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EXHIBIT 2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated this 6th day of
March, 1998, by and among POTTER'S ACQUISITION CORP., a Delaware corporation
("PURCHASER"), X. X. XXXXXX SAUSAGE COMPANY, an Oklahoma corporation
("SAUSAGE"), POTTER'S FARM, INC., an Oklahoma corporation ("FARM"), POTTER
RENDERING CO., an Oklahoma corporation ("RENDERING") and POTTER LEASING COMPANY,
LTD., an Oklahoma limited partnership ("LEASING"; and collectively with Sausage,
Farm and Rendering, the "SELLERS", and each, individually, a "SELLER"), and Xx.
Xxxxxx Xxxxxx, in her capacity as "REPRESENTATIVE" of all of the Sellers.
R E C I T A L S:
WHEREAS, collectively, Sellers are engaged in the business (the "BUSINESS")
of manufacturing, marketing, selling and distributing prepared food products and
related products and services; and
WHEREAS, Purchaser desires to acquire, and Sellers desire to sell, the
Purchased Assets (as described on Schedule A, attached hereto) , and which, for
purposes hereof, shall include the "INTANGIBLES" (as defined in Section 5H(iii)
hereof), for a purchase price which is established herein, all upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, and in consideration of the sum of $100.00 and the mutual
premises and representations, warranties and covenants and other good and
valuable consideration, the receipt and sufficiency of which being acknowledged,
the parties agree as follows:
1. SALE AND PURCHASE. On the Closing Date (as defined in Section 4
hereof), in reliance on the mutual representations, warranties, covenants
and agreements of the parties, and on the terms and subject to the
conditions set forth herein, Sellers shall sell, convey, transfer, assign
and deliver to Purchaser, the Purchased Assets, free and clear of all
Encumbrances (as defined in Section 5B hereof), except as permitted hereby.
The Purchased Assets shall include all property or interests in property
(real, personal or mixed; tangible or intangible) described on Schedule A
and shall specifically exclude only those assets identified on SCHEDULE B,
attached hereto (the "EXCLUDED ASSETS"), all of which shall be retained by
Sellers. Purchaser is not assuming any liability or obligation of the
Sellers of any nature whatsoever, except as expressly set forth in SCHEDULE
C hereto (each, an "ASSUMED LIABILITY", and collectively, the "ASSUMED
LIABILITIES"). Except for the Assumed Liabilities, the Sellers shall remain
liable and responsible for all obligations and liabilities not expressly
assumed by Purchaser hereunder, and the Sellers shall discharge all of
their lawful and legally enforceable obligations, regardless of any
agreement relating to indemnification of the parties pursuant hereto.
2. PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") for the
Purchased Assets shall be a cash amount equal to the sum of (i) THIRTEEN
MILLION DOLLARS ($13,000,000.00) (the "CASH"), (ii) plus the Income Tax
Adjustment (as defined, determined and settled in accordance with
SCHEDULE A1, attached hereto), (iii) plus or minus proratable items
("PRORATIONS") with respect to the Real Estate (as defined in Section
5B(ix) hereof), and (iv) interest ("INTEREST") on the Cash at the rate of
seven per cent (7%) per annum, accruing from September 1, 1997 through the
Closing Date (as defined in Section 4 hereof), all payable as set forth
below in Section 3 hereof. The Purchase Price shall be allocated for
Federal Income Tax purposes among the Purchased Assets as set forth on
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SCHEDULE A2, attached hereto, and the parties agree that, to the extent
permitted by law, they shall account for the sale thereof in a manner
consistent with such allocation.
Each of the Sellers hereby irrevocably appoints Representative as the
sole representative and agent of each, with the full and exclusive power
and authority to represent and bind each with respect to all matters
arising under and pursuant to this Agreement and the transactions
contemplated hereby. All actions taken by Representative hereunder shall be
binding upon each of the Sellers as if expressly confirmed and ratified in
writing by each. Representative will not resign unless a successor
Representative shall have been appointed. The Sellers shall communicate
with Purchaser exclusively by and through Representative or authorized
legal counsel (X. X. Xxxxxx) on all matters, and agree to be bound by such
communications.
3. PAYMENT OF PURCHASE PRICE. On the terms and subject to the conditions
herein, Purchaser shall pay and deliver to Sellers on the Closing Date, the
Purchase Price, as follows:
3.A. The sum of the Cash, plus the Income Tax Adjustment, plus the
Interest, less the "Escrow Deposit" (as defined in Section 13F
hereof); and
3.B. plus or minus the Prorations, at Closing;
all in immediately available funds. The Escrow Deposit shall not be deemed
delivered to the Sellers until all of the conditions set forth in the
"Escrow" (as defined below) are satisfied.
4. CLOSING. The consummation of the transactions contemplated hereby (the
"CLOSING") shall take place on the second business day after all conditions
precedent have been satisfied, but not earlier than March 15, 1998, and not
later than March 20, 1998, at 9:00 A.M. (the "CLOSING DATE") at the law
offices of the Sellers' counsel in Oklahoma City, Oklahoma, or otherwise,
on such other date or place as the parties hereto may mutually agree. The
transactions shall be effective for financial accounting purposes as if
they had taken place immediately following the close of regular business on
August 31, 1997 (the "Effective Date").
5. EACH SELLER'S REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS, WITH
RESPECT TO ITSELF (ONLY). Each of the Sellers hereby represents and
warrants to, covenants and agrees with, Purchaser, now and as of the
Closing Date, as follows:
5.A. Organization, Standing and Power. Each Seller other than Leasing
is a corporation duly organized, validly existing and in good
standing under the laws of Oklahoma. Leasing is a limited
partnership duly organized, validly existing and in good standing
under the laws of Oklahoma. The federal employer identification
number, state identification number for sales and tax purposes
and all similar identification numbers for each Seller are set
forth on PART A OF EXHIBIT 5A, attached hereto. Each Seller has
all requisite power and authority to own, lease and operate those
Purchased Assets owned, leased or operated by such Seller, and to
carry on the Business as now being conducted in the manner that
the Business is now being conducted. Neither the nature of the
Business nor the ownership, operation or leasing of real estate
or personal property by Sellers requires any to qualify as a
foreign entity in any jurisdiction other than jurisdictions in
which the failure to so qualify would not materially and
adversely affect the Business or any of the Purchased Assets,
including the Intangibles. No Seller conducts any business or
owns or leases any asset or property of any nature
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outside of the United States. Each of the Sellers has the full
power and authority and legal capacity to enter into and deliver
this Agreement, sell, transfer and deliver the Purchased Assets
and perform all other acts necessary or appropriate to consummate
all of the transactions contemplated hereby.
5.B. Capital Structure; Ownership of Purchased Assets and Related
Matters.
5.B.(i) The capital structure of each Seller, including the
number of authorized, issued and outstanding shares,
and ownership of such shares is listed on PART A OF
EXHIBIT 5B(i), attached hereto. Except as set forth on
PART B OF EXHIBIT 5B(i), there are no outstanding
options, warrants or other rights, contracts,
commitments, agreements, understandings, arrangements
or restrictions relating to the purchase or acquisition
of any shares of capital stock or other equity
securities or interests of any Seller. No shareholder
or holder of any equity interest of any nature has had
such equity interests redeemed by any Seller since
March 30, 1997.
5.B.(ii) Except as listed on EXHIBIT 5B(ii), Sellers have
and will have, at Closing, good and marketable title
to, or a valid and transferable leasehold interest in,
all of the Purchased Assets, except for those of the
Purchased Assets as may be sold or otherwise disposed
of between the date hereof and the Closing Date in the
ordinary course of business. No other "PERSON" (as
defined in Section 15M hereof) has any fee, leasehold
or equitable interest in and to any of the Purchased
Assets, except as set forth on EXHIBIT 5B(ii). Except
as set forth on EXHIBIT 5B(ii), when sold and delivered
to Purchaser, the Purchased Assets will be free and
clear of all the following (hereinafter collectively
referred to as "ENCUMBRANCES"): security interests,
liens, pledges, claims, charges, escrows, encumbrances,
options, rights of first refusal, mortgages,
indentures, security agreements or other agreements,
arrangements, contracts, commitments, understandings or
obligations, whether written or oral, encumbering title
in any way, other than the Encumbrances created hereby.
5.B.(iii) Except as listed on EXHIBIT 5B(iii), no Seller
owns,and none has ever owned, shares of any class of
capital stock of any other Person, none has or has ever
had any interest in any other Person, and there are no
contracts, commitments, agreements, understandings or
arrangements relating to such.
5.B.(iv) Except as listed on EXHIBIT 5B(iv), no Seller has
ever assumed or succeeded to the liabilities of any
Person, whether by operation of law or otherwise. No
Seller is contingently liable for any obligation of any
other Person. No Seller has ever been known by any
other name, and none does or has ever done business
under any other name.
5.B.(v) Except as listed on EXHIBIT 5B(v), none of the
Sellers has any direct or indirect financial stake in
any Person which has an interest in any assets used in
conducting the Business.
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5.B.(vi) Except as listed on EXHIBIT 5B(vi), there are no
contracts, commitments, agreements, understandings,
arrangements or restrictions relating to the
ownership or operation of any of the Purchased
Assets.
5.B.(vii) Other than the Excluded Assets, the Purchased
Assets constitute all of the property used or
useful in the Business as currently conducted by
Sellers, and are generally located at the locations
set forth on EXHIBIT 5B(vii).
5.B.(viii) The Purchased Assets are in good working or
reasonably repairable condition, have been
maintained in accordance with industry standards,
and are generally sufficient to conduct the
Business in a manner consistent with past
practices. The Sellers know of no unrepairable
condition which, either alone or with other
conditions, materially interferes with the economic
value of any of the Purchased Assets or the use
thereof in the manner used by Sellers in the
Business.
5.B.(ix) The Purchased Assets do not include any interest of
any nature in any parcel of real property, except
for the fee title interest in the real estate
legally and commonly identified on PART A OF
EXHIBIT 5H(i) (the "REAL ESTATE"), and no Seller
has any understandings, agreements or commitments
to purchase any other real property.
5.C. Authorization. This Agreement and all writings relating hereto to
be executed and delivered by each of the Sellers have been duly
authorized by all necessary action and constitute the valid and
binding obligations of each of the Sellers, enforceable against
each such Selling Party in accordance with their respective
terms. The individuals executing this Agreement and the other
documents executed in connection herewith individually and on
behalf of Sellers have been duly authorized and have the legal
capacity to execute all of such documents in such capacities.
Neither the execution and delivery hereof nor any writing
relating hereto nor the consummation by any of the Sellers of the
transactions contemplated hereby or thereby, nor compliance with
any of the provisions hereof or thereof, will: (i) conflict with
or result in a material breach of any of the Sellers' Articles or
Certificates of Incorporation, By-Laws or other charter
documents; (ii) violate any statute, law, rule or regulation or
any order, writ, injunction or decree of any court or
governmental authority; (iii) violate or conflict with or
constitute a default under (or give rise to any right of
termination, modification, cancellation or acceleration under),
any agreement or writing of any nature to which any of the
Sellers is a party or by which any of the Purchased Assets may be
bound or affected, or result in the creation of any Encumbrance
against or upon any of the Purchased Assets under any agreement
or writing to which any Seller is a party or by which any Seller
or any Seller's assets may be bound or affected, or (iv) impair
or in any way limit any governmental or official license,
approval, permit or authorization of any Seller, to the extent
that any of the foregoing would materially and adversely affect
the Business or any of the Purchased Assets. Other than as set
forth on EXHIBIT 5C, attached hereto, no consent or approval of
or notification to any Person is necessary or required in
connection with the execution and delivery by any of the Sellers
of this Agreement or any writing relating hereto or the
consummation of the transactions contemplated hereby or thereby.
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5.D. Financial Statements.
5.D.(i) EXHIBIT 5D hereto consists of the balance sheets
and the related statements of income, changes in
shareholders' equity and changes in financial
position of each Seller, and the notes thereto and
the auditor's report thereon, if applicable, as at
and for the calendar year or fiscal years ending
within or at the close of 1995 and 1996, and all
interim statements prepared to date for 1997
(collectively, the "HISTORICAL FINANCIALS").
EXHIBIT 5D shall be updated as interim statements
are prepared. To the best of Sellers' knowledge,
the Historical Financials are true, correct and
complete and present fairly the financial position
of each Seller and the results of each Seller's
operations, retained earnings and changes in
financial positions as at the dates thereof and for
the periods covered thereby, are consistent with
the books and records of Sellers, do not include or
omit to state any material fact which renders them
misleading, and have been prepared in conformity
with generally accepted accounting principles
applied on a consistent basis, except as may be
disclosed in the reports relating thereto. At the
Closing, the Sellers shall deliver to Purchaser a
consolidated balance sheet dated as of the end of
the month before the Closing Date (the "CLOSING
BALANCE SHEET") based on the best knowledge and
good faith of all of the Sellers, which shall be
prepared on a basis consistent with the Historical
Financials and in accordance with the provisions
hereof.
5.D.(ii) Except as disclosed therein, or otherwise listed on
EXHIBIT 5D(ii), the statements of income included
in the Historical Financials do not contain any
items of special or nonrecurring income, and the
balance sheets included in the Historical
Financials do not, and the Closing Balance Sheet
will not, reflect any write-up or revaluation
increasing the book value of any asset.
