================================================================================
ASSET PURCHASE AGREEMENT
By and Among
AQUA CARE SYSTEMS, INC.
and
DURAMETER PUMP COMPANY, INC.
and
XXXXXX HOLDINGS INC.
and
XXXXXX INTERNATIONAL, INC.
Dated as of December 27, 2000
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; INTERPRETATION..............................................................................1
Section 1.1 Certain Defined Terms..................................................................1
Section 1.2 Interpretation.........................................................................4
Section 1.3 Accounting Terms.......................................................................4
Section 1.4 Business Days..........................................................................4
ARTICLE II
ACQUISITION OF THE ASSETS
AND ASSUMPTION OF THE ASSUMED LIABILITIES................................................................5
Section 2.1 Purchase of the Assets.................................................................5
Section 2.2 Excluded Assets........................................................................6
Section 2.3 Assumed Liabilities....................................................................8
Section 2.4 Liabilities Not Assumed................................................................8
ARTICLE III
PAYMENT OF PURCHASE PRICE...............................................................................10
Section 3.1 Purchase Price of Assets..............................................................10
Section 3.2 Earnout Payments......................................................................10
Section 3.3 Allocation............................................................................11
ARTICLE IV
CLOSING.................................................................................................11
Section 4.1 Closing...............................................................................11
Section 4.2 Closing Costs.........................................................................11
Section 4.3 Prorations............................................................................11
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER.....................................................12
Section 5.1 Representations and Warranties Concerning Parent......................................12
Section 5.2 Representations and Warranties Concerning Seller......................................13
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER.................................................................22
Section 6.1 Organization of Buyer.................................................................22
Section 6.2 Authorization; Validity and Execution of Agreement....................................22
Section 6.3 Noncontravention; Consents............................................................22
Section 6.4 Brokers' Fees.........................................................................23
Section 6.5 Financial Statements..................................................................23
i
ARTICLE VII
CONDITIONS TO PARENT AND SELLER'S OBLIGATIONS...........................................................24
Section 7.1 Representations, Warranties and Covenants.............................................24
Section 7.2 Consents and Approvals................................................................24
Section 7.3 No Injunction.........................................................................24
Section 7.4 Payments..............................................................................24
Section 7.5 Documents to be Delivered by Buyer....................................................24
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS.......................................................................25
Section 8.1 Representations, Warranties and Covenants.............................................25
Section 8.2 Consents and Approvals................................................................25
Section 8.3 No Injunction.........................................................................25
Section 8.4 Documents to be Delivered by Parent and Seller........................................25
ARTICLE IX
POST-CLOSING COVENANTS..................................................................................26
Section 9.1 Further Assurances....................................................................26
Section 9.2 Tax Matters...........................................................................26
Section 9.3 Confidentiality.......................................................................26
Section 9.4 Non-Competition; Non-Interference; Non-Solicitation...................................27
Section 9.5 Other Agreements and Approvals........................................................29
Section 9.6 No Assignment Causing Breach..........................................................30
Section 9.7 Access to Information and Records.....................................................30
Section 9.8 Seller's Employees....................................................................30
ARTICLE X
INDEMNIFICATION.........................................................................................31
Section 10.1 Survival, Representations and Warranties..............................................31
Section 10.2 Indemnification Obligation of Parent and Seller.......................................31
Section 10.3 Indemnification Obligation of Buyer...................................................32
Section 10.4 Indemnification Procedures............................................................33
Section 10.5 Limitation of Liability; Effect of Disclosure on the Disclosure Schedule..............34
Section 10.6 Payment...............................................................................35
Section 10.7 Adjustment to Indemnities.............................................................35
ARTICLE XI
MISCELLANEOUS...........................................................................................36
Section 11.1 Assignment............................................................................36
Section 11.2 Notices...............................................................................36
Section 11.3 Choice of Law.........................................................................37
Section 11.4 Entire Agreement; Amendments and Waivers..............................................37
Section 11.5 Counterparts..........................................................................37
Section 11.6 Invalidity............................................................................37
Section 11.7 Headings..............................................................................38
ii
Section 11.8 Expenses..............................................................................38
Section 11.9 Specific Performance..................................................................38
Section 11.10 Waiver of Jury Trial..................................................................38
Section 11.11 No Strict Construction................................................................38
Exhibits
Exhibit A - Purchase Price Allocation
Exhibit B - Year End Financial Statements
Exhibit C - Interim Financial Statements
Exhibit D - Buyer's Audited Financial Statements
Exhibit E - Buyer's Interim Financial Statements
Exhibit F - Form of Transition Services Agreement
Exhibit G - Form of Assignment and Assumption Agreement
Exhibit H - Form of Xxxx of Sale
Exhibit I - Form of Opinion of Seller's Counsel
iii
Disclosure Schedule
Section 2.2(g) - Excluded Contracts
Section 2.3 - Personal Property Leases, Business Contracts and
Business Licenses
Section 3.2(b)(iii) - Seller's Products
Section 5.1(c) - Parent's Consents and Approvals
Section 5.2(a) - Incorporation and Foreign Qualifications
Section 5.2(c) - Seller's Consents and Approvals
Section 5.2(k) - Intangible Property
Section 5.2(l) - Tangible Assets
Section 5.2(q) - Product Warranty Provisions
Section 5.2(r) - Employees
Section 5.2(u) - Substantial Customers and Suppliers
Section 5.2(w) - Insurance
Schedules
Schedule 6.3 - Buyer's Consents and Approvals
iv
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("Agreement"), dated as of December 27, 2000
by and among AQUA CARE SYSTEMS, INC. ("Parent"), DURAMETER PUMP COMPANY, INC.
(the "Seller"), XXXXXX HOLDINGS INC. and XXXXXX INTERNATIONAL, INC. (the
"Buyer"). Parent, Seller and Buyer are referred to collectively herein as the
"Parties."
WHEREAS, Parent owns all of the outstanding shares of common stock of
Seller.
WHEREAS, Seller is engaged in the business of the design, engineering,
manufacturing, assembly, sales, marketing, distribution and service of chemical
injection pumps, other pumps and related parts (the "Business").
WHEREAS, Seller wishes to sell, and Buyer wishes to purchase, the
Assets (as hereinafter defined) subject to the assumption by Buyer of certain
specified liabilities of Seller consisting of the Assumed Liabilities (as
hereinafter defined) upon the terms and conditions hereinafter set forth.
WHEREAS, capitalized terms used herein which are otherwise not defined
shall have the meanings set forth in Section 1.1 hereof.
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1 Certain Defined Terms. As used herein, the terms below
shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by Contract or otherwise, and the terms
"controlled" and "controlling" have meanings correlative thereto.
"Affiliated Group" means any affiliated group within the meaning of
Section 1504(a) of the Code or any similar group defined under a similar
provision of state, local or foreign law.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Contract" means any agreement, contract, evidence of Indebtedness,
lease, sublease, license, sublicense, mortgage, indenture, security agreement or
other arrangement (whether written or oral).
"Disclosure Schedule" means the disclosure schedule delivered by Parent
and Seller to the Buyer on the date hereof. The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Agreement.
"Employee Benefit Plans" shall mean all Employee Pension Benefit Plans
and Employee Welfare Benefit Plans.
"Employee Pension Benefit Plan" shall mean any "employee pension
benefit plan" as defined in Section 3(2) of ERISA.
"Employee Welfare Benefit Plan" shall mean any "employee welfare
benefit plan" as defined in Section 3(1) of ERISA.
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions now or hereafter in effect having the force or effect of law, all
judicial and administrative orders and determinations, all contractual
obligations and all common law concerning public health and safety, worker
health and safety, pollution, or protection of the environment, including all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as
amended.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means any entity which is or has ever been treated as
a single employer with Seller for purposes of Section 414 of the Code.
"GAAP" means generally accepted accounting principles as in effect in
the United States on the date of this Agreement, as applied by Seller (to the
extent consistent with such principles) on a consistent basis in accordance with
past custom and practice.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"Income Taxes" shall mean taxes measured by or with reference to net
income imposed by any federal, state, local or foreign governmental taxing
authority, including additions to tax and penalties related to such taxes, and
interest on such taxes and on such additions to tax and penalties.
-2-
"Indebtedness" of any Person means all obligations of such Person (i)
for borrowed money (including principal, interest, overdrafts, penalties,
premiums, fees, expenses, indemnities and breakage costs), (ii) evidenced by
notes, bonds, debentures or similar instruments, (iii) for the deferred purchase
price of goods or services (other than trade payables or accruals incurred in
the Ordinary Course of Business), (iv) under capital leases and (v) in the
nature of guarantees of the obligations described in clauses (i) through (iv)
above of any other Person.
"Knowledge" means any fact or information which is actually known or
reasonably should be known by any officer or director of Parent or Seller, and
each of Xxxxxx Xxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxxxxx
and Xxxxx Xxxxxxx, after due inquiry and investigation.
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Lien" shall mean any claim, lien, pledge, option, charge, security
interest, mortgage, right-of-way, restriction, encumbrance or other right of any
third party.
"Losses" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses (including interest, court costs, fees of
attorneys, accountants and other experts or other expenses of litigation or
other proceedings or of any claim, default or assessment).
"Multiemployer Plan" shall mean any "multiemployer plan," as defined in
Section 3(37) of ERISA.
"Ordinary Course of Business" means the ordinary course of business
consistent with Seller's past custom and practice (including with respect to
quantity, quality and frequency).
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Person" means an individual, partnership, corporation, limited
liability company, joint stock company, unincorporated organization or
association, trust, joint venture, association or other organization, whether or
not a legal entity, or a Governmental or Regulatory Authority.
"Proprietary Rights" shall mean all (i) patents, patent applications,
patent disclosure and inventions (whether patentable or unpatentable and whether
or not reduced to practice), (ii) trademarks, service marks, trade dress, trade
names, corporate names and Internet domain names and uniform resource locators
("URLs") and registration and applications for registration thereof, together
with all of the goodwill associated therewith, (iii) copyrights, copyrightable
works and industrial designs, and registrations and applications for
registration thereof, (iv) computer software, data bases and documentation, and
(v) trade secrets and other confidential information (including ideas, formulae
and compositions), know-how, processes, techniques, research and development
information, drawings, specifications, designs, plans, proposals, data,
financial, business and marketing plans and customer and supplier lists and
information.
-3-
"Security Interest" shall mean any Lien, other than (a) mechanic's,
materialmen's, and similar liens, (b) Liens for Taxes not yet due and payable or
for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings and for which adequate reserves have been established on the Interim
Financial Statements, (c) purchase money Liens and Liens securing rental
payments under capital lease arrangements, and (d) other Liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing of
money.
"Subsidiary" means any Person whose (a) securities having ordinary
voting power to elect a majority of its board of directors or managing or
general partners (or other persons having similar functions) or (b) other
ownership interests (including partnership and membership interests) ordinarily
constituting a majority interest in the capital, profits or cash flow of such
Person, are at the time, directly or indirectly, owned or controlled by another
Person, or by one or more other Subsidiaries of such other Person, or by such
other Person and one or more of its other Subsidiaries.
"Tax" shall mean any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Section 59A of
the Code), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not, and any amounts payable
pursuant to the determination or settlement of an audit.
"Tax Return" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
Section 1.2 Interpretation. Unless otherwise indicated to the contrary
herein by the context or use thereof: (i) the words, "herein," "hereto,"
"hereof" and words of similar import refer to this Agreement as a whole and not
to any particular Section or paragraph hereof; (ii) the word "including" means
"including, but not limited to"; (iii) masculine gender shall also include the
feminine and neutral genders, and vice versa; and (iv) words importing the
singular shall also include the plural, and vice versa.
Section 1.3 Accounting Terms. Each accounting term used herein shall
have the meaning that is applied thereto in accordance with GAAP.
Section 1.4 Business Days. Whenever the last day for the exercise of
any privilege or the discharge of any duty hereunder shall fall upon any day
which is not a business day, the party having such privilege or duty may
exercise such privilege or discharge such duty on the next succeeding business
day.
