ASSET PURCHASE AGREEMENT
AMONG
XXXXXXXXX INTERNATIONAL, INC.
AND
XXXXX WINE COMPANY
(D/B/A/ MONARCH WINE COMPANY OF GEORGIA)
AND
XXXXXX X. XXXXXXXXX, XXXXX XXXXXXXXX,
XXX XXXXXXXXX AND XXXXXXX XXXXXXXXX
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II
SALE AND PURCHASE OF ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1 Sale and Purchase of the Assets. . . . . . . . . . . . . . . . . . . . 10
2.2 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.3 Assumption of Liabilities. . . . . . . . . . . . . . . . . . . . . . . 12
2.4 No General Assumption of Liabilities.. . . . . . . . . . . . . . . . . 12
ARTICLE III
PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Post-Closing Adjustments . . . . . . . . . . . . . . . . . . . . . . . 14
3.3 Allocation of Purchase Price and Assumed Liabilities . . . . . . . . . 15
ARTICLE IV
SELLER'S AND PRINCIPALS' REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . 15
4.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . 15
4.2 Authority; No Conflict.. . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.6 Title to and Character of Assets; Facility Lease; Real Property. . . . 17
4.7 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.8 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.9 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . 18
4.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.11 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . 19
4.12 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.13 Compliance with Legal Requirements; Governmental Authorizations. . . . 21
4.14 Legal Proceedings; Orders. . . . . . . . . . . . . . . . . . . . . . . 22
4.15 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.16 Absence of Certain Changes and Events. . . . . . . . . . . . . . . . . 23
4.17 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.18 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.19 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . 26
4.20 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.21 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . 28
4.22 Relationships with Related Persons . . . . . . . . . . . . . . . . . . 29
4.23 Conditions Affecting Seller. . . . . . . . . . . . . . . . . . . . . . 29
4.24 No Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER. . . . . . . . . . . . . . . . . 30
5.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . 30
5.2 Authority; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . 30
5.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.4 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.5 Financial Ability. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.6 Business Operation.. . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.7 Year 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI
COVENANTS OF SELLER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.1 Operation of the Business. . . . . . . . . . . . . . . . . . . . . . . 31
6.2 Access and Investigation; HSR Filing by Purchaser and Seller . . . . . 33
6.3 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.4 Negative Covenant. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.5 Required Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.6 No Shop. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.7 Consulting Arrangement . . . . . . . . . . . . . . . . . . . . . . . . 35
6.8 Tax Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VII
COVENANTS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.1 Required Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.2 Bulk Transfer Compliance.. . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VIII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS. . . . . . . . . . . . . . . 36
8.1 True and Correct Representations . . . . . . . . . . . . . . . . . . . 36
8.2 Compliance with Covenants. . . . . . . . . . . . . . . . . . . . . . . 36
8.3 Delivery of Documents. . . . . . . . . . . . . . . . . . . . . . . . . 36
8.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.5 Environmental Audit(s) . . . . . . . . . . . . . . . . . . . . . . . . 37
8.6 Due Diligence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.7 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IX
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS . . . . . . . . . . . . . . . . 37
9.1 True and Correct Representations . . . . . . . . . . . . . . . . . . . 37
9.2 Compliance with Covenants. . . . . . . . . . . . . . . . . . . . . . . 37
9.3 Delivery of Documents. . . . . . . . . . . . . . . . . . . . . . . . . 37
9.4 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE X
DELIVERIES AT CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.1 Deliveries by Seller and Principals. . . . . . . . . . . . . . . . . . 37
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10.2 Deliveries by Purchaser. . . . . . . . . . . . . . . . . . . . . . . . 39
10.3 Possession by Purchaser. . . . . . . . . . . . . . . . . . . . . . . . 40
10.4 Failure to Obtain Consents, Licenses, Permits and Approvals. . . . . . 40
ARTICLE XI
POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.1 After the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 40
11.2 Payments Received by Seller Subsequent to the Closing Date . . . . . . 40
11.3 Access to Records. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.4 Pending Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE XII
SURVIVAL; INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.2 Indemnification Obligation . . . . . . . . . . . . . . . . . . . . . . 42
12.3 Indemnification Notice . . . . . . . . . . . . . . . . . . . . . . . . 44
12.4 Indemnification Payment and Limitations. . . . . . . . . . . . . . . . 45
ARTICLE XIII
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.2 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.6 Pronouns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.7 Third Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.9 Schedules Included in Exhibits; Incorporation by Reference . . . . . . 47
13.10 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.11 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.12 Jurisdiction and Venue . . . . . . . . . . . . . . . . . . . . . . . . 47
13.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.15 No Construction Against Draftsmen. . . . . . . . . . . . . . . . . . . 48
13.16 Enforcement Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.17 Equitable Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.18 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.19 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.20 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.21 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . 49
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EXHIBITS
A - Form of Purchaser's Legal Opinion
B - Form of Seller's Legal Opinion
C - Form of Xxxx of Sale and Assignment
D - Form of Non-Competition Agreement
E - Form of Employment Agreement
SCHEDULES
2.1(c)(ii) - Independent Contractor
2.1(f) - Prepaid Items
2.1(k) - Permits
2.2 - Excluded Assets
2.3(e) - Liabilities and Obligations of Seller
3.3 - Allocation of Purchase Price
4.1 - Seller's Governing Documents
4.3 - Consents
4.6(a) - Title to and Character of Assets
4.8 - Inventory
4.12(a)(i) - List of Company Plans, Company Other Benefit Obligations and
Company VEBAs
4.12(a)(iv) - Post-Retirement Benefits
4.12(c) - ERISA
4.12(d) - Collective Bargaining Agreements
4.13(a)(iii) - Compliance with Legal Requirements
4.13(b) - Governmental Authorizations
4.13(b)(iii) - Compliance with Governmental Authorizations
4.14(b) - Legal Proceedings
4.14(d)(iv) - Seller's Payments
4.16 - Absence of Certain Changes and Events
4.17(a) - Contracts
4.17(c) - Violations of Contracts
4.18 - Insurance Policies
4.20(a) - Employee Information
4.20(c) - Retired Employee Information
4.21(a) - Intellectual Property
4.21(b) - Encumbrances
4.21(d) - Marks
11.4 - Pending Disputes
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 27th day of September, 1999, by and among XXXXXXXXX
INTERNATIONAL, INC., a Delaware corporation ("Purchaser"), XXXXX WINE COMPANY
(d/b/a Monarch Wine Company of Georgia), a Georgia corporation ("Seller"),
and XXXXXX X. XXXXXXXXX, XXXXX XXXXXXXXX, XXX XXXXXXXXX and XXXXXXX XXXXXXXXX
(collectively, the "Principals").
PRELIMINARY STATEMENTS:
WHEREAS, Purchaser desires to purchase from Seller, and Seller desires
to sell to Purchaser, certain of the Assets (as hereinafter defined) used in
Seller's business of producing, buying, or otherwise acquiring, holding,
owning, mixing, flavoring, labeling, storing, shipping, exporting, marketing
and selling bulk wines and brandies, including, but not limited to, cooking
wines (collectively, the "Business").
WHEREAS, as material and specific inducements to Purchaser and Seller
to purchase and sell the Assets, Purchaser, Seller and the Principals desire
to make certain representations and warranties and agree to be bound by
certain covenants and obligations provided in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, 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
1.1 DEFINITIONS. For purposes of this Agreement, the following terms
have the meanings set forth below:
(a) "ACQUISITION PROPOSAL" means an inquiry, offer or proposal
regarding any of the following (other than the transactions contemplated by
this Agreement) involving Seller: any merger, reorganization, consolidation,
share exchange, recapitalization, business combination, liquidation,
dissolution, or other similar transaction involving, or, any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of, all or any
significant portion of the Assets or 100% or more of the equity interests of
Seller in a single transaction or series of related transactions which could
reasonably be expected to interfere with the completion of the transactions
contemplated herein.
(b) "AFFILIATE" means a Person who, with respect to any other
Person (i) directly or indirectly controls, is controlled by or is under
common control with such other Person, (ii) owns or controls ten percent
(10%) or more of the outstanding voting interests of such other Person, (iii)
is an officer, director, partner or member of such other Person, or (iv) if
such other Person is an officer, director, partner or member of any Person
for which such other Person acts in any such capacity.
(c) "AGREEMENT" means this Asset Purchase Agreement.
(d) "ASSETS" has the meaning set forth in Section 2.1 of this
Agreement.
(e) "ASSUMED LIABILITIES" has the meaning set forth in Section
2.3 of this Agreement.
(f) "CLOSING" means the closing of the transactions
contemplated by this Agreement, which shall be held at the offices of
Gunster, Yoakley, Xxxxxx-Xxxxx & Xxxxxxx, P.A., 000 Xxxxx Xxxxxxx Xxxxx,
Xxxxx 000-Xxxx Xxxxx, Xxxx Xxxx Xxxxx, Xxxxxxx 00000, on the Closing Date.
(g) "CLOSING DATE" means 10:00 A.M. local time, on September
__, 1999, or on such other date and at such other place as may be mutually
agreed upon by the parties.
(h) "CODE" means the Internal Revenue Code of 1986, as amended,
or any successor law and any successor regulations issued by the IRS pursuant
to the Internal Revenue Code or any successor law.
(i) "COLLECTIVE BARGAINING AGREEMENT" means the Collective
Bargaining Agreement with The International Brotherhood of Firemen and
Oilers, AFL-CIO, on behalf of its Local 288, and all amendments thereto.
(j) "COMPANY OTHER BENEFIT OBLIGATION" means an Other Benefit
Obligation owed, adopted, or followed by Seller or an ERISA Affiliate of
Seller, if any.
(k) "COMPANY PLAN" means all Plans of which Seller or an ERISA
Affiliate (as hereinafter defined) of Seller, if any, is or was a Plan
Sponsor, or to which Seller or an ERISA Affiliate of Seller, if any,
otherwise contributes or has contributed, or in which Seller or an ERISA
Affiliate of Seller, if any, otherwise participates or has participated. All
references to Plans are to Company Plans unless the context requires
otherwise.
(l) "CONSENT" means any approval, permit, consent,
ratification, satisfaction of waiting periods, waiver, or other authorization
(including any Governmental Authorization).
(m) "CONTEMPLATED TRANSACTIONS" means all of the transactions
contemplated by this Agreement.
(n) "CONTRACTS" means all written or oral contracts, licenses,
agreements, purchase orders, or commitments relating to the Assets or the
Business to which Seller or a Principal is a party or is bound, including,
but not limited to, the Facility Lease and the Pending Contracts.
(o) "DAMAGES" means any loss, liability, claim, damage
(excluding, however, consequential damages), expenses (including, but not
limited to, reasonable legal fees, accounting fees, paralegal fees and other
expenses) or diminution of value, whether or not involving a third party
claim.
(p) "DECEMBER BALANCE SHEET" has the meaning set forth in
Section 4.4 of this Agreement.
(q) "ENCUMBRANCE" means any option, right of first refusal,
lien, claim, or restriction of any kind.
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(r) "ENVIRONMENT" means soil, land surface or subsurface
strata, surface waters (including navigable waters, ocean waters, streams,
ponds, drainage basins, and wetlands), groundwaters, drinking water supply,
stream sediments, ambient air (including indoor air), plant and animal life,
and any other environmental medium or natural resource.
(s) "ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" means any
Damages, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(i) any environmental, health, or safety matters or
conditions (including on-site or off-site contamination, occupational safety
and health, and regulation of chemical substances or products);
(ii) fines, penalties, judgments, awards, settlements,
legal or administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and expenses arising
under Environmental Law or Occupational Safety and Health Law;
(iii) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other
remediation or response actions ("Cleanup") required by applicable
Environmental Law or Occupational Safety and Health Law (whether or not such
Cleanup has been required or requested by any Governmental Body or any other
Person) and for any natural resource damages; or
(iv) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational Safety and
Health Law.
The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended.
(t) "ENVIRONMENTAL LAW" means any Legal Requirement that
requires or relates to:
(i) advising appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous substances
or materials, violations of discharge limits, or other prohibitions and of
the commencements of activities, such as resource extraction or construction,
that could have significant impact on the Environment;
(ii) preventing or reducing to acceptable levels the
release of pollutants or hazardous substances or materials into the
Environment;
(iii) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
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(iv) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to human
health or the Environment when used or disposed of;
(v) protecting resources, species, or ecological
amenities;
(vi) reducing to acceptable levels the risks inherent in
the transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
(vii) cleaning up pollutants that have been released,
preventing the Threat of Release, or paying the costs of such clean up or
prevention; or
(viii) making responsible parties pay private parties, or
groups of them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public interest to recover
for injuries done to public assets.
(u) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time, or any successor law, and regulations
and rules issued pursuant to that Act or any successor law.
(v) "EXCLUDED ASSETS" means only those items listed on SCHEDULE
2.2 of this Agreement, which shall include Seller's automobiles and Seller's
tangible personal property located in New Jersey.
(w) "FACILITY" means the property located at 000 Xxxxxxx
Xxxxxx, X.X., Xxxxxxx, Xxxxxxx 00000, used by Seller to manufacture, market
and sell bulk wines and brandies and otherwise operate the Business.
(x) "FACILITY LEASE" means that certain lease agreement, dated
as of April 1, 1969, by and between Seller and Gilstar Corporation and
relating to the Facility, together with the amendments thereto reflected in
SCHEDULE 4.17(a).
(y) "FF&E" has the meaning set forth in Section 2.1(a) of this
Agreement.
(z) "FOUR DIGIT YEAR FORMAT" means a format that allows entry
or processing of a four digit year date where the first two digits will
designate the century and the second two digits will designate the year with
the century.
(aa) "GAAP" means generally accepted United States accounting
principles.
(bb) "GOVERNMENTAL AUTHORIZATION" means any approval, consent,
license, permit, waiver, or other authorization issued or granted by or under
the authority of any Governmental Body or pursuant to any Legal Requirement
applicable to Seller.
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(cc) "GOVERNMENTAL BODY" means any:
(i) nation, state, county, city, town, village,
district, or similar jurisdiction; or
(ii) federal, state, local, municipal, government,
agency, court, or similar entity; or
(iii) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal); or
(iv) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or
taxing authority or power of any nature.
(dd) "HAZARDOUS ACTIVITY" means the distribution, generation,
handling, importing, management, manufacturing, processing, production,
refinement, Release (as hereinafter defined), storage, transfer,
transportation, treatment, or use (including any withdrawal or other use of
groundwater) of Hazardous Materials (as hereinafter defined) in, on, under,
about, or from the Facility or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk
of danger, or poses an unreasonable risk of harm to persons or property on or
off the Facility, or that may affect the Facility, the Assets or the Business
PROVIDED, HOWEVER, that this definition shall not include Seller's use of
ethyl alcohol, ethyl acetate or laboratory chemicals in the Ordinary Course
of Business in accordance with Environmental Laws.
(ee) "HAZARDOUS MATERIALS" means any waste or other substance
that is listed, defined, designated, or classified as hazardous, radioactive,
or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and
specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
(ff) "HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 or any successor law, and regulations and rules
issued pursuant to that Act or any successor law.
(gg) "INSURANCE POLICIES" means all of the policies of fire,
casualty, fidelity, liability, professional liability or other form of
insurance relating to the Business, as set forth in SCHEDULE 4.18, which
shall not include any Key-Man Life Insurance policies.
