Exhibit 10.(a)(g)
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated as of the day of
February, 1998, effective as of the first day of June, 1997 (the "Effective
Date"), by and among D.G. Jewellery of Canada, Ltd., a province of Ontario,
Canada corporation ("Parent") with a principal place of business at 0000
Xxxxxxxx Xxxx, Xxxxx Xxxx, Xxxxxxx, Xxxxxx X0X 0X0, Aviv, Inc., a Delaware
corporation with a principal place of business at 0000 Xxxxxxxx Xxxx, Xxxxx
Xxxx, Xxxxxxx, Xxxxxx X0X 0X0 ("Buyer"), Aviv, Inc., a Texas corporation with a
principal place of business at 0000 Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxx 00000
("Seller"), New York Gold & Diamond Exchange, Inc., a Texas corporation with a
principal place of business at 0000 Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxx 00000
("Subsidiary"), Gadi Beer, an individual residing at 00 Xxxxx Xxxxxx #0000,
Xxxxxxx, Xxxxx 00000 ("Beer"), Xxxxx Xxxxx, an individual residing at 00000
Xxxxxx Xxxxx Xxxxx, Xxxxxxx, Xxxxx 00000 ("Xxxxx") and Xxxxxx Xxxx, an
individual residing at 00000 Xxxxxxxx #0, Xxxxxxx, Xxxxx 00000 ("Cash" and,
together with Beer and Xxxxx, the "Stockholders").
WITNESSETH:
WHEREAS, Seller and Subsidiary engage in a business which manufactures,
advertises, markets and/or sells jewelry and conducts related activities (the
"Business");
WHEREAS, Subsidiary is a direct, wholly-owned subsidiary of Seller;
WHEREAS, the Stockholders are the owners, beneficially and of record
of, in the aggregate, one hundred percent (100%) of the issued and outstanding
shares of Common Stock, $.50 par value per share, of Seller (the "Aviv Common
Stock"); and
WHEREAS, Buyer desires to acquire substantially all of the assets of
Seller and Subsidiary, and Seller and Subsidiary desire to sell such assets to
Buyer, all on the terms and conditions set forth herein.
NOW, THEREFORE, for full and adequate consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.1 The Purchase and Sale. Upon the terms and conditions contained in
this Agreement, on the Closing Date (as defined in Section 1.3 below), effective
as of the Effective Date, Seller and Subsidiary shall each sell, assign,
transfer, set over, convey and deliver to Buyer, and Buyer shall purchase from
Seller and Subsidiary, all of Seller and Subsidiary's respective right, title
and interest in, to and under the Purchased Assets (as defined below) for the
Purchase Price (as defined below), free and clear of all security interests,
liens, claims, charges, restrictions, mortgages, third-party interests, equities
or encumbrances of any kind (each, a "Lien") save and except Liens to secure the
debt in favor of Rhode Island Hospital Trust and/or Bank of Boston described on
Schedule 2.16(d). The "Purchased Assets" means all of the assets of every kind
and nature, real, personal and mixed, tangible and intangible, wherever located,
owned by, used by or held for use by Seller or Subsidiary, including any and all
of the following assets of Seller and Subsidiary (except, and only except, the
Excluded Assets):
1.1.1 Cash; Bank Accounts. All cash and cash equivalents and all
amounts held in bank accounts and other similar accounts (the "Bank Accounts").
1.1.2 Accounts and Instruments. All accounts, instruments and
chattel paper (as such terms are defined in Article 9 of the Uniform Commercial
Code currently in effect in the State of Texas), including all trade receivables
and non-trade receivables.
1.1.3 Inventory. All inventory, including all finished goods, raw
materials (if any), work in progress (if any) and supplies ("Inventory").
1.1.4 Machinery, Equipment, Fixtures and Supplies. All machinery
and equipment, test equipment, office equipment, vehicles and other
transportation equipment, accessories, tools, spare parts, molds, dies, patterns
and gauges, fixtures, furniture, supplies relating to the foregoing and other
similar personal property.
1.1.5 Leasehold Interests. All leasehold interests in real and
personal property held by Seller or Subsidiary (including all rights under
leases) and rights of Seller or Subsidiary in leasehold improvements.
1.1.6 Customer and Supplier Information. All current or historical
information relating to customers, vendors or other suppliers, including all
customer lists, mailing lists, customer price lists, customer files, customer
account histories, vendor and supplier lists, vendor and supplier price lists
and other correspondence and other recorded knowledge relating to customers,
vendors or suppliers.
1.1.7 Proprietary Technology; Other Information. All proprietary
technology, including all know-how, trade secrets, quality control standards,
reports (including test reports), processes, market research and other data,
computer software and programs, formulae, inventions and other ideas, current
and historical information relating to products purchased or sold by Seller or
Subsidiary (or contemplated to be purchased or sold), including all sales
literature, sales data and other related information (including correspondence
and recorded knowledge) and all other current and historical information
relating to the Purchased Assets, including employee records and other
information pertaining to the Business, and all computer disks and other media
on which such information is stored.
1.1.8 Goodwill. All goodwill.
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1.1.9 Permits; Intellectual Property; Contract Rights; Prepaid
Assets; Insurance Policies; Other Assets. All of the following: (a) all rights,
to the extent transferable under applicable law, in and to all authorizations,
permits, licenses, registrations, other Regulatory Approvals, franchises,
variances, consents, clearances, waivers, certificates, other approvals and
similar writings, including certificates of occupancy, issued by any
governmental entity ("Permits"); (b) all rights in and to all United States and
foreign trademarks, patents, copyrights, trademark, patent and/or copyright
applications, trade names, service marks and the like (including the name "Aviv,
Inc." and "New York Gold & Diamond Exchange, Inc." and any derivatives thereof),
all other intellectual property whether arising under statute, common law or
otherwise, and whether registered or unregistered, all goodwill associated with
the foregoing and the right to xxx for infringements of any of the foregoing
prior to the Effective Date ("Intellectual Property"); (c) all of Seller and
Subsidiary's rights under all material contracts, mortgages, indentures, leases,
subleases, notes, bonds, deeds of trust, licenses, sublicenses, purchase orders,
sales order, consignment agreements, undertakings, understanding, plan,
commitment, arrangement, instrument, commitment or other agreement, oral or
written, formal or informal, to which Seller or Subsidiary is a party or has
rights (each a "Contract") other than the Excluded Contracts (as defined in
1.7.5 below); (d) all prepaid or deferred expenses, including all advertising
and promotional materials, catalogs and labels; (e) all plans, blueprints,
drawings, surveys, engineering reports, appraisal reports and other similar
property; (f) all warranties, guarantees and rights of indemnity, at common law,
by contract or otherwise to the extent relating to any of the other Purchased
Assets; (g) all other rights relating to the Purchased Assets, including all
guaranties, security agreements and other collateral in respect of any such
assets and claims now existing or hereafter arising relating thereto; (h) other
than the policies set forth on Schedule 1.1.9 (the "Excluded Policies"), all
insurance policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of Seller and
Subsidiary (the "Insurance Policies"), the cash surrender value of the Excluded
Policies (including all amounts pledged to the Small Business Administration
(the "Pledged Cash Surrender Value")) (the "Cash Surrender Values") (which, for
the avoidance of doubt, such cash surrender values of all of the Excluded
Policies shall be Purchased Assets), and all rights to receive proceeds of
insurance and condemnation awards payable on or after the Effective Date with
respect to any damage, destruction, loss, condemnation or taking of any
Purchased Asset; (i) all security deposits; (j) all claims and other causes of
action inuring to Seller or Subsidiary's benefit; (k) all trade and similar
association memberships; and (l) all UCC consignment notice filings related to
any of the Purchased Assets naming Seller or Subsidiary as secured
party/consignor.