-4-
ARTICLE II
ACQUISITION OF THE ASSETS
AND ASSUMPTION OF THE ASSUMED LIABILITIES
Section 2.1 Purchase of the Assets. On the terms and subject to the
conditions set forth in this Agreement, on the Closing Date, Seller agrees to
sell, transfer, assign, convey and deliver to Buyer, and Buyer agrees to
purchase, acquire and accept from Seller, all of the right, title and interest
of Seller in and to all of the assets, properties and rights owned or used by
Seller as of the Closing Date of every type and description, wherever located
and whether or not reflected on the books and records of Seller, in each case
free and clear of any Liens, excluding those assets, properties and rights which
are specifically excluded pursuant to Section 2.2 (the "Assets"). The Assets
include, without limitation, all of the right, title and interest of Seller in
or to the following:
(a) Inventory. All inventories or raw materials,
work-in-process, finished goods, merchandise, products under research
and development, demonstration equipment, office and other supplies,
parts, packaging materials and other accessories related thereto
wherever held, including any of the foregoing purchased subject to any
conditional sales or tide retention agreement in favor of any other
Person, together with all rights of Seller against suppliers of such
inventories (the "Inventory");
(b) Accounts Receivable. All trade accounts receivable and
other rights to receive payments, including any rights of Seller with
respect to vendor rebate programs, any third party collection
proceedings or any other action, suit, proceeding or arbitration which
has been commenced in connection therewith (the "Accounts Receivable");
(c) Tangible Personal Property. All furniture, fixtures,
equipment, machinery, motor vehicles, and other tangible personal
property used or held for use at the locations at which the Business is
conducted or at suppliers' premises or customers' premises, or
otherwise used or held for use by Seller, including any of the
foregoing purchased subject to any conditional sales or title retention
agreement in favor of any other Person (the "Tangible Personal
Property");
(d) Personal Property Leases. (i) The leases or subleases of
tangible personal property as to which Seller is the lessor or
sublessor and (ii) all leases of tangible personal property as to which
Seller is the lessee or sublessee, together with any options to
purchase or sell the underlying property (the leases and subleases
described in subclauses (i) and (ii), the "Personal Property Leases");
(e) Business Contracts. In addition to the Personal Property
Leases and the Accounts Receivable separately described above, all
other Contracts and all purchase orders from customers of Seller
relating to the Business which Seller has accepted in the Ordinary
Course of Business, but excluding any and all employment, severance or
collective bargaining agreements, any similar Contracts and any
Contract maintained pursuant to or in connection with any Employee
Benefit Plan (the "Business Contracts");
-5-
(f) Intangible Property. All Proprietary Rights owned, used or
held for use by Seller (including Seller's goodwill therein), along
with all rights, privileges, and all options, income, royalties,
damages and payments due or payable at the Closing or thereafter
(including damages and payments for past and future infringements or
misappropriation thereof), the right to xxx and recover for past
infringement or misappropriation thereof, and all corresponding rights
that, now or hereafter, may be secured throughout the world and all
copies and tangible embodiments of any of the foregoing (the "Seller
Proprietary Rights");
(g) Licenses. All Licenses (including applications therefor)
(the "Business Licenses");
(h) Security Deposits. All security deposits deposited by or
on behalf of Seller as lessee or sublessee under the Personal Property
Leases;
(i) Balance Sheet Assets. Those assets, properties and rights
of Seller reflected on the November 30, 2000 balance sheet included in
the Financial Statements (as hereinafter defined) relating to or used
or held for use in connection with the Business or otherwise referred
to in this Agreement or the Disclosure Schedule, subject to changes in
the Ordinary Course of Business through the Closing Date;
(j) Books and Records. Copies of all books and records
relating to Seller or its assets or properties, provided that Seller
shall have the right to retain the originals of any such books and
records ; and
(k) Warranties. All rights of Seller under or pursuant to all
warranties, representations and guarantees made by suppliers,
manufacturers and contractors in connection with products sold to or
services provided to Seller, or affecting the property, machinery or
equipment used or usable by Seller or relating to any property leased
pursuant to the Personal Property Leases.
Section 2.2 Excluded Assets. Any provision of this Agreement to the
contrary notwithstanding, Buyer shall not acquire shall not acquire and there
shall be excluded from the Assets, Seller's interest in each of the following
(the "Excluded Assets"):
(a) Cash. All cash on hand or in bank, cash equivalents,
marketable and non-marketable securities and other investments, all
rights in any funds of any nature, bank and security accounts, safe
deposit boxes and vaults and insurance policies, wherever maintained or
held.
(b) Books and Corporate Seal. The minute books, stock transfer
books and corporate seal of Seller;
(c) Seller Real Property and Seller Improvements. Any real
property owned by Seller or any of its Affiliates, together with all
easements, licenses, interests and all of the rights and interests
arising out of the ownership thereof or appurtenant thereto (the
"Seller Real Property"), together with all buildings, structures,
facilities, fixtures and other
-6-
improvements located thereon or otherwise owned by Seller or any of its
Affiliates pursuant to any Seller Real Property Lease (as hereinafter
defined) or otherwise (the "Seller Improvements") and all options to
purchase any real property that are not set forth in any Seller Real
Property Lease;
(d) Seller Real Property Leases. (i) The leases, subleases or
other occupancy Contracts of real property and/or the buildings,
structures, facilities, fixtures and other improvements located on such
real property or elsewhere with respect to which Seller or any of its
Affiliates is the lessor or sublessor and all easements, licenses,
interests and rights arising out of the ownership of such leasehold
estates or appurtenant thereto, and (ii) the leases, subleases or other
occupancy Contracts of real property and/or the buildings, structures,
facilities, fixtures and other improvements located on such real
property or elsewhere with respect to which Seller or any of its
Affiliates is the lessee or sublessee, and all easements, licenses,
interests and rights arising out of the ownership of such leasehold
estates or appurtenant thereto, together with any options to purchase
the underlying property and leasehold improvements thereon, and in each
case all other rights, subleases, licenses, permits, deposits and
profits appurtenant to or related to such leases and subleases (the
leases, subleases, appurtenances and interests related thereto
described in subsections (i) and (ii) are referred to herein as the
"Seller Real Property Leases" and all such leased real property,
improvements and appurtenances shall be collectively referred to as the
"Seller Leased Real Property");
(e) Property Plans. All site plans, surveys, soil and
substratum studies, architectural drawings, plans and specifications,
engineering, electrical and mechanical plans and studies, floor plans,
landscape plans, appraisals, feasibility studies, environmental studies
and other plans and studies of any kind if existing and in the
possession or subject to the control of Seller relating to the Seller
Real Property, the Seller Leased Real Property or the Seller
Improvements (collectively, "Property Plans");
(f) Security Deposits. All security deposits deposited by or
on behalf of Seller as lessee or sublessee under the Seller Real
Property Leases;
(g) Excluded Contracts. Any Contract which is not a Business
Contract, Business License or Personal Property Lease including each of
the Contracts set forth in Section 2.2(g) of the Disclosure Schedule;
(h) Taxes. Any rights to credits, refunds or offsets with
respect to any Taxes or estimated Taxes relating to the Assets or the
Business which Seller is required to pay hereunder;
(i) Employee Benefits. All assets relating to any Employee
Benefit Plan;
(j) Insurance Policies and Proceeds. All rights of Seller
under any insurance policies maintained by Seller on the Assets or the
Business, together with any proceeds for any pending claims or rebates
and refunds on premiums; and
-7-
(k) Other Matters. All rights of Seller under this Agreement
and any documents or other papers delivered to Seller by Buyer pursuant
to this Agreement (including the proceeds of the Purchase Price payable
in accordance with Article III).
Section 2.3 Assumed Liabilities. On the terms and subject to the
conditions set forth in this Agreement, Buyer agrees that, at the Closing, Buyer
shall assume and thereafter pay, perform or discharge when due or required to be
performed, as the case may be, the following liabilities or obligations of
Seller (the "Assumed Liabilities"):
(a) Obligations Under Personal Property Leases. All
liabilities or obligations of Seller under the Personal Property Leases
set forth in Section 2.3 of the Disclosure Schedule arising and to be
performed on or after the Closing Date; and
(b) Obligations Under Business Contracts and Business
Licenses. All liabilities or obligations of Seller under the Business
Contracts, and the Business Licenses, set forth in Section 2.3 of the
Disclosure Schedule arising and to be performed on or after the Closing
Date.
In the event of any claim against Buyer with respect to any of the Assumed
Liabilities hereunder, Buyer shall have, and Seller hereby assigns to Buyer, any
defense, counterclaim, or right of set-off which would have been available to
Seller if such claim had been asserted against Seller.
Section 2.4 Liabilities Not Assumed. Any provision of this Agreement to
the contrary notwithstanding (and without implication that Buyer is assuming any
liability or obligation not expressly excluded and, where applicable, without
implication that any of the following have been included in the Assumed
Liabilities), except as specifically set forth in Section 2.3 above, Seller
shall retain and discharge all its liabilities or obligations arising or alleged
to arise from, relating to, in connection with or resulting from the ownership
of the Assets by Parent, Seller or any other prior owner of any of the Assets
and each of their respective predecessors and Affiliates or the operation of the
Business by Parent, Seller, any other prior operator of the Business and each of
their respective predecessors and Affiliates, whether arising prior to, on or
after the Closing Date (the "Excluded Liabilities"), including, but not limited
to, the following:
(a) any liabilities or obligations for Taxes;
(b) any liabilities or obligations of Parent, Seller or any of
their Affiliates to any current or former officer, director, employee,
shareholder, agent, advisor, representative or Affiliate of Parent,
Seller or any of their Affiliates or any current or former officer,
director, employee, shareholder, agent, advisor, representative or
Affiliate of any of the foregoing;
(c) any liabilities or obligations arising out of or in
connection with any Employee Benefit Plan or any other employee benefit
plan, program or arrangement at any time maintained or contributed to
by Seller or any ERISA Affiliate or with respect to which Seller or any
ERISA Affiliate has any liability or potential liability;
-8-
(d) any liabilities or obligations for severance benefits for
employees of Parent, Seller or any of their Affiliates whose employment
with Parent, Seller or any of their Affiliates is terminated on, prior
to or after the Closing Date, or accrued vacation, sick pay or other
accrued employee benefits;
(e) any liabilities or obligations under or relating to any
plant closing or employee layoff activities by Parent, Seller or any of
their Affiliates that violate or require notification pursuant to, the
Worker Adjustment Retraining and Notification Act of 1988, as amended,
or any similar state or local plant closing or mass layoff statute,
rule or regulation;
(f) any liabilities or obligations (whether asserted before or
after Closing Date) for any breach of a representation, warranty, or
covenant, or for any claim for indemnification, contained in any
Personal Property Lease, Business Contract or Business License agreed
to be performed pursuant hereto by Buyer, to the extent that such
breach or claim arises out of or by virtue of Seller's performance or
nonperformance thereunder prior to the Closing Date, it being
understood that, as between the parties hereto, this subsection shall
apply notwithstanding any provision which may be contained in any form
of consent to the assignment of any such Personal Property Lease,
Business Contract or Business License which by its terms, imposes such
liabilities upon Buyer and which assignment is accepted by Buyer
notwithstanding the presence of such a provision, and that Seller's
failure to discharge any such liability shall entitle Buyer to
indemnification in accordance with the provisions of Article X (Buyer
shall provide notice to Seller of any claim against Buyer for any
liability or obligation described in this Section 2.4(f));
(g) any liabilities or obligations with respect to any
products or merchandise of the Business sold prior to the Closing Date
(including product warranty liabilities); it being understood and
agreed that any such liability or obligation asserted after the Closing
Date arising out of the sale of any product sold by Parent, Seller or
any of their Affiliates prior to the Closing Date shall be considered
to be a claim against or a liability or obligation of Seller and
therefore not assumed hereunder by Buyer;
(h) any liabilities or obligation relating to or arising out
of any Environmental, Health and Safety Requirements;
(i) any liabilities or obligations relating to the Excluded
Assets including any Contract which is not a Personal Property Lease,
Business Contract or Business License; and
(j) without limitation by the specific enumeration of the
foregoing, any liabilities or obligations not expressly assumed by
Buyer pursuant to the provisions of Section 2.3.
The assumption by Buyer of the Assumed Liabilities, and the transfer thereof by
Seller, shall in no way expand the rights or remedies of any third party against
Buyer or Seller or their respective officers, directors, employees, shareholders
and advisors as compared to the rights and remedies
-9-
which such third party would have had against such parties had Buyer not assumed
such liabilities or obligations. Without limiting the generality of the
preceding sentence, the assumption by Buyer of said liabilities or obligations
shall not create any third party beneficiary rights. Seller shall pay and
discharge when due, or contest in good faith, all of those liabilities or
obligations of Seller which Buyer has not specifically agreed to assume pursuant
to the provisions of Section 2.3.
ARTICLE III
PAYMENT OF PURCHASE PRICE
Section 3.1 Purchase Price of Assets.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, as consideration for the purchase of the Assets, Buyer
shall pay to Seller, as provided in Section 3.1(b) and Section 3.2
below, an amount (the "Purchase Price") equal to the Initial Purchase
Price Payment (as defined below) plus the Earnout Payments (as defined
below).
(b) On the Closing Date, Buyer shall pay to Seller, by wire
transfer of immediately available funds, an amount (the "Initial
Purchase Price Payment") equal to $3,750,000.
Section 3.2 Earnout Payments.
(a) In addition to the Initial Purchase Price Payment set
forth in Section 3.1(b) above, Buyer shall pay to Seller earnout
payments (each, an "Earnout Payment") based upon the achievement by
Buyer of certain Net Sales (as defined below) of Seller's Products (as
defined below) during each Earnout Period (as defined below), as
follows:
(i) in the event the Net Sales during such Earnout
Period shall equal or exceed $2,250,000, the Earnout Payment
for such Earnout Period shall be $125,000; or
(ii) in the event the Net Sales during such Earnout
Period shall be less than $2,250,000, the Earnout Payment for
such Earnout Period shall be $0.
(b) For the purposes of this Section 3.2:
(i) "Net Sales" shall mean, for each Earnout Period,
the net sales by Buyer of Seller's Products during such
Earnout Period, as determined from the books and records of
Buyer.
(ii) "Earnout Period" shall mean each six-month
period ended June 30, 2001, September 30, 2001, December 31,
2001, March 31, 2002, June 30, 2002, September 30, 2002,
December 31, 2002 and March 31, 2003.
-10-
(iii) "Seller's Products" shall mean those products
set forth on Section 3.2(b)(iii) of the Disclosure Schedule,
together with any product which is substantially the same as,
and was derived directly from, any of the products set forth
on Section 3.2(b)(iii) of the Disclosure Schedule.
(c) With respect to each Earnout Payment, Buyer shall pay to
Seller, by wire transfer of immediately available funds, each such
Earnout Payment (if any) within 30 days after the end of each such
Earnout Period.
(d) Notwithstanding the foregoing, the aggregate amount of all
Earnout Payments shall not exceed $1,000,000.
Section 3.3 Allocation. Buyer and Seller shall each duly and timely
complete and attach IRS Form 8594 to their respective federal Income Tax returns
for their respective tax years in which the sale contemplated hereunder occurs
with an allocation of the Purchase Price in accordance with Exhibit A (which
shall be prepared jointly by Seller and Buyer in good faith prior to the Closing
and attached to this Agreement at the Closing). Buyer and Seller shall adhere to
such allocation for all Tax and financial accounting purposes.