(hh) "INTELLECTUAL PROPERTY" means any and all rights of Seller in:
(i) the name "Monarch Wine Company of Georgia" and
derivations thereof, trade names, registered or unregistered trademarks,
service marks and applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable with respect to the Business
(collectively, "Patents");
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(iii) all copyrights in both published works and
unpublished works with respect to the Business (collectively, "Copyrights");
(iv) all rights in mask works with respect to the
Business (collectively, "Rights in Mask Works"); and
(v) all know-how, formulas, trade secrets, confidential
information (including, without limitation, sales volume information specific
to each customer), customer lists, hardware and software (and related
documentation), technical information, data, process technology, plans,
drawings, blue prints and other intangible property and rights with respect
to the Business (collectively, "Trade Secrets"), owned, used, licensed by
Seller as licensee or licensor or that Seller has any interest in or has ever
used in connection with the Business.
(ii) "INTERIM BALANCE SHEET" has the meaning set forth in
Section 4.4 of this Agreement.
(jj) "INVENTORY" means all inventory owned by Seller.
(kk) "IRS" means the United States Internal Revenue Service or
any successor agency, and, to the extent relevant, the United States
Department of the Treasury.
(ll) "KNOWLEDGE" means with respect to any Person, that such
Person will be deemed to have "Knowledge" of a particular fact or other
matter if such Person, or an executive officer of such Person is actually
aware of such fact or matter. A Person (other than an individual) will be
deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving, or who has at any time served, as a director,
officer, partner, executor, or trustee of such Person (or in any similar
capacity) has, or at any time had, Knowledge of such fact or other matter.
(mm) "LEAP YEAR" means the year during which an extra day is
added in February (February 29th). Leap Year occurs in all years evenly
divisible by the number divisible by 400 or evenly divisible by four (4) and
not evenly divisible by 100.
(nn) "LEGAL REQUIREMENT" means any federal, state, local,
municipal, or other administrative order, law, ordinance or regulation, which
pertains to Seller.
(oo) "NON-COMPETITION AGREEMENTS" has the meaning as set forth
in Section 10.1 of this Agreement.
(pp) "NOTICE OF CLAIM" has the meaning as set forth in Section
12.3(a) of this Agreement.
(qq) "OCCUPATIONAL SAFETY AND HEALTH LAW" means any Legal
Requirement designed to provide safe and healthful working conditions and to
reduce occupational safety and health hazards, and any program, whether
governmental or private (including those promulgated or sponsored by industry
associations and insurance companies), designed to provide safe and healthful
working conditions.
6
(rr) "ORDER" means any award, decision, injunction, judgment,
order, ruling, subpoena, or verdict entered, issued, made, or rendered by any
court, administrative agency, or other Governmental Body or by any arbitrator
having jurisdiction over Seller or the Assets.
(ss) "ORDINARY COURSE OF BUSINESS" means an action taken by a
Person (as hereinafter defined) will be deemed to have been taken in the
"Ordinary Course of Business" only if:
(i) such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal day-to-day
operations of such Person; and
(ii) such action is not required to be authorized by the
board of directors of such Person (or by any Person or group of Persons
exercising similar authority).
(tt) "OTHER BENEFIT OBLIGATIONS" means all obligations,
arrangements, or customary practices, whether or not legally enforceable, to
provide benefits, other than salary, as compensation for services rendered,
to present or former directors, employees, or agents, other than obligations,
arrangements, and practices that are Plans (as hereinafter defined). Other
Benefit Obligations includes, but is not limited to, consulting agreements
under which the compensation paid does not depend upon the amount of service
rendered, sabbatical policies, severance payment policies, and fringe
benefits within the meaning of Code Section 132.
(uu) "PBGC" means the Pension Benefit Guaranty Corporation, or
any successor thereto.
(vv) "PENDING CONTRACTS" means contracts between Seller and its
third party customers.
(ww) "PERMITS" means all governmental, quasi-governmental or
regulatory agency licenses, consents, certificates of authority,
accreditations, permits, registrations, orders, credentials, authorizations,
certifications and approvals held or obtained by or issued to Seller in
connection with the operation of the Business.
(xx) "PERSON" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor
union, or other entity or Governmental Body.
(yy) "PLAN" has the meaning given in ERISA Section 3(3).
(zz) "PLAN SPONSOR" has the meaning given in ERISA Section
3(16)(B).
(aaa) "PROCEEDING" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
(bbb) "PURCHASE PRICE" has the meaning set forth in Section 3.1
of this Agreement.
(ccc) "PURCHASER" has the meaning set forth in the first
paragraph of this Agreement.
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(ddd) "PURCHASER LEGAL OPINION" means an opinion of legal counsel
to Purchaser, dated as of the Closing Date, substantially in the form of
EXHIBIT A attached hereto.
(eee) "PURCHASER'S CLOSING DOCUMENTS" has the meaning set forth
in Section 5.2(a) of this Agreement.
(fff) "PURCHASER'S INDEMNIFIED PARTIES" has the meaning set forth
in Section 12.2(b) of this Agreement.
(ggg) "PURCHASER'S SYSTEMS" means all equipment, hardware,
computerized devices and software used by Purchaser in its business,
including but not limited to, all purchased applications, software
development packages, customer-developed software, files, databases,
operating systems, database management systems, firmware and imbedded
microchips.
(hhh) "QUALIFIED PLAN" means any Plan that meets or purports to
meet the requirements of Code Section 401(a).
(iii) "RECEIVABLES" means all receivables of Seller, including,
but not limited to, all accounts receivable, notes receivable, and
receivables from vendors, customers or suppliers of Seller relating to the
Business.
(jjj) "RELATED PERSON" means with respect to a particular
individual:
(i) each other member of such individual's Family (as
hereinafter defined);
(ii) any Person that is directly or indirectly controlled
by such individual or one or more members of such individual's Family;
(iii) any Person in which such individual or members of
such individual's Family hold (individually or in the aggregate) a Material
Interest (as hereinafter defined); and
(iv) any Person with respect to which such individual or
one or more members of such individual's Family serves as a director,
officer, partner, member, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(i) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly under
common control with such specified Person;
(ii) any Person that holds a Material Interest in such
specified Person;
(iii) each Person that serves as a director, officer,
partner, member, executor, or trustee of such specified Person (or in a
similar capacity);
(iv) any Person in which such specified Person holds a
Material Interest;
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(v) any Person with respect to which such specified
Person serves as a general partner or a trustee (or in a similar capacity);
and
(vi) any Related Person of any individual described in
clause (b) or (c).
For purposes of this definition, (a) the "Family" of an
individual includes (i) the individual, (ii) the individual's spouse, (iii)
any other natural person who is related to the individual or the individual's
spouse within the second degree, and (iv) any other natural person who
resides with such individual, and (b) "Material Interest" means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of voting securities or other voting interests
representing at least 50% of the outstanding voting power of a Person or
equity securities or other equity interests representing at least 50% of the
outstanding equity securities or equity interests in a Person.
(kkk) "RELEASE" means any spilling, leaking, emitting,
discharging, depositing, escaping, leaching, dumping, or other releasing into
the Environment, whether intentional or unintentional.
(lll) "RETAINED LIABILITIES" has the meaning set forth in Section
2.4 of this Agreement.
(mmm) "SELLER" has the meaning set forth in the first paragraph
of this Agreement.
(nnn) "SELLER'S CLOSING DOCUMENTS" has the meaning set forth in
Section 4.2 of this Agreement.
(ooo) "SELLER INDEMNIFIED PARTIES" has the meaning set forth in
Section 12.2(a) of this Agreement.
(ppp) "SELLER LEGAL OPINION" means an opinion of Xxxxx Xxxxx
Mulliss & Xxxxx, L.L.P., dated as of the Closing Date, substantially in the
form of EXHIBIT B attached hereto.
(qqq) "SYSTEMS" means all equipment, hardware, computerized
devices and software used by the Business, including but not limited to, all
purchased applications, software development packages, custom-developed
software, files, databases, operating systems, database management systems,
firmware and imbedded microchips.
(rrr) "TAXES" means all federal, state, local, foreign, and other
net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
windfall profits, customs, duties, or other taxes, fees, assessments, or
charges of any kind whatever, together with any interest and any penalties,
additions to tax, or additional amounts with respect thereto, and the term
"Tax" means any one of the foregoing Taxes imposed by any Governmental Body
on Seller or any of the Assets.
(sss) "TAX RETURNS" means any return (including any information
return), report, statement, schedule, notice, form, or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
9
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any
Legal Requirement relating to any Tax.
(ttt) "THIRD PARTY CLAIM" has the meaning set forth in Section
12.3(b) of this Agreement.
(uuu) "THREAT OF RELEASE" means a substantial likelihood of a
Release that according to applicable law requires action by Seller in order
to prevent or mitigate damage to the Environment that may result from such
Release.
(vvv) "THREATENED" means a claim, Proceeding, dispute, action, or
other matter will be deemed to have been "Threatened" if any demand or
statement has been made (orally or in writing) or any notice has been given
(orally or in writing), or if any other event has occurred or any other
circumstances exist, that would likely result in such a claim, Proceeding,
dispute, action, or other matter being asserted, commenced, taken, or
otherwise pursued in the future.
(www) "TRADE PAYABLES" shall mean current liabilities incurred by
Seller that are expected to be repaid during the following twelve (12) months
(including, without limitation, trade and accounts payable such as sales
commissions to brokers and sales agents and royalties which are payable), but
only to the extent directly attributable to Receivables and Inventory
purchased by Purchaser pursuant to this Agreement and only in the Ordinary
Course of Business.
(xxx) "WORKING CAPITAL" means all current assets of Seller other
than cash and prepaid expenses, LESS Trade Payables.
(yyy) "YEAR 2000 COMPLIANT" shall mean that dates outside of the
range 1900-1998, including the years 1999, 2000 and thereafter, encountered
and/or processed by the Systems will be correctly recognized, calculated,
sorted, stored, displayed and/or otherwise processed in any level of computer
hardware or software, including, but not limited to, firmware, application
programs, system software, utilities, files and databases.
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1 SALE AND PURCHASE OF THE ASSETS. Subject to the terms and
conditions set forth in this Agreement, Seller agrees to sell, convey,
transfer, assign and deliver to Purchaser, and Purchaser agrees to purchase
from Seller, on the Closing Date, all of Seller's right, title and interest
in and to all assets relating to the Business, including, but not limited to,
the following (collectively, the "Assets"):
(a) All equipment, furniture, fixtures, supplies, furnishings,
machinery, tools, parts, office equipment, computer equipment, vehicles and
all other tangible personalty owned by Seller with respect to the Business
(the "FF&E");
(b) The Facility Lease;
(c) All rights and interests of Seller in and to the following
Contracts:
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(i) all Pending Contracts (excluding all collective
bargaining agreements);
(ii) all independent contractor and other such agreements
entered into by Seller and relating to, or for the benefit of, the Business,
including those which are listed on SCHEDULE 2.1(c)(ii); and
(iii) all management agreements, services agreements and
distribution agreements entered into by Seller and relating to, or for the
benefit of, the Business;
(d) All express or implied warranties applicable to any of the
items listed in this Section 2.1 received by Seller from manufacturers or
suppliers (to the extent such warranties are transferable);
(e) Two Hundred Thousand and No/100 Dollars ($200,000.00) in
cash;
(f) Those certain prepaid items relating to the Business which
are listed on SCHEDULE 2.1(F) attached hereto;
(g) All Receivables;
(h) All Inventory;
(i) All rights of Seller under non-solicitation agreements
entered into for the benefit of Seller with regard to the Business;
(j) All rights of Seller under indemnification agreements
entered into for the benefit of Seller with regard to the Business, except to
the extent such indemnification agreements relate to Retained Liabilities;
(k) All Permits relating to the Business, including those set
forth on SCHEDULE 2.1(k) attached hereto (to the extent such Permits are
transferable);
(l) All rights, title and interest in and to the Intellectual
Property relating to the Business (including the name "Monarch Wine Company
of Georgia"), in each case together with all registrations thereof, all
common and civil law rights thereto, all rights to royalties or fees paid by
others in respect thereof, and all claims or causes of action for
infringement thereof;
(m) All operating data, business records, employee records and
computer records of Seller relating to the Business, including, but not
limited to, supplier lists, customer lists, payment invoices, billing
records, correspondence, all records, documents or data relating to
accounting and financial information and all other sales and marketing
information which relate to the Business; PROVIDED, HOWEVER, Seller shall
maintain those certain business records, computer records, billing and
accounting records as required under Bureau of Alcohol, Tobacco and Firearms
("BATF") regulations until such time as final BATF audit of Seller is
completed (the "BATF Documents"); PROVIDED, FURTHER, that Seller shall
promptly provide copies of all BATF Documents to Purchaser as Purchaser may
reasonably request from time to time; and
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(n) All rights of Seller in all telephone and telecopier
numbers and post office boxes utilized in connection with the Business.
At Closing, the Assets shall be conveyed to Purchaser free and clear of
all Encumbrances.
2.2 EXCLUDED ASSETS. The parties expressly agree that the Assets
shall not include any asset or property listed in SCHEDULE 2.2 of this
Agreement (the "Excluded Assets").
2.3 ASSUMPTION OF LIABILITIES. At the Closing, Purchaser shall
assume, as of the Closing Date, and pay when due, otherwise discharge and
perform thereunder, or satisfy, the obligations and liabilities of Seller set
forth in this Section 2.3 (collectively, the "Assumed Liabilities"):
(a) The Facility Lease with respect to the post-Closing period,
subject to Section 8.4;
(b) Payroll and employment liability associated with any
employees of Seller hired by Purchaser at or after Closing, but only for
periods after the Closing;
(c) Except as set forth in Section 2.4(e) and Section 13.1
herein, Trade Payables;
(d) Any liability subject to the indemnification obligation of
Purchaser arising under Section 12.2(a);
(e) Those liabilities and obligations of Seller set forth on
SCHEDULE 2.3(e) attached hereto; and
(f) Except as set forth in Section 2.4, any claim against
Seller based upon acts or omissions by Purchaser occurring subsequent to the
Closing Date regardless of the manner in which asserted or the nature of the
claim or cause of action alleged (including, but not limited to, negligence,
product liability, breach of contract, intentional tort or injury to person
or property) arising from or related to the Business (collectively,
"Claims");
2.4 NO GENERAL ASSUMPTION OF LIABILITIES. Except for the Assumed
Liabilities, Purchaser shall not assume any liabilities of Seller of any
nature whatsoever, including, but not limited to, the following
(collectively, the "Retained Liabilities"):
(a) Taxes;
(b) Except as set forth in Section 2.3(c) herein, wages,
salaries, commissions, fees, reimbursements, benefits, bonuses, obligations
for severance or compensation of any kind payable to any past or present
employees, officers agents or independent contractors of Seller;
(c) Except as set forth in Section 2.3(c) or Section 2.3(e),
any claim against Seller regardless of the manner in which asserted or the
nature of the claim or cause of action alleged, including, but not limited
to, negligence, product liability, breach of contract, intentional tort or
injury to person or property arising from or related to the Business of
Seller, or from or related to employees,
12
independent contractors, agents, partners, officers, directors or
shareholders of Seller, and all liabilities under the Facility Lease for the
period ending on and through the Closing Date (collectively, "Claims").
(d) Except as set forth in Section 2.3(c) herein, any
liabilities or obligations of Seller to creditors attributable to the
Business existing as of the date of this Agreement or arising between the
date of this Agreement and the Closing Date;
(e) Any liability or obligation of Seller arising or incurred
in connection with the negotiation, preparation and execution of this
Agreement and the transactions contemplated by this Agreement and the fees
and expenses of counsel, accountants and other experts retained by Seller;
(f) The liabilities and obligations described in Section
12.2(b) of this Agreement;
(g) Any Plan or any liability or obligation of Seller arising
out of or relating to (i) any Plans, (ii) any fines, penalties, taxes, or
related charges under Section 502(c) or Section 4071 of ERISA or Chapter 43
of the Code resulting from any act or omission by Seller or any ERISA
Affiliate or (iii) any unfunded Multi-Employer Pension Fund liabilities
arising out of any collective bargaining agreements; and
(h) Any liability arising out of any collective bargaining
agreement.