1.1.10 Tax Refunds. All of Seller and/or Subsidiary's rights to and
claims for federal and state income, customs, excise, franchise and sales and
use tax refunds, insurance refunds and real and personal property tax refunds,
each relating to operations prior to or after the Effective Date but not after
the Closing Date.
Notwithstanding the foregoing enumeration of assets, it is the purpose
and intent of the parties that Buyer is acquiring, and Seller and Subsidiary are
selling, and the term "Purchased Assets" includes, all assets, property, rights
and interests of Seller and Subsidiary other than the Excluded Assets, whether
or not above enumerated. For purposes of the transactions contemplated by this
Agreement, Seller and Subsidiary shall have deemed to have used the Purchased
Assets to operate the Business as agent for Buyer (provided, however, that the
foregoing shall not be deemed to affect the liability of Seller, Subsidiary or
Stockholders hereunder).
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1.2 Excluded Assets. Notwithstanding the provisions of Section 1.1, the
Purchased Assets shall not include any of the following assets (the "Excluded
Assets"):
1.2.1 Consideration Under This Agreement. The consideration to be
delivered to Seller and Subsidiary pursuant to this Agreement for the Purchased
Assets and all rights of Seller and Subsidiary under this Agreement.
1.2.2 Stock of Subsidiary. The capital stock of Subsidiary.
1.2.3 Corporate Records. The certificate of incorporation,
corporate seals, minute books, stock books and other corporate records having to
do with the corporate organization, corporate proceedings and capitalization of
Seller and Subsidiary.
1.2.4 Tax Records. The tax records of Seller and Subsidiary to the
extent the same do not constitute books of account, subject, however, to the
rights of Buyer to inspect such tax records after the Closing during reasonable
hours upon reasonable prior written notice.
1.3 Closing. The closing of the purchase and sale contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxx Cummis
Xxxxxxxxx Xxxxx Tischman Xxxxxxx & Xxxxx, Xxx Xxxxxxxxxx Xxxxx, Xxxxxx, Xxx
Xxxxxx 00000-0000 on February , 1998, or at such other place, date and time as
the parties may agree in writing (the "Closing Date").
1.4 Purchase Price. As the purchase price for the Purchased Assets (the
"Purchase Price"), at the Closing Seller shall assume all of the Assumed
Liabilities, as set forth in Section 1.6 below.
1.5 Allocation of Purchase Price. The Purchase Price shall be allocated
in the manner set forth on Schedule 1.5. The parties hereto agree that (a) the
allocation of the Purchase Price hereunder to items, classes and categories of
the Purchased Assets as set forth in Schedule 1.5 reflects and constitutes
arms-length negotiations between the parties, and (b) the foregoing allocation
is reasonable based on the parties' estimates of the fair market value as of the
Effective Date of each such class of Purchased Assets. The allocation reflected
in this Section 1.5 shall be binding on the parties for United States and state
income tax purposes and shall be consistently reflected by each party on its
United States and state income tax returns.
1.6 Assumption of Assumed Liabilities by Buyer. Buyer shall, at the
Closing, assume and agree to pay, perform and discharge the Assumed Liabilities.
For purposes of this Agreement, "Assumed Liabilities" means
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1.6.1 Seller and Subsidiary's obligations under the Contracts other
than as set forth in Section 1.7.5 below.
1.6.2 All trade payables and accounts payable in the amounts
included in the Current Balance Sheet which are unpaid as at the Closing plus
such other trade payables and accounts payable which are of the same nature as
the trade payables and accounts payable reflected on the Current Balance Sheet
and which have been incurred on or before the Closing Date in connection with
the ordinary course of the business of Seller and/or Subsidiary.
1.6.3 All accrued expenses and other liabilities in the amounts
included in the Current Balance Sheet which are unpaid as at the Closing Date
plus such other accrued expenses and other liabilities which have been incurred
on or before the Closing in the ordinary course of business of Seller and
Subsidiary and which are of the same nature as the accrued expenses and other
liabilities historically reflected on the financial statements of Seller and/or
Subsidiary.
1.6.4 Intentionally omitted.
1.6.5 The outstanding principal, interest, penalties and other sums
owing by Seller and/or Subsidiary to The Bank of Boston/Rhode Island Hospital
Trust (the "Bank") set forth on Schedule 2.16(d) immediately prior to the
Closing.
1.6.6 Twenty-five percent (25%) of the amounts owing by Seller to
the Major Creditors (as defined in Section 2.8 below) as of October 1, 1997
(such assumed amounts being listed on Schedule 2.8(b)) and one hundred percent
(100%) of the amounts owing by Seller to the Major Creditors after October 1,
1997 to the extent that Seller has provided Buyer with copies of, and Buyer has
approved, the purchase orders relating to such amounts.
1.6.7 All accrued vacation pay of employees of Seller and/or the
Subsidiary and such accrued compensation of employees of Seller and/or
Subsidiary incurred in the ordinary course of business since the last pay period
prior to Closing and payroll taxes of Seller and/or Subsidiary incurred in the
ordinary course of business since the last pay period prior to Closing which are
of the same nature as the accrued compensation and payroll taxes historically
reflected on the financial statements of Seller and/or Subsidiary.
It is confirmed and agreed that references in Sections 1.6.2 and 1.6.3 above to
trade payables and accrued expenses included in the Current Balance Sheet or
incurred thereafter do not include contingent liabilities. Notwithstanding the
provisions of this Section 1.6, Buyer shall not assume any liabilities,
commitments or other obligations of any kind or nature whatsoever, known or
unknown, accrued, fixed, contingent or otherwise, liquidated or unliquidated,
xxxxxx or inchoate, determined or non-determinable, due or to become due
("Liabilities") which are Excluded Liabilities pursuant to Section 1.7.
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1.7 Non-Assumption of Excluded Liabilities. Buyer shall not assume,
undertake, accept, be bound by or otherwise be responsible for any Liabilities
other than the Assumed Liabilities. Notwithstanding the provisions of Section
1.6, and without limiting the generality of the foregoing, Assumed Liabilities
shall not include Liabilities consisting of or arising out of, in connection
with or otherwise relating to:
1.7.1 Any Taxes (as defined in Section 2.18 below) except for
payroll taxes assumed pursuant to Section 1.6.7 above.
1.7.2 Any Liabilities to be borne by Seller, Subsidiary and/or any
Stockholder hereunder.
1.7.3 Any Liabilities to any affiliate of Seller, Subsidiary and/or
any Stockholder, including all loans made by the Stockholders to Seller or
Subsidiary or pursuant to any Contract (except as set forth in the Lease
referred to in Section 5.1.8).