ARTICLE IV
CLOSING
Section 4.1 Closing. The Closing (the "Closing") of the sale and
purchase of the Assets shall take place on the date of the execution of this
Agreement (the "Closing Date"). The Closing shall take place at the offices of
Xxxxxxxx & Xxxxx, in New York, New York, at a mutually agreeable time. The
transaction shall be deemed to have occurred at 11:59 p.m. on the Closing Date.
Section 4.2 Closing Costs. The Party responsible under applicable law
shall pay any sales, excise, transfer, property or other Taxes with respect to
the sale or transfer of the Assets and the assumption of the Assumed
Liabilities. To the extent neither Party is responsible under applicable law,
Buyer and Seller shall each pay one-half of any such Taxes.
Section 4.3 Prorations. Seller shall pay at or prior to the Closing
such amounts as may be necessary to release any Lien on any of the Assets
existing prior to the Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER
Section 5.1 Representations and Warranties Concerning Parent. Parent
represents and warrants to Buyer that the statements contained in this Section
5.1 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 5.1).
-11-
(a) Organization. Parent is a corporation organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite power and authority to conduct its
business as it is presently being conducted and to own and lease its
properties and assets.
(b) Authorization; Validity and Execution of Agreement. Parent
has the full legal right, capacity and power and has all requisite
corporate authority and approval required to enter into, execute and
deliver this Agreement and to perform fully its obligations hereunder
and to consummate the transactions contemplated hereby. The execution
and delivery by Parent of this Agreement and the performance of its
obligations hereunder and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the board
of directors of Parent and no other corporate action on the part of
Parent is required. This Agreement has been duly executed and delivered
by Parent and constitutes the valid and binding obligation of Parent
enforceable against Parent in accordance with its terms.
(c) Noncontravention; Consents. Neither the execution and
delivery of this Agreement nor the performance by Parent of its
obligations under this Agreement and the consummation of the
transactions contemplated hereby will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, or other restriction
of any Governmental or Regulatory Authority to which Parent is subject;
(ii) violate any provision of the charter or bylaws of Parent; or (iii)
conflict with, result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, result in or give to any Person any
additional rights or entitlement to increased, additional, accelerated
or guaranteed payments under, or require any notice under any Contract
or License to which Parent is a party or by which it is bound or to
which any of its assets is subject (or result in the creation or
imposition of any Lien upon any of its assets), except where the
violation, conflict, breach, default, acceleration, termination,
modification, cancellation, failure to give notice, or Lien would not
have a material adverse effect on the ability of Parent to consummate
the transactions contemplated by this Agreement. Except as set forth in
Section 5.1(c) of the Disclosure Schedule, Parent does not need to
obtain any authorization, consent, or approval of, or make any
declaration, filing or registration with, any Governmental or
Regulatory Agency or any other Person in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby.
(d) Brokers' Fees. Parent does not have and will not have any
liability or will not otherwise suffer or incur any loss as a result of
or in connection with any brokerage or finder's fee or other commission
of any Person retained by or on behalf of Parent in connection with any
of the transactions contemplated by this Agreement.
Section 5.2 Representations and Warranties Concerning Seller. Parent
and Seller, jointly and severally, represent and warrant to Buyer that the
statements contained in this Section 5.2 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 5.2).
-12-
(a) Organization and Qualification. Seller is a corporation
duly organized, validly existing, and in good standing under the laws
of the jurisdiction of its incorporation. Seller is duly authorized to
conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required, except where the
lack of such qualification would not have a material adverse effect on
the business, condition (financial or otherwise), operations, results
of operations, or future prospects of Seller (a "Material Adverse
Effect"). Section 5.2(a) of the Disclosure Schedule lists the
jurisdiction of Seller's incorporation and each jurisdiction in which
Seller is qualified to do business. Seller has full corporate power and
authority to (i) own, lease and operate its properties and assets as
they are now owned, leased and operated and (ii) carry on its business
as now presently conducted and as proposed to be conducted. Seller has
delivered to Buyer true and complete copies of the charter and bylaws
of Seller as in effect on the date of this Agreement.
(b) Authorization; Validity and Execution of Agreement. Seller
has the full legal right, capacity and power and has all requisite
corporate authority and approval required to enter into, execute and
deliver this Agreement and to perform fully its obligations hereunder
and to consummate the transactions contemplated hereby. The execution
and delivery by Seller of this Agreement and the performance of its
obligations hereunder and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the
shareholders and the board of directors of Seller and no other
corporate action on the part of Seller is required. This Agreement has
been duly executed and delivered by Seller and constitutes the valid
and binding obligation of Seller enforceable against Seller in
accordance with its terms.
(c) Noncontravention; Consents. Neither the execution and
delivery of this Agreement nor the performance by Seller of its
obligations under this Agreement and the consummation of the
transactions contemplated hereby will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, or other restriction
of any Governmental or Regulatory Authority to which Seller is subject;
(ii) violate any provision of the charter or bylaws of Seller; or (iii)
conflict with, result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, result in or give to any Person any
additional rights or entitlement to increased, additional, accelerated
or guaranteed payments under, or require any notice under any Contract
or License to which Seller is a party or by which it is bound or to
which any of its assets is subject (or result in the creation or
imposition of any Lien upon any of its assets), except where the
violation, conflict, breach, default, acceleration, termination,
modification, cancellation, failure to give notice, or Lien would not
have a Material Adverse Effect or on the ability of the Parties to
consummate the transactions contemplated by this Agreement. Except as
set forth in Section 5.2(c) of the Disclosure Schedule, Seller does not
need to obtain any authorization, consent, or approval of, or make any
declaration, filing or registration with, any Governmental or
Regulatory Agency or any other Person in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby including the sale of the Assets and
the assignment of any Business Contract or Business License.
-13-
(d) Brokers' Fees. Seller does not have and will not have any
liability or will not otherwise suffer or incur any loss as a result of
or in connection with any brokerage or finder's fee or other commission
of any Person retained by or on behalf of Seller in connection with any
of the transactions contemplated by this Agreement.
(e) Title to Assets; Sufficiency. Seller has good and
marketable title to, or a valid leasehold interest in, the Assets free
and clear of all Liens. The Assets, together with the property subject
to the Personal Property Leases, constitute all of the assets necessary
to conduct the business of Seller in accordance with past practices as
of November 30, 2000 and as of the date hereof.
(f) Subsidiaries. Seller does not own, directly or indirectly,
any capital stock of, or any other interest in, any other Person.
(g) Financial Statements.
(i) The unaudited balance sheets of Seller as of
December 31, 1999 and December 31, 1998 and the related
audited consolidated statements of income for the years then
ended, correct and complete copies of which are attached
hereto as Exhibit B, have been prepared from the books and
records of Seller and present fairly the financial position of
Seller as of such dates and its results of operations for the
years then ended, in each case, in accordance with GAAP
consistently applied for the periods covered thereby, except
for the absence of footnote disclosure generally required
pursuant to GAAP(the "Year End Financial Statements").
(ii) The unaudited balance sheet of Seller as of
November 30, 2000 (the "Interim Balance Sheet") and the
related unaudited consolidated statements of income for the
eleven-month period then ended, correct and complete copies of
which are attached hereto as Exhibit C, have been prepared
from the books and records of Seller and present fairly the
financial position of Seller as of such date and its results
of operations for such period, in each case, in accordance
with GAAP consistently applied for the eleven-month period
covered thereby, except for the absence of footnote disclosure
generally required pursuant to GAAP(the "Interim Financial
Statements" and, together with the Year End Financial
Statements, the "Financial Statements").
(h) Events Subsequent to December 31, 1999. Since December 31,
1999, (i) there has been no material adverse change in the assets,
properties, business, operations, income or condition (financial or
otherwise) of Seller, nor is any such change threatened; except to the
extent any such change results from or is attributable to changes
generally affecting the industry in which Seller operates (provided
that such changes do not affect Seller in a materially disproportionate
manner) (ii) there have been no events or developments which,
individually or together with other such events or developments, could
reasonably be expected to result in a Material Adverse Effect except to
the extent any such events or developments result from or are
attributable to events or developments generally affecting the industry
in which Seller operates (provided that such events or developments
-14-
do not affect Seller in a materially disproportionate manner); and
(iii) there have been no damages, destructions or losses, individually
or in the aggregate, which could have a Material Adverse Effect,
whether or not covered by insurance. Without limiting the generality of
the foregoing, since December 31, 1999 Seller has not:
(i) sold, leased, transferred, or assigned any
material assets, tangible or intangible (including any
Proprietary Rights), outside the Ordinary Course of Business;
(ii) (nor has any other party thereto) accelerated,
terminated, made material modifications to, or canceled any
material Contract or License to which Seller is a party or by
which Seller is bound;
(iii) operated the Seller's business other than in
the Ordinary Course of Business including engaged in any
activity which has resulted in any acceleration or delay of
the collection of its accounts or notes receivable or any
delay in the payment of its accounts payable;
(iv) granted any license or sublicense of any
material rights under, allowed to lapse, disposed of or
otherwise experienced any material adverse change with respect
to any Proprietary Rights;
(v) experienced any material damage, destruction, or
loss (whether or not covered by insurance) to its assets or
its properties;
(vi) made or been subject to any change in its
accounting practices, procedures or methods or in its cash
management practices;
(vii) entered into any other transaction involving or
development affecting Seller outside the Ordinary Course of
Business; or
(viii) committed to do any of the foregoing.
(i) Legal Compliance. Seller has materially complied and is in
material compliance with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, grievance,
proceeding, hearing, investigation, charge, complaint, claim, demand,
or notice has been filed, commenced or, to the Knowledge of Seller,
threatened against Seller alleging any failure so to comply.
(j) Tax Matters.
(i) There is no material dispute or claim concerning
any Tax liability of Seller either (A) claimed or raised by
any authority in writing or (B) as to which Seller has
Knowledge;
-15-
(ii) Seller has not waived any statute of limitations
in respect of Taxes or agreed to any extensions of time with
respect to any Tax assessment or deficiency;
(iii) There are no Security Interests on any assets
or properties of Seller that arose in connection with any
failure (or alleged failure) to pay any Tax;
(iv) No claim has been made with respect to any
taxable year of Seller for which the applicable statute of
limitations has not yet expired by a taxing authority in a
jurisdiction where Seller does not pay Taxes or file Tax
Returns that Seller is or may be subject to Taxes assessed by
such jurisdiction; and
(v) Seller is a United States person as defined in
Code Section 7701(a)(30).
(k) Intangible Property.
(i) Seller has not interfered with, infringed upon,
misappropriated, or violated any Proprietary Rights of any
Person, Seller has no Knowledge of any facts that indicate a
likelihood of any of the foregoing, and Seller has not ever
received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement,
misappropriation, or violation (including any offers to
license or demands that Seller refrain from using any
Proprietary Rights of any Person). To the Knowledge of Seller,
no third party has interfered with, infringed upon,
misappropriated, or violated any material Proprietary Rights
of Seller, and Seller has no Knowledge of any facts that
indicate a likelihood of the foregoing.
(ii) All of the Proprietary Rights owned or used by
Seller are valid and enforceable and, to the Knowledge of
Seller, none of the Proprietary Rights owned or used by Seller
has been misused. No claim by any Person contesting the
validity, enforceability, use or ownership of any of the
Proprietary Rights owned or used by Seller has been made, is
currently outstanding or, to the Knowledge of Seller, is
threatened, and there are no grounds for the same.
(iii) Section 5.2(k)(iii) of the Disclosure Schedule
identifies each patent or registration which has been issued
to Seller with respect to any Proprietary Rights, identifies
each pending patent application or application for
registration which Seller has made with respect to any
Proprietary Rights, and identifies each Contract or other
permission which Seller has granted to any Person with respect
to or that affects Seller's ability to use or disclose any
Proprietary Rights (together with any exceptions) of Seller.
The Seller has delivered to Buyer correct and complete copies
of all such patents, registrations, applications, Contracts
and permissions (as amended to date). Section 5.2(k)(iii) of
the Disclosure Schedule also identifies each trade name or
unregistered trademark used by Seller.
-16-
(iv) Section 5.2(k)(iv) of the Disclosure Schedule
identifies each item of Proprietary Rights that any Person
owns and that Seller uses pursuant to any Contract or other
permission or that affects Seller's ability to use or disclose
any Proprietary Rights of a third party (excluding software
licensed pursuant to shrink-wrap agreements for a total cost
of less than $10,000 in the aggregate). Seller has delivered
to Buyer correct and complete copies of all such Contracts and
permissions (as amended to date).
(v) With respect to each item of Proprietary Rights
required to be identified in Section 5.2(k)(iii) or Section
5.2(k)(iv) of the Disclosure Schedule:
(A) the Contract or permission covering the
item is legal, valid, binding, enforceable, and in
full force and effect;
(B) no party to the Contract or permission
is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a
breach or default or permit termination,
modification, or acceleration thereunder;
(C) no party to the Contract or permission
has repudiated any provision thereof; and
(D) Seller has not granted any sublicense or
similar right with respect to the Contract or
permission.
(vi) Seller owns or has a Contract to use all
Proprietary Rights necessary for the operation of its business
as currently conducted. The Proprietary Rights owned or used
by Seller are not subject to any Liens.
(l) Tangible Assets. The machinery, equipment, motor vehicles
and other tangible assets (including the patterns described in Section
5.2(l) of the Disclosure Schedule) that Seller owns and leases, have
been maintained in the Ordinary Course of Business and such tangible
assets as are necessary for normal operation of business in the
ordinary course (and, without limiting the foregoing, all such
patterns) are free from defects (patent and latent), and are in good
operating condition and repair (subject to normal wear and tear).
Section 5.2(l) of the Disclosure Schedule is a complete list of all
patterns used in the production of any Seller's Product and, in each
case, sets forth the location of such pattern.
(m) Inventory.