5.D.(iii) All pro forma adjustments made by Sellers or on
Sellers' behalf in any sales brochure or other
document or literature used for purposes of
determining an adjusted earnings number are
reasonable, appropriate and adequate and are based
on the good faith belief of the Sellers.
5.E. Liabilities.
5.E.(i) Except as listed on EXHIBIT 5E(i), the liabilities
of Sellers on the Historical Financials consisted,
and the liabilities on the Closing Balance Sheet
will consist, solely of obligations and liabilities
incurred in the ordinary and regular course of
Business to Persons which are not affiliated with
any of the Sellers. Items listed on EXHIBIT 5E(i)
are not Assumed Liabilities.
5.E.(ii) As of the Closing, no Seller will have any material
and adverse liabilities or obligations of any
nature whatsoever, including, without limitation,
known or unknown, fixed or contingent, accrued,
absolute, matured or unmatured, or any "LOSS
CONTINGENCIES" considered "PROBABLE" or "REASONABLY
POSSIBLE" within the meaning of the Financial
Accounting Standards Board's Statement of Financial
Accounting Standards No. 5, which were not or will
not be recorded
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on the Historical Financials, the Closing Balance
Sheet or on EXHIBIT 5E(i) hereof, it being the
intent of the parties that every liability of every
nature (including those liabilities or obligations
commonly referred to as "off-balance sheet"
liabilities) be specifically, accurately and
properly disclosed to Purchaser, and properly
accrued on either the Historical Financials or the
Closing Balance Sheet or herein, as the case may
be. All contingent liabilities, either not
disclosed, or disclosed on EXHIBIT 5E(i) shall be
for the account of the Sellers in all respects
(including indemnification hereunder), and, if any
such undisclosed or contingent liability is paid by
Purchaser, then such payment shall be deemed
accrued on the books of the Business immediately
prior to the Effective Date.
5.E.(iii) All reserves and allowances to be included in the
Closing Balance Sheet are, and will be, adequate,
appropriate and reasonable (in accordance with
generally accepted accounting principles).
5.E.(iv) EXHIBIT 5E(iv) is a complete list (the "PAYABLES'
LIST"), as sworn to by the Sellers, of every
material business creditor of each Seller,
including taxing authorities (whether the liability
to such creditor is accrued, absolute, contingent
or otherwise), listed by name, address, amount of
liability to such creditor, and whether such
liability is disputed. The Payables' List shall be
updated as of the Closing Date.
5.F. Absence of Changes. Except as otherwise listed on EXHIBIT 5F
hereto, the Business has been operated only in the ordinary
and regular course, and there has not been, since January 1,
1997, and through the Closing Date there will not be, with
respect to any Seller:
5.F.(i) any material and adverse change in its condition,
financial or otherwise, other than that resulting
in the ordinary and regular course of business;
5.F.(ii) any material and adverse damage, destruction or
loss of any of the Purchased Assets, whether or not
covered by insurance;
5.F.(iii) the incurring of any obligation or liability
(whether absolute, accrued, contingent or otherwise
and whether due or to become due) in excess of
$10,000.00, except for:
5.F.(iii)(a) purchases in the ordinary course of
business, and
5.F.(iii)(b) the payment in the full and complete
satisfaction of the litigation
described on EXHIBIT 5K hereof;
5.F.(iv) any transfer or application of any assets outside
the regular course of financing and conducting the
business to the payment of any amount payable,
directly or indirectly, to or for the benefit of
any Seller;
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5.F.(v) any declaration, setting aside or payment of any
dividend or other distribution in respect of any
shares of capital stock of any Seller (other than
for the distribution of current earnings due to a
Seller's status as an "S" corporation), or any
direct or indirect redemption, purchase or other
acquisition of any such stock or any distribution
in excess of current profits or loan repayment
obligations to a partner in a Seller's partnership;
5.F.(vi) any organized labor negotiations, strike or work
stoppage affecting the Business or any threat of
the foregoing;
5.F.(vii) any sale, transfer or other disposition of any
tangible or intangible asset of any Seller to any
Person, except for:
5.F.(vii)(a) payments of third party obligations
incurred in the ordinary and regular
course of business, in accordance with
the regular payment practices of
Sellers;
5.F.(vii)(b) sales, exchanges and dispositions of
inventory and other property
in the ordinary and regular course of
business; and
5.F.(vii)(c) those items set forth in
section 5F(v).
5.F.(viii) any termination or waiver of any rights of
material value to the Business;
5.F.(ix) to the knowledge of the Sellers, the adoption of
any statute, rule, regulation or order which
materially and adversely affects the Business;
5.F.(x) any increase in the compensation of, or benefits
for, directors, officers or employees performing
services for any Seller (including, without
limitation, any increase pursuant to any bonus,
pension, profit-sharing or other plan or
commitment), having annual remuneration in excess
of $40,000.00, except for increases in accordance
with the Sellers' normal salary administration
policies;
5.F.(xi) any capital expenditure or commitment in excess of
$20,000.00 for property other than vehicles, plant
or equipment;
5.F.(xii) any forward purchase commitments not completed by
the Closing Date involving more than $20,000.00 per
item;
5.F.(xiii) any material change in the accounting methods or
practices followed any Seller or any change in
depreciation or amortization policies or rates
theretofore adopted;
5.F.(xiv) any commitment or understanding to lease or
acquire any interest of any nature in any real
estate;
5.F.(xv) any payment of any liability or obligation of any
Seller in excess of $5,000.00 sooner than in
accordance with its usual or customary practices;
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5.F.(xvi) any sale of goods or services to any customer
where the payment for such goods or services
allows for the payment therefor more than thirty
(30) days after the goods or services have been
provided to such customer; or
5.F.(xvii) any change in the recipes or manufacturing
process of any product;
5.F.(xviii) any material decrease in marketing, advertising,
promotional or similar expenses; or
5.F.(xix) any commitment, obligation or understanding to do
any of the foregoing.
5.G. Tax Matters. Each Seller has filed, and will timely file,
all tax returns and reports required to be filed and, in
respect of any period ending prior to or which includes the
Closing Date, has paid, or has set up an adequate reserve for
the payment of, all taxes required to be paid or anticipated
to be payable, which reserve either is reflected in the
Historical Financials or will be reflected in the Closing
Balance Sheet, as the case may be. All tax returns of each
Seller for the last three (3) years have been delivered to
Purchaser, and there have been no tax audits of such returns,
in process or threatened, except as listed on EXHIBIT 5G.
None of the Sellers has any liability for any taxes in excess
of the amounts so paid or reserves so established. Each
Seller has properly withheld and paid, and will properly
withhold and pay, all payroll or similar taxes. No Seller is
delinquent in the payment of any tax, assessment, penalties
or interest, and except as listed on EXHIBIT 5G, none has
requested any extension of time within which to file any tax
returns in respect of any fiscal year which have not since
been filed. All tax returns filed or to be filed are, or will
be, true, complete and correct. There are no tax liens on any
of the Purchased Assets. No deficiencies for any tax,
assessment, penalties or interest have been proposed,
asserted, assessed or, to the knowledge of the Sellers,
threatened against any Seller which would not be covered by
existing reserves and, as of the date hereof, no requests for
waiver of the time to assess any such tax are pending. None
of the Sellers has given or been requested to give waivers of
any statute of limitations relating to the assessment or
payment of any taxes for any taxable period. As of the
Closing Date, all taxes collected under color of law will
have been remitted to the proper taxing jurisdiction. For
purposes hereof, the term "TAX" shall include all Federal,
state, local and foreign taxes, assessments, and all
franchise, income, sales, use, occupation, payroll, property,
excise or other taxes of any nature whatsoever, and
governmental charges, including penalties and interest
relating to the foregoing. Provisions hereof notwithstanding,
taxes arising by reason of the closing shall thereafter be
timely returned and paid by all parties hereto.
5.H. Property Owned, Leased or Licensed.
5.H.(i) PART A OF EXHIBIT 5H(i) contains a list of all
real estate owned or leased by any Seller
(collectively, the "REAL ESTATE") and with respect
to that Real estate which is leased, the
termination date or notice requirement with
respect to termination, annual rental and renewal
or purchase options). Except as set forth on PART
A OF EXHIBIT 5H(i), none of the Sellers own any
fee interest in any real property used by Sellers
in connection with the Business and none has any
understandings, agreements or commitments to
purchase any. With
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respect to the Real Estate and except as listed on
EXHIBITS 5H(i)(a) through EXHIBIT 5H(i)(f), both
inclusive:
5.H.(i)(a) there are no interior or exterior
structural defects or other defects
in the buildings or improvements
thereon or in the plumbing, gas,
electrical, mechanical, heating,
ventilating, air-conditioning,
sprinkler or other systems
(collectively, the "SYSTEMS") thereof.
PART B OF EXHIBIT 5H(i), or an
environmental assessment (or an update
thereof) to be delivered to Purchaser
(with the update, the "ENVIRONMENTAL
REPORT"), sets forth the location of
all underground or below grade storage
tanks, pumps, piping, dispensers, or
any retention pits located on any part
thereof, along with a list of all
documents, notices, test reports or
other information relating thereto
including a description of substances
stored therein. In addition, at the
Closing, each of the Sellers will
deliver a Certificate (the
"ENVIRONMENTAL CERTIFICATE") which
details all known or suspected
environmental concerns with respect to
the Real Estate and the operation of
the Business not expressly detailed in
the Environmental Report. The
Environmental Certificate shall also
detail the sources of information
utilized by the Sellers therein. When
delivered to Purchaser, the Real
Estate will be free of all material
environmental risks and hazards (other
than those arising out of the
operation of the Business in the
ordinary course); \ 5.H.(i)(b) there
are no unrecorded leases,
Encumbrances, restrictions or other
matters materially affecting title or
the current use thereof; no Person has
the right to impose or claim any
interest whatsoever thereon; and,
there are no covenants, conditions,
restrictions or other title exceptions
applicable thereto which are presently
violated or which adversely affect the
marketability thereof and there are no
defects therein or thereon;
5.H.(i)(c) to the Sellers' knowledge, it is not
subject to or threatened with any
requests, applications or proceedings
to condemn, rezone or demolish all or
any portion thereof. Sellers have
obtained all permits and certificates
necessary for the use and occupancy
thereof and the improvements thereon
and such use and occupancy is and has
been in full compliance with all
Federal, state and local laws, rules
and regulations. To the knowledge of
the Sellers: (i) all water, sewer,
gas, electric, telephone, drainage and
other utility equipment, air
conditioning, heating, ventilation and
all other facilities and services
(collectively, the "SERVICES")
required by law or necessary for the
operation of the Real Estate as it is
now being operated are installed and
connected pursuant to valid permits,
are adequate to service the Real
Estate and the Business, and are in
good operating condition and repair,
and (ii) to Sellers' knowledge, no
material fact or condition exists
which would result in the
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termination or impairment in the
furnishing of any Service or System.
All reports related to the Real
Estate, including those related to the
Systems and Services, which have been
prepared by any Person and delivered
to any of the Sellers since 1994 and
which are in Sellers' possession, have
been delivered to Purchaser;
5.H.(i)(d) none of the Sellers has received
notice of and has no awareness of any
currently due, pending or threatened
general or special assessments, taxes,
litigation or governmental proceedings
against or affecting or which may
affect the Real Estate. No Seller pays
any taxes or assessments with respect
to the Real Estate, except as set
forth in PART C OF EXHIBIT 5H(i). PART
C OF EXHIBIT 5H(iii) also details the
water charges of Seller on a monthly
and yearly basis, and lists if any
increases are pending or contemplated;
5.H.(i)(e) it consists of one contiguous parcel,
abuts on and has direct vehicular
access to a dedicated thoroughfare;
and it is not located in an area
designated as being subject to flood
hazards or risks;
5.H.(i)(f) with respect to the leases covering
the Real Estate, such leases are in
full force and effect, are valid and
binding obligations of the parties
thereto, have not been amended and are
enforceable against its parties in
accordance with the terms thereof.
There are no defaults (alleged or
actual) by either party to such leases
and no event has occurred which with
due notice or lapse of time or both
would constitute a default. Sellers
have no obligation to pay brokerage
commissions or other compensation in
connection with such leases.
5.H.(ii) PART A OF EXHIBIT 5H(ii) contains a list of each
item of machinery, equipment, tooling, office
furniture, automobiles, trucks and other fixed
assets owned or leased by any Seller
(collectively, the "FIXED ASSETS"), and all
general locations thereof. PART B OF EXHIBIT
5H(II) contains a list and brief description of
each lease or other agreement under which any
Seller pays in excess of $5,000.00 annually to
lease, license, hold or operate any Fixed Asset.
Copies of all leases relating to any Fixed Asset
have been delivered to Purchaser. The Fixed Assets
will, individually or in the aggregate, be fit, or
reasonably repairable, for such assets' intended
use as of the Closing Date.
5.H.(iii) To the extent pertinent to the Business and the
Purchased Assets, PART A OF EXHIBIT 5H(iii)
contains a list of all unexpired non-governmental
licenses, franchises, distribution rights and the
like held by each Seller (including, as to each,
the names of the parties thereto, a description of
the subject matter of the license, etc., the
termination date or notice requirement with
respect to termination, the basis of royalties
calculation and renewal options, if applicable)
and all unexpired trademarks, trade names
(including each Seller's name and trade names),
service marks, copyrights, know-how, software,
written, magnetic and storage media, inventions,
designs, recipes, models,
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processes, patents or any other proprietary rights
and applications for any of the foregoing owned by
or registered in the name of or used by any Seller
(collectively, the "INTANGIBLES") and those
Intangibles expired within the last two (2) years.