1.7.4 Any claims (product liability or otherwise), whether made
before or after the Closing Date, or any claims, controversies, demands,
actions, suits, investigations, proceedings or other disputes, formal or
informal, including any by, involving or before any arbitrator or any
governmental entity (each a "Proceeding"), whether commenced before or after the
Closing Date, arising out of the Business or otherwise relating to Seller,
Subsidiary and/or any Stockholder, prior to Closing Date, or otherwise arising
out of any act or occurrence prior to, or any state or facts existing as of the
Closing Date (regardless of whether or not referred to on a Schedule to this
Agreement or otherwise disclosed or known to Buyer).
1.7.5 Any Contract of Seller or Subsidiary (a) listed on Schedule
1.7.5 hereto (the "Excluded Contracts"), or (b) not effectively assigned to
Buyer which Buyer does not directly receive the benefits of.
1.7.6 Indebtedness for borrowed money other than as specified on
Schedule 1.7.6 or as specifically assumed pursuant to Section 1.6.5.
1.7.7 The employment prior to the Closing Date by Seller or
Subsidiary of former employees of Seller or Subsidiary or specific events and
occurrences arising from the employment prior to the Closing Date by Seller or
Subsidiary of current employees, whether or not they become employees of Buyer
on the Closing Date, including severance payable to such persons that relates to
the fact that certain employees of Seller or Subsidiary will at the Closing Date
become employees of Buyer, severance Liabilities arising from the termination of
employment by Seller or Subsidiary caused by the transactions contemplated
hereby, severance liabilities to those employees who do not become employees of
Buyer and any other severance liabilities of Seller or Subsidiary.
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1.7.8 The employment prior to the Closing Date by Seller or
Subsidiary of any employees who become employed by Buyer on the Closing Date, to
the extent such Liabilities arise out of (A) any present or terminated employee
benefit plan of any kind or nature, oral or written, including Seller or
Subsidiary's profit sharing plan, any "Top Hat" plan for a select group of
employees, any non-qualified deferred compensation plan (whether funded or not),
any split dollar life insurance agreement between Seller or Subsidiary and any
employee, and any agreement to pay a disability or death benefit on behalf of
any employee (including any such requirement under the terms of any
shareholders' agreement to which Seller or Subsidiary is a party), or (B) any
disability or xxxxxxx'x compensation arising out of any act or omission
occurring prior to the Closing Date.
1.7.9 Obligations to comply with Environmental Laws (as defined in
Section 2.23.1.2 below) and all Liabilities and other Damages (as defined in
Section 7.2 below) arising out of non-compliance with Environmental Laws prior
to the Closing Date or otherwise arising out of other environmental
contamination of any property prior to the Closing Date (regardless of whether
such contamination occurred prior to or after Seller or Subsidiary's lease of
any such property which was leased by Seller or Subsidiary), including fees and
costs arising out of the settlement, defense or response to directives or orders
of any governmental entities or other persons or entities arising from the
protection of human health or safety, the environment or natural resources, or
otherwise arising out of environmental contamination of any kind or nature prior
to the Closing Date on or under or which has migrated from or to any property
the lease of which is to be assigned to Buyer pursuant to the terms hereof or to
any property which now is or previously has been owned or leased by Seller or
Subsidiary (regardless of whether such contamination occurred prior to or after
the purchase or lease of any such property purchased or leased by Seller or
Subsidiary), including personal injury claims and other claims of any kind or
nature relating to environmental contamination existing on or prior to the
Closing Date, including any Liabilities arising from the shipment,
transportation, generation or otherwise arranging for the shipment or
transportation of, on or prior to the Closing Date, any waste or any remediation
on or prior to the Closing Date including any pre-remedial response, studies or
investigations and subsequent remedial monitoring and care of or contamination
of ground water, surface water, soils or air.
1.7.10 Proceedings existing on the Closing Date.
1.7.11 Seller or Subsidiary's accrued medical insurance (if any) or
otherwise in connection with Seller or Subsidiary's medical plans;
1.7.12 Liabilities related to any business of Seller or Subsidiary
other than the Business.
1.7.13 Professional fees incurred in connection with the
negotiation of this Agreement and the other Transaction Documents and matters
related thereto.
1.7.14 Any amounts owing by Seller or Subsidiary to the Major
Creditors other than as specifically assumed by Buyer pursuant to Section 1.6.6
above.
1.7.15 Any other Liabilities of Seller or Subsidiary not
specifically assumed pursuant to Section 1.6.
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The parties hereto confirm and agree that the Liabilities under Seller or
Subsidiary's Contracts that do not constitute Assumed Liabilities pursuant to
Section 1.7 hereof shall constitute Excluded Liabilities as between Buyer on the
one hand and Seller and/or Subsidiary, on the other hand, whether or not Buyer
has agreed with a third party to assume or otherwise be responsible for any
Liabilities not constituting Assumed Liabilities. All Liabilities described in
this Section 1.7 are hereinafter collectively referred to as the "Excluded
Liabilities". For the purposes of this Section 1.7, Seller includes any person
or entity owning or operating the Business (or any portion thereof) prior to
Seller.
1.8 Closing Financial Statements. Within thirty (30) calendar days
after the Closing Date, Seller and Subsidiary shall provide Buyer with
consolidated balance sheets of Seller and Subsidiary as of the Closing Date and
related statements of income and retained earnings and cash flows for the period
ended the Closing Date (the "Closing Financial Statements"), which Closing
Financial Statements shall be at least as favorable as the Current Balance Sheet
and the related statements of income and retained earnings and cash flows for
the period ending December 31, 1997, including, without limitation, with respect
to cash, accounts receivable, inventory and other assets. Buyer shall have sixty
(60) calendar days following its receipt of the Closing Financial Statements
(the "Review Period") to review the same and the Purchased Assets. If Buyer in
good faith reasonably determines that the Closing Financial Statements do not
satisfy the foregoing requirements and objects to Seller and Subsidiary in
writing on or before the expiration of the Review Period, the amount of direct
damages suffered by Buyer as a result of such non-conformity may be offset
against the amounts otherwise due pursuant to the terms of the Promissory Notes
described in Section 5.2.11 below (pro rata among the Stockholders based on
their pro rata portion of the original principal balance of such Promissory
Notes).
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Seller, Subsidiary and the Stockholders hereby jointly and severally
represent and warrant to Buyer as follows:
2.1 Status; Authority; Binding Agreement. Seller and Subsidiary each
have the requisite corporate power and authority to enter into this Agreement
and the other documents and executed and delivered, or to be executed and
delivered by them, in connection herewith (the "Transaction Documents") and to
carry out their respective obligations hereunder and thereunder. The
Stockholders each have the requisite power and authority to enter into this
Agreement and the other Transaction Documents. This Agreement and the other
Transaction Documents to which Seller, Subsidiary and/or the Stockholders are a
party constitute the valid and binding obligations of Seller, Subsidiary and/or
Stockholders, as the case may be, enforceable against them in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency and similar laws affecting creditors' rights generally.
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2.2 Share Ownership. The Stockholders are the legal beneficial and
record owners of, and have good and valid title to, the Aviv Common Stock, free
and clear of any and all Liens. The Aviv Common Stock represents one hundred
percent (100%) of the issued and outstanding capital stock of Seller. The Aviv
Common Stock is owned by each of the Stockholders in the amount set forth
opposite his respective name on Schedule 2.2.