(i) The Inventory of Seller consists of raw
materials, work in process, and finished goods, all of which
(A) is valued in the books and records and financial
statements of the Seller on a lower-of-cost-or-market basis
applying a first-in-first-out convention, and (B) is or was,
prior to the sale thereof, in good condition, suitable and
usable or salable (at not less than its book value determined
in the manner described in clause (A) above) in the Ordinary
Course of Business, subject
-17-
only to the reserve for inventory write-down reflected on the
Interim Balance Sheet, as adjusted for the passage of time
through the Closing Date in accordance with past custom and
practice.
(ii) Those items of Inventory that are obsolete (as
defined below) have an aggregate book value (determined in the
manner described in clause (i)(A) above) that does not exceed
$200,000. Those items of Inventory that are slow-moving (as
defined below), including those items that are obsolete (as
defined below), have an aggregate book value (determined in
the manner described in clause (i)(A) above) that does not
exceed $600,000. For purposes of this Section 5.2(m), items of
Inventory are "obsolete" to the extent they exist in a
quantity that is greater than 5 years' usage of items of that
type, and items of Inventory are "slow-moving" to the extent
they exist in a quantity that is greater than 4 years' usage
of items of that type, in each case with "usage" determined by
reference to quantities consumed or sold the period beginning
on January 1, 2001, and ending on May 25, 2002.
(n) Contracts, Licenses and Personal Property Leases. Seller
has delivered to Buyer a correct and complete copy of each written
Business Contract, Business License and Personal Property Lease listed
in Section 2.3 of the Disclosure Schedule and a written summary setting
forth the material terms and conditions of each oral agreement referred
to in Section 2.3 of the Disclosure Schedule. With respect to each such
Business Contract, Business License and Personal Property Lease: (i)
the Business Contract, Business License or Personal Property Lease was
entered into in the Ordinary Course of Business; (ii) the Business
Contract, Business License or Personal Property Lease is legal, valid,
binding, enforceable, and in full force and effect and will continue to
be so following the Closing; (iii) Seller is not and, to the Knowledge
of Seller, no other party is, in breach or default, and, to the
Knowledge of Seller, no event has occurred which with notice or lapse
of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the Business Contract, Business
License or Personal Property Lease; and (iv) no party has repudiated
any provision of the Business Contract, Business License or Personal
Property Lease. Except as set forth in Section 2.3 of the Disclosure
Schedule, there are no Contracts with any Person to distribute the
products manufactured or sold by Seller. Without limiting the
foregoing, each order that is part of Seller's backlog is for the sale
of Seller's Products at a price established in conformity with Seller's
normal pricing policies.
(o) Accounts Receivable. All Accounts Receivable of Seller are
reflected properly on its books and records (including the Interim
Balance Sheet), are valid receivables subject to no setoffs or
counterclaims, are, to the Knowledge of Seller, collectible, subject
only to the reserve for bad debts set forth on the face of the Interim
Balance Sheet (rather than in any notes thereto, if any), as adjusted
for operations and transactions through the Closing Date in accordance
with the past custom and practice of Seller.
(p) Litigation. Seller is not (i) subject to any outstanding
injunction, judgment, order, decree, ruling, settlement, claim or
charge or (ii) a party, or, to the Knowledge of Seller, threatened to
be made a party, to any action, suit, proceeding, hearing,
-18-
or investigation of, in, or before any Governmental or Regulatory
Authority or before any arbitrator.
(q) Product Warranty. All of the products manufactured, sold,
leased, or delivered by Seller have conformed with all applicable
contractual commitments and all express and implied warranties, and
Seller has no liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to
become due) (i) arising out of any injury to individuals or property as
a result of the ownership, possession, or use of any product
manufactured, sold, leased, or delivered by Seller or (ii) for
replacement or repair thereof or other damages in connection therewith,
subject only to the reserve for product warranty claims set forth on
the face of the Interim Balance Sheet (rather than in any notes
thereto) as adjusted for operations and transactions through the date
hereof in accordance with past custom and practice of Seller. All of
the products manufactured, sold, leased, and delivered by Seller are
subject to standard terms and conditions of sale or lease. Section
5.2(q) of the Disclosure Schedule includes copies of the standard terms
and conditions of sale or lease for Seller (containing applicable
guaranty, warranty, and indemnity provisions).
(r) Employees. Except as set forth in Section 5.2(r) of the
Disclosure Schedule, Seller is not a party to or bound by any
collective bargaining Contract, nor has Seller experienced any strike,
work stoppage or claim of unfair labor practices, material grievance,
or other collective bargaining dispute within the past three years.
Seller has not committed any unfair labor practice. To the Knowledge of
Seller, no organizational or decertification effort is presently being
made or threatened by, on behalf of or against any labor union with
respect to any employee of Seller. Seller has not engaged in any plant
closing or employee layoff activities that would violate or require
notification pursuant to the Worker Adjustment Retraining and
Notification Act of 1988, as amended, or any similar state or local
plant closing or mass layoff statute, rule or regulation. Seller has
satisfied any notice or bargaining obligation it may have under any law
or collective bargaining agreement to any employee representative with
respect to the transactions contemplated by this Agreement. Except as
set forth in Section 5.2(r) of the Disclosure Schedule, no employment
or labor related claim has been brought during the last five years
against Seller before any Governmental or Regulatory Authority and, to
the Knowledge of Seller, no such claim has been threatened.
(s) Environmental, Health, and Safety Matters. To the
Knowledge of Seller, with respect to the Business, the Assets, and the
Real Property, has materially complied and is in material compliance
with all Environmental, Health, and Safety Requirements, including all
Licenses that are required pursuant to Environmental, Health, and
Safety Requirements for the occupation of the Real Property and the
operation of the Business. To the Knowledge of Seller, Seller has not,
with respect to the Business, the Assets, or the Real Property,
received any notice, report or other information regarding any actual
or alleged violation of Environmental, Health, and Safety Requirements,
or any liabilities or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) arising under Environmental,
Health, and Safety Requirements. Seller has not
-19-
treated, stored, disposed of, arranged for or permitted the disposal
of, transported, handled, or released any substance, including any
hazardous substance, or owned or operated any property or facility (and
no such property or facility, including the Real Property, is
contaminated by any such substance) in a manner that has given rise to
or would give rise to liabilities under Environmental, Health, and
Safety Requirements, including any liability for response costs,
corrective action costs, personal injury, property damage, natural
resource damages or attorney fees, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA") or the Solid Waste Disposal Act, as amended
("SWDA"). Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any
obligations for site investigation or cleanup, or notification to or
consent of government agencies or third parties, pursuant to any of the
so-called "transaction-triggered" or "responsible property transfer"
Environmental, Health, and Safety Requirements. No facts, events or
conditions relating to the Assets, the Real Property, or the past or
present facilities, properties or operations of Seller or the Business
or any predecessor or Affiliate of Seller would prevent, hinder or
limit continued compliance with Environmental, Health, and Safety
Requirements, give rise to any investigatory, remedial or corrective
obligations pursuant to Environmental, Health, and Safety Requirements,
or give rise to any other liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to Environmental,
Health, and Safety Requirements. Seller has provided to Buyer copies of
all material environmental reports, audits, assessments, and
investigations, and any other material environmental documents, related
to the Assets, the Real Property, or any past or present facilities,
properties or operations of the Business, to the extent the forgoing
are in the possession, custody, or control of Seller or Parent.
(t) Transaction With Affiliates. None of Seller's
shareholders, directors, officers or employees nor any of their
respective relatives or Affiliates is involved in any material business
arrangement or relationship with Seller (whether written or oral), and
none of Seller's shareholders, directors, officers or employees nor any
of their respective relatives or Affiliates own any material property
or right, tangible or intangible, which is used by Seller.
(u) Substantial Customers and Suppliers. Section 5.2(u) of the
Disclosure Schedule lists the fifteen (15) largest customers of Seller
on the basis of revenues for goods sold or services provided for (i)
the 12-month period ended December 31, 1999 and (ii) the eleven-month
period ended November 30, 2000. Section 5.2(u) of the Disclosure
Schedule lists the fifteen (15) largest suppliers of Seller, on the
basis of cost of goods or services purchased for (i) the 12-month
period ended December 31, 1999 and (ii) the eleven-month period ended
November 30, 2000. Except as set forth on Section 5.2(u) of the
Disclosure Schedule, no such customer or supplier has ceased or
materially reduced its purchases from, use of the services of, sales
to, or provision of services to, Seller since December 31, 1999, or to
the Knowledge of Seller, has threatened to cease or materially reduce
such purchases, use, sales or provision of services since such date.
(v) Undisclosed Liabilities. Seller does not have any material
liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent,
-20-
whether accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due, including any liability for Taxes),
except for (i) liabilities set forth on the face of the Interim Balance
Sheet (rather than in any notes thereto) and (ii) liabilities which
have arisen after November 30, 2000 in the Ordinary Course of Business,
none of which is a liability resulting from, arising out of, relating
to, in the nature of or caused by any breach of contract, breach of
warranty, tort, infringement, claim or lawsuit.
(w) Insurance. Section 5.2(w) of the Disclosure Schedule sets
forth each insurance policy (including policies providing property,
casualty, liability, directors' and officers', and workers'
compensation coverage and bond and surety arrangements) with respect to
which Seller is a party, a named insured, or otherwise the beneficiary
of coverage. With respect to each such insurance policy: (i) the policy
is legal, valid, binding, enforceable, and in full force and effect in
all material respects; (ii) neither Seller, nor to the Knowledge of
Seller, any other party to the policy is in material breach or default
(including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of
time, would constitute such a material breach or default, or permit
termination, modification, or acceleration, under the policy; and (iii)
no party to the policy has repudiated any material provision thereof.
Section 5.2(w) of the Disclosure Schedule describes any material
self-insurance arrangements affecting Seller. The insurance coverage
provided by such policies will not terminate or lapse by reason of the
transactions contemplated by this Agreement. Such insurance policies
are placed with financially sound and reputable insurers and, in light
of the respective business, operations, assets and properties of
Seller, are in amounts and have coverages that are reasonable and
customary for Persons engaged in such businesses and operations and
having such assets and properties. All known claims, if any, made
against Seller that are covered by insurance have been disclosed to and
accepted by the appropriate insurance companies and are being defended
by such appropriate insurance companies and are described in Section
5.2(w) of the Disclosure Schedule and no claims have been denied
coverage during the last three (3) years.
(x) Disclosure. The representations and warranties of Seller
contained in this Agreement (including the Disclosure Schedule and any
certificate or other writing provided to Buyer pursuant to any
provision of this Agreement) do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements and information contained herein not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Parent and Seller as follows:
Section 6.1 Organization of Buyer. Buyer is a corporation organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite power and authority to conduct its business
as it is presently being conducted and to own and lease its properties and
assets.
-21-
Section 6.2 Authorization; Validity and Execution of Agreement. Buyer
has the full legal right, capacity and power and has all requisite corporate
authority and approval required to enter into, execute and deliver this
Agreement and to perform fully its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery by Buyer of this
Agreement and the performance of its obligations hereunder and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
the board of directors of Buyer and no other corporate action on the part of
Buyer is required. This Agreement has been duly executed and delivered by Buyer
and constitutes the valid and binding obligation of Buyer enforceable against
Buyer in accordance with its terms.
Section 6.3 Noncontravention; Consents. Neither the execution and
delivery of this Agreement nor the performance by Buyer of its obligations under
this Agreement and the consummation of the transactions contemplated hereby will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
or other restriction of any Governmental or Regulatory Authority to which Buyer
is subject, which violation would have a material adverse effect on Buyer's
ability to consummate the transactions contemplated hereby; (ii) violate any
provision of the charter or bylaws of Buyer; or (iii) conflict with, result in a
violation or breach of, constitute (with or without notice or lapse of time or
both) a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, result in or give to any
Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or require any notice under any
Contract or License to which Buyer is a party or by which it is bound or to
which any of its assets is subject (or result in the creation or imposition of
any Lien upon any of its assets), except where the violation, conflict, breach,
default, acceleration, termination, modification, cancellation, failure to give
notice, or Lien would not have a material adverse effect on the ability of Buyer
to consummate the transactions contemplated by this Agreement. Except as set
forth in Schedule 6.3, Buyer does not need to obtain any authorization, consent,
or approval of, or make any declaration, filing or registration with, any
Governmental or Regulatory Agency or any other Person in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby.
Section 6.4 Brokers' Fees. Buyer does not have and will not have any
liability or will not otherwise suffer or incur any loss as a result of or in
connection with any brokerage or finder's fee or other commission of any Person
retained by or on behalf of Buyer in connection with any of the transactions
contemplated by this Agreement.
Section 6.5 Financial Statements.
(a) The (i) audited balance sheet of Buyer as of May 29, 1999
and the related audited consolidated statement of income for the 36-day
period then ended, including the footnotes thereto, and (ii) audited
balance sheet of Buyer as of May 27, 2000 and the related audited
consolidated statement of income for the 12-month period then ended,
including the footnotes thereto, correct and complete copies of which
are attached hereto as Exhibit D, have been prepared from the books and
records of Buyer and present fairly the financial position of Buyer as
of such dates and its results of operations for such periods, in each
case, in accordance with GAAP consistently applied for the periods
covered thereby (the "Buyer's Audited Financial Statements").
-22-
(b) The unaudited balance sheet of Buyer as of November 25,
2000 and the related unaudited consolidated statement of income for the
six-month period then ended, correct and complete copies of which are
attached hereto as Exhibit E, have been prepared from the books and
records of Buyer and present fairly the financial position of Buyer as
of such date and its results of operations for such period, in
accordance with GAAP consistently applied for the six-month period
covered thereby, except for the absence of footnote disclosure
generally required pursuant to GAAP (the "Buyer's Interim Financial
Statements" and, together with the Buyer Audited Financial Statements,
the "Buyer's Financial Statements").
