxxx, III By: /s/ Xxxx X. Xxxxxx, III
---------------------------------- -------------------------------
Secretary President
WITNESS: XXXX X. XXXXXX, III
/s/ Xxxxxxxx X. X'Xxxxxxx /s/ Xxxx X. Xxxxxx, III
---------------------------------- ----------------------------------
ATTEST: BUYER:
WORTHINGTON HOLDINGS, INC.
/s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxx
---------------------------------- ------------------------------
Secretary
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