2.3 Capitalization. All of the currently issued and outstanding shares
of capital stock of Seller and Subsidiary have been duly authorized and are
validly issued, fully paid and nonassessable and have not been issued in
violation of any law (including State and federal securities laws) or in
violation of any preemptive, first refusal or other subscription rights of any
person or entity or of any agreement. Except as set forth on Schedule 2.3, there
are no outstanding (a) shares of capital stock or other securities of Seller or
Subsidiary, (b) securities of Seller or Subsidiary convertible into or
exchangeable for shares of capital stock or other securities of Seller or
Subsidiary, (c) options, warrants, exchange rights, subscription rights or other
agreements, commitments or rights to purchase or otherwise acquire from Seller
or Subsidiary, or agreements, commitments or obligations of Seller or Subsidiary
to issue or sell, any capital stock, other securities or securities convertible
into or exchangeable for capital stock or other securities of Seller or
Subsidiary, or (d) agreements, commitments or obligations of Seller or
Subsidiary to grant, or enter into any such option, warrant, call, right,
commitment or agreement (the items in clauses (a), (b) (c) and (d) being
referred to collectively as the "Company Securities"). There are no outstanding
obligations of Seller or Subsidiary to sell, issue or deliver, or to repurchase,
redeem or otherwise acquire any Company Securities.
2.4 Corporate Existence and Power. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Texas and has all corporate power and authority necessary to enable it to
own, lease or otherwise hold its properties and assets and to carry on its
business as now conducted and currently proposed to be conducted. Subsidiary is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Texas and has all corporate power and authority necessary
to enable it to own, lease or otherwise hold its properties and assets and to
carry on its business as now conducted and currently proposed to be conducted.
Each of Seller and Subsidiary is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary except where such failure to qualify will not have and
could not be reasonably expected to have a material adverse effect on the
business or assets of Seller or Subsidiary (a "Material Adverse Effect"). All
jurisdictions in which Seller or Subsidiary is so qualified to do business are
listed in Schedule 2.4. Seller, Subsidiary and the Stockholders have previously
delivered to Buyer true and complete copies of the certificate of incorporation
and by-laws of Seller and Subsidiary, as amended to date and as currently in
effect, and all minutes of meetings (including actions in lieu thereof) of the
board of directors (and each committee thereof) and stockholders of Seller and
Subsidiary.
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2.5 Governmental Authorization; Permits. Except and set forth on
Schedule 2.5 the execution, delivery and performance by Seller, Subsidiary and
the Stockholders of this Agreement and the other Transaction Documents, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not require any consent, approval or action by or in respect of, or any
declaration, filing or registration with, by or on behalf of Seller, Subsidiary
or the Stockholders, any governmental or regulatory body, court, agency,
official or authority (each, a "Governmental Authority"). Schedule 2.5 also
lists all Permits registered in the name of Seller or Subsidiary or otherwise
related to the Business.
2.6 Non-Contravention. Except as set forth on Schedule 2.6, the
execution, delivery and performance by Seller, Subsidiary and the Stockholders
of this Agreement and the other Transaction Documents and the consummation of
the transactions contemplated hereby and thereby, do not and will not, with or
without the giving of notice, the lapse of time or both (a) contravene or
conflict with the certificate of incorporation or by-laws of Seller or
Subsidiary, (b) contravene or conflict with or constitute a violation of any
provision of any law, rule, regulation, judgment, injunction, order or decree
currently in effect and binding upon or applicable to Seller, Subsidiary or the
Stockholders, which contravention, conflict or violation has had or could
reasonably be expected to result in or have a Material Adverse Effect, (c)
require any consent, approval or other action by any person, contravene or
conflict with or constitute a violation of or a default under, or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of Seller or Subsidiary or to a loss of any benefit to which Seller
or Subsidiary is entitled, under any provision of (i) any agreement, contract,
indenture, lease or other instrument binding upon Seller or Subsidiary, or (ii)
any license, franchise, Permit or other similar authorization held by Seller or
Subsidiary, or (d) result in the creation or imposition of any Lien on any asset
of Seller or Subsidiary.
2.7 Subsidiaries. Subsidiary is a direct, wholly-owned subsidiary of
Seller. Except for Subsidiary, Seller does not hold or own, directly or
indirectly, any capital stock or other equity securities of any other
corporation, or have any direct or indirect equity or ownership interest in any
association, partnership, joint venture or other entity, other than Subsidiary.
To the extent possible, Seller and the Stockholders shall indicate on all
Schedules to this Agreement whether each particular disclosure applies to
Seller, Subsidiary or both. All references in this Agreement to "Seller and
Subsidiary" or "Seller and Subsidiary" shall also be interpreted to mean "Seller
or Subsidiary or both Seller and Subsidiary."
2.8 Financial Statements. Attached hereto as Schedule 2.8(a) are true
and complete copies of the consolidated balance sheets of Seller and Subsidiary
as of May 31, 1997 (the "Annual Balance Sheets") and as of December 31, 1997
(the "Current Balance Sheet") and the related statements of income and retained
earnings and cash flows for the fiscal years ended May 31, 1997 and for the
period ended December 31, 1997. As used herein, "Balance Sheets" means the
Annual Balance Sheet and the Current Balance Sheet and "Financial Statements"
means each of the Balance Sheets and the annual and interim statements of income
and retained earnings and cash flows referred to above in this Section 2.8. The
Financial Statements are complete and correct in all material respects, in
accordance with all books and records of Seller and Subsidiary (and such books
and records accurately reflect the transactions of Seller and Subsidiary) and
have been prepared in conformity with generally accepted accounting principles
consistently applied. Seller and Subsidiary's books of account have been
maintained on a consistent basis. Each Balance Sheet presents fairly the
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financial position of Seller and Subsidiary as of its date, and each statement
of income and retained earnings and cash flows presents fairly the results of
operations and changes in cash flow, respectively, for the respective periods
then ended. All accounts receivable of Seller and Subsidiary are valid and
enforceable, are not subject to any valid defense, set off, counterclaim or
returns. and arose out of bona-fide transactions, except to the extent of any
reserves therefor reflected on the Current Balance Sheet. There are no
non-recurring types of income in excess (individually or in the aggregate) of
$5,000 included in any line item of income in any of the statements of income
and retained earnings included in the Financial Statements which are not
identified as non-recurring types of income either in the caption or in notes to
such Financial Statements. Seller's creditors other than the Bank representing
at least eighty percent (80%) of all obligations and liabilities of Seller to
its creditors other than the Bank are listed on Schedule 2.8(b) (the "Major
Creditors").