ARTICLE VII
CONDITIONS TO PARENT AND SELLER'S OBLIGATIONS
The obligation of Parent and Seller to enter into and complete the
Closing as provided hereby are subject to the satisfaction, on or prior to the
Closing Date, of each of the following conditions (all or any of which may be
waived in whole or in part by Parent or Seller in its or their sole discretion):
Section 7.1 Representations, Warranties and Covenants. All
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects, except for any such representations
or warranties which are qualified by materiality or Material Adverse Effect
which shall be true and correct in all respects, when made and on and as of the
Closing Date as if such representations and warranties were made on and as of
the Closing Date, and Buyer shall have performed in all material respects all
agreements and covenants required hereby to be performed by it prior to or at
the Closing Date.
Section 7.2 Consents and Approvals. All consents, permits, approvals
and waivers from any Person (including any Governmental or Regulatory Authority)
set forth on any Schedule hereto, and any other consent, permit or approval that
may be required in connection with the performance by Buyer of its obligations
under this Agreement or the consummation of the transactions contemplated
hereunder shall have been obtained.
Section 7.3 No Injunction. No injunction, stay or restraining order
shall be in effect prohibiting the consummation of the transactions contemplated
by this Agreement.
Section 7.4 Payments. Buyer shall have tendered the Initial Purchase
Price Payment to Seller in accordance with Section 3.1(b).
Section 7.5 Documents to be Delivered by Buyer. At the Closing, Buyer
shall have delivered to Parent and Seller the following documents, in each case
duly executed or otherwise in proper form:
(a) Compliance Certificate. A certificate signed by the
president or any vice president of Buyer as to the matters set forth in
Section 7.1.
-23-
(b) Consents and Approvals. Material consents, if any, of
third parties necessary for the Buyer to execute, deliver and perform
this Agreement.
(c) Transition Services Agreement. The Transition Services
Agreement (the "Transition Services Agreement") in the form of Exhibit
F attached hereto.
(d) Conveyancing Documents. The Assignment and Assumption
Agreement (the "Assignment and Assumption Agreement") in the form of
Exhibit G attached hereto.
(e) Other Documents. All other documents, instruments or
writings required to be delivered to Parent or Seller at or prior to
the Closing pursuant to this Agreement and such other certificates of
authority and documents as Parent or Seller may reasonably request.
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to enter into and complete the Closing as
provided hereby are subject to the satisfaction, on or prior to the Closing
Date, of each of the following conditions (all or any of which may be waived in
whole or in part by Buyer in its sole discretion):
Section 8.1 Representations, Warranties and Covenants. All
representations and warranties of Parent and Seller contained in this Agreement
shall be true and correct in all material respects, except for any such
representations or warranties which are qualified by materiality or Material
Adverse Effect which shall be true and correct in all respects, when made and,
except as contemplated by this Agreement, on and as of the Closing Date as if
such representations and warranties were made on and as of the Closing Date, and
Parent and Seller shall have performed all agreements and covenants required
hereby to be performed by any of them prior to or at the Closing Date.
Section 8.2 Consents and Approvals. All consents, permits, approvals
and waivers from any Person (including any Governmental or Regulatory Authority)
set forth on any Section of the Disclosure Schedule, and any other consent,
permit or approval that may be required in connection with the performance by
Parent and Seller of their obligations under this Agreement or the consummation
of the transactions contemplated hereunder shall have been obtained.
Section 8.3 No Injunction. No injunction, stay or restraining order
shall be in effect prohibiting the consummation of the transactions contemplated
by this Agreement.
Section 8.4 Documents to be Delivered by Parent and Seller. At the
Closing, Parent and Seller shall have delivered to Buyer the following
documents, in each case duly executed or otherwise in proper form:
-24-
(a) Parent Compliance Certificate. A certificate signed by the
president or any vice president of Parent as to the matters set forth
in Section 8.1.
(b) Seller Compliance Certificate. A certificate signed by the
chief executive officer or any vice president of Seller as to the
matters set forth in Section 8.1.
(c) Consents and Approvals. Consents, if any, of any Persons
necessary for each of Parent and Seller to execute, deliver and perform
this Agreement and the transaction contemplated hereby.
(d) Releases. Fully executed UCC-3 Termination Statements and
other terminations and/or releases necessary to terminate or release
all Security Interests in, and Liens on, any of the Assets (other than
in respect of Taxes not yet due and payable).
(e) Transition Services Agreement. The Transition Services
Agreement.
(f) Conveyancing Documents. The Assignment and Assumption
Agreement and the Xxxx of Sale (the "Xxxx of Sale") in the form of
Exhibit H attached hereto.
(g) Opinion of Counsel. A written opinion of Wallace, Bauman,
Legon, Fodiman, Xxxxx & Xxxxxxx, P. A., counsel to Seller, dated as of
the Closing Date, addressed to Buyer, substantially in the form of
Exhibit I attached hereto.
(h) Other Documents. All other documents, instruments or
writings required to be delivered to Buyer at or prior to the Closing
pursuant to this Agreement and such other certificates of authority and
documents as Buyer may reasonably request.
ARTICLE IX
POST-CLOSING COVENANTS
Section 9.1 Further Assurances. On and after the Closing Date, Parent,
Seller and Buyer will take all appropriate action and execute (or cause to be
executed) all documents, instruments or conveyances of any kind which may be
reasonably necessary or advisable to carry out any of the provisions hereof.
Section 9.2 Tax Matters. Parent and Seller shall be responsible for the
payment of any Taxes (including Taxes payable as a result of the disallowance of
any deduction) that may be imposed on Seller. Buyer shall be responsible for the
payment of any Taxes (including Taxes payable as a result of the disallowance of
any deduction) that may be imposed on Buyer.
Section 9.3 Confidentiality. Parent and Seller will and will cause each
of their respective employees, officers, directors, agents and advisors
(collectively, "Representatives") to, treat and hold as such all of the
Confidential Seller Information (as defined below), refrain from using any of
the Confidential Seller Information except in connection with this Agreement,
and deliver to Buyer at Closing or upon the termination of the Transition
Services Agreement (to the
-25-
extent retaining such information is necessary for Seller to perform its
obligations under the Transition Services Agreement), all tangible embodiments
(and all copies) of the Confidential Seller Information which are in their
possession. In the event that either Parent, Seller or any of their
Representatives is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential Seller
Information, Parent, Seller or such Representative, as applicable, will notify
Buyer promptly of the request or requirement so that Buyer may seek an
appropriate protective order or waive compliance with the provisions of this
Section 9.3. If, in the absence of a protective order or the receipt of a waiver
hereunder, either Parent, Seller or any of their Representatives is, on the
advice of counsel, compelled to disclose any Confidential Seller Information to
any tribunal, as applicable, or else stand liable for contempt, Parent, Seller
or such Representative, as applicable, may disclose the Confidential Seller
Information to the tribunal; provided, that Parent, Seller or such
Representative shall use its best efforts to obtain, at the reasonable request
of Buyer, an order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Seller Information required to be
disclosed as Buyer shall designate.
Section 9.4 Non-Competition; Non-Interference; Non-Solicitation. As a
significant inducement to Buyer to enter into and perform its obligations under
this Agreement, each of Parent and Seller hereby agrees as follows:
(a) Covenant Against Competition. Each of Parent and Seller
acknowledge that (i) the principal business of Seller is the Business;
(ii) Seller is one of a limited number of Persons who have developed
the Business; (iii) the Business is, in part, national and
international in scope; (iv) Parent's ownership of Seller has given and
will continue to give Parent access to the confidential and business
affairs and proprietary information of Seller not readily available to
the public (including Seller's technology, methods of doing business
and supplier and customer information) (collectively, "Confidential
Seller Information"); (v) such information is the property of Seller
and that the continued success of Seller depends in large part on
keeping this information from becoming known to its competitors; (vi)
the agreements and covenants of each of Parent and Seller contained in
this Section 9.4 are essential to the business and goodwill of Buyer
and Seller; and Buyer would not have entered into this Agreement and
purchased the Assets but for the covenants and agreements set forth in
this Section 9.4. Accordingly, each of Parent and Seller covenants and
agrees that:
(i) During the period commencing on the Closing Date
and ending 5 years following the Closing Date (the "Restricted
Period"), neither Parent, Seller or any of their Subsidiaries
or Affiliates (but excluding any individual who is not
employed by any of the foregoing) (each, a "Restricted
Person") shall (A) directly or indirectly, own, operate,
manage, control, participate in, consult with, advise, permit
its or his name to be used by, provide services for, lease, or
in any manner engage in (including by its or himself, in
association with any Person, or through any Person) any
business that manufactures or sells any products or provides
any services which may be used as substitutes for or are
otherwise in competition with any products or services in the
Business or the business of Buyer anywhere in
-26-
the United States or in any other place where Buyer, Seller,
or their respective Subsidiaries conduct business, as such
businesses exist or are proposed as of the Closing Date or
logical extensions thereof (collectively, "Covered
Activities"); or (B) become interested in any such Person
which engages in any Covered Activities as a partner,
shareholder, principal, agent, consultant or in any other
relationship or capacity; provided, however, that
notwithstanding the above, a Restricted Person may own,
directly or indirectly, solely as an investment, securities of
any such Person which are traded on any national securities
exchange or NASDAQ if the Covered Person is not a controlling
person of, or a member of a group which controls, such Person,
does not, directly or indirectly, own five percent (5%) or
more of any class of securities of such Person and has no
active participation in the business of such Person.
(ii) At all times after the date hereof, each
Restricted Person shall keep secret and retain in strictest
confidence, and shall not use for his benefit or the benefit
of others, all Confidential Seller Information including
information with respect to (i) prospective facilities, (ii)
sales figures, (iii) profit or loss figures, and (iv)
customers, clients, suppliers, sources of supply and customer
lists and shall not disclose such Confidential Seller
Information to anyone outside of Buyer except with the express
written consent of the Buyer and except for Confidential
Company Information which is at the time of receipt or
thereafter becomes publicly known through no wrongful act of a
Restricted Person. The Restricted Person shall deliver to
Buyer on the Closing Date, or upon the termination of the
Transition Services Agreement (to the extent retaining such
information is necessary for Seller to perform its obligations
under the Transition Services Agreement), all memoranda,
notes, plans, records, reports, computer tapes, printouts and
software and other documents and data (and copies thereof)
relating to the Confidential Seller Information, Work Product
(as defined below) or the Business which it may then possess
or have under its control.
(iii) During the Restricted Period, each Restricted
Person shall not, without the prior written consent of the
Buyer, directly or indirectly, (i) induce or attempt to induce
any employee of Buyer to leave the employ of Buyer, employ any
employee of Buyer or in any other way interfere with the
relationship between Buyer and any employee of Buyer, (ii)
hire any person within two years of the last day such person
was an employee of Buyer or (iii) induce or attempt to induce
any customer, supplier, licensee, licensor, franchisee or
other business relation of Buyer to cease doing business with
Buyer, or in any way interfere with the relationship between
any such customer, supplier, licensee or business relation and
Buyer (including making any disparaging statements or
communications about Buyer).
(iv) All inventions, innovations, improvements,
developments, methods, designs, analyses, drawings, reports,
characters, props, molds and all similar or related
information (whether or not patentable) which relate to the
Business or anticipated business, research and development or
existing or future products or services and which are
conceived, developed or made by an employee
-27-
of, or a consultant to, Seller (collectively, "Work Product")
belong to Buyer. Each Restricted Person shall promptly
disclose such Work Product to the Buyer and perform all
actions requested by the Buyer (whether on or after the
Closing Date) to establish and confirm such ownership
(including assignments, consents, powers of attorney and other
instruments).
(v) (A) the covenants set forth in Section 9.4(a) are
reasonable in geographical and temporal scope and in all other
respects, (B) Buyer would not have entered into this Agreement
but for the covenants of each Restricted Person contained
herein, and (C) the covenants contained herein have been made
in order to induce Buyer to enter into this Agreement and
purchase the Assets from which Seller will receive substantial
benefit.
(vi) If, at the time of enforcement of the covenants
contained in Section 9.4 (a)(i), a court shall hold that the
duration, scope or area restrictions stated therein are
unreasonable under circumstances then existing, the parties
agree that the maximum duration, scope, or area reasonable
under such circumstances shall be substituted for the stated
duration, scope or area.
(b) Rights and Remedies upon Breach. If a Restricted Person
breaches, or threatens to commit a breach of, any of the provisions of
Section 9.4(a) (the "Restrictive Covenants"), Buyer shall have the
following rights and remedies (upon compliance with any necessary
prerequisites imposed by law upon the availability of such remedies),
each of which rights and remedies shall be independent of the other and
severally enforceable, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies
available to Buyer under law or in equity:
(i) The right and remedy to have the Restrictive
Covenants specifically enforced (without posting bond) by any
court having equity jurisdiction, including the right to an
entry against the Restricted Person of restraining orders and
injunctions (preliminary, mandatory, temporary and permanent)
against violations, threatened or actual, and whether or not
then continuing, of such covenants, it being acknowledged and
agreed that the Restricted Person has, and has had, access to
Confidential Seller Information and Work Product and that any
breach or threatened breach of the Restrictive Covenants will
cause irreparable injury to Buyer and that money damages will
not provide an adequate remedy to Buyer.
(ii) The right and remedy to require the Restricted
Person to account for and pay over to Buyer all compensation,
profits, monies, accruals, increments or other benefits
(collectively, "Benefits") derived or received by it as the
result of any transactions constituting a breach of the
Restrictive Covenants, and the Restricted Person shall account
for and pay over such Benefits to Buyer.
(iii) In the event of an alleged breach or violation
by the Restricted Person of Section 9.4(a), the Restricted
Period shall be tolled during the period of such breach until
such breach or violation has been duly cured.