Each Seller has a valid fee or licensee interest
in, all Intangibles held by such Seller, and,
except as set forth on PART B OF EXHIBIT 5H(III),
pays no royalty with respect to any of them, has
the exclusive right to bring actions for the
infringement thereof and has not granted any
rights of any nature in any of the Intangibles to
any Person. No product made or sold by any Seller
or for any Seller's benefit violates any license,
franchise or distribution agreement or infringes
any trademark, trade name, service xxxx,
copyright, know-how or patent of another Person.
Except as set forth on PART C OF EXHIBIT 5H(iii),
all Intangibles described in this paragraph
5H(iii) are assignable to Purchaser without the
consent of any Person.
5.I. Insurance. Each Seller has maintained and presently
maintains in effect insurance covering the Purchased Assets
and the Business from reasonably foreseeable losses and any
liabilities or risks relating thereto and such insurance
coverage shall be maintained by each Seller through the
Closing Date. EXHIBIT 5I hereto sets forth a complete and
accurate schedule (including the type of policy, the policy
number, the limits of coverage, the carrier, the insurance
agent or broker and the expiration date) of all insurance
policies, letters of credit or performance bonds held or
issued by or on behalf of each Seller and now in force and
those contemplated (including, without limitation,
comprehensive general liability, personal liability,
comprehensive general casualty and extended coverage,
automobile, machinery, fire and lightning, title, endowment,
life, workers' compensation and fidelity bond coverage)
(collectively, the "INSURANCE POLICIES") and insurance agents
and/or brokers providing such insurance coverage. Except as
disclosed on EXHIBIT 5I, such coverage fully complies with
all contractual requirements of the Business, and no Seller
has forfeited or waived any claim under any Insurance
Policies and no Seller has failed to comply in all material
respects with the terms and conditions thereof. Unless
otherwise set forth on EXHIBIT 5I, the products liability,
personal injury and property damage insurance maintained has
been on an "OCCURRENCE" basis during the five-year period
prior to the Closing Date. EXHIBIT 5K sets forth all
significant property damage or personal injury claims
asserted against any Seller during the past three years, or
otherwise still pending. All of such claims have been and are
being defended by insurance carriers or indemnitors without
reservation and are or will be completely covered by the
Insurance Policies. Except as listed on XXXXXXX 0X, xxxx of
the Sellers has received notification, either directly or
indirectly, from any insurance carrier, denying or disputing
any claim made by any Seller, denying or disputing any
coverage for any such claim, denying or disputing the amount
of any claim, or regarding the possible termination,
cancellation or amendment of, or premium increase with
respect to, any Insurance Policies during the term currently
in force; and no Seller has any pending or anticipated claim
against any of the insurance carriers under any of such
policies, and there has been no, to the knowledge of the
Sellers, actual or alleged occurrence of any kind which may
give rise to any such claim.
5.J. Agreements, Etc. EXHIBIT 5J contains a list of all written,
and brief description of all legally enforceable oral
contracts, agreements, leases, understandings, commitments,
licenses, letters of credit, instruments and obligations, the
open purchase and sales orders
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journals as of the beginning of business on August 31, 1997
(which journals shall be updated as of the Closing Date), and
other instruments and obligations not listed on another
Exhibit or schedule hereto (unless excluded therefrom due to
the dollar amount involved) materially affecting the Business
in any manner whatsoever (collectively, the "CONTRACTS"). With
respect to the Contracts, except as otherwise set forth on
such EXHIBIT 5J: (i) all are in full force and effect, have
not been modified or amended, and constitute legal, valid and
binding obligations of the respective parties thereto; (ii)
each Seller has, in all material respects, performed all of
the obligations required to be performed by it to date and is
not in default or, to the knowledge of the Sellers, alleged,
to be in default in any respect thereunder, no party has been
released from any material obligation thereto and there exists
no event, condition or occurrence which, with or without
notice, lapse of time or the occurrence of any other event,
would constitute a default thereunder by any Seller or, to the
Sellers' knowledge, would constitute a default on the part of
any other party thereto; (iii) the continuation, validity and
effectiveness under the current terms thereof (including the
current rentals under any leases or licenses) will in no way
be affected by the transactions contemplated hereby, or, if
any would be affected without a consent or waiver, the Sellers
shall cause an appropriate consent or waiver respecting such
transfer to be delivered to Purchaser prior to the Closing
Date at no cost to Purchaser or other adverse consequences to
any Seller or Purchaser; and (iv) none require the payment or
performance of material considerations by any Seller on or
after the Closing Date without the receipt of consideration of
commensurate value, within the meaning of applicable
fraudulent conveyance laws or decisions. The Sellers have
furnished to Purchaser complete copies of all written
Contracts and complete written summaries of all oral Contracts
described on any Exhibit hereto. No Seller is restricted by
any agreement to which it is a party from carrying on the
Business anywhere in the world. The Contracts confer on
Sellers all rights necessary to enable them to conduct the
Business as now being conducted (as well as any expansion
thereof now contemplated) and none imposes upon any Seller any
unduly or extraordinary burdensome obligation.
5.K. Litigation and Claims, Etc. Except as set forth on EXHIBIT
5K, there are no personal injury, product liability or other
actions, suits, claims, investigations or legal or
administrative or arbitration proceedings of any nature
pending or, to the knowledge of the Sellers, threatened,
against or involving any of the Sellers, the Purchased
Assets, the Intangibles, the Business or products, whether at
law or in equity, or before or by any foreign, federal,
state, municipal or other governmental or quasi-governmental
instrumentality. Attached to EXHIBIT 5K are (i) all current
service bulletins or similar notices to customers, vendors or
the public at-large and other Persons which discusses or
notifies such Persons about existing problems with any
Sellers' products, and (ii) all current notes from technical
or engineering meetings (or the like) which relate to
problems or potential problems with respect to such products.
There is no basis for any action, suit, claim, investigation
or proceeding, and except as set forth on EXHIBIT 5K, none of
the foregoing has been pending during the last three years.
There are no outstanding orders, decrees or stipulations
issued by any foreign, local, state or federal judicial or
governmental or quasi-governmental authority to which any of
the Sellers is or was a party or by which any is or was
bound. EXHIBIT 5K also details all "RECALLS" or similar
measures or public notices which occurred on or after January
1, 1995 with respect to the Business, Sellers' products, and
Sellers' system for handling claims,
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whether under warranties or otherwise, and also lists all such
claims made in the last three years.
5.L. Compliance; Governmental Authorizations; OSHA.
5.L.(i) Each Seller is in compliance, in all material
respects, with all federal, state and local laws,
ordinances, regulations, permits, licenses,
decrees, judgments and orders applicable to the
Business, and has all foreign and federal, state
and local governmental licenses and permits
necessary for the conduct of the Business as
presently conducted or contemplated and sold to
Purchaser in accordance herewith; such licenses
and permits are legally valid and in full force
and effect; no violations are or have been
recorded in respect of any thereof; and no
proceeding is pending or, to the knowledge of the
Sellers, threatened, to revoke or limit any
thereof. EXHIBIT 5L contains a list and
description (including subject matter and
termination information) of: (a) all such
governmental licenses and permits (none of which
will be adversely affected by the transactions
contemplated hereby, unless otherwise indicated on
said Exhibit); and, (b) all consents, orders,
decrees and other compliance agreements under
which any Seller is operating or bound, copies of
all of which have been furnished to Purchaser.
5.L.(ii) The Sellers have furnished to Purchaser copies of
all written reports in their control or possession
of inspections relating to the Business and
properties from January 1, 1996 through the date
hereof under the Occupational Safety and Health
Administration Act, as amended, or comparable
state legislation and all other applicable foreign
and United States federal, state and local health
and safety laws and regulations or any other law,
rule or regulation to which Sellers or the
Business is subject. To the knowledge of the
Sellers, there have been no other similar
inspections. The deficiencies, if any, noted on
such reports or any deficiencies noted by
inspection through the Closing Date have been
corrected, or will be corrected by the Closing. To
the knowledge of the Sellers, there is no other
safety, health, environmental or other material
problem or concern relating to the Business.
5.M. Inventories. The inventories of Sellers included on the
Historical Financials and included on the Closing Balance
Sheet are and will be valued with respect to each category of
inventory at cost. Such inventories are all usable in the
ordinary and regular course of the Business, and are fit and
sufficient for the purpose for which they were purchased or
manufactured. Excess and obsolete items are included as
Purchased Assets, but no representations or warranties are
made by Sellers with respect thereto. The inventories which
were in transit on the date hereof, and the inventories which
are in transit on the Closing Date, do not and will not
include any items which are damaged, spoiled or below standard
quality (except items for which Sellers will receive credit or
replacement from the manufacturer or shipper thereof). Sellers
have exercised, and through the Closing Date will exercise,
their best efforts to have the proper amount of inventories to
conduct the Business consistent with past practices. EXHIBIT
5M lists the general locations of all inventories of Sellers.
The inventories of each do not have any allocation of overhead
except as required for income tax purposes or as specifically
disclosed on EXHIBIT 5M.
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Except as specifically disclosed on EXHIBIT 5M, the inventory
consists of items of quality and quantity usable in the normal
course of the Business. The Sellers will provide to Purchaser
a list of all inventory (the "INVENTORY LIST") on hand as of
the end of the monthly accounting period ending closest to the
Closing Date.
5.N. Employee Matters. Each Seller has generally enjoyed a good
employer-employee relationship with its employees. Each Seller
has included (in accordance with its accounting method) on the
Historical Financials, in accordance with historical
practices, and if applicable for its accounting method, will
accrue adequate reserves on the Closing Balance Sheet, all
wages, salaries, contractual bonuses, vacation pay and other
direct and indirect compensation earned by, or accrued for the
benefit of, all employees (whether or not vested or payable by
such date). EXHIBIT 5N (cash basis) or the Closing Balance
Sheet will include accruals for year end bonuses, pension and
profit sharing contributions, and any other adjustments which
might normally be made only at year end. Upon termination of
the employment of any employee of any Seller, Purchaser will
not incur any liability for any severance or termination pay,
pension or profit-sharing benefit or other similar payment
under or pursuant to Sellers' practices or policies in effect
on or prior to the Closing Date. Except as set forth on
EXHIBIT 5K, there are no controversies pending or, to the
knowledge of the Sellers, threatened by any of Sellers'
employees, former employees, job applicants or any
association, group or other Person or Persons regarding any of
the Sellers' employment practices or policies.
No Seller is a party to or bound by any employment or
consulting agreement which will continue after the Closing
Date at the expense of Purchaser or any collective bargaining
agreement or any other agreement with a labor union. There is
not pending or, to the knowledge of the Sellers, threatened
any labor dispute, strike or work stoppage (whether by their
own employees or another Person's employees) which may affect
the Business or which may interfere with its continued
operation. Each Seller has complied with all laws, rules and
regulations in connection with all employment matters,
including without limitation, hiring and firing of employees,
wage matters, collective bargaining matters, and matters
relating to the National Labor Relations Act and the Workers
Adjustment and Retraining Notification Act, and there are no
activities or proceedings of any labor union to organize any
employees of any Seller. During the twelve-month period
preceding the date hereof, there have not been any significant
labor troubles involving employees of Sellers and there are no
significant threats of work stoppages by employees of Sellers.
EXHIBIT 5N contains a list of all directors, officers,
managers and employees rendering any service to any Seller
who, during the 1997 calendar year, are expected to receive
remuneration in excess of $30,000, together with the current
job title and aggregate remuneration rate (bonus and salary)
for each such person, as well as the total remuneration paid
to date and expected amount of remuneration in 1997. To the
knowledge of the Sellers, no such Person has any plans to
terminate employment with Sellers, and no such Person has any
plans to refuse an offer of employment from Purchaser if such
offer is made.
5.O. Employee Benefit Plans. Other than a plan conforming with
Internal Revenue Code ss.401(k), no Seller now maintains,
nor has any Seller ever maintained at any time in the
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past, any "employee pension benefit plan" or "employee welfare
benefit plan," as such terms are defined in Sections 3(1) and
3(2) of the Employee Retirement Security Act of 1974, as
amended which will adversely affect Purchaser on or after the
Closing Date, and other provisions hereof to the contrary
notwithstanding, each Seller will hold harmless and indemnify
Purchaser in these premises. Purchaser will not assume,
succeed to or continue Sellers' ss.401(k) plan.
5.P. Transactions with Related Parties. Except for (i) salaries
at the per year rate of $140,000 to Xxxxxx Xxxxx Xxxxxx,
$27,300 to Xxxxxx Xxxxxx and $32,600 to Xxxx Xxxxxx (which
salaries were paid in the ordinary course of business), (ii)
amounts paid from one Seller to another Seller, and (iii)
distributions and/or dividends paid to any of the
shareholders or partners of any Seller based on the ownership
of such entity, EXHIBIT 5P lists all amounts directly or
indirectly paid (or deemed for accounting purposes to have
been paid) or to be paid by any of the Sellers to, or
received by any of the Sellers from, any one Person not a
party hereto which is controlled by, who individually
controls, or who/which is under common control with, directly
or indirectly, any of the Sellers during the current and the
last fiscal year for products or services (including any
charge for management, interest, capital employed,
administrative, purchasing, financial or other services)
related in any way to the Business. For purposes of this
Section, the term "Sellers" shall include any and all of the
Sellers' Affiliates."