2.9 Absence of Certain Changes. Except as disclosed in Schedule 2.9,
since May 31, 1997, the respective businesses of Seller and Subsidiary have been
conducted in the ordinary course and there has not been:
2.9.1 any event, occurrence, development or state of circumstances
or facts which has had or could reasonably be expected to result in or have a
Material Adverse Effect on Seller or Subsidiary;
2.9.2 any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of Seller or
Subsidiary, or any repurchase, redemption or other acquisition by Seller or
Subsidiary of any outstanding shares of capital stock or other securities of, or
other equity or ownership interests in, Seller or Subsidiary;
2.9.3 any amendment of any term of any outstanding security of
Seller or Subsidiary;
2.9.4 any incurrence, assumption or guarantee by Seller or
Subsidiary of any indebtedness for borrowed money other than in the ordinary
course of business, but in any event not exceeding an aggregate of $5,000;
2.9.5 any creation or assumption by Seller or Subsidiary of any
Lien;
2.9.6 any making of any loan, advance or capital contributions to
or investment in any person;
2.9.7 any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of Seller or
Subsidiary which has had or would reasonably be expected to result in or have a
Material Adverse Effect on Seller or Subsidiary;
2.9.8 any acquisitions of any capital assets or other investments;
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2.9.9 any sale, lease, pledge, transfer or other disposition of any
capital assets other than in the ordinary course of business consistent with
past practices;
2.9.10 any transaction or commitment made, or any contract or
agreement entered into, by Seller or Subsidiary relating to its assets or
business (including the acquisition or disposition of any assets) other than
those transactions covered by any other subparagraphs of this Section 2.9 or any
relinquishment by Seller or Subsidiary of any contract or other right, in either
case, involving an amount in excess of $5,000, other than transactions,
commitments and relinquishments in the ordinary course of business and/or those
contemplated by this Agreement;
2.9.11 any change in any method of accounting or accounting
practice by Seller or Subsidiary;
2.9.12 other than with respect to employees of Seller (other than
the Stockholders) in the ordinary course of Seller's business consistent with
past practices, any (a) grant of any severance or termination pay to any
director, officer or employee of Seller or Subsidiary, (b) entering into of any
employment, severance, management, consulting, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
director, officer, consultant or employee of Seller or Subsidiary, (c) change in
benefits payable under existing severance or termination pay policies or
employment, severance, management, consulting or other similar agreements, or
(d) change in compensation, bonus or other benefits payable to directors,
consultants, officers or employees of Seller or Subsidiary;
2.9.13 any labor dispute, other than routine individual grievances,
or to the knowledge of Seller, Subsidiary or the Stockholders, any activity or
proceeding by a labor union or representative thereof to organize any employees
of Seller or Subsidiary, or any lockouts, strikes, slowdowns, work stoppages or
threats thereof by or with respect to any employees of Seller or Subsidiary;
2.9.14 any agreement or commitment containing a covenant limiting
or purporting to limit the freedom of Seller or Subsidiary to compete with any
person in any geographic area or engage in any line of business;
2.9.15 any joint venture or similar arrangement which involves a
sharing of profits or future payments to other persons;
2.9.16 any license of any of the Intellectual Property; or
2.9.17 any agreement, undertaking or commitment to do any of the
foregoing.
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2.10 Absence of Undisclosed Liabilities. Each of Seller and Subsidiary
has no liabilities or obligations except those liabilities or obligations which
are (a) fully reflected or in the aggregate adequately reserved against in the
Current Balance Sheet (including any notes thereto), (b) disclosed on Schedule
2.10 hereto, or (c) incurred in the ordinary course of business since the date
of the Current Balance Sheet consistent with prior practices of Seller or
Subsidiary. To the knowledge of Seller, Subsidiary and the Stockholders, there
is no basis for any assertion against Seller or Subsidiary of any material
liability or obligation of any nature or in any amount not fully reflected or in
the aggregate adequately reserved against in the Current Balance Sheet. For the
purposes of this Agreement the phrase "liabilities or obligations" shall include
any direct or indirect indebtedness, claim, loss, damage, deficiency (including
deferred income tax and other net tax deficiencies), cost, expense, obligation,
guarantee, or responsibility, whether accrued, absolute or contingent, known or
unknown, fixed or unfixed, liquidated or unliquidated, secured or unsecured.
2.11 Properties. Except as set forth in Schedule 2.11(a), all of the
assets and properties of Seller and Subsidiary are reflected on the Current
Balance Sheet (except to the extent not required to be so reflected by generally
accepted accounting principles), and Seller and Subsidiary have good, valid and
marketable title to all of their respective owned assets and properties, whether
real, personal or mixed, tangible or intangible, that are material to the
business of Seller and Subsidiary, free and clear of all Liens. All Bank
Accounts (including account number, location and balance) and all safe deposit
boxes are listed on Schedule 2.11(b).
2.12 Real Property. Except as set forth on Schedule 2.12, Seller and
Subsidiary do not own any real property. Set forth on Schedule 2.12 is an
accurate and complete list and summary description of all real property
currently leased by or on behalf of Seller or Subsidiary and, except as set
forth on Schedule 2.12, none of the described leases require any consent to the
transactions contemplated by this Agreement or the other Transaction Documents.
Seller, Subsidiary and the Stockholders have previously delivered to Buyer
accurate and complete copies of all leases listed and described on Schedule
2.12. Except as set forth on Schedule 2.12, Seller or Subsidiary has possession
of each of the aforementioned properties and no event has occurred which, with
the lapse of time or notice or both, could result in a default under any of the
described leases. All rents or other material payment obligations which have
become due in respect of each of such leased properties have been paid. Each of
Seller and Subsidiary has complied with its obligations under said leases and
neither has received any notice of any breach of its obligations under any
covenants, agreements, statutory requirements, planning consents, by-laws,
orders and regulations affecting any of such properties (whether owned or
leased), their use and any business of Seller or Subsidiary there carried on.
2.13 Condition of Tangible Assets. All tangible property, including the
real property and structures thereon, of Seller and Subsidiary is in good
operating condition, reasonable wear and tear excepted, and the operation and
use of such property in the business of Seller and Subsidiary conforms to all
applicable laws, ordinances, regulations, Permits, licenses and certificates,
except where the failure to so conform has not had and could not reasonably be
expected to result in or have a Material Adverse Effect on Seller or Subsidiary.
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2.14 Intellectual Property. Schedule 2.14 sets forth a true, correct
and complete list of all of Seller and Subsidiary's rights in and to all
Intellectual Property other than design copyrights. Except as disclosed on
Schedule 2.14, Seller or Subsidiary owns all of the Intellectual Property, free
and clear of all Liens and is not subject to any license, royalty or other
agreement. None of the Intellectual Property has been or is the subject of any
pending or litigation or claim of infringement and, to the knowledge of Seller,
Subsidiary and the Stockholders, no such litigation or claim is threatened. No
license or royalty agreement to which Seller or Subsidiary is a party is in
breach or default by any party thereto or the subject of any notice of
termination given or threatened. To the knowledge of Seller, Subsidiary and the
Stockholders, the use or sale of the Intellectual Property does not infringe any
trademark, servicemarks, trade name, copyrights, trade secret, patent or
confidential or proprietary rights of any other person or entity and Seller or
Subsidiary has not received any notice contesting its right to use any
Intellectual Property. Neither Seller nor Subsidiary has granted any license or
agreed to pay or receive any royalty in respect of any Intellectual Property.
Each of Seller and Subsidiary owns or possesses adequate rights in and to all
Intellectual Property necessary in connection with the operation of its
respective business.
2.15 Litigation. Except as set forth in Schedule 2.15, there is no
Proceeding pending against or, to the knowledge of Seller, Subsidiary and the
Stockholders, threatened against or affecting, Seller, Subsidiary or any of
their respective properties or assets before any court or arbitrator or any
Governmental Authority. Except as set forth in Schedule 2.15, there is no
Proceeding pending or, to the knowledge of Seller, Subsidiary or the
Stockholders, threatened against any officer or key employee relating to Seller,
Subsidiary or their respective businesses. Neither Seller, Subsidiary nor any
officer or key employee of Seller or Subsidiary is subject to any judgment,
order or decree relating to Seller or Subsidiary entered in any lawsuit or
proceeding or issued by any Governmental Authority. The foregoing sentences
include, without limiting their generality, actions pending or, to the knowledge
of Seller, Subsidiary and the Stockholders, threatened (or any basis therefor
known to Seller, Subsidiary and the Stockholders) involving, to the knowledge of
Seller, Subsidiary and the Stockholders, the prior employment or engagement of
any of Seller or Subsidiary's officers or key employees or their use in
connection with Seller or Subsidiary's business or any information or techniques
allegedly proprietary to any of their former employers or to any other person.