-28-
Section 9.5 Other Agreements and Approvals. Parent, Seller and Buyer
shall take, or cause to be taken, all actions and to do, or cause to be done,
all things reasonably necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement, including taking all commercially reasonable actions required to
obtain all consents, approvals, waivers and agreements of, and to give all
notices and make all other registrations or filings with, any Person (including
Governmental or Regulatory Authorities) necessary to authorize, approve or
permit the full and complete sale, conveyance, assignment, transfer and delivery
of the Assets to Buyer free and clear of all Liens and the continuance in full
force and effect of the Business Contracts, Business Licenses and Personal
Property Leases set forth in the Disclosure Schedule.
Section 9.6 No Assignment Causing Breach. Notwithstanding anything in
this Agreement, neither this Agreement nor any document or instrument delivered
pursuant hereto shall constitute an assignment of any claim, Contract, Business
License, Business Contract, lease, commitment, sales order or purchase order of
any claim or right or any benefit arising thereunder or resulting therefrom if
an attempted assignment thereof without the consent of any other Person would
constitute a breach thereof or in any way adversely affect the rights to be
assigned. Until such consent is obtained, or if an attempted assignment
thereunder would be ineffective or would affect the rights of Seller thereunder
so that Buyer, would not in fact receive all such rights, Seller on the one
hand, and Buyer, on the other hand, will cooperate with each other to provide
for the benefits of, and to permit Buyer to assume all liabilities under, any
such Asset or Assumed Liability including enforcement at the request and expense
of Buyer for the benefit of Buyer any and all rights of Seller against any
Person thereto arising out of the breach or cancellation thereof by such Person;
and any transfer or assignment to Buyer by Seller of any property or property
rights or any Contract which shall require the consent or approval of any Person
shall be made subject to such consent or approval being obtained.
Section 9.7 Access to Information and Records. After the Closing, each
of Parent, Seller and Buyer shall provide to the other and its representatives
the opportunity, upon reasonable request and notice, to examine and make copies
of any documents and records relating to the Assets and the conduct of the
Business prior to the Closing Date which may be in its custody and to consult
with its employees, accountants and other representatives in connection with any
bona fide business purpose including the preparation of tax returns and
financial statements and/or any audits with respect thereto. For a period of
five (5) years after the date hereof, neither party shall dispose of any records
relating primarily to the Business in its custody unless it has first given the
other party at least thirty (30) days prior written notice of its intention to
do so and afforded the other party the opportunity to take possession of or copy
such records prior to their disposition.
Section 9.8 Seller's Employees. Seller shall provide all notices
required by law or Contract to employees and their collective bargaining
representatives, if any, relating to the effects and impact of the transactions
contemplated by this Agreement, and shall satisfy any bargaining obligations
that may exist or arise. Nothing in this Agreement shall require Buyer to offer
employment to or employ any of Seller's employees, nor to assume any Seller
collective bargaining Contract.
-29-
Section 9.9 Bulk Sale and Other Tax Filings. Parent, Seller and Buyer
hereby waive compliance with all bulk sales or other laws for the protection of
creditors in connection with the transactions contemplated by this Agreement.
Section 9.10 Access to Books and Records; Buyer's Financial Statements;
Confidentiality. For a period from the Closing Date through September 30, 2003,
Buyer shall provide Seller and its Representatives reasonable access to those
books and records of Buyer related to the Business to be conducted by Buyer
following the Closing Date which are necessary to enable Seller to confirm the
Net Sales as determined by Buyer pursuant to Section 3.2(b). Seller and its
Representatives hereby agree to treat the Buyer's Financial Statements and any
information made available by Buyer to Seller pursuant to this Section 9.10 in
the same manner as the Confidential Seller Information pursuant to Section 9.3
hereof; provided, however, the information provided pursuant to this Section
9.10 shall be delivered to Buyer immediately upon completion of Seller's review
of the same.
ARTICLE X
INDEMNIFICATION
Section 10.1 Survival, Representations and Warranties. The
representations and warranties provided for in this Agreement shall survive the
Closing Date. The provisions of this Section 10.1 shall not limit any covenant
or agreement of the parties hereto which, by its terms, contemplates performance
after the Closing Date. The indemnification provisions contained in this Article
X are in addition to, and not in derogation of, any statutory, equitable, or
common law remedy any party hereto may have for any breach of any
representation, warranty, or covenant. The covenants and agreements in this
Article X shall survive until such time as any claim for indemnification is
finally settled in accordance with the terms hereof.
Section 10.2 Indemnification Obligation of Parent and Seller.
(a) Parent and Seller, jointly and severally, agree to
indemnify Buyer and its Affiliates, stockholders, officers, directors,
employees, agents, representatives and successors and assigns
(collectively, the "Buyer Indemnitees") in respect of, and save and
hold each Buyer Indemnitee harmless against and pay on behalf of or
reimburse each Buyer Indemnitee as and when incurred, any Losses which
any Buyer Indemnitee suffers, sustains or becomes subject to as a
result of or by virtue of, without duplication:
(i) any facts or circumstances which constitute a
misrepresentation or breach by Parent or Seller of any
representation or warranty set forth in this Agreement
(including any section of the Disclosure Schedule), or in any
certificate delivered by Parent or Seller pursuant to this
Agreement, in each case determined without regard for any
materiality qualifier contained in such representation and
warranty;
(ii) any non-fulfillment or breach of any covenant or
agreement of Seller or Parent set forth in this Agreement;
-30-
(iii) Any liability or obligation with respect to the
Business, the Assets, or the Real Property relating to or
arising out of any Environmental, Health and Safety
Requirements resulting from facts, events or conditions
existing or occurring on or prior to the Closing Date or
resulting from the actions or operations of Parent, Seller or
their Affiliates;
(iv) Any liability or obligation relating to or
arising out of the failure of Parent and Seller to make any
required filings under all applicable state sales tax bulk
sales notification statutes and regulations and any applicable
state tax statutes, in connection with the sale of the Assets
to Buyer;
(v) any Excluded Liability; or
(vi) any facts or circumstances which constitute a
misrepresentation or breach by Parent or Seller of any
representation or warranty set forth in the Transition
Services Agreement or any non-fulfillment or breach of any
covenant or agreement of Parent or Seller set forth in the
Transition Services Agreement.
(b) Notwithstanding the foregoing, neither Parent nor Seller
shall be required to indemnify the Buyer Indemnitees in respect of any
Losses any Buyer Indemnitee suffers, sustains or becomes subject to as
a result of or by virtue of any of the occurrences referred to in
Section 10.2(a)(i) above unless the aggregate of all such Losses
exceeds $50,000; provided, that in such event, Parent and Seller shall
be responsible for the amount of all such Losses, and provided,
further, that the maximum obligation of the Parent and Seller for such
Losses shall be limited to an amount equal to the Purchase Price.
Section 10.3 Indemnification Obligation of Buyer.
(a) Buyer will indemnify each of Parent and Seller and their
respective Affiliates, stockholders, officers, managers, directors,
employees, agents, representatives and successors and assigns
(collectively, the "Seller Indemnitees") in respect of, and save and
hold each Seller Indemnitee harmless against any Losses which such
Seller Indemnitee suffers, sustains or becomes subject to as a result
of or by virtue of, without duplication:
(i) any facts or circumstances which constitute a
misrepresentation or breach by Buyer of any representation of
warranty set forth in this Agreement or in any certificate
delivered by Buyer pursuant to this Agreement, in each case
determined without regard for any materiality qualifier
contained in such representation and warranty;
(ii) any non-fulfillment or breach of any covenant or
agreement of the Buyer set forth in this Agreement;
(iii) any Assumed Liability;
-31-
(iv) any liability to the extent related to or
arising from Buyer's ownership of the Assets or operation of
the Business after the Closing Date;
(v) any liability or obligation with respect to the
Real Property relating to or arising out of any Environmental,
Health and Safety Requirement to the extent caused by the
actions of any employee of Buyer and its Affiliates in
connection with the operation of the Business after the
Closing Date; or
(vi) any facts or circumstances which constitute a
misrepresentation or breach by Buyer of any representation of
warranty set forth in the Transition Services Agreement or any
non-fulfillment or breach of any covenant or agreement of
Buyer set forth in the Transition Services Agreement.
(b) Notwithstanding the foregoing, Buyer shall not be required
to indemnify the Seller Indemnitees in respect of any Losses any Seller
Indemnitee suffers, sustains or becomes subject to as a result of or by
virtue of any of the occurrences referred to in Section 10.3(a)(i)
above unless the aggregate of all such Losses exceeds $50,000;
provided, that in such event, Buyer shall be responsible for the amount
of all such Losses.
Section 10.4 Indemnification Procedures.
(a) Any Person making a claim for indemnification pursuant to
Section 10.2 or Section 10.3 above (each, an "Indemnified Party") must
give the party from whom indemnification is sought (an "Indemnifying
Party") written notice of such claim promptly after the Indemnified
Party receives any written notice of any action, lawsuit, proceeding,
investigation or other claim (a "Proceeding") against or involving the
Indemnified Party by any Person or otherwise discovers the liability,
obligation or facts giving rise to such claim for indemnification;
provided, that the failure to notify or delay in notifying an
Indemnifying Party will not relieve the Indemnifying Party of its
obligations pursuant to Section 10.2 or Section 10.3 above, as
applicable, except to the extent that such failure actually irreparably
xxxxx the Indemnifying Party.
(b) With respect to the defense of any Proceeding against or
involving an Indemnified Party in which any Person in question seeks
only the recovery of a sum of money (and not for injunctive or
equitable relief) for which indemnification is provided in Section 10.2
or Section 10.3 above, at its option an Indemnifying Party may appoint
as lead counsel of such defense any legal counsel selected by the
Indemnifying Party; provided, that before the Indemnifying Party
assumes control of such defense it must first:
(i) enter into an agreement with the Indemnified
Party (in form and substance reasonably satisfactory to the
Indemnified Party) pursuant to which the Indemnifying Party
agrees to be fully responsible (with no reservation of any
rights other than the right to be subrogated to the rights of
the Indemnified Party) for all Losses relating to such
Proceeding and unconditionally guarantees the payment and
performance of any liability or obligation which may arise
with respect to such Proceeding or the facts giving rise to
such claim for indemnification; and
-32-
(ii) furnish the Indemnified Party with evidence that
the Indemnifying Party, in the Indemnified Party's sole
judgment, is and will be able to satisfy any such liability.
(c) Notwithstanding Section 10.4(b) above: (i) the Indemnified
Party will be entitled to participate in the defense of such claim and
to employ counsel of its choice for such purpose at its own expense
(provided that the Indemnifying Party will bear the reasonable fees and
expenses of such separate counsel incurred prior to the date upon which
the Indemnifying Party effectively assumes control of such defense),
and (ii) the Indemnifying Party will not be entitled to assume control
of the defense of such claim, and will pay the reasonable fees and
expenses of legal counsel retained by the Indemnified Party, if:
(i) the Indemnified Party reasonably believes that an
adverse determination of such Proceeding could be detrimental
to or injure the Indemnified Party's reputation or future
business prospects;
(ii) the Indemnified Party reasonably believes that
there exists or could arise a conflict of interest which,
under applicable principles of legal ethics, could prohibit a
single legal counsel from representing both the Indemnified
Party and the Indemnifying Party in such Proceeding; or
(iii) a court of competent jurisdiction rules that
the Indemnifying Party has failed or is failing to prosecute
or defend vigorously such claim.
(d) The Indemnifying Party must obtain the prior written
consent of the Indemnified Party (which the Indemnified Party will not
unreasonably withhold) prior to entering into any settlement of such
claim or Proceeding or ceasing to defend such claim or Proceeding,
provided that any such settlement shall provide for the full release of
all claims against each Indemnified Party.
Section 10.5 Limitation of Liability; Effect of Disclosure on the
Disclosure Schedule.
(a) No Indemnifying Party shall have any liability to an
Indemnified Party under this Article X with respect to a claim for a
misrepresentation or breach of any representation or warranty made by
such Indemnifying Party in this Agreement to the extent that the
Indemnifying Party establishes that the Indemnified Party had actual
knowledge of the facts and circumstances which constitute such
misrepresentation or breach on the date hereof. For purposes of this
Article X, all Losses shall be computed net of any insurance payments
(net of any deductibles payable by the Indemnified Party) actually
received by the Indemnified Party.
(b) To the extent (i) an item is disclosed or set forth in one
Section of the Disclosure Schedule or an attachment thereto and is
referenced to a paragraph or section number of this Agreement and (ii)
that same item also may be applicable to (or properly
-33-
serve as an amendment to or disclosure regarding) another paragraph or
section of this Agreement, then the inclusion of such item anywhere in
the Disclosure Schedule or an attachment thereto shall be deemed to be
an automatic cross-reference to, and inclusion in, the Disclosure
Schedule or the attachments thereto as may be appropriate throughout
this Agreement and any and all applicable sections and paragraphs
hereof, whether or not a specific cross-reference is noted, but only to
the extent the disclosure is reasonably sufficient for such other
paragraph or section. Any and all attachments, statements or other
documents attached to any Section of the Disclosure Schedule are
incorporated by reference to the Section of the Disclosure Schedule
which may be appropriate.
Section 10.6 Payment. Upon the final determination of liability under
Article X by judicial proceeding in the form of a non-appealable final judgment
of a court of competent jurisdiction or as otherwise agreed among the Parties,
the appropriate Party shall pay to the other, as the case may be, within ten
(10) days after such determination, the amount of any claim for indemnification
made hereunder. The Buyer Indemnitees shall have recourse against either Parent
or Seller for the amount of any claim for indemnification under this Article X
and Parent and Seller hereby acknowledge and agree that each shall be jointly
and severally liable for the entire amount of any such claim. Parent and Seller
acknowledge and agree that Buyer may set-off against any and all amounts payable
by Buyer to Parent or Seller under this Agreement (including the Earnout
Payments) any and all amounts that are or shall be payable by Parent or Seller
to Buyer under this Agreement only after a final determination of liability
pursuant to this Section 10.6. In the event that any amounts Buyer owes to
Seller pursuant to Section 3.2 come due prior to the final determination of
liability pursuant to this Section 10.6, Buyer shall deposit the amount owed to
Seller with a mutually acceptable escrow agent, who shall hold such amount in an
interest bearing escrow account until such final determination. Buyer
acknowledges and agrees that Parent or Seller may set-off against any and all
amounts payable by Parent or Seller, as the case may be, to Buyer under this
Agreement any and all amounts that are or shall be payable by Buyer to Parent or
Seller, as the case may be, under this Agreement only after a final
determination of liability pursuant to this Section 10.6. In the case of a claim
by Buyer based on a breach of a representation or warranty set forth in Section
5.2(m)(ii), upon payment of all amounts owing to Buyer in respect of such claim,
Buyer will convey the items of Inventory in question to Seller without the
payment of any further consideration by Seller.