5.Q. Accounts and Notes Receivable. EXHIBIT 5Q contains an aged
list of unpaid accounts and notes receivable (the
"RECEIVABLES") owing to each Seller as of a date not more than
four (4) business days prior to the date hereof, with the
address of Sellers' trade debtors. Purchaser shall be
furnished with an updated schedule of Receivables and any
other information relating thereto as Purchaser shall
reasonably request on reasonable advance notice. All of the
Receivables reflected on the Historical Financials and to be
reflected on updated Receivables Schedules and the Closing
Balance Sheet constituted and will constitute only valid
claims against third parties not affiliated with any of the
Sellers. The Business has no trade debtors of any Seller with
principal places of business outside of the continental United
States. The Receivables arose or will arise from bona fide
transactions in the ordinary and regular course of Business
and all (subject to a reasonable reserve for bad debt) are due
and collectible within thirty (30) days after they arose or
will arise, and are not subject to any known defenses,
set-offs or counterclaims. The Historical Financials do, and
the Closing Balance Sheet will, include reserves for bad debt
reasonably based on past customer performance. Except as
listed on EXHIBIT 5Q, no Seller sells, and none contemplates
selling, products directly to the United States of America or
any branch, agency or subdivision thereof.
EXHIBIT 5Q also highlights those customers of Sellers
whose accounts have been more than thirty (30) days past due
repeatedly over the past six (6) months or which Sellers
believe may be uncollectible.
5.R. Customers and Suppliers. EXHIBIT 5R is a list of the ten (10)
largest customers and suppliers (measured by U.S. dollar
volume in each case) of each Seller during the 1996 and 1997
(to date) fiscal years and the last twelve (12) months
showing, with respect to each, the name, address and dollar
volume involved. No Seller is required to provide any bonding,
guaranty or other financial security arrangements in
connection with any
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transactions with any of its customers or suppliers. The
Sellers have no knowledge or reason to believe that as a
result of the transactions contemplated hereby or otherwise,
any customer or supplier listed on EXHIBIT 5R intends to cease
or substantially reduce, the purchase or sale, respectively,
of goods or services from or to Purchaser on terms and
conditions similar to those imposed on purchases and sales
from and to Sellers prior to the date hereof. The Sellers do
not know of any claims or disputes pending, contemplated or
threatened with respect to any of the parties referred to in
EXHIBIT 5R, and none know of any fact or condition which would
cause a reasonable person to be concerned about the financial
viability of any of such parties, except as listed on EXHIBIT
5R.
5.S. Miscellaneous Assets. The Purchased Assets do not and will not
include (i) any contracts for future services or prepaid items
or deferred charges, the substantial value or benefit of which
will not be usable by Purchaser after the Closing Date, and
(ii) other than the Intangibles, any goodwill, organization
expense or other intangible asset.
5.T. Bank Accounts; Officers; Directors; Credit Cards. EXHIBIT 5T
is a list of all bank accounts, safe deposit and post office
boxes and the like in the name of or controlled by any Seller
and details about the Persons having access thereto. EXHIBIT
5T also lists all officers, directors and managers of each
Seller and all credit or debit cards under which any Seller
has or may have current or future liability and the names of
the Persons holding such cards.
5.U. Business Generally. Except as listed on EXHIBIT 5U, since
January 1, 1997, to the knowledge of the Sellers, other than
the economy in general and items which would affect the entire
industry in which Sellers operate, there have been no events,
transactions or information affecting or relating to any
Seller or the Business which could be reasonably expected to
have a material and adverse effect on the Business.
5.V. Reports and Studies. EXHIBIT 5V lists all significant and
material reports and studies relating to the Business or the
sale thereof in the possession or control of any of the
Sellers not previously furnished to Purchaser prepared for the
officers, directors, management, stockholders and agents of
the Sellers since January 1, 1996 by investment bankers,
investment advisors, accountants, engineers, environmental
consultants, management consultants or any other Persons.
Items listed on EXHIBIT 5V will be delivered to Purchaser
concurrently with each applicable Seller's signature hereto.
5.W. Environmental Matters. Except as listed on EXHIBIT 5W:
5.W.(i) No Seller has transported, stored, treated or
disposed, and has not allowed or arranged for any
other Person to transport, store, treat or
dispose, waste to or at: (a) any location other
than a site lawfully permitted to receive such
waste for such purposes or (b) any location
designated for remedial action pursuant to the
Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA"),
the Resource Conservation and Recovery Act, as
amended ("RCRA"), or any similar federal, state or
local statute; nor has it performed, arranged for
or allowed by any method or procedure such
transportation or disposal in contravention of any
laws or regulations or in any other manner which
may result in liability for
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contamination of the environment. No Seller has
disposed of or allowed or arranged for any other
Person to dispose, of waste upon property owned,
leased or used by any Seller;
5.W.(ii) (a) No generation, use, handling, storage,
treatment, Release (as defined below), discharge,
spillage or disposal of any Hazardous Waste,
Hazardous Substance or Hazardous Chemical (as
defined below) has occurred or is occurring at any
site or Facility (as defined below) now owned,
leased or operated, directly or indirectly, by any
Seller, (b) no Hazardous Waste or waste containing
any Hazardous Substance or Hazardous Chemical
generated, used, handled, stored or treated by any
Seller has been stored, Released, discharged,
spilled or disposed of at any site or Facility now
owned, leased or operated, directly or indirectly,
by any Seller, and (c) no site or Facility owned,
leased or operated, directly or indirectly, by any
Seller is or has been the site of any industrial
facility, dump or landfill;
5.W.(iii) No soil or water in, upon, under or adjacent to
any site or Facility now owned, leased, or
operated, directly or indirectly, by any Seller
has been contaminated by any Hazardous Waste,
Hazardous Substance or Hazardous Chemical, and no
such site constitutes a nuisance of any kind or
nature;
5.W.(iv) None of the Sellers has received notification of
any past or present failure by any Seller to
comply with any laws, regulations, permits,
franchises, licenses or orders applicable to them
or the Business, which have not been remedied,
cured or complied with, or, as disclosed on
EXHIBIT 5W(iv), are in the process of being fully
remedied, cured or complied with. Without limiting
the generality of the foregoing, none of the
Sellers has received any notification (including
requests for information directed to any) from any
governmental or quasi-governmental agency or
Person asserting that any Seller is or may be a
"potentially responsible party" for a remedial
action at any Facility, pursuant to the provisions
of CERCLA, RCRA or any similar federal, state or
local statute assigning responsibility for the
costs of investigating or remediation of Releases
of contaminants into the environment;
5.W.(v) For purposes of this Agreement, the terms
"Hazardous Waste", "Hazardous Substance",
"Hazardous Chemical", "pollutant", "contaminant",
"Release" and "Facility" include any "hazardous
waste", "hazardous substance", "pollutant",
"contaminant" and "facility", respectively, within
the meaning of RCRA, CERCLA, the Emergency
Planning and Community Rights to Know Act of 1986,
as amended, or any other federal, state or local
law, rule or regulation adopted pursuant thereto
or otherwise relating to the disposal of Hazardous
Wastes or the cleanup of sites at which Hazardous
Substances have been released or the environment
in general; and
5.W.(vi) EXHIBIT 5W(VI) is a list of (i) locations
(identified by address, owner/operator, type of
facility, type of waste (including waste water),
and period of time the Facility was used) to which
any Seller has, during the past three (3) years,
transported, or caused to be transported, or
allowed or arranged for any other
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Person to transport, any type of waste material,
generated by any Seller or its customers, for
storage, treatment, burning, recycling or disposal
and (ii) storage, treatment, burning, recycling or
disposal activities which any Seller has
undertaken, during the past three (3) years, at
locations then or now owned or occupied by any
Seller together with such other relevant
information concerning such locations as would
enable Purchaser to determine whether any Seller
has any liability for such locations and the
activities thereon, including, but not limited to,
property address, nature of such Seller's interest
in the property, current owner of the property,
nature of the activity conducted at such location,
type and form of waste, estimated volume of waste
disposal on or in ground, and period of time the
activity was conducted.
5.X. Securities' Issues. Listed on EXHIBIT 5X, if any.
5.Y. Illegal Payments; Other Competitors. None of the Sellers knows
that, and none has any reason to believe that, any agent or
representative of any Seller has made any illegal payments,
gifts or the like in the procurement of any of the contracts
or purchase orders being assigned hereunder or under any
contract procured at any time after January 1, 1995.
5.Z. Brokers and Finders. None of the Sellers nor any officer,
director or employee thereof, has employed any broker or
finder or incurred any liability for any financial advisory
fees, brokerage fees, commissions or finders' fees, and no
broker or finder has acted directly or indirectly for any of
the Sellers in connection with this Agreement and the
transactions contemplated hereby. Obligations to attorneys and
accountants are expressly excluded herefrom.
5.AA. Material Disclosures. Unless otherwise provided herein, no
representation, warranty, covenant or agreement by the Sellers
contained herein, and no statement contained in any
certificate, Schedule, Exhibit, list or other writing
furnished to Purchaser in connection with the transactions
contemplated hereby, contains any untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not
misleading; all Schedules and Exhibits hereto and all writings
furnished to Purchaser hereunder or in connection with the
transactions contemplated hereby are accurate, true and
complete; all representations, warranties, covenants and
agreements made by the Sellers herein and all other agreements
and instruments delivered in connection herewith or pursuant
hereto and facts and information contained in the Exhibits and
Schedules shall be true and correct as of the Closing Date
with the same effect as if they had been made at and as of the
Closing Date; there are no facts, conditions, or aspects
relating to the past or present operations of Sellers and the
Business which are not set forth herein which would have a
material adverse affect upon the operation of the Business
after the Closing Date or Purchaser's investment decision in
acquiring the Purchased Assets, and none of the Sellers know
of any fact, event or action which could result in a material
adverse change in the Business, prospects, financial condition
or results of operations of Seller and the Business or the
operation or ownership of the Purchased Assets by Purchaser
following the Closing; the records of Sellers relating to the
Business are accurate and complete in all material respects
and there are no matters as to which appropriate entries have
not been made in such records.
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6. PURCHASER'S REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS.
Purchaser represents and warrants to, and agrees and covenants with,
the Sellers, now and as of the Closing Date, as follows:
6.A. Organization, Standing and Power. Purchaser is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Delaware. Purchaser has all requisite
power and authority to own, lease and operate the Purchased
Assets and to carry on the Business after the transactions
contemplated hereby. Purchaser has the full power and
authority to enter into this Agreement and perform all acts
necessary or appropriate to consummate all of the transactions
contemplated hereby.
6.B. Authorization. This Agreement and all writings relating
hereto to be executed and delivered by Purchaser have been
duly authorized by all necessary action and constitute the
valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms.
The individuals executing this Agreement and the other
documents executed in connection herewith on behalf of
Purchaser have been duly authorized to execute all of such
documents on behalf thereof. Neither the execution and
delivery hereof nor any writing relating hereto nor the
consummation by Purchaser of the transactions contemplated
hereby or thereby, nor compliance with any of the provisions
hereof or thereof, will: (i) conflict with or result in a
material breach of the Certificate of Incorporation, bylaws or
other formation or charter documents of Purchaser; (ii)
violate any statute, law, rule or regulation or any order,
writ, injunction or decree of any court or governmental
authority; (iii) violate or conflict with or constitute a
default under (or give rise to any right of termination,
modification, cancellation or acceleration under), any
agreement or writing of any nature to which Purchaser is a
party or by which its assets may be bound or affected, or
result in the creation of any Encumbrance against or upon any
of its assets under any agreement or writing to which it is a
party or by which it or its assets may be bound or affected;
or (iv) impair or in any way limit any governmental or
official license, approval, permit or authorization of
Purchaser. Other than the consents required in Section 9
hereof, no consent or approval of or notification to any
Person is necessary or required in connection with the
execution and delivery by Purchaser hereof or any writing
relating hereto or the consummation of the transactions
contemplated hereby or thereby.
6.C. Brokers and Finders. Neither Purchaser nor any officer,
director or employee thereof, has employed any broker or
finder or incurred any liability for any financial advisory
fees (other than amounts due to Sterling Advisors, L.P., and
Elfman Venture Partners, Inc., which will be paid by Purchaser
or an affiliate of Purchaser), brokerage fees, commissions or
finders' fees, and except as stated above, no broker or finder
has acted directly or indirectly for Purchaser, in connection
with this Agreement and the transactions contemplated hereby.
6.D. Material Disclosures. No representation, warranty, covenant or
agreement by Purchaser contained herein, and no statement
contained in any certificate, Schedule, Exhibit, list or other
writing furnished to any of the Sellers in connection with the
transactions contemplated hereby, contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or
therein not misleading. All Schedules and Exhibits hereto and
all copies of all writings furnished to
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the Sellers hereunder or in connection with the transactions
contemplated hereby are accurate, true and complete. All
representations, warranties, covenants and agreements made by
Purchaser herein and facts and information contained in the
Exhibits and Schedules shall be true and correct as of the
Closing Date with the same effect as if they had been made at
and as of the Closing Date. There are no facts, conditions, or
aspects relating to the past or present operations of
Purchaser which are not set forth herein which would have a
material adverse affect upon the operation of the Business.