2.16 Contracts. Set forth on Schedule 2.16(a) is a list of any and all
Contracts which require the payment by Seller or Subsidiary of at least $10,000
in any one year or $25,000 over a series of years. Seller and Subsidiary have
entered into a written consignment Contract with each person or entity to whom
Seller or Subsidiary has consigned any of its Inventory with a value of $75,000
or more. Except as set forth on Schedule 2.16(b), none of the rights of Seller
or Subsidiary under any Contract will be adversely affected by the consummation
of the transactions contemplated hereby. Each Contract is valid, binding and in
full force and effect and is enforceable by Seller or Subsidiary, as the case
may be, in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency and similar laws effecting creditors' rights
generally. Except with respect to the accounts payable and trade payables listed
on Schedule 2.16(c) and the debt to the Bank set forth on Schedule 2.16(d),
Seller and Subsidiary have each performed all material obligations required to
be performed by it under each Contract (and is not otherwise in default or
claimed or purported or alleged to be in default thereunder which defaults will
require payment by Seller or Subsidiary of at least $1,000 individually or
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$10,000 in the aggregate) and, to the knowledge of Seller, Subsidiary and the
Stockholders (except with respect to the timely receipt of accounts receivable),
no other party thereto is in default thereunder, and neither Seller, Subsidiary
nor any Stockholder has received or given notice of default with respect to any
Contract, except as set forth on Schedule 2.16(e). When used in this Section
2.16, "default" includes a state of facts which with notice or lapse of time or
both would constitute a default on the part of any party in the performance of
any obligation to be performed or paid by any party under any Contract. Seller,
Subsidiary and the Stockholders have provided Buyer true and complete copies of
all Contracts. Whenever any party represented or covenanted herein or in any
Transaction Document that he or it has provided or furnished true and complete
copies of or given or will give access to or otherwise make available Contracts
or other documents, this includes the original document and all documents which
supplement, amend, otherwise modify or otherwise interpret (including letter
interpretations) such Contracts and other documents.
2.17 Inventory. A list of all of Seller and Subsidiary's Inventory as
of December 31, 1997, together with its physical location (specifying the
location of the warehouse or place of consignment, as applicable), is listed on
Schedule 2.17(a). In the case any item of Inventory on consignment, Schedule
2.17(a) describes the terms of such consignment. Schedule 2.17(b) is a copy of
each financing statement or consignment notice filing in effect with respect to
the Inventory which have been filed by Seller or Subsidiary (collectively, the
"Financing Statements").
2.18 Taxes.
2.18.1 Definitions. The term "Taxes" as used herein 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,
unemployment insurance, environmental, worker's compensation, Pension Benefit
Guaranty Corporation premiums and all other taxes, fees, assessments or other
charges of any kind similar to Taxes, 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. The term "Returns" as used
herein means all returns, declarations, reports. statements and other documents
required to be filed in respect of Taxes, including information returns or
reports with respect to backup withholding and other payments to third parties,
and "Return" means any one of the foregoing returns. All citations to the
Internal Revenue Code of 1986, as amended (the "Code"), or the Treasury
Regulations promulgated thereunder, shall include any amendments or any
substitute or successor provisions thereto.
2.18.2 General. Each of Seller and Subsidiary has filed all Returns
required to be filed by or on its behalf on a timely basis and such Returns are
true, complete and correct. None of the Returns filed or required to be filed by
Seller or Subsidiary contains or will contain a disclosure statement under
former Section 6661 or Section 6662 of the Code or any similar provision of any
state, local or foreign law. All Taxes shown to be payable by Seller or
Subsidiary on the Returns or on subsequent assessments with respect thereto have
been paid in full on a timely basis, and, the knowledge of Seller, Subsidiary or
the Stockholders, no other Taxes are payable by Seller or Subsidiary with
respect to items or periods covered by such Returns (whether or not shown on or
reportable on such Returns) or with respect to any period with respect to which
Seller has been required to file a Return or make a payment with respect to
Taxes. Each of Seller and Subsidiary has withheld and paid over all Taxes
required to have been withheld and paid over by it, and complied in all respects
with all information reporting and backup withholding requirements, including
maintenance of required records with respect thereto, in connection with amounts
paid or owing to any employee, creditor, independent contractor or other third
party. There are no Liens on any of the assets of Seller or Subsidiary with
respect to Taxes other than Liens for Taxes not yet due and payable and no Liens
will arise as a result of the transactions contemplated by this Agreement
directly as a result of acts of Seller, Subsidiary or the Stockholders.
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2.18.3 Waivers, etc. No issues have been raised and are currently
pending by any taxing authority in connection with any of the Returns of Seller
or Subsidiary. No waivers of statutes of limitation with respect to any of the
Returns have been given by or requested from Seller or Subsidiary. All
deficiencies asserted or assessments made as a result of any examinations have
been fully paid, or are fully reflected as a liability in the Financial
Statements, or are being contested and an appropriate reserve therefor has been
established and is fully reflected in the Financial Statements. All elections
with respect to Taxes affecting Seller or Subsidiary, as of the date hereof, are
set forth in the Returns, other than any such elections which are not required
to be included in the Returns, copies of which have been made available to
Buyer.
2.19 Employees. Schedule 2.19 sets forth a true and complete list of
(a) the names, titles, annual salaries and other compensation of all employees
of Seller and Subsidiary (the "Employees") as of the date first above written
and the location at which such Employees regularly perform services for Seller
or Subsidiary, and (b) the wage rates for non-salaried Employees of Seller or
Subsidiary (by classification). Any agreements, commitments or understandings
between Seller or Subsidiary and any Employee concerning such Employee's future
salary, compensation or terms of employment are summarized in Schedule 2.19.
Except as set forth on Schedule 2.19, as of the date first written above none of
such Employees has indicated to Seller, Subsidiary or a Stockholder that he or
she intends to resign or retire as a result of the transactions contemplated by
this Agreement or otherwise. Seller and Subsidiary have no Employees represented
by a union and each of Seller and Subsidiary (a) is in compliance with all
material applicable laws and regulations respecting welfare and retirement
benefit plans, employment wages and laws, and (b) is not engaged in any unfair
labor practice. All of Seller and Subsidiary's employees are employees-at-will
and may be terminated by Seller or Subsidiary, as the case may be, for any
reason at any time.
2.20 Transactions with Affiliates. Except as set forth in Schedule
2.20, there are no Contracts or other continuing transactions between Seller
and/or Subsidiary, on the one hand, and any affiliate of Seller, Subsidiary or
any Stockholder, on the other hand. Except as set forth in Schedule 2.20, none
of the officers or directors of Seller or Subsidiary (a) has any material direct
or indirect interest in any entity which does business with Seller or
Subsidiary, (b) has any direct or indirect interest in any property, asset or
right which is used by Seller or Subsidiary in the conduct of its business, or
(c) has any contractual relationship with Seller or Subsidiary other than such
relationships which occur from being an employee, officer, director or
stockholder of Seller or Subsidiary.