Section 10.7 Adjustment to Indemnities. The amount of indemnity payable
under Section 10.2 or Section 10.3 shall be treated by Buyer, Parent and Seller
as an adjustment to the Purchase Price.
Section 10.8 Legal Fees. Each Party acknowledges that the agreement
contained in this Article X is an integral part of the transactions contemplated
by this Agreement and that, without such agreement, the other Parties would not
have entered into this Agreement. Accordingly, if any Party fails to pay
promptly any amounts due from such Party pursuant to this Article X and, in
order to obtain such amounts, any other Party commences a suit against such
non-paying Party to collect the amounts provided for herein, if such other Party
succeeds in such action or proceeding, such non-paying Party shall be liable to
pay to such other Party its reasonable costs and expenses (including reasonable
attorneys' fees) in connection with such suit.
-34-
ARTICLE XI
MISCELLANEOUS
Section 11.1 Assignment. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned by Parent or Seller without the prior
written consent of Buyer, or by Buyer without the prior written consent of
Seller, except that Buyer may, without such consent, assign, directly or
indirectly, all of its rights and obligations under this Agreement to any of its
Affiliates, any Person which provides financing to the Buyer or any of its
Subsidiaries or any subsequent purchaser (or its Affiliates) of the Buyer
(whether by merger, consolidation, sale of stock, sale of assets or otherwise).
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and permitted assigns. This Agreement shall be for the sole benefit
of the parties hereto and their respective heirs, successors, permitted assigns
and legal representatives and is not intended, nor shall be construed, to give
any Person, other than the parties hereto and their respective heirs,
successors, assigns and legal representatives, any legal or equitable right,
remedy or claim hereunder.
Section 11.2 Notices. Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing. All such notices shall be delivered personally, by telecopier, by
certified mail, return receipt requested, or by reputable overnight courier
(costs prepaid), and shall be deemed given or made upon receipt thereof. All
such notices are to be given or made to the parties at the following addresses
(or to such other address as any party may designate by a notice given in
accordance with the provisions of this Section):
If to Buyer:
Xxxxxx International, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
With copies (which shall not constitute notice to Buyer) to:
Tinicum Incorporated
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
-35-
and
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx
Telecopy No.: (000) 000-0000
If to the Parent or Seller:
Aqua Care Systems, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Vice President-Finance
Telecopy No.: (000) 000-0000
With copies (which shall not constitute notice to Seller) to:
Wallace, Bauman, Legon, Fodiman, Xxxxx & Xxxxxxx, P. A.
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
Section 11.3 Choice of Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York,
without reference to the choice of law or conflicts of law principles thereof.
Section 11.4 Entire Agreement; Amendments and Waivers. This Agreement,
together with all Exhibits, the Disclosure Schedule and any other Schedules
hereto, constitutes the entire agreement among the Parties pertaining to the
subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties. No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the Party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
Section 11.5 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 11.6 Invalidity. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the
-36-
validity, legality or enforceability of any other provision of this Agreement in
such jurisdiction or affect the validity, legality or enforceability of any
provision in any other jurisdiction, but this Agreement shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
Section 11.7 Headings. The headings of the Articles and Sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
Section 11.8 Expenses. Except as otherwise provided herein, Parent,
Seller and Buyer will each be liable for their respective costs and expenses
incurred in connection with the negotiation, preparation, execution and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
Section 11.9 Specific Performance. Each of Parent, Seller and Buyer
acknowledge and agree that the other party would be damaged irreparably in the
event any of the provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached. Accordingly, each party
agrees that the other party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which they may be
entitled, at law or in equity.
Section 11.10 Waiver of Jury Trial. Each of the Parties waives to the
fullest extent permitted by law any right it may have to trial by jury in
respect of any claim, demand, action or cause of action based on, or arising out
of, under or in connection with this Agreement, or any course of conduct, course
of dealing, verbal or written statement or action of any party hereto, in each
case whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise. The parties to this Agreement each hereby agrees that any
such claim, demand, action or cause of action shall be decided by court trial
without a jury and that the parties to this Agreement may file an original
counterpart of a copy of this Agreement with any court as evidence of the
consent of the parties hereto to the waiver of their right to trial by jury.
Section 11.11 No Strict Construction. The Parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the Parties, and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement.
* * * * *
-37-
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date and year first above written.
BUYER:
XXXXXX INTERNATIONAL, INC.
By: _____________________________________
Name:
Its:
PARENT:
AQUA CARE SYSTEMS, INC.
By: _____________________________________
Name:
Its:
SELLER:
DURAMETER PUMP COMPANY, INC.
By: _____________________________________
Name:
Its:
GUARANTEE
In consideration of the benefits accruing as a result of this Agreement and the
transactions contemplated hereby to XXXXXX HOLDINGS INC., for good and valuable
consideration, the sufficiency of which is hereby acknowledged, XXXXXX HOLDINGS
INC. hereby agrees to guarantee the obligations of Buyer under this Agreement.
XXXXXX HOLDINGS INC.
By: __________________________________
Name:
Its:
-38-
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"), dated as
of December 27, 2000, by and between DURAMETER PUMP COMPANY, INC. (the "Seller")
and XXXXXX INTERNATIONAL, INC. (the "Buyer").
WHEREAS, by an Asset Purchase Agreement, dated as of December 27, 2000
(the "Purchase Agreement"), by and among Aqua Care Systems, Inc. ("Parent"),
Seller, Buyer and Xxxxxx Holdings Inc., Seller has agreed to sell and assign the
Assets to Buyer; and
WHEREAS, as a part of the purchase price for the Assets, Buyer has
agreed to assume the Assumed Liabilities.
WHEREAS, the parties hereto desire to execute this Agreement to further
evidence the assignment by Seller and assumption by Buyer.
NOW, THEREFORE, in consideration of the above premises and of the
mutual covenants and agreements herein contained, the parties, intending to be
legally bound, hereby agree as follows:
1. Definitions. Except as otherwise provided herein, all
capitalized terms used herein (including the recitals hereto) but not otherwise
defined shall have the respective meanings ascribed to them in the Purchase
Agreement.
2. Assignment. Seller hereby sells, transfers, conveys, assigns
and sets over to Buyer, its successors and assigns, all of the Assets,
including, without limitation, all Personal Property Leases, Business Contracts,
Business Licenses, commitments and undertakings which constitute a portion of
the Assets (all of the foregoing Personal Property Leases, Business Contracts,
Business Licenses, commitments and undertakings, being collectively hereinafter
referred to as the "Assigned Agreements").
3. Assumption of Assumed Liabilities. Buyer hereby assumes and
undertakes to pay, perform and discharge the Assumed Liabilities.
4. Assignability of Assigned Agreements. To the extent that any
of the Assigned Agreements are not assignable without the consent of another
party and such consent has not been obtained on or prior to the Closing Date,
this Agreement shall not constitute an assignment or attempted assignment as
would constitute a breach thereof. Any obligation of Seller under the Purchase
Agreement to effect the transfer of any Assigned Agreement to Buyer shall not be
terminated or abridged by this provision and shall be governed by Section 9.6 of
the Purchase Agreement.
5. Further Assurances. At any time and from time to time after
the date hereof, at the request of Buyer, and without further consideration,
Seller shall execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation and take such other action as Buyer may
reasonably request as necessary or desirable in order to more effectively
transfer, convey and assign to Buyer the Assets.
6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of law
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
DURAMETER PUMP COMPANY, INC.
Attest:
By:
________________________________ _________________________________
Secretary: Name:
Title:
XXXXXX INTERNATIONAL, INC.
Attest:
By:
________________________________ _________________________________
Secretary: Name:
Title:
2
XXXX OF SALE
THIS XXXX OF SALE, dated as of December 27, 2000 (this "Xxxx of Sale"),
by DURAMETER PUMP COMPANY, INC. (the "Seller") to XXXXXX INTERNATIONAL, INC.
(the "Buyer").
WHEREAS, the Purchase Agreement, dated as of December 27, 2000 (the
"Purchase Agreement"), by and among Aqua Care Systems, Inc., Seller, Buyer and
Xxxxxx Holdings Inc. provides for, among other things, the transfer and sale to
Buyer of certain assets of the Seller, all as more fully described in the
Purchase Agreement, for consideration in the amount and upon the terms provided
in the Purchase Agreement.
WHEREAS, by this instrument Seller is vesting in Buyer all of the
properties, assets, and rights of Seller hereinafter described.
NOW, THEREFORE, in consideration of the above premises and of other
valuable consideration to Seller in hand paid by Buyer, at or before the
execution and delivery hereof, the receipt and sufficiency of which by Seller is
hereby acknowledged, Seller has conveyed, granted, bargained, sold, transferred,
set over, assigned, aliened, remised, released, delivered and confirmed, and by
this Xxxx of Sale does convey, grant, bargain, sell, transfer set over, assign,
alien, remise, release, deliver and confirm unto Buyer, its Successors and
assigns forever, all of Seller's right, title and interest in the Assets (as
defined in Section 2.1 of the Purchase Agreement) of every nature and
description, whether tangible or intangible, whether real, personal, or mixed,
whether accrued, contingent or otherwise, wherever located.
TO HAVE AND TO HOLD all of the Assets unto Buyer, its successors and
assigns, Seller's true and lawful attorney and attorneys, with full power of
substitution, in Seller's name and stead, but on behalf and for the benefit of
Buyer, its successors and assigns, to demand and receive any and all of the
Assets, and to give receipts and releases for and in respect of the same, and
any part thereof, and from time to time to institute and prosecute in Seller's
name, or otherwise, for the benefit of Buyer, its successors and assigns, may
deem proper for the collection or reduction to possession of any of the Assets
or for the collection and enforcement of any claim or right of any kind hereby
sold, conveyed, transferred and assigned, or intended so to be, and to do all
acts and things in relation to the Assets which Buyer, its successors and
assigns shall deem desirable, Seller hereby declaring that the foregoing powers
are coupled with an interest and are and shall be irrevocable by Seller or by
its dissolution or in any manner or for any reason whatsoever.
Seller hereby covenants that, from time to time after the delivery of
this instrument, at Buyer's request and without further consideration, Seller
will do, execute, acknowledge, and deliver, or will cause to be done, executed,
acknowledged and delivered, all and every such further acts, deeds, conveyances,
transfers, assignments, powers of attorney and assurances as reasonably may be
required more effectively to convey, transfer to and vest in Buyer, and to put
Buyer in possession of, any of the Assets.
Nothing in this instrument, express or implied, is intended or shall be
construed to confer upon, or give to, any person, firm or corporation other than
Buyer and its successors and assigns any remedy or claim under or by reason of
this instrument or any terms, covenants or condition hereof, and all the terms,
covenants and conditions, promises and agreements in this instrument contained
shall be for the sole and exclusive benefit of Buyer and its successors and
assigns.
This instrument is executed by, and shall be binding upon, Seller, its
successors and assigns, for the uses and purposes above set forth and referred
to, effective immediately upon its delivery to Buyer. This instrument shall be
governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflicts of law.
IN WITNESS WHEREOF, Seller has caused this Xxxx of Sale to be executed
on its behalf by its duly authorized officer as of the date first above written.
DURAMETER PUMP COMPANY, INC.
By:
________________________________
Name:
Title:
ATTEST:
___________________________________
Name:
Receipt of the foregoing instrument
acknowledged:
XXXXXX INTERNATIONAL, INC.
By:
________________________________
Name:
Title:
2
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT, dated as of December 27, 2000 (this
"Agreement"), by and among AQUA CARE SYSTEMS, INC. ("Parent"), DURAMETER PUMP
COMPANY, INC. ("Seller") and XXXXXX INTERNATIONAL, INC. ("Buyer").
WHEREAS, Buyer has purchased certain assets of Seller pursuant to the
terms of an Asset Purchase Agreement, dated as of December 27, 2000 (the
"Purchase Agreement"), by and among Parent, Seller, Buyer and Xxxxxx Holdings
Inc.
WHEREAS, for a period of time following the date hereof, Buyer requires
that Parent and Seller (i) make available, and provide access to, each of the
Facilities (as defined below) utilized by Parent and Seller to operate the
Business prior to the Closing Date and (ii) provide the Services (as defined
below) to Buyer, in order to facilitate the orderly relocation of the Assets to
Buyer's facilities and their integration into Buyer's operations and to permit
Buyer to conduct and assure operation of the Business without interruption
during such relocation and integration process.
WHEREAS, this Agreement is being executed by Parent, Seller and Buyer
in accordance with the terms of the Purchase Agreement and is a condition to
Buyer's consummation of the transactions contemplated by the Purchase Agreement.
NOW, THEREFORE, in consideration of the above premises and of the
mutual covenants and agreements contained herein, the parties, intending to be
legally bound, hereby agree as follows:
Section 1. Definitions. Except as otherwise provided herein, all
capitalized terms used herein (including the recitals hereto) but not otherwise
defined shall have the respective meanings ascribed to them in the Purchase
Agreement.