Notwithstanding anything herein to the contrary, nothing contained in
this Section 2.4 shall be deemed to be inconsistent with Section 12.2 herein.
Seller shall retain all Retained Liabilities, and shall discharge all such
liabilities (to the extent they may create any Encumbrances on any Assets) as
and when due. After the Closing Date, Seller shall have complete control over
the payment, settlement or other disposition of, or any dispute involving,
any of the Retained Liabilities and Seller shall have the right to conduct
and control all negotiations and proceedings with respect thereto, except as
otherwise provided in Section 12.3 hereof.
ARTICLE III
PURCHASE PRICE
3.1 PURCHASE PRICE. Subject to the adjustments set forth in Section
3.2 herein, as consideration to Seller for the sale of the Assets, at the
Closing, Purchaser shall deliver to Seller the aggregate sum of Twenty-Two
Million Four Hundred Ninety-Six Thousand and No/100 Dollars ($22,496,000.00),
(i) PLUS the prepaid items relating to the Business, as identified and
pro-rated on SCHEDULE 2.1(f), (ii) PLUS the excess Working Capital, if any,
in Seller's Working Capital stated in the unaudited financial statements of
Seller as of the last day of the month immediately preceding the Closing Date
(the "Closing Date Balance Sheet") as compared to the December Balance Sheet
and, (iii) to the extent Seller's Working Capital as stated on the Closing
Date Balance Sheet is less than Seller's Working Capital as stated on the
December Balance Sheet, MINUS such negative amount (collectively, the
"Purchase Price").
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3.2 POST-CLOSING ADJUSTMENTS.
(a) The Purchase Price shall be appropriately adjusted following
the Closing based upon the difference between Seller's Working Capital as
derived from the Closing Date Balance Sheet and the Seller's Working Capital as
derived from an audited balance sheet produced by Purchaser's independent
certified public accountants, McGladrey & Xxxxxx, L.L.P. (or another independent
certified public accountant approved by Purchaser) ("Purchaser's Accountants"),
as of the Closing Date (the "Adjusted Balance Sheet"). The Purchase Price shall
(i) be adjusted upward on a dollar-for-dollar basis to the extent the Working
Capital determined from the Adjusted Balance Sheet is more than the Working
Capital determined from the Closing Date Balance Sheet (an "Increase") and (ii)
downward on a dollar-for-dollar basis to the extent the Working Capital
determined from the Adjusted Balance Sheet is less than the Working Capital
determined from the Closing Date Balance Sheet (a "Decrease"). Accordingly,
following the Closing Date, Purchaser and Seller shall determine the difference
between the Working Capital set forth on the Closing Balance Sheet and the
Adjusted Balance Sheet in the manner set forth in Section 3.2(b) below.
(b) Within forty-five (45) days following the Closing, Purchaser's
Accountants will prepare and deliver to Seller the Adjusted Balance Sheet, which
shall be prepared in accordance with generally accepted accounting principles
and applied on a consistent basis with Seller's year-end audited financial
statements dated as of December 31, 1998. The expense of Purchaser's
Accountants shall be borne by Purchaser. Seller shall, within fifteen (15) days
after the delivery by Purchaser of the Adjusted Balance Sheet, complete its
review of the same. In the event that Seller determines that the Adjusted
Balance Sheet has not been determined on the basis set forth in this Section
3.2(b), Seller shall inform Purchaser in writing ("Seller's Objection") setting
forth a specific description of Seller's Objection and the adjustments to the
Purchase Price which the Seller believes should be made, on or before the last
day of such fifteen (15) day period. Purchaser shall then have twenty (20) days
to review and respond to Seller's Objection. If Seller and Purchaser are unable
to resolve all of their disagreements with respect to the determination of the
adjustment to the Purchase Price within ten (10) days following the completion
of Purchaser's review of Seller's Objection, they shall refer their remaining
differences to Ernst & Young, LLP (the "CPA Firm"), who shall, acting as experts
and not as arbitrators, determine on the basis of the standard set forth in this
Section 3.2(b), and only with respect to the remaining differences so submitted,
whether and to what extent, if any, the Working Capital as derived from the
Adjusted Balance Sheet requires adjustment. The parties shall instruct the CPA
Firm to deliver its written determination to Purchaser and Seller no later than
the twentieth (20th) day after the matter is referred to the CPA Firm; PROVIDED,
HOWEVER, that during such twenty (20) day period, Purchaser and Seller may waive
any determination made by the CPA Firm or may mutually instruct the CPA Firm to
cease its review of the Adjusted Balance Sheet. The CPA Firm's determination
shall be conclusive and binding upon Purchaser and Seller. The fees and
disbursements of the CPA Firm shall be shared equally by Purchaser and Seller.
Seller and Purchaser shall make readily available to the CPA Firm all relevant
books and records and any work papers and all other items reasonably requested
by the CPA Firm.
(c) Upon a final determination (a "Final Determination") of the
Working Capital derived from the Adjusted Balance Sheet pursuant to Section
3.2(b) above, (i) to the extent there is an Increase, Purchaser shall pay Seller
an amount equal to the Increase within ten (10) days of such Final Determination
and (ii) to the extent there is a Decrease, Seller and the Principals shall pay
Purchaser an amount equal to the Decrease within ten (10) days of such Final
Determination.
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3.3 ALLOCATION OF PURCHASE PRICE AND ASSUMED LIABILITIES. The Purchase
Price shall be allocated for tax reporting purposes as agreed to by Purchaser
and Seller in the manner set forth in SCHEDULE 3.3 attached to this Agreement,
which SCHEDULE 3.3 shall be delivered by Purchaser's Accountants and mutually
agreed upon and initialed by the parties on or before the Closing. SCHEDULE 3.3
shall value the Assets at estimated fair market value as of the Closing Date.
Purchaser and Seller declare that the valuation of the Assets and the Assumed
Liabilities has been determined in good faith and as the result of arms' length
bargaining and Purchaser and Seller agree that no position inconsistent with the
allocation agreed to by Purchaser and Seller shall be taken by either party
before any governmental or judicial authority. Purchaser and Seller agree to
file Internal Revenue Service Form 8594 in accordance with the agreed upon
allocation referenced in SCHEDULE 3.3.
ARTICLE IV
SELLER'S AND PRINCIPALS' REPRESENTATIONS AND WARRANTIES
With the understanding that Purchaser intends to rely hereon, Seller and
each of the Principals, jointly and severally, represent and warrant to
Purchaser (which warranties and representations shall survive the Closing to the
extent set forth in Section 12.1 hereof regardless of what examinations,
inspections, audits and other investigations Purchaser has heretofore made or
may hereafter make, with respect to such warranties and representations), as of
the date hereof and as of the Closing Date as follows:
4.1 ORGANIZATION AND GOOD STANDING. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under the Contracts. To Seller's Knowledge, Seller is duly qualified to do
business as a foreign corporation and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification. True, complete and correct copies of Seller's
articles of incorporation, bylaws and any shareholder agreements (including all
amendments or modifications thereto) are attached hereto as SCHEDULE 4.1.
4.2 AUTHORITY; NO CONFLICT.
(a) Except for Consents of third parties described in Section 4.3
below, upon the execution and delivery by Seller of this Agreement and all other
documents contemplated hereby and required to be executed by Seller
(collectively, the "Seller's Closing Documents"), Seller's Closing Documents
will constitute the legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect that
affect creditors' rights generally and by legal and equitable limitations on the
availability of specific remedies. Seller has the absolute and unrestricted
right, power and authority to execute and deliver this Agreement and Seller's
Closing Documents and to perform its obligations under this Agreement and
Seller's Closing Documents. No other acts or proceedings on the part of Seller
will be necessary to authorize the performance of this Agreement or the Seller's
Closing Documents by Seller.
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(b) Upon the execution and delivery by each of the Principals of
this Agreement and all other documents contemplated hereby and required to be
executed by each of the Principals, such documents will constitute the legal,
valid and binding obligations of the Principals, enforceable against the
Principals in accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws from time to time in effect that affect creditors' rights
generally and by legal and equitable limitations on the availability of specific
remedies. No other acts or proceedings on the part of the Principals will be
necessary to authorize the performance of this Agreement or any other documents
contemplated hereby and required to be executed by the Principals.
(c) Neither the execution and delivery of this Agreement and the
Seller's Closing Documents, nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time):
(i) contravene, conflict with, or result in a violation of
any provision of Seller's Articles of Incorporation, Bylaws, Shareholders'
Agreement or other organizational documents;
(ii) to Seller's and Principals' Knowledge, conflict with,
or result in a violation of, or give any Governmental Body or other Person the
right to challenge any of the Contemplated Transactions or to exercise any
remedy or obtain any relief under, any Legal Requirement or any Order to which
Seller, or any of the Assets is subject except with respect to those Permits
listed on SCHEDULE 2.1(k) which are not transferrable;
(iii) conflict with, or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization
that is held by Seller or that otherwise relates to the Business or any of the
Assets except with respect to those Permits listed on SCHEDULE 2.1(k) which are
not transferrable;
(iv) to Seller's and Principals' Knowledge, cause Purchaser
to become subject to, or to become liable for the payment of, any Tax;
(v) conflict with, or result in a violation or breach of
any provision of, or give any Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any material Contract, except purchase orders, the
Facility Lease and the Collective Bargaining Agreement; or
(vi) result in the imposition or creation of any Encumbrance
upon or with respect to any of the Assets.
4.3 CONSENTS. Except as set forth on SCHEDULE 4.3 (the "Consents")
attached hereto, Seller is not nor will it be required to give any notice to or
obtain any consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
4.4 FINANCIAL STATEMENTS. Sellers have delivered to Purchaser:
(a) audited balance sheets of Seller as at December 31 in each of the years 1996
through 1997, and the related audited statements of income, changes in
stockholders' equity, and cash flow for each of the fiscal years then ended,
together
16
with the report thereon of Babush, Neiman, Xxxxxxx & Xxxxxxx, LLP,
independent certified public accountants, (b) an audited balance sheet of
Seller as at December 31, 1998 (including the notes thereto, the "December
Balance Sheet"), and the related audited statements of income, changes in
stockholders' equity, and cash flow for the fiscal year then ended, together
with the report thereon of Babush, Neiman, Xxxxxxx & Xxxxxxx, LLP,
independent certified public accountants, and (c) an unaudited balance sheet
of Seller as at June 30, 1999 (the "Interim Balance Sheet") and the related
unaudited statements of income, changes in stockholders' equity, and cash
flow for the six (6) months then ended. Such financial statements and notes
for the audited financial statements fairly present the financial condition
and the results of operations, changes in stockholders' equity, and cash flow
of Seller as at the respective dates of and for the periods referred to in
such financial statements, all in accordance with GAAP, subject, in the case
of interim financial statements, to normal recurring year-end adjustments
(the effect of which will not, individually or in the aggregate, be
materially adverse) and the absence of notes (that, if presented, would not
differ materially from those included in the December Balance Sheet). The
financial statements referred to in this Section 4.4 reflect the consistent
application of such accounting principles throughout the periods involved.
4.5 BOOKS AND RECORDS. The books of account, minute books, stock record
books, sales records, payment records, invoices, shipment records, production
records, customer complaint and recall records, purchasing records, and any and
all formulations (including, without limitation, governmental formulations) of
Seller, all of which have been made available to Purchaser, are true, complete
and correct and have been maintained in accordance with sound business practices
and on a consistent basis. The minute books of Seller contain accurate and
complete records of all meetings held of, and corporate action taken by, the
shareholders and the Boards of Directors of Seller.
4.6 TITLE TO AND CHARACTER OF ASSETS; FACILITY LEASE; REAL PROPERTY.
(a) Except as set forth on SCHEDULE 4.6(a), Seller owns and has
good and marketable title to all the Assets, free and clear of all Encumbrances,
except for Encumbrances related to Taxes or assessments not yet due and payable
(the "Permitted Encumbrances"). The Assets constitute all the tangible and
intangible personal property deemed necessary by Seller for the conduct of the
Business of Seller.
(b) Upon the sale, transfer and assignment of the Assets pursuant
to this Agreement, there shall be vested in Purchaser good and valid title to
all of the Assets free and clear of any Encumbrances, except for Permitted
Encumbrances.
(c) All of the equipment is sold "as is," "where is" with all
faults, other than Seller's computers which are in good operating condition.
There are no outstanding agreements, options or commitments of any nature
obligating Seller to transfer any of the Assets or the Assumed Liabilities or
rights or interests therein to any other party, other than Inventory in the
Ordinary Course of Business .
(d) The Facility Lease is the only office and place of business
relating to the Business, except for a sales office located at 000 X.X. Xxxxxxx
Xxx, X., Xxxxx Xxxxxxxxx, Xxx Xxxxxx.
(e) Seller does not own legal or equitable title to any real
property.
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4.7 RECEIVABLES. All Receivables of Seller that are reflected on the
December Balance Sheet or the Interim Balance Sheet or on the accounting
records of Seller as of the Closing Date represent or will represent valid
obligations arising from sales actually made or services actually performed
in the Ordinary Course of Business. Unless paid prior to the Closing Date,
the Receivables are or will be as of the Closing Date current and
collectible. Each of the Receivables either has been or will be collected in
full, without any set-off, within ninety days after the day on which it first
becomes due and payable. To Seller's and Principals' Knowledge, there is no
contest, claim, or right of set-off, other than immaterial returns in the
Ordinary Course of Business, which are consistent in amount with historical
amounts, under any Contract with any obligor of Receivables relating to the
amount or validity of such Receivables. It is understood that Seller retains
payments made on Receivables prior to the Closing Date, subject to the
requirement of Sections 2.1(e), 3.1 and 3.2 of this Agreement.
4.8 INVENTORY. All Inventory of Seller, whether or not reflected in
the December Balance Sheet or the Interim Balance Sheet, consists of a
quality and quantity usable and salable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all of which
have been written off or written down to net realizable value in the December
Balance Sheet or the Interim Balance Sheet or on the accounting records of
Seller as of the Closing Date, as the case may be or set forth on SCHEDULE 4.8
attached hereto. The quantities of each item of Inventory (whether raw
materials, work-in-process, or finished goods) are reasonable in Seller's
Ordinary Course of Business.
4.9 NO UNDISCLOSED LIABILITIES. To Seller's and Principals' Knowledge,
Seller has no liabilities or obligations of any nature (whether absolute,
accrued, contingent, or otherwise) except for Permitted Encumbrances,
liabilities or obligations reflected or reserved against in the December Balance
Sheet or the Interim Balance Sheet and current liabilities incurred in the
Ordinary Course of Business since the respective dates thereof.
4.10 TAXES.
(a) (i) Seller has filed or caused to be filed (on a timely
basis) all Tax Returns (or extensions thereof) that are or were required to
be filed by it pursuant to applicable Legal Requirements. Seller has
delivered to Purchaser copies of all such Tax Returns filed since 1994. An
extension of time to file any Tax Return that has not been filed has not been
required or granted. Seller has paid all Taxes that have or may have become
due pursuant to those Tax Returns or otherwise, or pursuant to any assessment
received by Sellers through the date of this Agreement;
(ii) Except as otherwise reserved against or reflected in
the December Balance Sheet or the Interim Balance Sheet, all Taxes that Seller
is or was required by Legal Requirements to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Body or other Person;
(iii) Seller has not incurred any liability with respect to
any Taxes except in the Ordinary Course of Business; and
(iv) the Tax Returns are true, accurate and complete in all
respects and properly reflect the liabilities, if any, of Seller for Taxes for
the periods, property or events covered thereby.