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2.21 Insurance Coverage. Schedule 2.21 sets forth an accurate and
complete list of all Insurance Policies and the cash surrender values of each
such life Insurance Policy. To the knowledge of Seller, Subsidiary and the
Stockholders, there is no claim by Seller or Subsidiary pending under any of
such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums payable
under all such policies and bonds have been paid, and Seller and Subsidiary have
otherwise complied in all material respects with the terms and conditions of the
Insurance Policies. Such Insurance policies have been in effect since the dates
indicated on Schedule 2.21 and remain in full force and effect. Seller and the
Stockholders have no knowledge of any threatened termination of, and have not
received written notice of, any premium increase with respect to, any of such
policies or bonds.
2.22 Compliance with Laws; No Defaults. Except as disclosed in Schedule
2.22, Seller and Subsidiary are not in violation of any applicable provisions of
any law, statute, ordinance, regulation, judgment, order, injunction, Permit,
license, certificate or other authorization, or its governing instruments,
except for violations that have not had and could not reasonably be expected to
have a Material Adverse Effect on Seller or Subsidiary. Neither Seller nor
Subsidiary is in material default under, and to the knowledge Seller, Subsidiary
or the Stockholders, no condition exists that with notice or lapse of time or
both would constitute a material default under, any applicable law, statute,
ordinance, regulation, judgment, order, injunction, Permit, license, certificate
or other authorization, or its governing instruments. Except as set forth on
Schedule 2.22, each of Seller and Subsidiary is in compliance with all currently
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and is not engaged in any unfair
labor practice, failure to comply with which or engagement in which, as the case
may be, has had, or could reasonably be expected to have, a Material Adverse
Effect on Seller or Subsidiary. There is no unfair labor practice complaint
pending or, to the knowledge of Seller, Subsidiary or the Stockholders,
threatened against Seller or Subsidiary before the National Labor Relations
Board.
2.23 Environmental Matters.
2.23.1 Definitions. As used herein:
2.23.1.1 "CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended.
2.23.1.2 "Environmental Laws" means any and all laws or
regulations, judicial decisions, orders or Permits issued to Seller or
Subsidiary of applicable governing authorities relating to the environment or to
emissions, discharges or releases of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic, radioactive or hazardous
substances or wastes into the environment including, without limitation, ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic, radioactive or hazardous substances
medical wastes or other wastes or the clean-up or other remediation thereof.
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2.23.1.3 "Environmental Liabilities" means all liabilities
arising in connection with or in any way relating to the assets of Seller,
Subsidiary or Seller or Subsidiary's use or ownership thereof, whether vested or
unvested, contingent or fixed, actual or potential, which (i) arise under or
relate to Environmental Laws or arise in connection with or relate to any matter
disclosed or required to be disclosed in Schedule 2.23, or (ii) arise from or
relate in any way to actions occurring or conditions existing before the Closing
Date.
2.23.1.4 "Hazardous Substance" means petroleum products or
hazardous substances as defined in Section 101 of CERCLA on the date of this
Agreement.
2.23.1.5 "Release" has the meaning specified in 42 U.S.C.
ss.9601(22) on the date of this Agreement.
2.23.1.6 For purposes of this Section, the term "Seller" or
"Subsidiary" shall include any business or business entity (including a
corporation) which is a predecessor, in whole or in part, of Seller or
Subsidiary, as the case may be.
2.23.2 Except as disclosed on Schedule 2.23, to the knowledge of
Seller, Subsidiary and the Stockholders:
2.23.2.1 no notice, notification, demand, request for
information, citation, summons, complaint or order has been issued, no complaint
has been filed with any Governmental Authority, no penalty has been assessed and
no investigation or review is pending or, to the knowledge of Seller, Subsidiary
and the Stockholders, threatened by any governmental entity or other person with
respect to any (a) alleged violation by Seller or Subsidiary of any
Environmental Law or liability thereunder, (b) alleged failure by Seller or
Subsidiary to have any Permit, certificate, license, approval, registration or
authorization required under any Environmental Law in connection with the
conduct of its business, or (c) Release of Hazardous Substances;
2.23.2.2 no polychlorinated biphenyls, radioactive material,
urea formaldehyde, lead, asbestos. asbestos-containing material or underground
storage tank (active or abandoned) is or was present at any property now owned
or leased by Seller or Subsidiary in such quantities, concentrations, forms or
levels which would constitute a violation of any applicable Environmental Laws;
2.23.2.3 there are no Environmental Liabilities that have
had or may reasonably be expected to have a Material Adverse Effect on Seller or
Subsidiary; and
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2.23.2.4 there has been no environmental investigation,
study, audit, test, review or other analysis conducted of which Seller or
Subsidiary has possession, or to the knowledge of Seller, Subsidiary and the
Stockholders, to which it has access, in relation to the current or prior
business of Seller or Subsidiary or any property or facility now or previously
owned or leased by Seller or Subsidiary which has not been delivered to Buyer at
least five days prior to the date hereof. Seller and Subsidiary have not
transported or arranged for the transportation (directly or indirectly) of any
Hazardous Substance to any location which is listed or, to the knowledge of
Seller, Subsidiary and the Stockholders, proposed for listing under CERCLA, or
under any similar state or local environmental law or which is the subject of
Federal, state or local enforcement actions or other investigations by
applicable governing authorities which may lead to claims for clean-up costs,
remedial work, damages to natural resources or for personal injury claims,
including, but not limited to, claims under CERCLA or analogous state
environmental clean-up laws.
2.24 Employee Plans. Schedule 2.24 sets forth a complete list of all
benefits provided to employees of Seller and Subsidiary, including all benefit
plans, policies, agreements and arrangements of Seller.
2.25 No Brokers or Finders. Seller, Subsidiary and the Stockholders
have not employed any broker or finder or incurred any liability for any
brokerage or finder's fees or commissions or similar payments in connection with
any of the transactions contemplated by this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Buyer and Parent hereby represent and warrant to the Stockholders as
follows:
3.1 Status; Authority; Binding Agreement. Each of Buyer and Parent has
all requisite corporate power and authority to enter into this Agreement and the
other Transaction Documents to which it is a party. This Agreement and the other
Transaction Documents to which it is a party constitute the valid and binding
obligations of Buyer and Parent, enforceable against each of them in accordance
with their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency and similar laws affecting creditors' rights generally.
3.2 Corporate Existence and Power. Buyer and Parent are each
corporations duly incorporated, validly existing and in good standing under the
laws of the state of Delaware and the province of Ontario, Canada, respectively,
and each has all corporate power and authority necessary to enable it to own,
lease or otherwise hold its properties and assets and to carry on its business
as now conducted and currently proposed to be conducted. Each of Buyer and
Parent is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary
except (a) where such failure to qualify will not have a Material Adverse Effect
on the business of Buyer or Parent, as the case may be, and (b) that Buyer will
qualify to do business as a foreign corporation in the State of Texas after
Seller and Subsidiary have complied with the requirements contained in Section
4.3 below regarding the use of the corporate name "Aviv, Inc." Buyer has
delivered to Seller, Subsidiary and the Stockholders true and correct copies of
the Certificate of Incorporation and bylaws of Buyer, as amended to date.