Section 2. Agreement. In order to facilitate the uninterrupted
operation of the Business and the orderly relocation of the Assets to Buyer's
facilities and their integration into Buyer's operations, during the term of
this Agreement:
(a) Parent and Seller shall make available to Buyer and its employees,
agents, advisors and representatives (the "Buyer Representatives"), and
provide them access to and unconstrained use of, the facilities set forth
on Schedule 2(a) attached hereto (the "Facilities"). Parent and Seller
hereby acknowledge and agree that from time to time during the term of this
Agreement, all, or a portion, of the Assets and other property of Buyer
used or held for use in the conduct of its business (e.g., raw materials
and other inventory) may be located at one or more of the Facilities, as
Buyer may elect.
(b) Parent and Seller shall provide to Buyer the services (the
"Services") described on Schedule 2(b)(i) attached hereto and made a part
hereof. Schedule 2(b)(ii) attached hereto and made a part hereof lists the
name, title and current monthly salary or hourly wage, as applicable, of
each Person who will provide Services under this Agreement, which schedule
shall be amended from time to time, at the request of Buyer,
to remove any Person who Buyer determines is unnecessary for the provision
of the Services under this Agreement.
(c) Buyer hereby acknowledges that Parent and Seller's ability to
provide the Services to be provided hereunder may be affected by the
voluntary resignation of the Persons listed on Schedule 2(b)(ii), attached
hereto, and that Parent's and Seller's inability to provide such Services
as a result of such resignation(s) shall not constitute a breach of Parent
and Seller's obligations hereunder.
(d) Buyer shall advise Parent and Seller of Buyer's operational plans
and procedures (the "Operational Plans") with respect to the Services
required hereunder to enable Buyer to conduct and operate the Business
after the Closing Date, including daily production scheduling and planning,
procurement and sales and marketing efforts. Parent and Seller shall
provide a contact Person(s) who shall be responsible for communicating with
Buyer regarding any issues relating to the Operational Plans and the
Services to be provided by Parent and Seller hereunder.
Section 3. Term. The term of this Agreement shall commence on the date
hereof and continue in effect for a period of six months, unless earlier
terminated in accordance with Section 10 hereof.
Section 4. Expenses.
(a) With respect to each month (or pro rata portion thereof) during the
term of this Agreement, Buyer shall pay to Seller an amount equal to the
sum of (i) the real estate Tax and utility (phone, gas and electric)
expenses actually incurred at each of the Facilities as well as costs
incurred by Seller as a result of any damage to the Facilities to the
extent caused by Buyer and Buyer's Representatives (collectively, the
"Facility Expenses") during such month (or pro rata portion thereof) and
(ii) the product of (x) the salary or hourly wage expenses actually
incurred by Parent or Seller for the Persons listed on Schedule 2(b)(ii),
as amended, during such month (or pro rata portion thereof) and (y) 1.216
(collectively, the "Personnel Expenses"); provided, however, if any Person
listed on Schedule 2(b)(ii), as amended, also provides services to Seller
or any of its Affiliates during any such period, Buyer shall only be
responsible for its pro rata share of such Personnel Expenses. With respect
to the Facility Expenses, within 10 days of the end of each month, Seller
shall submit an invoice to Buyer setting forth in reasonable detail the
Facility Expenses incurred by Parent or Seller during such month along with
all available relevant supporting documentation and such additional other
information as Buyer may reasonably request. With respect to the Personnel
Expenses, within 10 days of the end of each payroll period, Seller shall
submit an invoice to Buyer setting forth in reasonable detail the expenses
incurred by Parent or Seller during such payroll period in respect of the
Personnel Expenses along with all available relevant supporting
documentation and such additional other information as Buyer may reasonably
request. Buyer shall pay each invoice within 15 days of the receipt of such
invoice (and such supporting documentation and other information, if any,
reasonably requested by Buyer).
2
(b) In order to provide certain employees of Seller with an incentive
to remain in the employ of Seller during the term of this Agreement, Seller
shall implement a stay-bonus program (the "Stay-Bonus Program") for each
Person listed on Schedule 4(b) attached hereto. The Stay-Bonus Program will
provide for the payment to each participant in such program in an amount
equal to the product of (i) such participants weekly salary or average
weekly wages, as the case may be, and (ii) 2; provided, however, such
payment shall be conditioned upon the participant being employed by Seller
as of the date mutually agreed upon by Seller and Buyer. Buyer shall
reimburse Seller for fifty percent (50%) of the amount paid by Seller in
connection with the Stay-Bonus Program in accordance with the invoicing
procedures for Personnel Expenses described above.
Section 5. Covenants. During the term of this Agreement, Parent and
Seller shall:
(a) Take such actions as are necessary to enable Parent and Seller to
fully comply with the agreements set forth in Section 2 hereof.
(b) Provide Buyer and the Buyer Representatives access to the
Facilities and shall use best efforts to assist Buyer in the removal and
relocation of the Assets and the other property of Buyer from the
Facilities which assistance shall be provided without cost to Parent and
Seller (other than the Facility Expenses and Personnel Expenses for which
Seller is reimbursed hereunder).
(c) Manage Seller's workforce in order to facilitate the orderly
relocation of the Assets to Buyer's facilities and to enable Buyer to
conduct and operate the Business without interruption in accordance with
the Operational Plans.
(d) Maintain the Facilities in order to facilitate the orderly
relocation of the Assets to Buyer's facilities and to enable Buyer to
conduct and operate the Business without interruption in accordance with
the Operational Plans.
(e) Use their best efforts to (i) keep available the services of the
Persons listed on Schedule 2(b)(ii) attached hereto and (ii) not interfere
with the relationship between Buyer and each supplier and customer of
Seller as of the Closing Date.
(f) Not reassign or substitute any Person listed on Schedule 2(b)(ii)
attached hereto to any other position with Seller or its Affiliates prior
to the earlier (i) the date mutually agreed upon by Seller and Buyer and
(ii) the termination of this Agreement.
(g) Not increase the salary or hourly wages of any Person listed on
Schedule 2(b)(ii) attached hereto, except as (i) required in accordance
with any collective bargaining or employment agreement covering such
Persons or (ii) mutually agreed upon by Parent, Seller and Buyer.
(h) Provide prompt notice of any actual or threatened labor dispute or
shortage which would delay or threaten to delay Parent's or Seller's
provision of any of the Services pursuant to this Agreement.
3
Section 6. Title to Assets and Risk of Loss; Security Interest; Product
Liability.
(a) Title to Assets and Risk of Loss. Title to the Assets and the other
property of Buyer located at any of the Facilities will remain in Buyer at
all times. All risk of loss, damage to, or destruction of the Assets and
the other property of Buyer located at any of the Facilities shall remain
in Buyer during the term of this Agreement, except for any damage or
destruction resulting from the gross negligence or willful misconduct of
Parent, Seller or any of their respective employees, agents, advisors and
representatives (the "Parent and Seller Representatives").
(b) Security Interest. The Assets and the other property of Buyer
located at any of the Facilities pursuant to this Agreement are subject to
a Security Interest. Parent and Seller shall not take any action which
would compromise the Security Interest in such Assets and other property of
Buyer. Parent and Seller further agree to execute financing statements and
such other documents as Buyer may reasonably deem necessary to protect such
Security Interest. Parent and Seller also agree not take any action that
would impose, or allow to be imposed, any Liens (including Liens for Taxes
that have been or were created by or during the period of Parent and
Seller's ownership of the Assets) on the Assets or the other property of
Buyer located at any of the Facilities.
(c) Product Liability. Buyer hereby acknowledges that pursuant to the
Purchase Agreement, Buyer has assumed all liabilities and obligations with
respect to any products of the Business sold after the Closing Date
(including product warranty liabilities).
Section 7. Independent Contractor Relationship; Employees.
(a) Parent and Seller, on the one hand, and Buyer, on the other hand,
intend that an independent contractor relationship be created by this
Agreement. The relationship of Parent and Seller to Buyer shall be that of
vendor and vendee of services, and nothing in this Agreement shall be
construed (a) as creating any other relationship or (b) to limit in any way
the relationship and obligations set forth in the Purchase Agreement.
(b) (i) Parent and Seller hereby acknowledge and agree that, except as
specifically set forth herein or as otherwise agreed to among Parent,
Seller, Buyer and their respective employees, neither Parent, Seller nor
any of their respective employees, agents, advisors or representatives (the
"Parent and Seller Representatives") (A) is authorized to act on behalf of
Buyer and (B) shall at any time attempt to act or act on behalf of Buyer to
bind Buyer in any manner to any obligations. Neither Parent, Seller nor any
Parent and Seller Representative shall engage in any acts which may lead
any Person to believe that any of them is an employee, agent, advisor or
representative of Buyer.
(ii) The employees of Parent and Seller rendering the Services pursuant
to this Agreement shall not be deemed employees of Buyer and shall not be
entitled to participate in or receive benefits under, any "employee benefit
plan" (as such term is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended) or any other employee benefit
plan, program or arrangement provided by Buyer for its employees.
4
(iii) Parent and Seller agree that, with respect to any Person
providing Services to Buyer, Parent and Seller shall have sole
responsibility for the maintenance of payroll records in accordance with
applicable law and regulation, the withholding and payment of Taxes, the
payment and administration of unemployment compensation insurance and
claims, salaries, wages, severance, pension, welfare and other employee
benefit plans, programs or arrangements, and compliance with employment and
labor laws.
(c) Buyer hereby acknowledges and agrees that neither Buyer nor any of
Buyer Representatives (i) is authorized to act on behalf of Parent or
Seller and (ii) shall at any time attempt to act or act on behalf of Parent
or Seller to bind Parent or Seller in any manner whatsoever to any
obligations. Neither Buyer nor any Buyer Representative shall engage in any
acts which may lead any Person to believe that any of them is an employee,
agent, advisor or representative of Parent or Seller.
(d) Each party hereto agrees to give prompt written notice to the other
parties hereto upon learning of any confusion by third parties as to the
relationship between Parent and Seller, on the one hand, and Buyer, on the
other hand, created by this Agreement.
(e) Buyer hereby acknowledges and agrees that:
(i) Subject to prior consultation with Buyer regarding the
establishment of production requirements, plans and priorities, Parent and
Seller shall have sole authority to determine:
(A) the means and details of all work performed by all full-time
and/or part time employees of Parent and Seller, and
(B) all wages, hours, awards, disciplinary or corrective action
and any other terms and conditions of employment of all
full-time and/or part-time employees of Parent and Seller.
(ii) If Buyer has any concern with respect to the performance or
conduct of any employee of Parent and Seller, Buyer shall notify Parent and
Seller of such concern, and Parent and Seller shall have sole authority to
determine the appropriate action (if any) to be taken.
(iii) Notwithstanding anything to the contrary contained or implied in
this Agreement, Buyer shall not as a consequence of its being a party to
this Agreement be required to be a party to any employment matters
(including, but not limited to, any collective bargaining agreement to
which Parent or Seller is party), and Parent or Seller shall have sole
authority to bargain or otherwise deal with any labor organization which is
now, or may hereafter become, the lawful collective bargaining
representative of employees of Parent or Seller.
Section 8. Mutual Cooperation. The parties hereto agree that each shall
take, or cause to be taken, all actions, and do, or cause to be done, all things
reasonable necessary, proper or advisable to accomplish the transactions
contemplated by this Agreement. Parent further
5
agrees to take all actions necessary to cause Seller to perform its obligations
under this Agreement.
Section 9. Termination.
(a) This Agreement may be terminated only in accordance with the
following provisions:
(i) by mutual written consent of Parent, Seller and Buyer;
(ii) by Buyer upon 10 days prior written notice;
(iii) by Parent or Seller upon written notice to Buyer following
Buyer's failure to pay to Seller any amounts due to Seller hereunder and
the failure by Buyer to make such payments within 10 days of the receipt of
such notice;
(iv) by Parent or Seller upon written notice to Buyer following Buyer's
breach of any covenant of Buyer in the Purchase Agreement and the failure
by Buyer to cure such breach within 30 days of the receipt of such notice;
or
(v) by either party immediately upon written notice to the other party
upon the occurrence of any of the following events: (A) the other party
enters into proceedings in bankruptcy or insolvency; (B) the other party
shall make an assignment for the benefit of creditors; (C) a petition shall
be filed against the other party under any bankruptcy law, corporate
reorganization laws or any other laws for which relief of debtors (or
similar laws in purpose or effect) which petition has not been dismissed or
discharged within 30 days after the filing thereof; or (D) the other party
enters into liquidation or dissolution proceedings.
(b) Notwithstanding anything else contained in this Agreement, neither
the termination or expiration of this shall act as a waiver of any breach
of any representation, warranty or covenant of any party hereto through the
date of termination or expiration.
Section 10. Miscellaneous.
(a) Survival. The obligations set forth with respect to Section 10
herein shall survive the expiration or termination of this Agreement.
(b) Entire Agreement; Amendments and Waivers. This Agreement, together
with all schedules hereto, constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether
oral or written, of the parties hereto. No supplement, modification or
waiver of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute
a continuing waiver unless otherwise expressly provided.
6
(c) Incorporation by Reference. Sections 1.2, 9.4, 10.2, 10.3, 10.4,
10.5, 10.6, 10.7, 10.8, 11.1, 11.2, 11.3, 11.5, 11.6, 11.7, 11.8, 11.9,
11.10 and 11.11 of the Purchase Agreement shall apply to this Agreement as
if fully set forth herein, mutatis mutandis; provided, however, the
limitation of liability set forth in each of Sections 10.2(b) and 10.3(b)
of the Purchase Agreement shall not apply to any indemnification claim made
hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
BUYER:
XXXXXX INTERNATIONAL INC.
By
_________________________________
Name:
Title:
PARENT:
AQUA CARE SYSTEMS, INC.
By
_________________________________
Name:
Title:
SELLER:
DURAMETER PUMP COMPANY, INC.
By
_________________________________
Name:
Title:
7