7. CLOSING TRANSACTIONS. On the Closing Date (or on a date otherwise indicated
herein):
7.A. The Sellers shall deliver or cause to be delivered to Purchaser:
7.A.(i) Such warranty bills of sale, warranty deeds,
endorsements, assignments(including assignments
from all Sellers as to Intangibles and the like),
receipts and other instruments, in such form as
are reasonably satisfactory to Purchaser as shall
be sufficient to vest in Purchaser good and
marketable title to the Purchased Assets, free and
clear of all Encumbrances (except those
Encumbrances arising pursuant to Assumed
Liabilities).
7.A.(ii) Such keys, lock and safe combinations, and new
bank signature cards and other similar items as
Purchaser shall require to obtain full and
exclusive occupation and control of the Purchased
Assets, including the Business' post office
box(es).
7.A.(iii) The Certificates required by Sections 9A and 9B
hereof.
7.A.(iv) The legal opinion of counsel to the Sellers, in
substantially the form as SCHEDULE D attached
hereto, to be addressed to Purchaser and
Purchaser's lenders.
7.A.(v) Applicable certificates of good standing of
Sellers certified by the Secretary of State of
Oklahoma and all other states in which any Seller
is qualified to transact business as a foreign
entity, dated no more than thirty (30) days prior
to the Closing Date.
7.A.(vi) A copy of the Articles (or Certificate) of
Incorporation or other formation document of each
Seller, certified by the Secretary of State of
Oklahoma no more than thirty (30) days prior to
the Closing Date.
7.A.(vii) As between Sellers and Purchaser, exclusive
possession of the Real Estate.
7.A.(viii) Such estoppel letters, not inconsistent with the
terms hereof, as are reasonably requested by
Purchaser or Purchaser's lenders, including those
to be executed and delivered by the landlords of
any Real Estate, in form and substance acceptable
to Purchaser's and lenders' counsel.
7.A.(ix) Such bailment letters, not inconsistent with the
terms hereof, as are reasonably requested by
Purchaser, including those to be executed and
delivered by the
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owners of real estate or warehouses, if any, where
inventory is located, in form and substance
acceptable to Purchaser's counsel.
7.A.(x) All consents, waivers and releases necessary,
required or appropriate to consummate the
transactions contemplated hereby.
7.A.(xi) No later than February 28, 1998, Uniform
Commercial Code Tax, Lien and Judgement Search
results showing all Encumbrances, if any, on the
Purchased Assets, which Encumbrances (other than
those expressly assumed by Purchaser) will be
released or terminated at or prior to the Closing.
7.A.(xii) An Authorization of Inspection of records related
to the Business, in form and substance acceptable
to Purchaser.
7.A.(xiii) Certificates of Title, as appropriate, evidencing
Sellers' ownership of the Purchased Assets and the
Intangibles.
7.A.(xiv) Commitment and Survey:
7.A.(xiv)(a) As soon as possible after signature
and execution of this Agreement and
on or before February 28, 1998, with
respect to the Real Estate which is
owned by any Seller, a commitment
("COMMITMENT") for an ALTA Owners
Policy of Chicago Title Insurance
Company, Form B (or other applicable
policy) of a current date, that
indicates that Purchaser will be
issued a title policy, with extended
coverage over general exceptions,
subject only to those exceptions
expressly approved by Purchaser, full
survey coverage, no mechanic's lien
exceptions and with those special
endorsements which Purchaser, at
Purchaser's cost, deems necessary or
desirable, including, but not limited
to, non- imputation, location,
access, ALTA Zoning Endorsement 3.1
(including parking lots and loading
docks, if any), contiguity, and a
special endorsement that the bills
for real estate taxes do not include
taxes pertaining to any other real
estate. Such title insurance policy
shall be issued in the approximate
amount of the fair market value of
the Real Estate as agreed between the
parties. The title insurance cost,
except special endorsements
referenced in this section 7A(xiv)(a)
shall be paid one half by Sellers and
one half by Purchaser.
7.A.(xiv)(b) As soon as possible after signature
and execution of this Agreement and
on or before February 28, 1998, with
respect to the Real Estate which is
owned by any Seller, at Sellers'
cost, a current plat of survey of
such parcel, made by a surveyor
registered in the state in which the
parcel is located, certified in favor
of the parties to be insured,
including Purchaser, Purchaser's
lenders, and Chicago Title Insurance
Company, and made in accordance with
the American Land Title Association
Survey
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Standards (or other customary state
standards) so as to induce the title
insurance company to remove without
subsequent addition any exception as
to matters which would be disclosed
by an accurate and complete survey or
inspection of the Real Estate. Such
survey shall, in addition, accurately
locate all improvements, building
lines, parking areas, curb cuts, any
encroachments of the improvements on
the subject parcel over easements,
setback lines or onto adjoining
properties, or encroachments of the
improvements on adjoining properties
onto the subject parcel, recorded
easements, lines and rights of way,
all roadways, include a metes and
bounds description, shall state the
calculation of the square footage and
the acreage thereof, shall state
whether and what portion of the Real
Estate is located in an area
designated by an agency of the United
States as being subject to flood
hazards or risks, and shall locate
all storm sewers, sanitary sewers,
water lines and other utility lines
located upon the subject real estate
and the service lines thereof from
their respective main lines.
Specifications of this section
7A(xiv)(b) notwithstanding, any
survey accepted by Purchaser shall be
deemed to meet the requirements
hereof.
7.A.(xiv)(c) If the Commitment or plat of survey
discloses either unpermitted
exceptions or survey matters that
adversely affect the marketability of
such real estate, the Sellers shall
have ten (10) days from the date of
delivery thereof to have such
exceptions removed from the
Commitment or to correct such defects
or to have the title insurer commit
to insure against loss or damage that
may be occasioned by such exceptions.
If the Sellers fail to have the
exceptions removed, or in the
alternative, to obtain the Commitment
specified above as to such survey
defects within the specified time,
Purchaser may elect, upon notice to
Sellers within five (5) days after
the expiration of the foregoing
10-day period, to accept title as it
then is with the right to deduct from
the Purchase Price the value of liens
or encumbrances of a definite or
ascertainable amount. If Purchaser
does not so elect, this Agreement
shall become null and void without
further action of the parties.
7.A.(xv) The Closing Balance Sheet, and, as updated to the
end of the month ended closest to the Closing, the
Inventory List, an updated Payables' List and an
updated schedule of Receivables.
7.A.(xvi) Certified copies of resolutions duly and
unanimously adopted by applicable Sellers' Board of
Directors and Shareholders unanimously approving
the transactions contemplated by, and authorizing
the execution, delivery and performance by Sellers
of, this Agreement, and a certificate as to the
incumbency of officers of each executing any
instrument or other document delivered in
connection with such transactions; certified copy
of Certificate of Limited Partnership and current
Certificate of Fictitious Name of Leasing;
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certificate of general partner approving the
transactions and authorizing execution, delivery
and performance of this agreement by Leasing.
7.A.(xvii) Evidence that X. X. Xxxxxx Sausage Company
has changed, or will immediately change,
its name to a name completely dissimilar
to its present name.
7.A.(xviii) On or before February 28, 1998, a document
sufficient to allow Purchaser to use the
name "Potter" as a foreign corporation in
the State of Oklahoma.
7.A.(xix) Such documents and instruments as are necessary to
grant Purchaser, and no other Person, the
exclusive right to use the Intangibles.
7.A.(xx) Such documents and instruments as are necessary to
assign and transfer to Purchaser all transferable
licenses and permits issued to Sellers.
7.A.(xxi) On or before December 31, 1997, at Sellers' cost,
results of a Phase I environmental assessment
evidencing and indicating no material
environmental risk with respect to the Real
Estate. If such report recommends one or more
Phase II inspections and/or one or more Phase III
remediations are eventually required or necessary,
Sellers shall undertake, at their own cost and
outside of the Escrow, to make such remediation.
7.A.(xxii) Such other applicable documents as Purchaser or
Purchaser's lenders may reasonably request.
7.B. Purchaser shall deliver or cause to be delivered to the
Sellers:
7.B.(i) The Cash, the Prorations and the Interest, less
the Escrow Deposit. The Income Tax Adjustment
shall be paid on or before ten days after Closing.
7.B.(ii) The Escrow Deposit, wired to the bank or other
deposit account designated in the Escrow.
7.B.(iii) The Certificates required by Sections 10A and 10B
hereof.
7.B.(iv) Certified copies of resolutions duly adopted by
Purchaser's Board of Directors approving the
transactions contemplated by, and authorizing the
execution, delivery and performance by Purchaser
of, this Agreement, and a certificate as to the
incumbency of the authorized agents of Purchaser
executing any instrument or other document
delivered in connection with such transactions.
7.B.(v) Certificate of good standing of Purchaser
certified by the Secretary of State of the State
of Delaware, dated no more than thirty (30) days
prior to the Closing Date and evidence certified
by the Secretary of State of Oklahoma that
Purchaser is duly qualified to transact business
in the State of Oklahoma.
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7.B.(vi) A copy of the Certificate of Incorporation of
Purchaser, certified by the Secretary of State of
the State of Delaware, dated no more than thirty
(30) days prior to the Closing Date and a
Certificate of Domestication similarly certified
by the Secretary of State of Oklahoma.
7.B.(vii) The legal opinion of Xxx X. Xxxxxxx, P.C., counsel
to Purchaser, in the form of SCHEDULE E, attached
hereto.
7.B.(viii) Such other applicable documents as the Sellers may
reasonably request.
7.C. Purchaser and each of Xxxxxx Xxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxx
Xxxxxx, Xxxx Xxxxxx, Xxx Xxxxxxxx, Xxx Xxxxxx, Xxxx Xxxxxxx
and such other persons as Purchaser deems reasonably necessary
will execute and deliver a Noncompetition Agreement in the
forms attached hereto as SCHEDULE F.
7.D. Purchaser and each of the Sellers will execute and deliver an
Escrow Agreement ("Escrow") in the form attached hereto as
SCHEDULE G.
8. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING.
8.A. Access to Records and Properties of Sellers. From and after
the date hereof until the Closing Date, the Sellers shall
afford (i) to all representatives of Purchaser and Purchaser's
lenders, free and full access at all reasonable times to the
assets, properties, books and records of Sellers in order that
Purchaser may have full opportunity to make investigations of
the assets and affairs of Sellers, and to such additional data
and other information about the Business and properties of
Sellers as Purchaser shall reasonably request or that the
Sellers believe in good faith Purchaser would want to see in
making its investment decision hereunder, and (ii) to the
accountants of Purchaser or other Persons conducting financial
due diligence, free and full access at all times to work
papers and other records of Sellers' accountants relating to
the Business. Any such investigation made pursuant to clause
(i) or (ii) shall not affect or otherwise diminish any of the
representations, warranties, covenants or agreements of the
Sellers hereunder or Purchaser's rights to indemnification or
otherwise. All information to which Purchaser is given access
shall be kept strictly confidential except as required by law,
statute, rule or regulation and, should the transactions
contemplated hereby fail to be consummated, all such
information shall be returned to the Sellers, or destroyed.
8.B. Operation of Business of Sellers. From the date hereof to the
Closing Date, Sellers shall operate the businesses only in the
ordinary and regular course of business, consistent with past
practices, and will:
8.B.(i) consult with Purchaser on a regular basis with
respect to all decisions outside of the ordinary
and regular course of business involving or
otherwise which may have a material affect on the
Business;
8.B.(ii) maintain the Purchased Assets in good repair,
order and condition (irreparable condition,
reasonable wear and use excepted) and cause its
the Insurance
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Policies not to be canceled or terminated and
all coverages thereunder to stay in effect;
8.B.(iii) maintain and keep in full force and effect the
Intangibles, without amending or modifying the
same;
8.B.(iv) not, except as permitted under Section 5F: (a)
enter into any contract or agreement binding upon
any which is to be assumed by Purchaser hereunder
and which is not immediately terminable upon
thirty (30) days notice without cost; (b) extend
credit in the sale of the products or services
other than in accordance with prior credit
practices; (c) lease, buy or otherwise acquire any
real estate or any interest therein; (d) increase
any type of compensation payable or to become
payable to any of employees, directors, agents or
representatives; (e) make any change in their
capital structure; (f) do any other thing or act
described in Section 5F hereof; or (g) enter into
any agreement, commitment or understanding to do
any of the foregoing;
8.B.(v) not do anything outside of the ordinary course of
business which has the intent or effect of
changing the Purchase Price;
8.B.(vi) use their best efforts to preserve intact their
business organizations, and to keep available to
Purchaser the services of all present officers,
employees and agents and use their best efforts to
preserve for Purchaser the goodwill of suppliers,
customers and others having business relations
with Sellers; and
8.B.(vii) maintain their books, accounts and records in a
proper manner and in the usual, regular and
ordinary manner on a basis consistent with prior
years, and deliver all regularly prepared
financial statements to Purchaser.
8.C. Supplements. From time to time prior to the Closing Date,
the Sellers shall furnish to Purchaser supplemental
information with respect to any matters or events arising or
discovered subsequent to the date hereof which, if existing
or known on the date hereof, would have rendered any
statement, representation or warranty made by the Sellers or
any information contained in any Exhibit or Schedule hereto
then inaccurate, or incomplete or misleading; the furnishing
of such supplemental information shall not, however, affect
or otherwise diminish any of the representations, warranties,
covenants or agreements of the Sellers hereunder. To the
extent that a supplemental disclosure materially affects the
representations and warranties made prior to the time of the
supplemental disclosure, Purchaser shall have the right to
terminate this Agreement and all of its duties and
obligations hereunder.