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(b) To Seller's and Principals' Knowledge, there is no dispute as
to Taxes payable by Seller that could have or result in any adverse effect on
the Assets, the Business or, after the Closing Date, the Purchaser.
(c) There is no tax sharing agreement that will require any
payment by Seller after the date of this Agreement.
(d) There are no liens for Taxes (other than for current Taxes not
yet due and payable) on the Assets.
4.11 NO MATERIAL ADVERSE CHANGE. Since the date of the December Balance
Sheet, there has not been any material adverse change in the business,
operations, properties, assets, or condition of Seller, and to Seller's and
Principals' Knowledge there has not been any material adverse change in Seller's
prospects and no event has occurred or circumstance exists that may result in
such a material adverse change; PROVIDED, HOWEVER, no representation or warranty
is made as to political or legislative efforts to change laws or regulations
which could have a material adverse affect on the Business, including without
limitation Code Section 5010.
4.12 EMPLOYEE BENEFITS.
(a) (i) SCHEDULE 4.12(a)(i) contains a complete and accurate
list of all Company Plans and Company Other Benefit Obligations, and identifies
as such all Company Plans that are Qualified Plans.
(ii) Seller has no Affiliates that, together with Seller,
would be treated as a single employer under Code Section 414.
(iii) Seller has not established, maintained, or contributed
to or otherwise participated in, or had an obligation to maintain, contribute
to, or otherwise participate in, any Multi-Employer Plan;
(iv) Seller has no post-retirement benefits other than the
plan listed on SCHEDULE 4.12(a)(iv).
(v) Seller has no obligations owed under any Company Plan
or Company Other Benefit Obligation.
(vi) Neither Seller nor any of its employees have
established or participate in any voluntary employees' beneficiary association
as described under Code Section 501(c)(9).
(b) Seller has delivered to Purchaser, or will deliver to
Purchaser within fifteen (15) days of the date of this Agreement:
(i) all documents (and amendments or modifications thereto)
that set forth the terms of each Company Plan, Company Other Benefit Obligation,
or Company VEBA and of any related trust, including (A) all plan descriptions
and summary plan descriptions of Company Plans for which Seller is required to
prepare, file, and distribute plan descriptions and summary plan descriptions,
19
and (B) all summaries and descriptions furnished to participants and
beneficiaries regarding Company Plans, Company Other Benefit Obligations, and
Company VEBAs for which a plan description or summary plan description is not
required;
(ii) all current personnel, payroll, and employment manuals
and policies;
(iii) all collective bargaining agreements pursuant to which
contributions have been made or obligations incurred (including both pension and
welfare benefits) by Seller and the ERISA Affiliates of Seller, if any, and all
collective bargaining agreements pursuant to which contributions are being made
or obligations are owed by such entities;
(iv) a written description of any Company Plan or Company
Other Benefit Obligation that is not otherwise in writing;
(v) all registration statements filed with respect to any
Company Plan;
(vi) all current insurance policies purchased by or to
provide benefits under any Company Plan;
(vii) all current contracts with third party administrators,
actuaries, investment managers, consultants, and other independent contractors
that relate to any Company Plan or Company Other Benefit Obligation;
(viii) all reports submitted within the three years preceding
the date of this Agreement by third party administrators, actuaries, investment
managers, consultants, or other independent contractors with respect to any
Company Plan or Company Other Benefit Obligation;
(ix) all notifications to employees of their rights under
ERISA Section 601 et seq. and Code Section 4980B that have been distributed
within the three years preceding the date of this Agreement;
(x) the Form 5500 filed in each of the most recent three
plan years with respect to the Company Plan, including all schedules thereto and
the opinions of independent accountants, if applicable;
(xi) all notices that were given by Seller or any Company
Plan to the IRS or any participant or beneficiary, pursuant to statute, within
the three years preceding the date of this Agreement, including notices that are
expressly mentioned elsewhere in this Section 4.12;
(xii) all notices that were given by the IRS, the PBGC, or
the Department of Labor to Seller or any Company Plan within the four years
preceding the date of this Agreement; and
(xiii) with respect to Qualified Plans, the most recent
determination letter for each Plan of Seller that is a Qualified Plan.
(c) (i) Seller has substantially performed its obligations
under all Company Plans and Company Other Benefit Obligations. Seller has made
appropriate entries in their financial
20
records and statements for all obligations and liabilities under such Plans
and Obligations that have accrued but are not due;
(ii) no statement, either written or oral, has been made by
Seller to any Person with regard to any Plan or Other Benefit Obligation that is
not in substantial accordance with the Plan or Other Benefit Obligation and that
could have substantial adverse economic consequence to Seller, the Business, the
Assets or to Purchaser; and
(iii) except to the extent required under ERISA Section 601
et seq. and Code Section 4980B, Seller provides no health or welfare benefits
for any retired or former employee or is obligated to provide health or welfare
benefits to any active employee following such employee's retirement or other
termination of service;
(iv) Seller has the right to modify and terminate benefits
to retirees (other than pensions) with respect to both retired and active
employees;
(v) Except as disclosed on SCHEDULE 4.12(c), Seller has
complied with the provisions of ERISA Section 601 et seq. and Code Section
4980B;
(vi) no payment that is owed or may become due to any
director, officer, employee, or agent of Seller will be non-deductible to Seller
or subject to tax under Code Section 280G or Section 4999; nor will Seller be
required to "gross up" or otherwise compensate any such person because of the
imposition of any excise tax on a payment to such person; and
(vii) Except as disclosed on SCHEDULE 4.12(c), the
consummation of the Contemplated Transactions will not result in the payment,
vesting, or acceleration of any benefit.
(d) Except as set forth on SCHEDULE 4.12(d), Seller is not, with
respect to the Business, (i) a party to any collective bargaining agreement,
(ii) no such agreement determines the terms and conditions of employment of any
employees, (iii) no collective bargaining agent has been certified as a
representative of any employees, (iv) no representation campaign or election is
now in progress with respect to any leased employee, if any, (v) to Seller's and
Principals' Knowledge, there is no labor trouble, dispute, grievance, strike,
unfair labor practices or request for union representation pending, or
Threatened, relating to or affecting the Business, and (vi) to Seller's and
Principals' Knowledge, there is no occurrence or any event which is likely to
give rise to any such trouble, dispute, strike or request for representation
(including, but not limited to, any unfair labor practice charge).
4.13 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
(a) (i) Seller is in material compliance with each Legal
Requirement that is applicable to it or to the conduct or operation of the
Business or the ownership or use of any of the Assets;
(ii) To Seller's and Principals' Knowledge, no event has
occurred or circumstance exists that (with or without notice or lapse of time)
(A) may constitute or result in a material violation by Seller of, or a failure
on the part of Seller to comply with, any Legal Requirement,
21
or (B) may give rise to any obligation on the part of Seller to undertake, or
to bear all or any portion of the cost of, any remedial action of any nature;
and
(iii) Except as set forth on SCHEDULE 4.13(a)(iii), neither
Seller nor the Principals have received since January 1, 1994 any notice or
other communication (whether oral or written) from any Governmental Body or any
other Person regarding (A) any actual, alleged, possible, or potential violation
of, or failure to comply with, any Legal Requirement, or (B) any actual,
alleged, possible, or potential obligation on the part of Seller to undertake,
or to bear all or any portion of the cost of, any remedial action of any nature.
(b) SCHEDULE 4.13(b) contains a complete and accurate list of each
Governmental Authorization that is held by Seller and relates to the Business or
to any of the Assets. To Seller's and Principals' Knowledge, each Governmental
Authorization listed in SCHEDULE 4.13(b) is valid and in full force and effect.
(i) Seller is in material compliance with all of the terms
and requirements of each Governmental Authorization identified or required to be
identified in SCHEDULE 4.13(b);
(ii) To Seller's and Principals' Knowledge, no event has
occurred or circumstance exists that may (with or without notice or lapse of
time) (A) constitute or result directly or indirectly in a violation of any term
or requirement of any Governmental Authorization listed or required to be listed
in SCHEDULE 4.13(b), or (B) result directly or indirectly in the revocation,
withdrawal, suspension, cancellation, or termination of, or any modification to,
any Governmental Authorization listed or required to be listed in SCHEDULE
4.13(b); and
(iii) Except as set forth on SCHEDULE 4.13(b)(iii), neither
Seller nor the Principals have received any notice or other communication
(whether oral or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or (B) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification to any
Governmental Authorization.
The Governmental Authorizations listed in SCHEDULE 4.13(b) collectively
constitute all of the Governmental Authorizations necessary to permit Seller to
lawfully conduct and operate the Business in the manner it currently conducts
and operates the Business and to permit Seller to own and use the Assets in the
manner in which it currently owns and uses such Assets.
4.14 LEGAL PROCEEDINGS; ORDERS.
(a) There is no pending Proceeding:
(i) that has been commenced by or against Seller or that
otherwise relates to or may adversely affect the Business or any of the Assets;
or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
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(b) Except as set forth on SCHEDULE 4.14(b), to the Knowledge of
Seller and the Principals,
(i) no Proceeding has been Threatened; and
(ii) no event has occurred or circumstance exists that may
give rise to or serve as a basis for the commencement of any Proceeding
described in Section 4.14(a).
(c) (i) There is no Order to which Seller or any of the Assets
is subject;
(ii) neither Seller nor any of the Principals is subject to
any Order that relates to the Business or any of the Assets; and
(d) Neither Seller nor any of its officers, directors,
shareholders, employees or constituent partners, on behalf of, or for the
benefit of, Seller, directly or indirectly, have done any of the following:
(i) offered, paid or received any remuneration to or from,
or made any arrangement with, any of the past or present customers or potential
customers in order to obtain business, other than standard pricing or discount
arrangements or other arrangements consistent with proper business practices and
applicable law;
(ii) given or received, or agreed to give or receive, or is
aware that there has been made, or that there is an agreement to make or
receive, any gift or gratuitous payment of any kind, nature or description
(whether in money, property or services) to any past or present customer,
supplier, source of financing, landlord, subtenant, licensee or anyone else at
any time, other than gifts and gratuitous payments that are consistent with
proper business practices and applicable law;
(iii) made, or has agreed to make, or is aware that there is
any agreement to make, any political contribution or any contributions, payments
or gifts of their respective funds or property to or for the private use of any
governmental official, employee or agent, where either the payment or the
purpose of such contribution, payment or gift relates to the Business and is
illegal under the laws of the United States, any state thereof or any other
jurisdiction (foreign or domestic); or
(iv) except as set forth on SCHEDULE 4.14(d)(iv), made, or
has agreed to make, or is aware that there have been made or that there is any
agreement to make, any payments to any persons with the intention or
understanding that any part of such payment was to be used, directly or
indirectly, for the benefit of any past or present customer, employee, supplier
or landlord of Seller for any purpose other than that reflected in the documents
supporting the payments.
4.15 BROKERS. Neither this Agreement nor the Contemplated Transactions
was induced by or procured through any person, firm, corporation or other entity
acting on behalf of, or representing, Seller as a broker, finder, investment
banker, financial advisor or in any similar capacity.
4.16 ABSENCE OF CERTAIN CHANGES AND EVENTS. Since the date of the
December Balance Sheet, Seller has conducted the Business only in the Ordinary
Course of Business and, except as set forth on SCHEDULE 4.16 attached hereto,
outside of the Ordinary Course of Business, there has not been any:
23
(a) damage to or destruction or loss of any Asset or property of
Seller, whether or not covered by insurance, materially and adversely affecting
the properties, Assets, Business, financial condition, or prospects of Seller,
taken as a whole;
(b) entry into, amendment of, termination of, or receipt of notice
of termination of (i) any material license, distributorship, dealer, joint
venture, or similar agreement, or (ii) any Contract or transaction involving a
total remaining commitment by or to Seller of at least Fifty Thousand and No/100
Dollars ($50,000.00);
(c) sale (other than sales of Inventory in the Ordinary Course of
Business), lease, assignment, transfer, Encumbrance or other disposition of any
Asset of Seller, including the sale, lease, or other disposition of any of the
Intellectual Property;
(d) material change in the accounting methods by Seller relating
to the Business, Assets or the revaluation by Seller of any of the Assets;
(e) incurrence of any obligation or liability (absolute or
contingent), except for current liabilities incurred, and obligations under
contracts entered into, in the Ordinary Course of Business;
(f) except for the loan from LaSalle National Bank, discharge or
satisfaction of any Encumbrance, or payment of any obligation or liability,
absolute or contingent, by Seller relating to the Business or the Assets, other
than current liabilities shown on the December Balance Sheet and current
liabilities incurred since that date in the Ordinary Course of Business;
(g) release, compromise, waiver or cancellation of any debts to or
claims by Seller relating to the Business or the Assets, except in each case in
the Ordinary Course of Business, or waiver of any rights of substantial value;
(h) other event or condition of any character that has or might
reasonably have a material adverse effect on the Business or the Assets
(excluding events or conditions, if any, of public knowledge or of a general
economic, market or similar nature);
(i) failure by Seller to satisfy any of its debts, obligations or
liabilities as the same become due and owing; or
(j) agreement or commitment, whether oral or written, by Seller to
do any of the foregoing.
4.17 CONTRACTS.
(a) SCHEDULE 4.17(a) contains a true, correct and complete list,
and Seller has delivered to Purchaser true, correct and complete copies, of:
(i) all Contracts other than purchase orders that are
reasonably likely to be in existence after the Closing Date;
24
(ii) each Contract that was not entered into in the Ordinary
Course of Business and that involves expenditures or receipts of Seller in
excess of Ten Thousand and No/100 Dollars ($10,000.00);
(iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Contract affecting the
ownership of the Assets and the Assumed Liabilities;
(iv) each licensing agreement or other Contract with respect
to patents, trademarks, copyrights, or other intellectual property, including
agreements with current or former employees, consultants, or contractors
regarding the appropriation or the non-disclosure of any of the Intellectual
Property;
(v) each collective bargaining agreement and other Contract
to or with any labor union or other employee representative of a group of
employees;
(vi) each joint venture, partnership, and other Contracts
(however named) involving a sharing of profits, losses, costs, or liabilities by
Seller with any other Person;
(vii) each Contract providing for payments to or by any
Person based on sales, purchases, or profits, other than direct payments for
goods;
(viii) each power of attorney relating to Seller or the
Business that is currently effective and outstanding;
(ix) each Contract entered into other than in the Ordinary
Course of Business that contains or provides for an express undertaking by
Seller to be responsible for consequential damages;
(x) each Contract for capital expenditures; and
(xi) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
(b) Each Contract is in full force and effect and is valid and
enforceable in accordance with its terms with respect to Seller, and to Seller's
and Principals' Knowledge, each Contract (other than purchase orders) is in full
force and effect and is valid and enforceable in accordance with its terms with
respect to other parties thereto.
(c) (i) Seller is in material compliance with all applicable
terms and requirements of each Contract;
(ii) to Seller's and Principals' Knowledge, each other
Person that has or had any obligation or liability under any Contract under
which Seller has or had any rights is in substantial compliance with all
applicable terms and requirements of such Contract;
25
(iii) except as set forth on SCHEDULE 4.17(c), no event has
occurred or circumstance exists that (with or without notice or lapse of time)
may contravene, conflict with, or result in a violation or breach of any
Contract; and
(iv) neither Seller nor the Principals have given to or
received from any other Person any notice or other communication (whether oral
or written) regarding any actual, alleged, possible, or potential violation or
breach of, or default under, any Contract.
(d) There are no current renegotiations of, or outstanding rights
to renegotiate any material amounts paid or payable to Seller under current or
completed Contracts with any Person and, to the Knowledge of Seller and the
Principals, no such Person has made written demand for such renegotiation.
(e) The Contracts relating to the sale, manufacture, or provision
of products or services by Seller in connection with the Business have been
entered into in the Ordinary Course of Business.
(f) Neither Seller nor the Principals have received notice
(whether written or oral) that any party to any Contract intends to cancel,
suspend or terminate any of the Contracts or to exercise any options under any
of the Contracts.
4.18 INSURANCE.
(a) SCHEDULE 4.18 is a true and complete list of all Insurance
Policies, together with a list of all outstanding claims under each Insurance
Policy.
(b) (i) To Seller's and Principals' Knowledge, the Insurance
Policies are in full force and effect in accordance with their terms, (ii) no
notice of cancellation has been received, and, to Seller's and Principals'
Knowledge, there is no existing default or event which, with the giving of
notice or lapse of time or both, would constitute a default thereunder, (iii)
such policies are in amounts which are deemed adequate by Seller in relation to
the Business and the Assets, (iv) all premiums to date have been paid in full,
and (v) Seller has not been refused any insurance, or had its coverage limited
by any insurance carrier to which it has applied for insurance or with which it
has carried insurance.
4.19 ENVIRONMENTAL MATTERS.
(a) Seller is, and at all times has been, in substantial
compliance with, and has not been and is not in violation of or liable under,
any Environmental Law. Neither Seller nor any of the Principals have a basis to
expect, nor have the Principals or Seller received, any actual or Threatened
Order, notice, or other communication from (i) any Governmental Body or private
citizen acting in the public interest, or (ii) the current or prior owner or
operator of the Facility, of any actual or potential violation or failure to
comply with any Environmental Law, or of any actual or Threatened obligation to
undertake or bear the cost of any Environmental, Health, and Safety Liabilities
with respect to the Facility.
(b) There are no pending or, to the Knowledge of Seller and the
Principals, Threatened claims, Encumbrances, or other restrictions of any
nature, resulting from any Environmental,
26
Health, and Safety Liabilities or arising under or pursuant to any
Environmental Law, with respect to or affecting the Facility.
(c) To Seller's and Principals' Knowledge, Seller has no
Environmental, Health, and Safety Liabilities with respect to the Facility.
(d) To Seller's and Principals' Knowledge, there are no Hazardous
Materials (excluding Seller's use of ethyl alcohol, ethyl acetate and laboratory
chemicals in the Ordinary Course of Business in accordance with Environmental
Laws) present on or in the Environment at the Facility, including any Hazardous
Materials contained in barrels, above or underground storage tanks, landfills,
land deposits, dumps, equipment (whether moveable or fixed) or other containers,
either temporary or permanent, and deposited or located in land, water, sumps,
or any other part of the Facility. Seller has not permitted or conducted, or is
aware of, any Hazardous Activity conducted with respect to the Facility.
(e) To Seller's and Principals' Knowledge, there has been no
Release or, to the Knowledge of Seller and the Principals, Threat of Release, of
any Hazardous Materials at or from the Facility.
(f) Seller has delivered to Purchaser true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by Seller pertaining to Hazardous Materials or Hazardous Activities
in, on, or under the Facility, or concerning compliance by Seller or in the
possession of Seller with respect to any other Person for whose conduct Seller
is or may be held responsible, with Environmental Laws.
4.20 EMPLOYEES.
(a) SCHEDULE 4.20(a) contains a true, correct and complete list of
the following information for each employee of Seller, including each employee
on leave of absence or layoff status: employee; name; job title; current
compensation paid or payable and any change in compensation since December 31,
1998; vacation accrued; and service credited for purposes of vesting and
eligibility to participate under Seller's pension, retirement, profit-sharing,
thrift-savings, deferred compensation, stock bonus, stock option, cash bonus,
employee stock ownership (including investment credit or payroll stock
ownership), severance pay, insurance, medical, welfare, vacation plan or other
Company Plan.
(b) To Seller's and Principals' Knowledge, no employee of Seller
is a party to, or is otherwise bound by, any agreement or arrangement, including
any confidentiality, noncompetition, or proprietary rights agreement, between
such employee and any other Person that in any way adversely affects or will
affect the performance of his duties as an employee of Seller, or if applicable,
Purchaser.
(c) SCHEDULE 4.20(c) also contains a complete and accurate list of
the following information for each retired employee of Seller, or their
dependents, receiving benefits or scheduled to receive benefits in the future:
name, pension benefit, pension option election, retiree medical insurance
coverage, retiree life insurance coverage, and other benefits.
27
4.21 INTELLECTUAL PROPERTY.
(a) SCHEDULE 4.21(a) contains a true, correct and complete list
and summary description, including any royalties paid or received by Seller, of
all Contracts relating to the Intellectual Property to which Seller is a party
or by which Seller is bound, except for any license implied by the sale of a
product and perpetual, paid-up licenses for commonly available software programs
with a value of less than $1,000 under which Seller is the licensee. There are
no outstanding and, to Seller's and Principals' Knowledge, no Threatened
disputes or disagreements with respect to any such agreement.
(b) The Assets that are Intellectual Property are all those deemed
necessary by Seller for the operation of the Business as it is currently
conducted. Except as disclosed on SCHEDULE 4.21(b), Seller is the owner of all
right, title, and interest in and to the formulas and customer lists, free and
clear of all Encumbrances, and has the right to use without payment to a third
party all of the Intellectual Property.
(c) Seller owns no Patents.
(d) (i) SCHEDULE 4.21(d) contains a true, correct and complete
list and summary description of all Marks owned by Seller. Seller is the owner
of all right, title, and interest in and to each of the Marks, free and clear of
all Encumbrances;
(ii) to Seller's and Principals' Knowledge, all Marks that
have been registered with the United States Patent and Trademark Office, if any,
are currently in compliance with all formal Legal Requirements (including the
timely post-registration filing of affidavits of use and incontestability and
renewal applications), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety days after the
Closing Date;
(iii) to Seller's and Principals' Knowledge, no Xxxx has been
or is now involved in any opposition, invalidation, or cancellation and, to
Seller's and Principals' Knowledge, no such action is Threatened with the
respect to any of the Marks;
(iv) to Seller's and Principals' Knowledge, other than PYA
Monarch, there is no potentially interfering trademark or trademark application
of any third party;
(v) no Xxxx is infringed or, to Seller's and Principals'
Knowledge, has been challenged or Threatened in any way. To Seller's and
Principals' Knowledge, none of the Marks used by Seller infringes or is alleged
to infringe any trade name, trademark, or service xxxx of any third party; and
(vi) all products and materials containing a Xxxx xxxx the
proper federal registration notice where permitted by law.
(e) Seller owns no copyrights.
(f) (i) With respect to the formulas, customer lists and sales
information specific to each of Seller's customers, the documentation relating
to such formulas, customer lists and sales information specific to each of
Seller's customers is current, accurate, and sufficient in detail and
28
content to identify and explain it and to allow its full and proper use
without reliance on the knowledge or memory of any individual;
(ii) Seller has taken all reasonable precautions to protect
the secrecy, confidentiality, and value of its Trade Secrets; and
(iii) Seller has good title and an absolute (but not
necessarily exclusive) right to use the formulas, customer lists and sales
information specific to each of Seller's customers. The formulas, customer
lists and sales information specific to each of Seller's customers are not part
of the public knowledge or literature, and, to Seller's and Principals'
Knowledge, have not been used, divulged, or appropriated either for the benefit
of any Person or to the detriment of Seller. The formulas, customer lists and
sales information specific to each of Seller's customers are not subject to any
adverse claim or have been challenged or Threatened in any way.
(g) To Seller's and Principals' Knowledge,
(i) All Systems are Year 2000 Compliant; are designed to be
used prior to, during, and after the calendar Year 2000; will operate
consistently, predictably and accurately, without interruption or manual
intervention, and in accordance with all requirements of this Agreement, in
relation to dates they encounter or process;
(ii) All date recognition and processing by the Systems will
include the Four Digit Year Format and will correctly recognize and process the
date of February 29, and any related data, during Leap Years; and that all date
sorting by the Systems that includes a "year category" shall be done based on
the Four Digit Year Format;
(iii) To the extent that the Systems will accept data from
other systems and sources that are not Year 2000 Compliant, the Systems will
properly recognize, calculate, sort, store, output and otherwise process such
data in a manner that eliminates any and all century ambiguity so that the
Systems remain Year 2000 Compliant; and
(iv) The Systems of all suppliers, vendors, agents, services
or other third parties whose activities and/or services affect the operations of
the Business are Year 2000 Compliant.
4.22 RELATIONSHIPS WITH RELATED PERSONS. Neither Seller, nor the
Principals nor any Related Person of Seller has had any interest in any of the
Assets (whether real, personal, or mixed and whether tangible or intangible).
Neither Seller, nor the Principals, nor any Related Person of Seller or the
Principals owns or has owned during the periods covered by the financial
statements referred to in Section 4.4 hereof, (of record or as a beneficial
owner), an equity interest or any other financial or profit interest in, a
Person (other than publicly traded companies) that has (a) had business dealings
or a financial interest in any transaction with Seller, or (b) engaged in
competition with Seller with respect to any line of the products or services of
Seller. Neither Seller, nor the Principals, nor any Related Person of Seller or
the Principals is a party to any Contract with, or has any claim or right
against, Seller.
4.23 CONDITIONS AFFECTING SELLER. Seller has no reason to believe that
any material loss or resignation of any agents, independent contractors or
suppliers will result because of the consummation of the Contemplated
Transactions. Seller has not received notice (written or oral) of the potential
loss of
29
any of its customers as a result of the pendency of the Contemplated
Transactions, has no reason to believe such a loss will occur, but makes no
representation that Purchaser will retain all of the Business' customers
after the Closing Date. Notwithstanding anything to the contrary in this
Agreement, nothing in this Section 4.23 shall be deemed a waiver by Purchaser
of its rights under Sections 4.11, 4.16, 6.1, 6.2, 6.3, 8.1 and 8.6.
4.24 NO SUBSIDIARIES. Seller does not own, either of record,
beneficially or equitably, any capital stock or other securities or any other
direct or indirect interest in any firm, corporation or other entity (including
any joint venture or partnership).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller and the Principals as
of the date of this Agreement (which warranties and representations shall
survive the Closing, to the extent set forth in Section 12.1 hereof, regardless
of what examinations, inspections, audits and other investigations Seller has
made or may hereafter make, with respect to such warranties and representations)
and as of the Closing Date, as follows:
5.1 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
5.2 AUTHORITY; NO CONFLICT.
(a) Upon the execution and delivery by Purchaser of this Agreement
and any other document required to be delivered by Purchaser herein
(collectively, the "Purchaser's Closing Documents"), the Purchaser's Closing
Documents will constitute the legal, valid, and binding obligations of
Purchaser, enforceable against Purchaser in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time in
effect that affect creditors' rights generally and by legal and equitable
limitations on the availability of specific remedies. Purchaser has the
absolute and unrestricted right, power and authority to execute and deliver this
Agreement and Purchaser's Closing Documents and to perform its obligations under
this Agreement and Purchaser's Closing Documents. No other acts or proceedings
on the part of Purchaser will be necessary to authorize the performance of this
Agreement, or the Purchaser's Closing Documents by Purchaser.
(b) Neither the execution and delivery of this Agreement and the
Purchaser's Closing Documents nor the consummation or performance of any of the
Contemplated Transactions by Purchaser will directly or indirectly (with or
without notice or lapse of time):
(i) contravene, conflict with or result in a violation of
any provision of Purchaser's Certificate of Organization, Bylaws or other
organizational documents; or
(ii) to Purchaser's Knowledge, conflict with, or result in a
violation of any Legal Requirement or any Order to which Purchaser is subject.
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5.3 CONSENTS. Except for an HSR Act filing, if applicable, and any
Consents previously obtained, Purchaser is not and will not be required to
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
5.4 BROKERS. Neither this Agreement nor the Contemplated Transactions
was induced by or procured through any person, firm, corporation or other entity
acting on behalf of, or representing, Purchaser as a broker, finder, investment
banker, financial advisor or in any similar capacity.
5.5 FINANCIAL ABILITY. Purchaser has the financial ability to
consummate the asset purchase contemplated hereunder, subject to receiving
financing.
5.6 BUSINESS OPERATION. Purchaser has the knowledge and experience to
operate the Business.
5.7 YEAR 2000. To Purchaser's Knowledge:
(a) all Purchaser's Systems are Year 2000 Compliant; are designed
to be used prior to, during, and after the calendar Year 2000; will operate
consistently, predictably and accurately, without interruption or manual
intervention, and in accordance with all requirements of this Agreement, in
relation to dates they encounter or process;
(b) all date recognition and processing by the Purchaser's Systems
will include the Four Digit Year Format and will correctly recognize and process
the date of February 29, and any related data, during Leap Years; and that all
date sorting by the Purchaser's Systems that includes a "year category" shall be
done based on the Four Digit Year Format;
(c) to the extent that the Purchaser's Systems will accept data
from other systems and sources that are not Year 2000 Compliant, the Purchaser's
Systems will properly recognize, calculate, sort, store, output and otherwise
process such data in a manner that eliminates any and all century ambiguity so
that the Purchaser's Systems remain Year 2000 Compliant; and
(d) the Purchaser's Systems of all suppliers, vendors, agents,
services or other third parties whose activities and/or services affect the
operations of Purchaser are Year 2000 Compliant.
ARTICLE VI
COVENANTS OF SELLER
6.1 OPERATION OF THE BUSINESS. Unless Purchaser shall otherwise agree
in writing, from and after the date of this Agreement and until the Closing
Date, which agreement shall not be unreasonably withheld, Seller shall:
(a) carry on the Business in the Ordinary Course of Business;
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(b) refrain from doing, or causing to be done, anything which
would cause the representations and warranties set forth in Article IV of
this Agreement from not being true, complete and correct on the Closing Date
as if made on such date;
(c) continue to insure itself and the Assets and all property
owned or leased by Seller in accordance with the manner disclosed in Section
4.18, and to use, operate, maintain and repair the Assets consistent with
past practices;
(d) not enter into any Contract or agreement for the purchase
of goods, equipment or services without Purchaser's prior written consent,
except in the Ordinary Course of Business;
(e) not enter into any agreement to sell Assets or supply
services to others without Purchaser's prior written consent, except in the
Ordinary Course of Business;
(f) use commercially reasonable efforts (without making any
commitments on behalf of Purchaser) to preserve the Business intact, and to
preserve for Purchaser the present relationships with customers, suppliers,
agents, independent contractors, franchisors, lenders, agents and others
having business relationships with Seller;
(g) refrain from doing any act or omitting to do any act, or
permitting any act or omission to act, which will cause a breach of any
contract, commitment or obligation of Seller related to the Business, the
Assets or the Assumed Liabilities;
(h) promptly notify Purchaser in writing of any written or
Threatened investigation or Proceeding by or relating to Seller, the Assets,
the Business or this Agreement before any court or governmental department,
commission, board, bureau, agency or instrumentality;
(i) refrain from doing any act or omitting to do any act, or
permitting any act or omission to act, which will cause any of the Assets to
be depleted or any of the Receivables or trade payables to be collected on an
accelerated basis, other than in the Ordinary Course of Business;
(j) use its best efforts to cause all of the conditions to the
obligations of Seller under this Agreement to be satisfied on or prior to the
Closing Date;
(k) not amend its Certificate of Incorporation, Bylaws,
Shareholders' Agreement or any of its other organizational documents;
(l) promptly disclose in writing to Purchaser any information
contained in Seller's representations and warranties contained in this
Agreement which is incomplete or incorrect as of all times after the date of
this Agreement until the Closing Date; PROVIDED, HOWEVER, that none of such
inaccurate or incomplete disclosures shall be deemed to modify, amend or
supplement the representations and warranties of Seller in this Agreement for
the purposes of Article IV of this Agreement; PROVIDED, FURTHER that if, and
only if, Seller notifies Purchaser in writing of any such incomplete or
inaccurate representation or warranty herein prior to the Closing and
Purchaser consummates the Contemplated Transactions after receipt of such
written notice, then Purchaser shall not be entitled to pursue any remedies
under Section 12.2(b) with respect to only such matter, but shall be entitled
to pursue any remedies thereunder as to other matters.