Notwithstanding the foregoing, Purchaser acknowledges
that the open purchase orders journals and open sales orders
journals change in the ordinary and regular course of
business; therefore, the Sellers shall only be obligated to
provide Purchaser with an updated list of such journals as of
the end of the month preceding the Closing Date.
8.D. Risk of Loss. With respect to any material loss, damage,
condemnation or destruction of any of the Purchased Assets,
upon any such loss, damage, condemnation or destruction,
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Purchaser may, at its option, cancel and terminate this
Agreement or proceed as follows: if, in the event of any such
material loss, damage or destruction prior to the Closing,
Purchaser elects not to terminate, the parties shall promptly
attempt to agree on a mutually satisfactory reduction in the
total price to be paid for the Purchased Assets, and the
transaction shall be closed on the basis of such reduced
price. If the parties are unable to agree on such reduced
value within seven (7) days after notice to Purchaser of such
loss, damage, destruction or taking and Purchaser is not
willing to conclude the transaction by payment of the full
price, then any party hereto may terminate this Agreement. In
the event the parties agree to a mutually satisfactory
reduction of the price and the transaction is closed on that
basis, any insurance or condemnation proceeds shall be paid to
and retained by Sellers. In the event the parties do not agree
to a mutually satisfactory reduction of the price, and
Purchaser elects to conclude the transaction by payment of the
full price, any insurance or condemnation proceeds shall be
paid to and retained by Purchaser. Only for purposes of this
Section 8.D., a material loss, damage or destruction shall be
deemed to be a loss, damage or destruction which, if measured
in terms of dollars, exceeds $100,000.
8.E. Consents, Waivers and Releases. The Sellers shall, at their
own cost and expense, use all reasonable efforts to:
8.E.(i) Provide all necessary or appropriate consents and
comply with all provisions arguably relating to
the transactions contemplated hereby, if any, and
all other federal, state or local laws, rules and
regulations;
8.E.(ii) Procure consents to the transactions contemplated
hereby, waivers of rights from, or releases from:
8.E.(ii)(a) all parties holding security interests
on any of the Purchased Assets; and
8.E.(ii)(b) all other third parties deemed
reasonably necessary or appropriate
by Purchaser.
All of such approvals, waivers, consents and releases shall be
in form and substance satisfactory to Purchaser and
Purchaser's counsel, in their sole discretion.
8.F. Distributions to Owners from Sellers. After the Effective
Date and until the Closing Date or until this Agreement has
been terminated, no Seller shall make, directly or indirectly,
distributions or dividends of any kind or nature from any
Seller to any shareholder or partner other than the following
(collectively, the "ALLOWED DISTRIBUTIONS"): (i) salaries at
the annual rate of (a) $27,300 per year to Xxxxxx Xxxxxx, (b)
$140,000 per year to Xxxxxx Xxxxx Xxxxxx, and (c) $32,600 per
year to Xxxx Xxxxxx; and, (ii) an amount equal to the cash of
the Business on hand as of the Effective Date. If and to the
extent amounts in excess of Allowed Distributions are or have
been distributed, the Purchase Price shall be decreased, and
if and to the extent amounts less than the Allowed
Distributions are or have been distributed, the Purchase Price
shall be increased.
8.G. No Shop Provisions.
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8.G.(i) To induce Purchaser to enter into this Agreement,
each of the Sellers agrees that it shall not, from
and after the date hereof, and through the date
which is the later of (a) the Closing Date or (b)
three months after the date this Agreement is
terminated: (I) solicit, initiate or encourage
submission of proposals or offers from any person
relating to any acquisition or purchase of all or
(other than in the ordinary course of business) a
substantial portion of the Purchased Assets, or
any equity interest in any Seller, or any business
combination involving any Seller, or (II)
participate in any negotiations regarding, or
furnish to any other person any information with
respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other
person to do or seek any of the foregoing. The
Sellers shall promptly advise Purchaser if any of
the activities specified in clause (II) of the
preceding sentence occur, and shall promptly
inform Purchaser of all the terms and conditions
of any proposal or offer, and shall furnish to
Purchaser copies of any such written proposal or
offer and the contents of any communications by
any of the Sellers in response thereto.
8.G.(ii) Each of the Sellers further agrees that each will
not, pursuant to negotiations or discussions that
commence or continue between the date hereof and
the later to occur of (a) the Closing Date or (b)
three months after the date this Agreement is
terminated: (I) dispose of all or (other than in
the ordinary course of business) a substantial
portion of the Purchased Assets, (II) participate
in any business combination involving any of the
Sellers, (III) issue additional debt or equity
securities, or (IV) declare or pay any dividend or
make any other distribution with respect to its
capital stock or repurchase any capital stock
(except consistent with prior practices).
8.H. Closing. The parties shall otherwise use their best efforts
and good faith to consummate the transactions contemplated
hereby.
9. CONDITIONS OF OBLIGATIONS OF PURCHASER. The obligations of Purchaser to
perform this Agreement are subject to the satisfaction of the following
conditions on or prior to the Closing Date:
9.A. Representations and Warranties. The representations and
warranties of the Sellers in this Agreement or in any
Schedule, Exhibit, certificate or document delivered in
connection herewith shall be true and correct in all material
respects on the Closing Date, and Purchaser shall have
received a Certificate signed by the Sellers to that effect.
9.B. Performance of Obligations of the Sellers. The Sellers shall
have performed and observed all agreements, covenants and
obligations required to be performed by them on or prior to
the Closing Date, and Purchaser shall have received a
Certificate signed by the Sellers to that effect.
9.C. Consents, Waivers and Releases. The Sellers shall have
obtained, or to the reasonable satisfaction of Purchaser
obviated the need to obtain, all consents, waivers and
releases (including those described in Section 8E) from third
parties necessary (or, in the sole discretion of Purchaser,
desirable) to execute and deliver this Agreement and
consummate
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the transactions contemplated hereby. Also, Purchaser shall
have obtained the consent of Purchaser's Board of Directors to
execute and deliver this Agreement and consummate the
transactions contemplated hereby and provided written evidence
thereof to the Sellers.
9.D. No Litigation. No action, suit or other proceeding shall be
pending before any court, tribunal or governmental authority
seeking or threatening to restrain or prohibit the
consummation of the transactions contemplated hereby, or
seeking to obtain substantial damages in respect thereof, or
involving a claim that consummation thereof would result in
the violation of any law, decree or regulation of any
governmental authority having appropriate jurisdiction.
9.E. Absence of Changes. Except as otherwise listed on EXHIBIT 5F
hereto, since August 31, 1997, the Business has been operated
only in the ordinary and regular course and there has not
been, and through the Closing Date there will not be, with
respect to any Seller, any thing or act described in Section
5F hereof, and there shall not have been, with respect to the
Business, any adverse changes.
9.F. Completion of Review by Purchaser. Purchaser and its agents
and representatives shall have completed their business,
accounting, financial, tax, environmental and legal review of
the Business and Purchased Assets, including the completion by
Xxxxxx Xxxxxxxx & Co. of audits specified by Purchaser, which
review and audits' results shall be satisfactory to Purchaser
and its agents and representatives, in their sole and absolute
discretion.
9.G. Financing and Additional Financial Matters. Purchaser shall
have procured financing in an amount and on terms and
conditions that are satisfactory to Purchaser, in its sole
discretion. In addition, as of the Closing Date, Purchaser
shall be reasonably satisfied that Sellers shall have paid all
liabilities in the ordinary course of business. In addition,
Purchaser shall be satisfied that except for the Allowed
Distributions, none of Sellers' earnings between the Effective
Date and the Closing Date shall have been distributed.
9.H. Closing Documents. The Sellers shall have delivered, or shall
have caused the delivery of, all appropriate documents and
instruments described in Section 7 hereof.
10. CONDITIONS OF OBLIGATIONS OF THE SELLERS. The obligations of the
Sellers to perform this Agreement are subject to the satisfaction, on
or prior to the Closing Date, of the following conditions:
10.A. Representations and Warranties. The representations and
warranties of Purchaser herein or in any Schedule, Exhibit,
certificate or document delivered in connection herewith shall
be true and correct in all material respects on the Closing
Date, and the Sellers shall have received a Certificate signed
by Purchaser to that effect.
10.B. Performance of Obligations of Purchaser. Purchaser shall have
performed and observed all agreements, covenants and
obligations required to be performed by it on or prior to the
Closing Date, and the Sellers shall have received a
Certificate signed by Purchaser to that effect.
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10.C. Consents, Waivers and Releases. Purchaser shall have obtained,
or to the reasonable satisfaction of the Sellers obviated the
need to obtain, all consents, waivers and releases from third
parties necessary for Purchaser to execute and deliver this
Agreement and consummate the transactions contemplated hereby.
10.D. No Litigation. No action, suit or other proceeding shall be
pending before any court, tribunal or governmental authority
seeking or threatening to restrain or prohibit the
consummation of the transactions contemplated hereby, or
seeking to obtain damages in respect thereof, or involving a
claim that consummation thereof would result in the violation
of any law, decree or regulation of any governmental authority
having appropriate jurisdiction.
10.E. Closing Documents. Purchaser shall have delivered, or shall
have caused the delivery of, all appropriate documents and
instruments described in Section 7 hereof.
11. CLOSING NOT A WAIVER. Except as a party may expressly agree in
writing, the consummation of the transactions contemplated by this
Agreement shall not be deemed to constitute a waiver by any of the parties
of any of the covenants or conditions herein set forth (whether the same is
by its terms to be performed or satisfied before, as of, or after the
Closing Date) or in any way be deemed to limit or impair any party's rights
or remedies (by way of indemnification or otherwise) on account of any
misrepresentation, breach of warranty or other breach of or default under
this Agreement, regardless of whether such party is aware of the existence
of such misrepresentation, breach, or default.
12. POST-CLOSING COVENANTS.
12.A. Restrictive Covenants.
12.A.(i) Non-disclosure. Each of the Sellers acknowledges
that each has been and may be entrusted with trade
secrets, marketing, operating and strategic plans,
customer and supplier lists, proprietary
information and other confidential or specialized
data and/or information relative to the Business,
whether now existing or to be developed or created
after the Closing Date (collectively, "TRADE
SECRETS"). Each of the Sellers covenants and
agrees that each shall at all times after the date
hereof hold in strictest confidence any and all
Trade Secrets that may have come or may come into
its possession or within its knowledge concerning
or related to the products, services, processes,
businesses, suppliers, customers and clients of
Sellers and the Business and also that the Trade
Secrets constitute Purchased Assets being
transferred pursuant hereto. Each of the Sellers
covenants and agrees that neither it/he nor any
Person controlled by it/him will for any reason,
directly or indirectly, for itself/himself or for
the benefit of any other Person, use, copy,
divulge or otherwise disseminate or disclose any
of the Trade Secrets owned or used by, or licensed
to, any Seller or any of their affiliates or
otherwise relating to Sellers or the Business;
provided that each of the Sellers may disclose
Trade Secrets pursuant to an order by a court of
competent jurisdiction, provided, further, that
the Sellers shall give Purchaser prompt notice of
such order and any court pleading requesting such
disclosure, in order to provide Purchaser
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with an opportunity to prevent such disclosure or
procure an appropriate protective order.
12.A.(ii) Customers and Trade Secrets. Each of the Sellers
acknowledges that the Intangibles, customers and
customer accounts and the Trade Secrets of Sellers
will, after the Closing, at all times be the sole
and separate property of Purchaser, in which the
Sellers have no rights whatsoever, and all
activities of or work performed by any of the
Sellers for or on behalf of Purchaser in the
future will be performed solely for the benefit of
Purchaser, and the goodwill resulting from such
efforts by any of the Sellers is and at all times
will be the sole and separate property of
Purchaser, which goodwill is intended to be
protected, in part, by this Section.
12.A.(iii) Non-Solicitation; Non-Hire. Each of the Sellers
agrees that from the Closing Date and continuing
for a period (the "NON-COMPETE PERIOD") of three
(3) years from the Closing Date, neither he/it nor
any Person or enterprise controlled by him/it will
solicit or hire or contract with, for employment,
consulting or any other reason, any person who was
employed by Purchaser or any Seller or any of
Purchaser's affiliates as a manager, sales person,
officer, office head, buyer, accountant/controller
or other key employee at any time within one (1)
year prior to the time of the act of solicitation,
or hire. The Non-Compete Period shall be extended
with respect to a particular Selling Party for
that period of time during which such Selling
Party is in violation of the covenants contained
in this Section 12A. The provisions of this
section shall not apply to family relationships
between the Sellers and the shareholders or
partners of any Selling Party.
12.A.(iv) Non-Competition by Sellers. During the
Non-Compete Period, each of the Sellers agrees
that each of them nor any Person or enterprise
controlled by each will become a stockholder,
partner, stake holder, member, director, officer,
agent, employee or representative of or consultant
or lender to any other Person, engage as a sole
proprietor in any business, act as a consultant to
any of the foregoing or otherwise engage, directly
or indirectly, in any enterprise which competes
with the Business in any geographic area in which
the Sellers now carry on the Business or any other
geographic area in which the Business is carried
on as of the Closing Date, including the
geographic areas set forth in Exhibit; provided,
however, that the foregoing shall not prohibit the
ownership of less than two percent (2%) of the
outstanding shares of the stock of any corporation
engaged in any business, which shares are
regularly traded on a national securities exchange
or in any over-the-counter market. Each Selling
Party acknowledges that notwithstanding the
ability to compete outside of the geographic
territories described above, each is strictly
prohibited from using any of the Trade Secrets or
Intangibles or any other intangible asset used in
the Business or otherwise trade on the good will
of Sellers in any respect anywhere in the world,
it being acknowledged that such assets will be,
after the Closing, strictly assets and properties
of Purchaser. The Non-Compete Period shall be
extended with respect to a particular Selling
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Party for that period of time during which such
Selling Party is in violation of the covenants
contained in this Section 12A.