32
(m) not terminate any of its employees without the prior
written consent of Purchaser, other than in the Ordinary Course of Business;
(n) not dispose of or modify or alter the Assets, other than in
the Ordinary Course of Business, or incur, create or assume any Encumbrance
on any Asset;
(o) take any action which could reasonably be expected to
prevent or materially delay the consummation of the Contemplated
Transactions;
(p) terminate all of its employees immediately prior to Closing;
(q) without limiting the generality of any of the foregoing,
if, at any time prior to the Closing, Seller receives notice (written or
oral) that any of Seller's customers do not desire to do business with
Purchaser subsequent to the Closing, Seller shall promptly notify Purchaser
in writing of the same; and
(r) agree to do any of the foregoing.
6.2 ACCESS AND INVESTIGATION; HSR FILING BY PURCHASER AND SELLER.
(a) Purchaser and its representatives, agents and financing
sources will have reasonable and appropriate access to the Facility and the
records (financial and otherwise) of Seller at any time during normal
business hours during a period commencing on the date hereof and ending
forty-five (45) days thereafter (the "Inspection Period"), at Purchaser's
sole cost and expense, to perform its due diligence review and to perform any
tests, borings, inspections, surveys, studies, preliminary environmental site
assessments and measurements which Purchaser reasonably deems necessary or
appropriate; PROVIDED, HOWEVER, that if, after receipt of the preliminary
site assessment reports, Purchaser deems it reasonably necessary to perform
additional environmental tests, the Inspection Period may, at Purchaser's
option, be extended for an additional forty-five (45) days. In conducting
its inspection and due diligence review pursuant to this Section 6.2,
however, neither Purchaser nor its representatives, agents, or financial
sources may directly or indirectly contact any of Seller's employees,
customers, distributors or suppliers without Seller's prior written consent,
which consent shall not be unreasonably withheld.
(b) Within fifteen (15) days following its execution of this
Agreement, Seller will furnish to Purchaser true, correct and complete copies
of all records, documentation and other information in its possession (or in
the possession of Seller's attorneys or other representatives) as Purchaser
may reasonably request concerning the ownership, use, operation and condition
of the Business and the Assets.
(c) Within thirty (30) days following its execution of this
Agreement, Purchaser and Seller shall prepare and file all notifications and
documents required to be filed for the Contemplated Transaction to comply
with the HSR Act, if necessary. Purchaser and Seller shall each be
responsible for all its costs, filing fees and expenses (including reasonable
attorneys' fees) associated with the preparation and filing of all documents
required under the HSR Act; PROVIDED, HOWEVER, that all notifications and
documents in connection with the HSR Act must be submitted to the other party
for its approval (which shall not be unreasonably withheld or delayed) prior
to filing.
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(d) After the Closing, Purchaser and its representatives and
agents shall have access to those business records, computer records, billing
and accounting records required to be kept by the BATF until the final BATF
audit of Seller is completed. Promptly following the completion of the BATF
audit, Seller shall deliver all such records to Purchaser.
6.3 TERMINATION. Purchaser will have the right, in its sole and
absolute discretion, to terminate this Agreement at any time during the
Inspection Period (as it may be extended pursuant to Section 6.2) for any
reason whatsoever. Purchaser will notify Seller and the Principals in
writing of its intention to terminate this Agreement pursuant to this Section
6.3 prior to 5:00 p.m. E.S.T. on the last day of the Inspection Period (or,
if the last day of the Inspection Period is not a business day, prior to 5:00
p.m. E.S.T. on the first business day following the end of the Inspection
Period). If Purchaser fails to so notify Seller within such time period,
then all rights of Purchaser to terminate this Agreement pursuant to this
Section 6.3 will be null and void and of no further force or effect. If the
sale shall not have been consummated within fifteen (15) days of the end of
the Inspection Period (including any extension thereof), and if Seller and
Principals shall not be or have been in violation of any of Seller's and
Principals' covenants, representations or warranties, Seller may terminate
this Agreement.
6.4 NEGATIVE COVENANT. Except as otherwise expressly permitted by
this Agreement, between the date hereof and the Closing Date, Seller will
not, without prior consent of Purchaser (which consent shall not be
unreasonably withheld or delayed), take any affirmative action, or fail to
take any reasonable action within its control, as a result of which any of
the changes or events listed in Section 4.16 is likely to occur.
6.5 REQUIRED CONSENTS. As promptly as practicable after the date of
this Agreement, Seller will make all filings required by Legal Requirements
to be made by it in order to consummate the Contemplated Transactions
(including all filings under the HSR Act, if applicable). Between the date
of this Agreement and the Closing Date, Seller will (a) cooperate with
Purchaser with respect to all filings that Purchaser elects to make or is
required by Legal Requirements to make in connection with the Contemplated
Transactions, and (b) obtain all Consents identified in SCHEDULE 4.3
(including taking all actions requested by Purchaser to cause early
termination of any applicable waiting period under the HSR Act, if
applicable). Prior to Closing, Seller and Principals shall use their best
efforts to obtain a consent from the landlord regarding the Facility Lease.
6.6 NO SHOP. From the date of this Agreement until the earlier of
the Closing Date or the termination of this Agreement pursuant to its terms,
Seller agrees that it will not and will not permit any of its officers,
directors, employees, representatives, agents, or Affiliates to, directly or
indirectly, (a) initiate, solicit or encourage (including by way of
furnishing information), any inquiries or the making of any proposal or offer
that constitutes, or may reasonably be expected to lead to, an Acquisition
Proposal, or (b) enter into or maintain or continue discussions or negotiate
with any Person in furtherance of such inquiries or to obtain an Acquisition
Proposal, or (c) agree to, approve, recommend, or endorse any Acquisition
Proposal, or authorize or permit any of its officers, directors, employees,
representatives, agents, or affiliates to take any such action, and Seller
shall promptly notify Purchaser of any such inquiries and proposals received
by Seller or any of its officers, directors, employees, representatives,
agents, or affiliates, relating to any of such matters. Seller agrees that
it will immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any parties regarding any Acquisition
Proposal. Seller agrees to keep Purchaser fully and timely informed of the
status of any
34
discussions, negotiations, furnishing of non-public information, or other
activities relating to an Acquisition Proposal.
6.7 CONSULTING ARRANGEMENT. During the six (6) months immediately
following the Closing Date, Xxxxx Xxxxxxxxx agrees to consult with Purchaser
at the request of Purchaser, from time to time (but not to exceed ten (10)
hours per month). Xxxxx Xxxxxxxxx may not, as a consultant to Purchaser,
enlist the services of any Person in connection with any consulting services
performed under this Section 6.7 without the prior written consent of
Purchaser. Xxxxx Xxxxxxxxx shall not, as a consultant to Purchaser, be
deemed in any way to be Purchaser's agent or employee or have any authority
to bind Purchaser to any obligation, agreement or otherwise.
6.8 TAX COVENANTS.
(a) No new elections with respect to Taxes or any changes in
current elections with respect to Taxes affecting the Assets shall be made
before the Closing Dated without the prior written consent of Purchaser.
(b) At or prior to Closing, Seller shall furnish Purchaser an
affidavit, stating under penalty of perjury, the transferor's United States
taxpayer identification number and that the transferor is not a foreign
person, pursuant to Section 1445(b)(2) of the Code.
(c) Purchaser and Seller will each pay one-half of any sales,
use, transfer, and documentary taxes and recording and filing fees applicable
to the transfer of the Assets to Purchaser at Closing.
ARTICLE VII
COVENANTS OF PURCHASER
7.1 REQUIRED COVENANTS. As promptly as practicable after the date of
this Agreement, Purchaser will make all filings required by Legal
Requirements to be made by it to consummate the Contemplated Transactions
(including all filings under the HSR Act, if applicable). Between the date
of this Agreement and the Closing Date, Purchaser will (a) cooperate with
Seller with respect to all filings that Seller is required by Legal
Requirements to make in connection with the Contemplated Transactions; and
(b) cooperate with Seller in obtaining all Consents identified in SCHEDULE
4.3; PROVIDED, HOWEVER, that this Agreement will not require Purchaser to
dispose of or make any change in any portion of the Business or to incur any
other burden to obtain a Governmental Authorization.
7.2 BULK TRANSFER COMPLIANCE. Purchaser hereby agrees to waive
compliance with applicable Uniform Commercial Code bulk transfer
requirements, and Seller and Principals hereby agree, jointly and severally,
to indemnify and hold harmless Purchaser against liability, cost and expense
(including reasonable attorneys' fees) arising out of noncompliance with
applicable bulk transfer laws.
35
ARTICLE VIII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the transactions contemplated
by this Agreement is subject to the satisfaction, at or before the Closing,
of the following conditions, any or all of which (other than Section 8.1) may
be waived, in whole or in part, by Purchaser:
8.1 TRUE AND CORRECT REPRESENTATIONS. Each of Seller's and
Principals' representations and warranties must have been true and correct in
all respects as of the date of this Agreement, and must be true and correct
in all respects as of the Closing Date as if made on the Closing Date;
PROVIDED, HOWEVER, that for purposes of this sentence only, those
representations and warranties in Section 4.9, Section 4.13, Section 4.19 and
Section 4.21 (other than Section 4.21(g)(iv)) which are qualified by
references of to the "Knowledge" of any Person shall be deemed not to include
such qualifications. Notwithstanding anything herein to the contrary,
however, if, prior to the Closing, Purchaser discovers any inaccuracy of, or
non-compliance with, any representation, warranty, covenant or obligation of
Seller or the Principals herein, Purchaser shall promptly give Seller and the
Principals written notice thereof ("Notice"), which Notice shall describe
such inaccuracy or non-compliance. Seller shall have a period of fifteen
(15) days following delivery of the Notice to Seller and the Principals
within which to attempt to cure such inaccuracy or non-compliance; provided,
however, that such fifteen (15) day period shall in no event extend the
Closing Date unless such extension is mutually agreed upon by Purchaser,
Seller and the Principals. If such inaccuracy or non-compliance is not cured
to the satisfaction of Purchaser, in its sole and absolute discretion, or
Purchaser has not waived such inaccuracy or non-compliance within such
fifteen (15) day period, Purchaser will have the right, in its sole and
absolute discretion, to terminate this Agreement without any liability or
obligation to Seller and the Principals whatsoever. Notwithstanding anything
herein to the contrary, if, and only if, Seller notifies Purchaser in writing
of any incomplete or inaccurate representations or warranties made by Seller
herein prior to the Closing and Purchaser consummates the Contemplated
Transactions after receipt of such written notice, then Purchaser shall not
be entitled to pursue any remedies under Section 12.2(b) with respect to only
such matter, but shall be entitled to pursue any remedies thereunder as to
other matters.
8.2 COMPLIANCE WITH COVENANTS. Each of the covenants and obligations
that Seller and the Principals are required to perform or to comply with
pursuant to this Agreement at or prior to the Closing must have been duly
performed and complied with prior to the Closing.
8.3 DELIVERY OF DOCUMENTS. Each document required to be delivered by
Seller and the Principals pursuant to Section 10.1 must have been delivered.
8.4 CONSENTS. Each of the Consents listed in SCHEDULE 4.3 (including
the landlord's consent to an assignment of the Facility Lease whether or not
the landlord has released Seller) must have been obtained and must be in full
force and effect; PROVIDED, HOWEVER, that if the landlord's consent under the
Facility Lease is not obtained and the condition precedent in this Section
8.4 has not been satisfied, then it shall be a condition precedent to
Purchaser's and Seller's obligation to consummate the Contemplated
Transactions that Purchaser and Seller negotiate in good faith to reach an
understanding with respect to the Facility Lease that is reasonably
acceptable to both parties (including, without limitation, the
indemnification described in Section 10.2(g) herein).
36
8.5 ENVIRONMENTAL AUDIT(S). Purchaser shall have obtained
environmental site assessment reports conducted in accordance with Sections
6.2 and 6.3 herein regarding the Facility acceptable to Purchaser, in its
sole discretion, issued by an environmental engineer acceptable to Purchaser
and confirming, among other things, that the Facility has not in the past
been used, and is not presently being used, for the handling, storage,
transportation, disposal or release of hazardous or toxic substances,
materials, pollutants or waste (or similar items under applicable
Environmental Law) in a manner in violation of Environmental Laws.
8.6 DUE DILIGENCE. Purchaser shall not have exercised its right to
terminate this Agreement pursuant to Section 6.3.
8.7 HSR ACT. All filings required under the HSR Act, if any, shall
have been made and any required waiting period under the laws applicable to
the Contemplated Transactions shall have expired or been earlier terminated.
ARTICLE IX
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligation of Seller to consummate the transactions contemplated by
this Agreement is subject to the satisfaction, at or before the Closing, of
the following conditions, any or all of which may be waived, in whole or in
part, by Seller:
9.1 TRUE AND CORRECT REPRESENTATIONS. Each of Purchaser's
representations and warranties must have been true and correct in all
respects as of the date of this Agreement and must be true and correct as of
the Closing Date as if made on the Closing Date.
9.2 COMPLIANCE WITH COVENANTS. Each of the covenants and obligations
that Purchaser is required to perform or to comply with pursuant to this
Agreement at or prior to the Closing must have been performed and complied
with.
9.3 DELIVERY OF DOCUMENTS. Each document required to be delivered by
Purchaser pursuant to Section 10.2 must have been delivered.
9.4 HSR ACT. All filings required under the HSR Act, if any, shall
have been made and any required waiting period under the laws applicable to
the Contemplated Transactions shall have expired or been earlier terminated.
ARTICLE X
DELIVERIES AT CLOSING
10.1 DELIVERIES BY SELLER AND PRINCIPALS. In addition to and without
limiting any other provision of this Agreement, Seller and the Principals
shall deliver, or cause to be delivered, to Purchaser, at or prior to the
Closing, the following in form and substance as reasonably satisfactory to
Purchaser and Purchaser's counsel:
37
(a) Seller Legal Opinion;
(b) a Secretary's Certificate setting forth the resolutions
adopted by the Board of Directors and shareholders of Seller authorizing and
directing the President or any Vice President of Seller to execute and
deliver the documents required to be executed and delivered by Seller under
this Agreement, which certificate will show the name, office and signature of
each officer of Seller authorized to execute and deliver such documents;
(c) a Xxxx of Sale, Assignment and Assumption in the form of
EXHIBIT C attached to this Agreement and such other deeds, certificates of
title, assignments, assurances and other instruments and documents as
Purchaser may reasonably request in order to effect the sale, conveyance,
transfer and assignment of the Assets to Purchaser free and clear of all
Encumbrances;
(d) unless waived by Purchaser, all Consents (including the
consent to assignment by the landlord of the Facility Lease, if the landlord
has consented);
(e) possession of all the Contracts and copies of all
documents, contracts, instruments, books, specifications, records and data
relating to the Assets and the Assumed Liabilities, which possession shall be
accomplished by delivering control to Purchaser of the offices in which same
are maintained;
(f) a certificate dated as of a date not earlier than ten (10)
days prior to the Closing Date, of the Secretary of State of the State of
Georgia as to the good standing of Seller in the State of Georgia;
(g) an executed copy of each Principal's Non-Competition
Agreement substantially in the form of EXHIBIT D;
(h) certificates of title to motor vehicles, if applicable;
(i) an executed copy of an employment agreement between Xxxxxx
X. Xxxxxxxxx and Purchaser (the "Employment Agreement") in the form attached
hereto as EXHIBIT E;
(j) a list of Seller's Receivables as of 5:00 p.m. on the day
immediately preceding the Closing Date;
(k) a list of Seller's Inventory as of 5:00 p.m. on the day
immediately preceding the Closing Date;
(l) a list of Seller's Trade Payables as of 5:00 p.m. on the
day immediately preceding the Closing Date;
(m) a certificate from Seller certifying that Seller has
committed to pay, or, concurrent with the closing of the Contemplated
Transactions will pay, no less than Six Hundred Thousand and No/100 Dollars
($600,000) in severance payments to Seller's employees (other than the
Principals) being terminated by Seller as a result of the Contemplated
Transactions;
38
(n) copies of all BATF Documents as of the Closing Date;
(o) copies of all Contracts, including without limitation,
purchase orders; and
(p) a UCC-3 termination statement executed by La Salle National
Bank, and any other termination documents reasonably requested by Purchaser
as to any and all liens on the Assets; and
(q) such other documents, instruments or certificates as shall
be reasonably requested by Purchaser or its counsel to consummate the
Contemplated Transactions.
10.2 DELIVERIES BY PURCHASER. In addition to and without limiting any
other provision of this Agreement, Purchaser shall deliver, or cause to be
delivered, to Seller and the Principals, at or prior to the Closing, the
following in form and substance approved in this Agreement or reasonably
satisfactory to Seller, the Principals and their counsel:
(a) the Purchase Price;
(b) the Purchaser Legal Opinion;
(c) a Secretary's Certificate setting forth the resolutions
adopted by the Board of Directors of Purchaser authorizing and directing the
Chairman of the Board/Chief Executive Officer and President of Purchaser to
execute and deliver the documents required to be executed and delivered by
Purchaser under this Agreement, which certificate will show the name, office
and signature of each officer of Purchaser authorized to execute and deliver
such documents;
(d) an executed copy of the Xxxx of Sale, Assignment and
Assumption;
(e) a certificate dated as of a date not earlier than ten (10)
days prior to the Closing Date of the Secretary of State of Delaware as to
the good standing of Purchaser in Delaware;
(f) an executed copy of each Non-Competition Agreement; and
(g) if the Landlord shall not have consented to the assignment
of the Facility Lease to Purchaser and if Seller and Purchaser shall have
reached an understanding with respect to the Facility Lease pursuant to
Section 8.4 herein, an indemnification and hold harmless by Purchaser of
obligations imposed on the tenant under the Facility Lease for the period
after the Closing Date in a form mutually and reasonably acceptable to each
of the parties hereto after good faith negotiations; PROVIDED, HOWEVER, that
such indemnification shall be no more extensive than the indemnification
required under Section 12.2(a)(vi), nor shall such indemnification be such
that it would reduce the indemnification afforded to Purchaser under Section
12.2(b)(xii) herein; PROVIDED, FURTHER, that Seller and each of the
Principals shall cooperate with Purchaser in performing any such obligations
under the Facility Lease;
(h) an executed copy of the Employment Agreement;
(i) Six Hundred Thousand and No/100 Dollars ($600,000) to be
used by Seller solely to pay severance benefits to Seller's employees (other
than the Principals) whose employment by Seller is terminated as a result of
the Closing; and
39
(j) such other documents, instruments or certificates as shall
be reasonably requested by Seller or Seller's counsel.
10.3 POSSESSION BY PURCHASER. Simultaneously with the consummation of
the transfer of the Assets, Seller, through its respective directors,
officers, representatives and agents will put Purchaser into full possession
and enjoyment of all the Assets and Assumed Liabilities to be conveyed and
transferred by this Agreement.
10.4 FAILURE TO OBTAIN CONSENTS, LICENSES, PERMITS AND APPROVALS.
Without restricting Purchaser's right not to proceed to the Closing if the
conditions in Article VIII are not satisfied, to the extent that the rights
of Seller under any contract, license, permit or approval or other Asset or
Assumed Liability to be assigned to Purchaser under this Agreement may not be
assigned without the consent of another person or entity which,
notwithstanding Seller's use of its best efforts to obtain any such required
consent(s) as promptly as possible, have not been obtained by the Closing
Date, Purchaser may elect that this Agreement not constitute an agreement to
assign the same if an attempted assignment would constitute a breach thereof
or be unlawful and, instead, proceed with Closing, provided Purchaser
indemnifies for same pursuant to Article XII.
ARTICLE XI
POST-CLOSING COVENANTS
11.1 AFTER THE CLOSING DATE. After the Closing Date, unless Purchaser
shall otherwise agree in writing, Seller shall:
(a) accurately prepare and file in the time periods prescribed
therefor all Tax Returns with respect to income attributable to the Business
in the period prior to the Closing Date, and pay when due all Taxes due and
owing with respect thereto to the extent they may create any Encumbrance on
any Asset;
(b) discharge all Retained Liabilities in the Ordinary Course
of Business; and
(c) not use the Intellectual Property (including, the name
"Monarch Wine Company of Georgia" or any variation thereof).
11.2 PAYMENTS RECEIVED BY SELLER SUBSEQUENT TO THE CLOSING DATE. From
and after the Closing, Purchaser shall have the right and authority to
endorse without recourse the name of Seller on any check or any other
evidences of indebtedness received by Purchaser on account of the Business,
the Assets or the Assumed Liabilities. After the Closing, Seller will hold
and promptly transfer and deliver to Purchaser (in no event later than five
(5) days after receipt), from time to time, as and when received, any cash,
checks with appropriate endorsements or other property that Seller may
receive on or after the Closing which properly belongs to Purchaser and will
account to Purchaser for all such receipts.
11.3 ACCESS TO RECORDS. At all reasonable times after the Closing
Date, upon reasonable prior notice of Purchaser and at Purchaser's expense,
Seller shall make available to Purchaser any records, documents and data
retained with respect to the Business, the Assets or the Assumed Liabilities
not transferred to Purchaser under this Agreement to the extent reasonably
required by Purchaser in
40
connection with the Business or this Agreement. Seller shall preserve until
the seventh (7th) anniversary of the Closing Date all records possessed or to
be possessed by Seller relating to the Business, the Assets or the Assumed
Liabilities. At all reasonable times after the Closing Date, upon the prior
written request of Seller, Purchaser shall make available to Seller and
Seller shall have the right to make copies of any records, documents and data
with respect to the Business, the Assets or the Assumed Liabilities
transferred to or assumed by Purchaser under this Agreement to the extent
reasonably required by Seller in connection with this Agreement at Seller's
expense. Seller and Purchaser shall (i) each provide the other with such
assistance as may reasonably be requested by any of them in connection with
the preparation of any Tax Return, audit, or other examination by any taxing
authority or judicial or administrative proceedings relating to liability for
Taxes, (ii) each retain and provide the other, and Purchaser shall retain and
provide Seller with, any records or other information that may be relevant to
such Tax Return, audit or examination, proceeding or determination, and (iii)
each provide the other with any final determination of any such audit or
examination, proceeding or determination that affects any amount required to
be shown on any Tax Return of the other for any period. Without limiting the
generality of the foregoing, Purchaser and Seller shall retain, until the
applicable statutes of limitations (including any extensions) have expired,
copies of all Tax Returns, supporting work schedules, and other records or
information that may be relevant to such returns for all tax periods or
portions thereof ending before or including the Closing Date and shall not
destroy or otherwise dispose of any such records without first providing the
other party with a reasonable opportunity to review and copy the same.
11.4 PENDING DISPUTES. Except as listed on SCHEDULE 11.4, from and
after the Closing Date, Purchaser shall have complete control over the
payment, settlement or other disposition of, or any dispute involving, any
customer of the Business and any Asset, obligation or liability of Seller
acquired or assumed by Purchaser pursuant hereto, and Purchaser shall have
the right to conduct and control all negotiations and proceedings with
respect thereto upon disclosing to and consulting with Seller. Seller shall
notify Purchaser immediately of any claim made with respect to any such
customer, asset, obligation or liability and shall not, except with the prior
written consent of Purchaser, make any payment of, or settle or offer to
settle, or consent to any compromise with respect to, any such obligation or
liability. Seller shall cooperate with Purchaser in any reasonable manner
requested by Purchaser in connection with any negotiations or proceedings
involving any such obligation or liability.
ARTICLE XII
SURVIVAL; INDEMNIFICATION
12.1 SURVIVAL. All representations, warranties, covenants and
obligations in this Agreement and in any other certificate or document
delivered pursuant to this Agreement will survive for a period of two (2)
years from the date of the Closing; PROVIDED, HOWEVER, that the
representations and warranties set forth in Sections 4.6, 4.12 and 4.19 shall
survive indefinitely after the Closing and the representations and warranties
set forth in Section 4.10 shall survive for the applicable statute of
limitations period. The right to indemnification, payment of Damages or
other remedy based on such representations, warranties, covenants and
obligations will not be affected by any investigation conducted with respect
to, or any Knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant or obligation and with
respect to the representations and warranties set forth in Section 4.9,
Section 4.13, Section 4.19 and Section 4.21 (other than Section 4.21(g)(iv)),
such representations and warranties which are qualified by references of to
the
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"Knowledge" of any Person shall be deemed not to include qualifications for
purposes of Section 12.2 herein. Subject to Section 6.1(l) herein, the
waiver of any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification, payment of Damages,
or other remedy based on such representations, warranties, covenants and
obligations.
12.2 INDEMNIFICATION OBLIGATION.
(a) INDEMNIFICATION OBLIGATION OF PURCHASER. Purchaser shall
indemnify, save, defend and hold harmless Seller and its successors, assigns,
officers, directors, shareholders, partners, Affiliates and attorneys and the
Principals (collectively, the "Seller Indemnified Parties"), against and in
respect of any and all actual Damages suffered by any of the Seller
Indemnified Parties which arise out of or are in respect of (i) any Breach or
violation of this Agreement by Purchaser, (ii) any falsity, inaccuracy or
misrepresentation in or Breach of any of the representations, warranties,
covenants or obligations made in the Purchaser's Closing Documents or in any
certificate, instrument or document delivered at or prior to the Closing Date
by or on behalf of Purchaser, (iii) with respect to Third Party Claims (as
defined in Section 12.3(b) herein), any action, event, condition, omission or
failure to act of or by Purchaser's Indemnified Parties or any other Person
for whose conduct Purchaser may be responsible after the Closing (other than
the Principals), (iv) the operations of the Business after the Closing
(excluding claims with respect to products manufactured by Seller but shipped
by Purchaser), (v) any brokerage commission, finder's fee, commissions or
similar payments alleged to be payable directly related to the Contemplated
Transactions because of any act, omission or other statement of Purchaser or
its representatives, (vi) if, and only if, the landlord under the Facility
Lease consents to the assignment of the Facility Lease to the Purchaser,
costs of Clean-up, containment, or other remediation arising, directly or
indirectly, from or in connection with any Environmental, Health, and Safety
Liabilities arising out of or relating to: (A) the leasing or operation at
any time after the Closing Date of the Facility; or (B) (x) any Hazardous
Materials or other contaminants, wherever located, that were, or were
allegedly, generated, transported, stored, treated, Released, or otherwise
handled at any time after the Closing Date by Purchaser or by any other
Person for whose conduct it is or may be held responsible, or (y) any
Hazardous Activities after the Closing Date that were, or were allegedly,
conducted by Purchaser or by any other Person for whose conduct it is or may
be held responsible; or (C) any bodily injury (including illness, disability
and death, and regardless of when any such bodily injury occurred, was
incurred, or manifested itself), personal injury, property damage (including
trespass, nuisance, wrongful eviction and deprivation of the use of real
property), or other damage of or to any Person for whose conduct it is or may
be held responsible, in any way arising from or allegedly arising from any
Hazardous Activity conducted or allegedly conducted with respect to the
Facility or the operation of the Business after the Closing Date, or from
Hazardous Material that was Released or allegedly Released by Purchaser or
any other Person for whose conduct it is or may be responsible, at any time
after the Closing Date, (vii) all obligations associated with any of the
Assets pertaining or related to acts or omissions arising subsequent to the
Closing Date, including all obligations imposed on tenant under the Facility
Lease for the period after the Closing Date if, and only if, the landlord
under the Facility Lease consents to the assignment of the Facility Lease to
the Purchaser, and (viii) any violations by Seller of the requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and the
Internal Revenue Service final and proposed regulations on health care
continuation coverage for employees, 64 Fed. Reg. 5160. This indemnity
covers contracts with customers to be performed after the Closing Date even
though the contract was made prior to the Closing Date, but only to the
extent of obligations accruing after the Closing Date under those contracts.
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(b) INDEMNIFICATION OBLIGATION OF SELLER AND THE PRINCIPALS.
Seller and the Principals, jointly and severally, shall save, indemnify,
defend and hold harmless Purchaser and its respective successors, assigns,
officers, directors, shareholders, Affiliates and attorneys (collectively,
the "Purchaser's Indemnified Parties") against and in respect of any and all
actual Damages suffered by any of the Purchaser's Indemnified Parties which
may arise out of or be in respect of (i) any Breach or violation of this
Agreement by Seller and/or the Principals, (ii) any falsity, inaccuracy or
misrepresentation in or Breach of any of the representations, warranties,
covenants or obligations made in the Seller's Closing Documents or in any
certificate, instrument or document delivered at or prior to Closing by or on
behalf of Seller or the Principals pursuant to this Agreement, (iii) with
respect to Third Party Claims, any action, event, condition, omission or
failure to act of or by Seller Indemnified Parties or any other Person for
whose conduct Seller may be responsible prior to the Closing, (iv) except to
the extent same is an Assumed Liability, the operations of the Business prior
to the Closing (including, but not limited to, any liabilities of whatever
nature arising out of or relating to any materials, products or services
manufactured or supplied by Seller, including any recalls of Seller's
products), (v) any Taxes imposed on Purchaser attributable to the revenue or
income Seller earned prior to the Closing Date, the revenue or income the
Business earned prior to the Closing Date, or any Taxes imposed on the Assets
or the Business with respect to the period on or prior to the Closing Date,
(vi) any and all of the Retained Liabilities, (vii) any brokerage commission,
finder's fee, commissions or similar payments alleged to be payable directly
related to the transactions contemplated by this Agreement because of any
act, omission or other statement of any of the Seller Indemnified Parties,
(viii) violations of the National Labor Relations Act ("NLRA") (including,
but not limited to, Section 8(a)(5) and Section 301 thereof) up to the
Closing Date and findings, if any, of the National Labor Relations Board
and/or the courts of any violation of the NLRA, (ix) the Collective
Bargaining Agreement, (x) waiver of compliance with applicable Uniform
Commercial Code bulk transfer requirements, (xi) the benefit plans listed on
SCHEDULES 4.12(a)(i) AND /OR 4.12(a)(iv), and (xii) costs of Clean-up,
containment, or other remediation arising, directly or indirectly, from or in
connection with any Environmental, Health, and Safety Liabilities arising out
of or relating to: (A) (x) the ownership, leasing, operation, or condition at
any time on or prior to the Closing Date of the Facility or any other
properties and Assets (whether real, personal, or mixed and whether tangible
or intangible) in which Seller has or had an interest, or (y) any Hazardous
Materials or other contaminants that were present on the Facility or such
other properties and assets in which Seller has or had an interest at any
time on or prior to the Closing Date; or (B) (x) any Hazardous Materials or
other contaminants, wherever located, that were, or were allegedly,
generated, transported, stored, treated, Released, or otherwise handled by
Seller or by any other Person for whose conduct it is or may be held
responsible at any time on or prior to the Closing Date, or (y) any Hazardous
Activities that were, or were allegedly, conducted by Seller or by any other
Person for whose conduct it is or may be held responsible; or (C) any bodily
injury (including illness, disability and death, and regardless of when any
such bodily injury occurred, was incurred, or manifested itself), personal
injury, property damage (including trespass, nuisance, wrongful eviction and
deprivation of the use of real property), or other damage of or to any
Person, including any employee or former employee of Seller or any other
Person for whose conduct it is or may be held responsible, in any way arising
from or allegedly arising from any Hazardous Activity conducted or allegedly
conducted with respect to the Facility or the operation of the Business prior
to the Closing Date, or from Hazardous Material that was (x) present or
suspected to be present on or before the Closing Date on or at the Facility
(or present or suspected to be present on any other property, if such
Hazardous Material emanated or allegedly emanated from the Facility and was
present or suspected to be present on the Facility on or prior to the Closing
Date); or (y) Released or allegedly Released by Seller or any other Person
for whose conduct it is or may be responsible, at any time on or prior to the
Closing Date.