12.A.(v) Relief, Reformation; Severability. The parties
agree that the covenants contained in this Section
12A are separate and are reasonable in their scope
and duration and may be enforced by specific
performance or otherwise. The parties shall not
raise any issue of reasonableness as a defense in
any proceeding to enforce any of the covenants
herein. Notwithstanding the foregoing, in the
event that a covenant included in this Section 12A
shall be deemed by any court to be unreasonably
broad in any respect, then, to the extent
permitted by law, the court which makes such
finding shall modify such covenant for the purpose
of making such covenant reasonable in scope and
duration. The validity, legality or enforceability
of the remaining provisions of this Agreement
shall not be affected by any such modification.
12.A.(vi) Remedies. The parties acknowledge that any
breach of the restrictive covenants contained
in this Section 12A will cause irreparable harm
to the other, and that such harm will be
difficult if not impossible to ascertain.
Therefore, if any action or proceeding is
commenced by or on behalf of any party to enforce
the provisions hereof, such party shall be
entitled to equitable relief, including
injunction, against any actual or threatened
breach hereof, and any damages arising therefrom
including, without limitation, reasonable fees of
its attorneys and their support staff and all
other costs and expenses incurred by the other
party in good faith in connection therewith,
without bond and without liability should such
relief be denied, modified or vacated. Neither
the right to obtain such relief nor the obtaining
of such relief shall be exclusive of or preclude
any party from any other remedy. Each party
hereby waives the claim or defense to an action
for equitable relief by the other that the other
has an adequate remedy at law or has not been or
is not being irreparably injured by such breach.
12.B. Inventions. The Sellers shall, and hereby do, assign to
Purchaser their entire right, title and interest in all
discoveries, computer programs, recipes, processes and
improvements, patentable or otherwise, trade secrets and
ideas, writings and copyrightable material, which have been,
prior to the Closing Date, or may be conceived by any of the
Sellers or developed or acquired by them during the
Non-Compete Period, which may pertain directly or indirectly
to the Business. The Sellers agree to promptly and fully
disclose in writing all such developments. The Sellers
acknowledge that all Trade Secrets and other ideas relating to
the Business which were or will be conceived by any of them
before the date hereof or during the Non-Compete Period have
been, or shall promptly be, assigned by each to Purchaser.
Each of the Sellers will, upon Purchaser's request, execute,
acknowledge and deliver to Purchaser all instruments and do
all other acts which are necessary or desirable to enable
Purchaser to file and prosecute applications for, and to
acquire, maintain and enforce all letters, patents, trademark
registrations, or copyrights or enforce all rights in any
intangible or intellectual property in all countries.
12.C. Collection of Receivables. From and after the Closing,
Purchaser shall have the right and authority to collect, for
its own account, all of the Receivables and other items
intended
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to be transferred to it pursuant hereto, and to endorse in any
Seller's name any checks or drafts received on account of any
such Receivables or such other items. Each Seller agrees that
it will transfer or deliver to Purchaser, promptly after the
receipt thereof, any cash or other property which any Seller
receives after the Closing in respect of any claims,
contracts, licenses, leases, commitments, sales orders,
purchase orders, Receivables of any character intended to be
transferred to Purchaser pursuant hereto.
12.D. Cooperation. From and after the Closing, each of the Sellers
will cooperate, for no additional cost, with Purchaser, in the
event Purchaser is required to: (i) institute and prosecute
proceedings which Purchaser may deem proper in order to
collect, assert or enforce any claim, right or title of any
kind in or to the Purchased Assets; (ii) subject to Section
13C hereof, defend or compromise any and all actions, suits or
proceedings in respect of any of the Purchased Assets, and do
all such acts and things in relation thereto as Purchaser
shall deem necessary or advisable; and (iii) take all action
which Purchaser may reasonably deem proper in order to provide
Purchaser with all of the benefits relating to the Purchased
Assets where any required consent of another party to the sale
or assignment thereof to Purchaser shall not have been
obtained.
12.E. Subrogation of Purchaser. Subject to the priority rights of
each Seller, in the event that Purchaser shall become liable
for or suffer any damage with respect to any matter which was
covered by insurance maintained by any Seller on or prior to
the Closing, Purchaser shall be and hereby is subrogated to
any rights of each Seller under such insurance coverage, and,
in addition, each Seller agrees to promptly remit to Purchaser
any insurance proceeds which it may receive on account of any
such liability or damage which exceed any liability of or
damage suffered by any Seller.
12.F. No Adverse Action. None of the Sellers nor any of their agents
or representatives shall take any action, directly or
indirectly, that would in any way adversely affect Purchaser's
efforts to obtain all proper permits and authorizations
necessary or appropriate to operate the Business in any manner
deemed reasonable by Purchaser.
12.G. Cooperation with Litigation, Claims, Etc. The Sellers will
fully cooperate with Purchaser after the Closing in connection
with any pending litigation, investigation or arbitration or
other legal proceeding which arises out of facts or
circumstances which pre-date the Closing.
13. INDEMNIFICATION. Payment of any financial obligation of Sellers which
may at any time become owing to Purchaser and/or Purchaser's
subsidiaries and affiliates, particularly including (but not limited
to) any obligation of Sellers arising from matters included in Section
5 and subsections thereof, shall be provided by indemnification
pursuant to this Section 13. Indemnification pursuant to this Section
13 shall, in the entirety, be absolutely limited to the escrow and the
escrow amount set forth in Section 13F and subject to the terms
thereof. In the event the escrow amount shall be exhausted by payment
of indemnified Losses, Sellers shall thereupon, thereby and thereafter
be fully and absolutely released and discharged of and from any and
all financial obligation and/or liability to Purchaser's Indemnified
Parties. Strictly subject to the foregoing:
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13.A. Subject to the last sentence of this Section 13A, each of the
Sellers jointly and severally agrees to indemnify and hold
harmless Purchaser and Purchaser's subsidiaries and affiliates
(collectively, "PURCHASER'S INDEMNIFIED PARTIES") against any
and all Unassumed Liabilities, regardless of Purchaser's
knowledge, and all damages, losses, settlement payments,
obligations, liabilities, claims, actions, causes of action,
suits, proceedings, costs of investigations, demands,
assessments, judgments, Encumbrances and costs and expenses
(including, without limitation, attorneys' fees, interest,
penalties and all costs associated therewith incurred by such
party in good faith) (collectively, "LOSSES") suffered,
sustained, incurred or paid by any of Purchaser's Indemnified
Parties, to which such indemnified party may become subject
under any federal, state or local law, rule or regulation, at
common law or otherwise (including in settlement of any
litigation), insofar as such Losses (or actions in respect
thereof) arise out of or are based upon (i) any untrue or
inaccurate statement or alleged untrue or inaccurate statement
or misrepresentation or breach of representation or warranty
made by any of the Sellers herein, including the information
included in any Exhibit hereto, or arise out of or are based
upon any of the Sellers' omission to state herein a material
fact required to be stated herein or necessary to make the
statements herein not misleading; (ii) the claims of any
broker or finder engaged by any of the Sellers; (iii) the
nonfulfillment or breach or alleged nonfulfillment or breach
of any agreement or covenant of any of the Sellers, including
but not limited to those covenants and agreements in Section
12 hereof; (iv) the assertion against any of Purchaser's
Indemnified Parties or any of their assets of any liability or
obligation of any of the Sellers (except an Assumed
Liability), including Litigation Matters (as defined below)
and those obligations or liabilities which are or should be
disclosed in EXHIBIT 5E(II) or those relating to the operation
of the Business and not accurately disclosed herein for any
reason whatsoever (regardless of whether such liability or
obligation is known or unknown, fixed or contingent, accrued,
absolute, matured or unmatured or otherwise), and regardless
of any compliance with any applicable bulk sales' laws; and
(v) any personal injury, death, property damage or other claim
(whether covered by warranties or otherwise) attributable to
services or products designed, manufactured, processed,
administrated, serviced or sold by any Seller, including all
items that are or should have been or should be listed on
EXHIBIT 5K (collectively, "LITIGATION MATTERS"); and will
reimburse each indemnified party for any legal or other cost
or expense incurred by such party in good faith in connection
with investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in
addition to any liability which any of the Sellers may
otherwise have and to any remedy which Purchaser may otherwise
have. To the extent that any matter gives rise to
indemnification hereunder, such matter shall be deemed to have
been accrued on the books of Sellers as of the day before the
Effective Date, for the purposes of calculating the Purchase
Price. The Sellers agree and acknowledge that Purchaser's
Indemnified Parties shall be entitled to indemnification for
all matters of any nature, other than Assumed Liabilities (and
those liabilities for which adequate reserves are accrued as
of the Effective Date), including those matters of which the
Sellers do not have knowledge or notice at the time of
Closing; provided, however, that the lack of indemnification
as a remedy shall in no way be deemed to have such matter
included as an Assumed Liability. Purchaser's actual knowledge
will not be limited to the information contained in the
Exhibits hereto, but will include other information learned by
Purchaser in its due diligence. If, prior to the Closing Date,
Purchaser has knowledge and Sellers do not have knowledge of a
matter which would give rise to indemnity hereunder, Purchaser
shall not be entitled to seek or
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receive indemnification hereunder unless Purchaser informs
Sellers of such matter prior to Closing.
13.B. Subject to the last sentence of Section 00X, Xxxxxxxxx will
indemnify and hold harmless each of the Sellers and each of
the Sellers' affiliates and subsidiaries (collectively,
"SELLERS' INDEMNIFIED PARTIES") against any and all Losses
suffered, sustained, incurred or paid by any of Sellers'
Indemnified Parties, to which such indemnified party may
become subject under any federal, state or local law, rule or
regulation, at common law or otherwise (including in
settlement of any litigation), insofar as such Losses (or
actions in respect thereof) arise out of, relate to or are
based upon (i) any untrue or inaccurate statement or alleged
untrue or inaccurate statement of any material fact or
misrepresentation or breach of representation or warranty made
by Purchaser herein, including the information included in any
Exhibit hereto, or arise out of or are based upon Purchaser's
omission to state herein a material fact required to be stated
herein or necessary to make the statements herein not
misleading; (ii) the claims of any broker or finder engaged by
Purchaser; (iii) the nonfulfillment or breach or alleged
nonfulfillment or breach of any agreement or covenant of
Purchaser; (iv) any Assumed Liability; (v) to the extent not
indemnified pursuant to Section 13A above, the assertion
against any Sellers' Indemnified Parties or any of their
assets of any liability or obligation of Purchaser, or
relating to Purchaser's operations or any of its assets,
whether absolute or contingent, matured or unmatured, known or
unknown; and (v) to the extent not indemnified pursuant to
Section 13A above, any personal injury, death or property
damage attributable to products manufactured and sold by
Purchaser; and will reimburse each indemnified party for any
legal or other expenses reasonably incurred by such party in
connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement
will be in addition to any liability which Purchaser may
otherwise have and to any remedy which the Sellers may
otherwise have. Notwithstanding anything herein to the
contrary, in any proceeding to enforce any of the provisions
herein, all of the Sellers shall be required to act jointly
through Representative, and not individually or singly.
Notwithstanding the foregoing, none of Seller's Indemnified
Parties shall be entitled to indemnification remedies
hereunder if, and only if, any of the Sellers has knowledge
(only as defined in section (i) of the second sentence of
Section 15J hereof) of such matter at the time of Closing.
13.C. Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party under this Section, notify
the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified
party except to the extent that the indemnifying party was
prejudiced by such failure to notify. In case any such action
in which any Person seeks only the recovery of money for which
indemnification is or may be provided hereunder, is brought
against any indemnified party, and such indemnified party
notifies any indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate in and,
to the extent that it may wish and at its cost and expense, to
assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however,
that (i) if (A) the indemnified party or parties reasonably
believe that an adverse determination of such action could be
detrimental to or injure the indemnified party's reputation or
future
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business prospects, or (B) the defendants in any such action
include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that
there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to
those available to the indemnifying party, or the indemnified
and indemnifying parties may have conflicting interests which
would make it inappropriate for the same counsel to represent
both of them, then the indemnified party or parties shall have
the right to select separate counsel as set forth below, at
the indemnified parties' cost (but subject to
indemnification), to assume such legal defense (in which case
the indemnified parties' counsel shall be the lead counsel in
such defense) and otherwise to participate in the defense of
such action on behalf of such indemnified party or parties,
and (ii) an indemnifying party shall be able to assume the
defense of an action only if (A) it can reasonably demonstrate
its financial soundness and wherewithal (which may include
bonding over a reasonable reserve) necessary for a lengthy
defense and possible judgement and (B) it enters into an
agreement with the indemnified party or parties (in form and
substance reasonably satisfactory to such party or parties)
pursuant to which the indemnifying party agrees to be fully
responsible for all Losses related to such action. Upon
receipt of notice from the indemnifying party to such
indemnified party of its election so to assume defense of such
action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party
shall have employed such counsel in connection with the
assumption of legal defense in accordance with the proviso to
the next preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the
expenses of more than one separate counsel representing all
indemnified parties not having different or additional
defenses or potential conflicting interests among themselves
who are parties to such action), (ii) the indemnifying party
shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action, or
(iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the
indemnifying party. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all
liability arising out of such proceeding. Notwithstanding
anything contained herein to the contrary, an indemnified
party shall have no obligation to bring a third party action
or an action for indemnification or contribution
simultaneously or in connection with a third party action
which may give rise to rights of indemnification or
contribution or similar remedies.