43
12.3 INDEMNIFICATION NOTICE.
(a) The indemnified party shall notify the indemnifying party,
in writing, of any facts or circumstances which may give rise to a right of
indemnification under Article XII of this Agreement ("Notice of Claim"). The
Notice of Claim shall specify the nature and details of such facts and
circumstances (including any amount claimed, if known) which may give rise to
such right of indemnification. The failure of the indemnified party to
promptly provide a Notice of Claim shall not relieve the indemnifying party
of its obligations hereunder, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice.
(b) If the claim or demand set forth in the Notice of Claim
relates to a claim or demand asserted by a third party (a "Third Party
Claim"), the indemnifying party shall have the right to employ counsel
reasonably acceptable to the indemnified party to defend any such claim or
demand and the indemnified party, at its sole cost and expense, shall have
the right to participate in the defense of any such Third Party Claim. The
indemnifying party shall notify the indemnified party, in writing, within
fifteen (15) days after the date of the Notice of Claim, of its decision to
defend in good faith any Third Party Claim. So long as the indemnifying
party is defending in good faith any such Third Party Claim, the indemnified
party shall not settle or compromise such Third Party Claim. If the
indemnifying party does not so elect to defend any such Third Party Claim,
the indemnified party shall have the right, but not the obligation, to
undertake the defense, compromise or final determination thereof.
(c) If the indemnifying party has undertaken defense of a Third
Party Claim and if there is a reasonable probability that the Third Party
Claim may materially and adversely affect the indemnified party or the
Business other than as a result of money damages or other money payments,
then the indemnified party, at the reasonable expense of the indemnifying
party, shall have the right to joint control of the defense, compromise or
settlement of such Third Party Claim; PROVIDED, HOWEVER, that if the Third
Party Claim may be settled in full without any acknowledgment of liability
solely by the payment of money and the indemnifying party is willing to pay
the money to settle the claim but the indemnified party is not, then the
indemnifying party may elect to pay that amount of money to the indemnified
party and thereafter have no further obligation with respect to such Third
Party Claim or any fees or expenses related thereto and the indemnified party
shall indemnify the indemnifying party with respect to same. Notwithstanding
the foregoing, the indemnifying party shall not be liable for any compromise
or settlement of any action, suit or other proceeding effected without its
written consent, which shall not be unreasonably withheld or delayed.
(d) The indemnified party shall make available to the
indemnifying party or its representatives all records and other materials
reasonably required by them for their use in contesting any Third Party Claim
and shall cooperate with the indemnifying party in connection therewith.
(e) Neither the indemnified party or the indemnifying party
shall, without the written consent of the other, settle or compromise any
Third Party Claim or consent to the entry of any judgment which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the indemnified party and the indemnifying party and their
respective affiliates a release from all liability in respect of such Third
Party Claim.
44
(f) As soon as is reasonably practicable after Notice of Claim
is deemed delivered to the receiving party, the indemnified party and the
indemnifying party shall endeavor to agree upon the amount, if any, to which
the indemnified party is entitled under this Article XII.
12.4 INDEMNIFICATION PAYMENT AND LIMITATIONS. Within thirty (30) days
after the indemnifying party and the indemnified party reach agreement on the
amount of any indemnification obligation of the indemnifying party (the
"Indemnification Amount"), the indemnifying party shall pay the
Indemnification Amount to the indemnified party. Notwithstanding the
indemnification obligation of any indemnifying party under this Article XII,
the indemnification obligation of any indemnifying party shall:
(a) be reduced by the amount that an indemnified party
recovers from any third party (other than by way of contribution from another
indemnifying party) with respect to the matter for which indemnification is
being paid, including, without limitation, any insurance company. An
indemnified party receiving any such amount shall promptly reimburse any
amount so received from a third party to the indemnifying party;
(b) be tolled and unenforceable until the aggregate Damages
incurred by the party claiming a right to indemnification under this Article
XII exceed $150,000, at which time the indemnification obligation of the
indemnifying party shall commence with respect to all Damages, including the
initial $150,000 of Damages; and
(c) not exceed an amount equal to the Purchase Price.
Notwithstanding anything to the contrary herein, this Section 12.4
shall not apply to any claims of fraud or claims arising out of or relating
to Uniform Commercial Code bulk transfer laws applicable to the Contemplated
Transactions, Section 4.7, 4.8, Section 12.2(b)(v) and Section 12.2(b)(x).
ARTICLE XIII
MISCELLANEOUS
13.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution and performance of
this Agreement and the Contemplated Transactions, including all fees and
expenses of agents, representatives, counsel and accountants.
13.2 GOVERNING LAW. This Agreement and all transactions contemplated
by this Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Florida.
13.3 NOTICES. All notices, requests, consents and other
communications required or permitted under this Agreement shall be in writing
(including electronic transmission) and shall be (as elected by the person
giving such notice) hand delivered by messenger or courier service,
electronically transmitted, or mailed (airmail if international) by
registered or certified mail (postage prepaid), return receipt requested,
addressed to:
45
If to Purchaser: With a copy to:
Xxxxxxxxx International, Inc. Gunster, Yoakley, Xxxxxx-Xxxxx &
000 Xxxxxxxx Xxxxxx Xxxxxxx, X.X.
Xxxxx 0000 000 Xxxxx Xxxxxxx Xxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000 Suite 500, East Tower
(000) 000-0000 Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Fax: (000) 000-0000 (000) 000-0000
Attn: A. Xxxxxxx Xxxxxxxx, Xx. Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
If to Seller or the Principals:
Xxxxx Wine Company Xxxxx Xxxxx Mulliss & Xxxxx, L.L.P.
d/b/a Monarch Wine Company of Georgia 0000 Xxxxxxxxx Xxxxxx, X.X.
000 Xxxxxxx Xxxxxx, X.X. Xxxxx 000
Xxxxxxx, Xxxxxxx 00000 Xxxxxxx, Xxxxxxx 00000
(000) 000-0000 (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxxxxx Attn: Xxxxxx Xxxxxx, III, Esq.
If to the Principals: With a copy to:
Xxxxxx X. Xxxxxxxxx
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
(000) 000-0000
Fax: (000) 000-0000
Xxxxx Xxxxxxxxx
000 Xxxxx 0xx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Xxx Xxxxxxxxx
00 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxxxx Xxxxxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
or to such other address as any party may designate by notice complying with
the terms of this Section 13.3. Each such notice shall be deemed delivered
(a) on the date delivered if by personal delivery; (b) on the date of
transmission with confirmed answer back if by electronic transmission; and
(c) on the date upon which the return receipt is signed or delivery is
refused or the notice is designated by the postal authorities as not
deliverable, as the case may be, if mailed.
46
13.4 BINDING EFFECT. All of the terms and provisions of this
Agreement shall be binding upon, inure to the benefit of, and be enforceable
by the parties and their respective legal representatives, heirs, successors
and permitted assigns, whether so expressed or not.
13.5 HEADINGS. The headings contained in this Agreement are for
convenience of reference only, are not to be considered a part of the
Agreement and shall not limit or otherwise affect in any way the meaning or
interpretation of this Agreement.
13.6 PRONOUNS. In this Agreement, the use of any gender shall be
deemed to include all genders, and the use of the singular shall include the
plural and vice versa, wherever it appears appropriate from the context. For
all purposes of this Agreement, unless otherwise expressly stated to the
contrary, the terms "hereby," "hereto," "hereof," "hereunder" and "herein"
shall refer to this entire Agreement.
13.7 THIRD PARTIES. Unless expressly stated herein to the contrary,
nothing in this Agreement, whether express or implied, is intended to confer
any rights or remedies under or by reason of this Agreement on any persons
other than the parties hereto and their respective legal representatives,
successors and permitted assigns. Nothing in this Agreement is intended to
relieve or discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provision give any third persons any
right of subrogation or action over or against any party to this Agreement.
13.8 FURTHER ASSURANCES. The parties hereby agree from time to time
to execute and deliver such further and other transfers, assignments and
documents and do all matters and things which may be convenient or necessary
to more effectively and completely carry out the intentions of this
Agreement.
13.9 SCHEDULES INCLUDED IN EXHIBITS; INCORPORATION BY REFERENCE. Any
reference to an Exhibit to this Agreement contained herein shall be deemed to
include any Schedules to such Exhibit. Each of the Exhibits referred to in
this Agreement (including Schedules thereto), and each Schedule to this
Agreement is hereby incorporated by reference in this Agreement as if such
Exhibits and Schedules were set out in full in the text of this Agreement.
13.10 AMENDMENTS. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
13.11 WAIVERS. The failure or delay of any party at any time to
require performance by another party of any provision of this Agreement, even
if known, shall not affect the right of such party to require performance of
that provision or to exercise any right, power or remedy hereunder. Any
waiver by any party of any breach of any provision of this Agreement should
not be construed as a waiver of any continuing or succeeding breach of such
provision, a waiver of the provision itself, or a waiver of any right, power
or remedy under this Agreement. No notice to or demand on any party in any
circumstance shall, of itself, entitle such party to any other or further
notice or demand in similar or other circumstances.
13.12 JURISDICTION AND VENUE. The parties acknowledge that a
substantial portion of the negotiations, anticipated performance and
execution of this Agreement occurred or shall occur in Palm
47
Beach County, Florida. Any civil action or legal proceeding arising out of
or relating to this Agreement shall be brought in the courts of record of the
State of Florida in Palm Beach County or the United States District Court,
Southern District of Florida. Each party consents to the jurisdiction of
such court in any such civil action or legal proceeding and waives any
objection to the laying of venue of any such civil action or legal proceeding
in such court. Service of any court paper may be effected on such party by
mail, as provided in this Agreement, or in such other manner as may be
provided under applicable laws, rules of procedure or local rules.
13.13 SEVERABILITY. If any provision of this Agreement or any other
agreement entered into pursuant hereto is contrary to, prohibited by or
deemed invalid under applicable law or regulation, such provision shall be
inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder hereof shall not be invalidated thereby and shall
be given full force and effect so far as possible. If any provision of this
Agreement may be construed in two or more ways, one of which would render the
provision invalid or otherwise voidable or unenforceable and another of which
would render the provision valid and enforceable, such provision shall have
the meaning which renders it valid and enforceable.
13.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument. Confirmation of
execution by electronic transmission of a facsimile signature page shall be
binding upon any party so confirming.
13.15 NO CONSTRUCTION AGAINST DRAFTSMEN. The parties acknowledge that
this is a negotiated agreement, and that in no event shall the terms hereof
be construed against either party on the basis that such party, or its
counsel, drafted this Agreement.
13.16 ENFORCEMENT COSTS. If any civil action, arbitration or other
legal proceeding is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation in connection
with any provision of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorneys' fees, sales and
use taxes, court costs and all expenses even if not taxable as court costs
(including, without limitation, all such fees, taxes, costs and expenses
incident to arbitration, appellate, bankruptcy and post-judgment
proceedings), incurred in that civil action, arbitration or legal proceeding,
in addition to any other relief to which such party or parties may be
entitled. Attorneys' fees shall include, without limitation, paralegal fees,
investigative fees, administrative costs, sales and use taxes and all other
charges billed by the attorney to the prevailing party.
13.17 EQUITABLE REMEDIES. Each of the parties acknowledges that the
parties will be irreparably damaged (and damages at law would be an
inadequate remedy) if this Agreement is not specifically enforced.
Therefore, in the event of a breach or threatened breach by any party of any
provision of this Agreement, then the other parties shall be entitled, in
addition to all other rights or remedies, to an injunction restraining such
breach, without being required to show any actual damage or to post an
injunction bond, and/or to a decree for specific performance of the
provisions of this Agreement
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13.18 ENTIRE AGREEMENT. This Agreement represents the entire
understanding and agreement between the parties with respect to the subject
matter hereof, and supersedes all other negotiations, writings,
understandings and representations, if any, made by and between such parties.
13.19 PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions
will be issued, if at all, at such time and in such manner as Purchaser and
Seller mutually agree, unless required by Legal Requirements. Unless
consented to by Purchaser in advance or required by Legal Requirements, prior
to the Closing, Seller and the Principals shall keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to any Person.
Seller, the Principals and Purchaser will consult with each other concerning
the means by which Seller's employees, customers and suppliers and others
having dealings with Seller will be informed of the Contemplated
Transactions, and Purchaser will have the right to be present for any such
communication.
13.20 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, Purchaser, Seller and the Principals will maintain in
confidence, and will cause the directors, officers, employees, agents and
advisors of Purchaser and the Seller to maintain in confidence, any written,
oral or other information obtained in confidence from the other party in
connection with this Agreement or the Contemplated Transactions, unless (a)
such information is already known to such party or to others not bound by a
duty of confidentiality or such information becomes publicly available
through no fault of such party, (b) the use of such information is necessary
or appropriate in making any filing or obtaining any Consent required for the
consummation of the Contemplated Transactions, or (c) the furnishing or use
of such information is required by a Proceeding or Legal Requirements. If
the Contemplated Transactions are not consummated, each party will return or
destroy as much of such written information as the other party may reasonably
request.
13.21 WAIVER OF JURY TRIAL. IN ANY CIVIL ACTION, COUNTERCLAIM, OR
PROCEEDING, WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS, OR
RELATES TO THIS AGREEMENT, ANY AND ALL TRANSACTIONS CONTEMPLATED HEREUNDER,
THE PERFORMANCE HEREOF, OR THE RELATIONSHIP CREATED HEREBY, WHETHER SOUNDING
IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, TRIAL SHALL BE TO A COURT
OF COMPETENT JURISDICTION AND NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT, AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO OF THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY. NEITHER PARTY HAS MADE OR RELIED UPON ANY ORAL REPRESENTATIONS
TO OR BY ANY OTHER PARTY REGARDING THE ENFORCEABILITY OF THIS PROVISION.
EACH PARTY HAS READ AND UNDERSTANDS THE EFFECT OF THIS JURY WAIVER PROVISION.
EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS OWN COUNSEL WITH
RESPECT TO THE TRANSACTION GOVERNED BY THIS AGREEMENT, ANY SPECIFICALLY WITH
RESPECT TO THE TERMS OF THIS SECTION 13.21, WHICH CONCERNS THE WAIVER OF EACH
PARTY'S RIGHT TO TRIAL BY JURY.
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IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the day and year first above written.
"PURCHASER"
XXXXXXXXX INTERNATIONAL, INC.
By: /s/ A. Xxxxxxx Xxxxxxxx, Xx.
---------------------------------
Name: A. Xxxxxxx Xxxxxxxx, Xx.
Title: Chairman and Chief Executive Officer
"SELLER"
XXXXX WINE COMPANY
d/b/a MONARCH WINE COMPANY OF GEORGIA
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
"PRINCIPALS"
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxx Xxxxxxxxx
-----------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxx Xxxxxxxxx
-----------------------------------
Xxx Xxxxxxxxx
/s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxxxx
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