13.D. All amounts that may become due from any of the Sellers to
Purchaser after the determination that such amount has become
payable pursuant to this Agreement, shall be paid by the
Sellers immediately upon demand by Purchaser, and if not so
paid within five (5) business days of such demand, such
amounts may be offset by Purchaser against any amounts then
owing to any of the Sellers under any document, instrument,
agreement or understanding, and if the amount to be offset is
greater than the amount which is then currently owing to any
of the Sellers, then (i) such amounts which are not then able
to be immediately offset or are not then immediately paid
shall bear interest at the rate of
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fifteen percent (15%) per annum, accruing from the date such
amount is demanded until paid or later offset, and (ii)
Purchaser may pursue all other remedies available to it in
order to collect such amount. The foregoing remedies shall not
be mutually exclusive.
13.E. All amounts that may become due from Purchaser to any of the
Sellers after the determination that such amount has become
payable pursuant to this Agreement, shall be paid by Purchaser
immediately upon demand by Representative, and if not so paid
within five (5) business days of such demand, such amounts may
be offset by the Sellers against any amounts then owing to
Purchaser under any document, instrument, agreement or
understanding, and if the amount to be offset is greater than
the amount which is then currently owing to Purchaser, then
(i) such amounts which are not then able to be immediately
offset or are not then immediately paid shall bear interest at
the rate of fifteen percent (15%) per annum, accruing from the
date such amount is demanded until paid or later offset, and
(ii) the Sellers may pursue all other remedies available to
them in order to collect such amount. The foregoing remedies
shall not be mutually exclusive.
13.F. Indemnification by the Sellers is limited to the total sum of
One Millions Dollars ($1,000,000) of the Purchase Price (with
interest earned thereon), irrespective of the number of Losses
subject to indemnification which may be claimed in accordance
herewith. As security for the Sellers' obligations, One
Million Dollars ($1,000,000) of the Purchase Price will be
deposited at the time of Closing with an escrow agent for a
term not exceeding three years from and after the Closing
Date, the same to be held, invested, managed and disbursed in
accordance with an escrow agreement conforming in form and
substance with SCHEDULE G.
14. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS.
14.A. All representations, warranties, agreements and covenants made
by any party hereto in this Agreement shall survive the
Closing of the transactions hereunder.
15. MISCELLANEOUS.
15.A. Manner of Closing. At the Closing, all transactions shall be
conducted substantially concurrently and no transaction shall
be deemed to be completed until all are completed.
15.B. Access to Records. At the Closing, Purchaser shall receive
possession of and thereafter afford to the Representative and
her agents and successors in interest, the opportunity, upon
reasonable advance notice, to examine and make copies of the
books and records of Sellers having an effect on all periods
through the Closing Date, in connection with tax and financial
reporting matters and other bona fide business purposes, and
Purchaser shall use reasonable efforts to retain such books
and records for a period of six (6) years from the date of
such books and records.
15.C. Parties in Interest. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the parties and
their respective executors, successors and assigns.
Notwithstanding the foregoing, the Sellers are prohibited from
assigning their respective obligations hereunder, by operation
of law or otherwise. The Sellers hereby consent to a
collateral assignment of Purchaser's rights hereunder to a
lender or lenders,
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understanding that such lender(s) shall have the ability to
enforce the rights of Purchaser granted herein.
15.D. Entire Agreement; Amendments. This Agreement, the Exhibits
and Schedules attached hereto, and the other writings referred
to herein or delivered in connection herewith contain the
entire understanding of the parties with respect to its
subject matter, and supersede all prior understandings and
agreements. This Agreement may be amended only by a written
instrument duly signed and executed by the parties. Any
reference herein to this Agreement shall be deemed to include
the Exhibits and Schedules attached hereto. If any provision
of this Agreement is determined to be illegal or
unenforceable, such provision will be deemed amended to the
extent necessary to conform to applicable law or, if it cannot
be so amended without materially altering the intention of the
parties, it will be deemed stricken and the remainder of the
Agreement will remain in full force and effect.
15.E. Headings. The section and subsection headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
15.F. Notices. All notices, claims, certificates, requests, demands
and other communications ("COMMUNICATIONS") hereunder shall be
in writing and shall be deemed to have been duly given when
personally delivered, mailed (by registered or certified mail,
postage prepaid) or sent by overnight courier service or
facsimile addressed as follows:
If to any of the Sellers,
in care of Representative, at: Xx. Xxxxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
With a copy to: X. X. XXXXXX LAW OFFICE
Suite 450, Citizens Tower Building
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: X. X. Xxxxxx, Esq.
Facsimile: (000)000-0000
If to Purchaser: c/o Sterling Capital, Ltd.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Facsimile: (000)000-0000
With a copy to: Xxx X. Xxxxxxx, P.C.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000)000-0000
or to such other address as the person to whom a communication
is to be given may have furnished to the others in writing in
accordance herewith. A communication given by any
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other means shall be deemed duly given on the earlier of when
actually received by the addressee or three (3) days after
sending such communication. Notice hereunder to Representative
shall be deemed to be notice to each of the Sellers.
15.G. Public Announcements. All public announcements relating to
this Agreement or the transactions contemplated hereby,
including announcements to employees, will be made only as may
be agreed upon jointly by the parties hereto, or as Purchaser
considers required or appropriate to comply with applicable
law. Any governmental, public or private inquiries or requests
for information shall be promptly referred to Purchaser.
15.H. Further Assurances. After the Closing Date, without further
consideration, the parties shall execute and deliver such
further instruments and documents as either party shall
reasonably request to consummate the transactions contemplated
hereby and to perfect Purchaser's title to the Purchased
Assets.
15.I. Waivers. Any party to this Agreement may, by written notice to
the other party hereto, or by written endorsement to or
limitation on any Exhibit or Schedule, waive any provision of
this Agreement. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent, same or different
breach.
15.J. Materiality and Knowledge. The terms "MATERIAL" or
"MATERIALLY" or "MATERIALITY" shall mean either (i) the
existence of a fact or condition or facts or conditions which,
if a dollar amount is readily ascertainable with respect to
such, has a value, either individually or in the aggregate, of
more than $5,000.00, or (ii) the determination by a lender, in
such lender's sole and absolute discretion, that such fact or
condition is, or, if known to such lender would be, material
for purposes of its making a loan to Purchaser in order to
consummate the transactions hereunder or to avoid any
acceleration of such loan, or (iii) any fact or condition
which gives rise to any right of termination, cancellation,
acceleration or modification of any agreement or understanding
to which any of the Sellers is a party and such right has been
exercised. The term "KNOWLEDGE" shall mean (i) actual
knowledge or notice, (ii) that knowledge which a party should
know after having made all reasonable inquiries and (iii) that
an individual or individuals making a statement as to its, his
or her "KNOWLEDGE" has made all reasonable inquiries regarding
the facts and circumstances relating to such statement. For
purposes of this Agreement, the knowledge of any of the
Sellers shall be deemed to be the knowledge of all of the
Sellers (i.e., the knowledge of one of the Sellers shall be
imputed to all other Sellers), and the receipt of a notice by
any Selling Party shall be deemed to be receipt by all
Sellers. Purchaser has knowledge of all information, facts and
circumstances disclosed by Sellers or otherwise discovered by
Purchaser incident to, in conjunction with, or arising from
Purchaser's due diligence. The knowledge of any of the
officers, directors or employees of Purchaser shall be deemed
to be the knowledge of Purchaser (i.e., the knowledge of such
persons shall be imputed to Purchaser), and the receipt of a
notice by any of such persons shall be deemed to be receipt by
Purchaser. The knowledge of any of the officers, directors or
employees of Sellers shall be deemed to be the knowledge of
Sellers (i.e., the knowledge of such persons shall be imputed
to Sellers), and the receipt of a notice by any of such
persons shall be deemed to be receipt by Sellers.
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15.K. Counterparts. The Agreement may be executed in one or more
counterparts, but all such counterparts shall constitute one
and the same instrument.
15.L. Certificate. A "Certificate" shall mean a certificate signed
by the individual stating that (i) such individual who is
signing the certificate has made or has caused to be made such
investigations as are necessary in order to permit him to
verify the accuracy of the information set forth in such
certificate and (ii) to the individual's knowledge, after due
inquiry, such certificate does not misstate any material fact
and does not omit any fact necessary to make the certificate
not misleading.
15.M. Use of Certain Terms. The term "Seller(s)" shall also
include all predecessors thereof and businesses acquired by
or merged therewith, or businesses whose liabilities (some or
all) have been assumed by any of Sellers to the extent
necessary to consummate the Transactions in accordance with
this Agreement. The term "each of the Sellers", "none of the
Sellers" "any of the Sellers" or any other similar term or
references shall mean any or all thereof, whichever has the
broadest meaning given the particular context. The term
"Person" shall mean an individual, a partnership, a joint
venture, a joint stock company, a corporation, a trust, an
unincorporated organization, a limited liability company, any
other legal entity and a government, governmental body or
quasi-governmental body, or any department, agency or
political subdivision thereof.
15.N. Applicable Law. The terms and conditions of this Agreement
shall be governed by and construed in accordance with the laws
of the State of Oklahoma applicable to agreements between
Oklahoma residents entered into and to be performed entirely
within Oklahoma.
15.O. Consent to Jurisdiction. For those matters or disputes of any
nature arising out of, connected with, related or incidental
to this Agreement, the parties hereto hereby irrevocably
submit themselves to the exclusive jurisdiction of the courts
of the State of Oklahoma located in the City of Oklahoma City
and to the jurisdiction of the United States District Court
for the Western District of Oklahoma for the purpose of
bringing any action that may be brought in connection with the
provisions hereof. The parties hereto hereby individually
agree that they shall not assert any claim that they are not
subject to the exclusive jurisdiction of such courts, that the
venue is improper, that the forum is inconvenient or any
similar objection, claim or argument. Service of process on
any of the parties hereto with regard to any such action may
be made by mailing the process to such Persons by regular or
certified mail to the address of such Person set forth herein
or to any subsequent address to which notices shall be sent.
Any action by any of the Sellers which seeks to rescind the
transactions contemplated hereby shall be preceded by the
tendering of the entire gross Purchase Price to Purchaser.
15.P. Exceptions to Exclusive Jurisdiction. Notwithstanding the
provisions of Section 15O hereof, in the event that there is a
third party action which may give rise to rights of
indemnification or contribution from one party(ies) to
another, the parties hereto irrevocably submit themselves to
the jurisdiction of the court in which such third party action
is brought, and the party to be indemnified may, but shall not
be obligated to, bring a third party action or other
appropriate proceeding to enforce such rights of
indemnification or contribution. The foregoing is not intended
to confer any rights upon any other party other than the
parties hereto.
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15.Q. Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, singular and
plural as the identity of that person referred to requires.
15.R. Several Obligations. The duties and obligations of each of the
Sellers are several, and the Purchaser and each of the Sellers
hereby acknowledge the same; however, the escrow is joint and
several as to the Sellers.
15.S. Effect of Disputes. Notwithstanding the fact that there may
from time to time be disputes among the parties concerning the
terms and conditions hereof, the parties agree not to under
any circumstances, disparage, criticize or denigrate the
talents, skills, products, prospects, abilities, integrity or
character of the other parties hereto, or such parties'
management, directors, employees, agents or representatives
(including those of Purchaser's affiliates). Each of the
Sellers further agrees that each will not, at any time after
the date hereof and without Purchaser's written consent,
contact any past, present or prospective customer, supplier,
employee or agent or representative of either Sellers or
Purchaser with the intent, purpose or effect of injuring the
reputation, business or business relationships of Purchaser.
The provisions of this Section shall survive the execution and
termination hereof, irrespective of the reason for such
termination.
15.T. Mutual Drafting. This Agreement is the joint product of
Purchaser and Sellers and their respective counsel, and each
provision hereof has been subject to the mutual consultation,
negotiation and agreement of such parties and counsel, and
shall not be construed for or against any party hereto.
15.U. Binding Effect. This Agreement shall be binding upon the
parties hereto when the Agreement has been signed by the
Purchaser and the Sellers and all schedules have been signed
by the Purchaser and the Sellers or their Representative.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
PURCHASER:
POTTER'S ACQUISITION CORP.
By /s/ XXXXXXX X. XXXXXX
-----------------------------
Xxxxxxx X. Xxxxxx, Chairman
SELLERS:
X.X. XXXXXX SAUSAGE COMPANY
By /s/ XXXXXX XXXXXX
-----------------------------
Xxxxxx Xxxxxx, President
POTTER'S FARM, INC.
By /s/ XXXXXX XXXXXX
-----------------------------
Xxxxxx Xxxxxx, President
POTTER RENDERING CO.
By /s/ XXXXXX XXXXXX
-----------------------------
Xxxxxx Xxxxxx, President
POTTER LEASING COMPANY, LTD.
By /s/ XXXXXX XXXXX XXXXXX
-----------------------------
Xxxxxx Xxxxx Xxxxxx, General Partner
SELLERS' REPRESENTATIVE:
/s/ XXXXXX XXXXXX
-----------------------------
Xxxxxx Xxxxxx
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