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3.3 Governmental Authorization. The execution, delivery and performance
by Buyer and Parent of this Agreement and the other Transaction Documents to
which it is a party, and the consummation of the transactions contemplated
hereby and thereby, do not and will not require any consent, approval or action
by or in respect of, or any declaration, filing or registration by Buyer or
Parent with any Governmental Authority.
3.4 Non-Contravention. The execution, delivery and performance of this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby, do not and will not, with or
without the giving of notice, the lapse of time or both (a) contravene or
conflict with the certificate of incorporation or by-laws of Buyer or Parent,
(b) contravene or conflict with or constitute a violation of any provision of
any law, rule, regulation, judgment, injunction, order or decree currently in
effect and binding upon or applicable to Buyer or Parent which contravention,
conflict or violation has had or could reasonably be expected to result in or
have a material adverse effect on the business or assets of Buyer or Parent, (c)
require any consent, approval or other action by any person, contravene or
conflict with or constitute a violation of or a default under, or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of Buyer or Parent or to a loss of any benefit to which Buyer or
Parent is entitled, under any provision of (i) any agreement, contract,
indenture, lease or other instrument binding upon Buyer or Parent, or (ii) any
license, franchise, Permit or other similar authorization held by Buyer or
Parent, or (d) result in the creation or imposition of any Lien on any asset of
Buyer or Parent.
3.5 Authorization of Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
approved by all requisite corporate action on the part of Buyer and Parent. This
Agreement has been duly executed and delivered on behalf of Buyer and Parent.
3.11 Brokerage Agreement. Buyer and Parent have not employed any broker
or finder or incurred any liability for any brokerage or finder's fees or
commissions or similar payments in connection with any of the transactions
contemplated by this Agreement.
3.12 Solvency. Neither the Buyer nor Parent (a) is now insolvent, nor
will it be rendered insolvent by the occurrence of the transactions contemplated
by this Agreement, and (b) is subject to any currently pending, or to the
knowledge of the Buyer or Parent, threatened bankruptcy or insolvency
proceedings.
ARTICLE 4
COVENANTS
4.1 Non-Compete, Non-Solicitation and Confidentiality.
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4.1.1 Non-Compete; Non-Solicitation. For a period ending three (3)
years after the Closing Date, neither Seller, Subsidiary, Beer nor their
respective affiliates shall, without the prior written consent of Buyer, engage
in a business which competes with the business of Seller, Subsidiary or Buyer as
conducted on the Closing Date, directly or indirectly, personally or as an
employee, owner, consultant, manager, associates, partner, agent or otherwise,
or by means of any corporate or other device within the United States (the
"Territory"); nor shall Seller, Subsidiary, Beer or their respective affiliates
for such period and in the Territory solicit orders, directly or indirectly from
any customer of Seller, Subsidiary or Buyer on or prior to the Closing Date for
any product substantially similar to those sold, manufactured or distributed by
Seller, Subsidiary or Buyer on or prior to the Closing Date, personally or as an
employee, owner, consultant, manager, associate, partner, agent or otherwise, or
by means of any corporate or other device (each a "Capacity"); nor shall Seller,
Subsidiary, Beer or their respective affiliates for such period solicit for
employment any employee of Seller, Subsidiary or Buyer as of, following or six
(6) months prior to the Closing Date. Notwithstanding anything contained herein
to the contrary, this Section 4.1.1 shall not apply to (a) Cash, (b) Xxxxx or
(c) any affiliates of Cash or Xxxxx which are not affiliates of Seller,
Subsidiary or Beer.
4.1.2 Confidentiality. Seller, Subsidiary and the Stockholders
acknowledge that by reason of their affiliation with Seller, Subsidiary and
Buyer, they have had access to confidential information of Seller, Subsidiary
and Buyer. Seller, Subsidiary and the Stockholders covenant and agree that they
shall not directly or indirectly, in any Capacity, use for their own benefit or
divulge to any third party any Confidential Information or trade secrets of
Buyer, Seller or Subsidiary except as required by law. As used herein
"Confidential Information" shall consist of the terms of this Agreement and all
information, knowledge or data relating to the Purchased Assets, the Assumed
Liabilities, the Business and Buyer (including without limit all information
relating to inventions, production methods, customer and prospective customer
lists, prices and trade practices) which is not in the public domain or
otherwise published or publicly available as of the date of execution and
delivery of this Agreement.
4.1.3 Specific Performance. Seller, Subsidiary and the Stockholders
acknowledge that the restrictions contained in this Section 4.1 are reasonable
and necessary to protect the legitimate interests of Buyer, do not cause Seller,
Subsidiary and the Stockholders undue hardship, and that any violations of any
provision of this Section 4.1 will result in irreparable injury to Buyer and
that, therefore, Buyer shall be entitled to preliminary and permanent injunctive
relief in any court of competent jurisdiction and to an equitable accounting of
all earnings, profits and other benefits arising from such violation, which
rights shall be cumulative and in addition to any other rights or remedies to
which Buyer may be entitled.
4.2 Intentionally Omitted.
4.3 Change of Name; Use of Names. Promptly following the Closing,
Seller and Subsidiary shall each file, to the extent necessary, an amendment to
its charter, trade name certificate or similar document and cause its affiliates
to file an amendment to their respective charter, trade name certificate or
similar document changing their respective names immediately after the Closing
to a name not confusingly similar in the sole judgment of Buyer to the name
"Aviv, Inc." or "New York Gold & Diamond Exchange, Inc." Seller, Subsidiary and
the Stockholders agree that after the Closing it or he will not, and will cause
its or his respective affiliates not to, use the name "Aviv, Inc." or "New York
Gold & Diamond Exchange, Inc." or any other trade names, expressions, corporate
symbols, logos, service marks or trademarks of the Business or any derivative of
any thereof or any name or logo etc. that is confusingly similar to any thereof,
in any form or manner or for any purpose.
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4.4 Cooperation. Each of the parties hereto covenants and agrees that
he or it shall cooperate fully with the other parties in furnishing any
information or performing any action reasonably requested by such other party,
which information or action is necessary to the successful consummation of the
transactions contemplated by this Agreement or is necessary, appropriate or
desirable for the corporate purposes of Buyer. Subject to its further rights
under this Agreement, he or it shall use all reasonable efforts to cause the
Closing to occur at the earliest practicable time.
4.5 Certain Other Covenants. Seller and Subsidiary hereby covenant and
agree with Buyer to do, or not do, as the case may be, the following prior to
the Closing Date:
4.5.1 Preservation of Business Organization. Seller and Subsidiary
shall use all reasonable efforts to preserve without material impairment the
business organization of Seller and Subsidiary and their respective goodwill as
to payors, providers, suppliers, distributors, clients and others having
business relations with Seller and Subsidiary.
4.5.2 Carry on in Regular Course. Seller and Subsidiary shall each
carry on its respective business in the ordinary course in a manner consistent
with its past practices.
4.5.3 Capital Stock. Seller and Subsidiary shall not redeem,
purchase or otherwise acquire any Seller Securities or agree to do any of the
foregoing. Seller and Subsidiary shall not issue, deliver, sell or grant or
authorize or propose the issuance, delivery, sale or grant of, or purchase or
propose the purchase of, any shares of its capital stock or securities
convertible into, or subscriptions, rights, warrants or options to acquire, or
other agreements or commitments of any character obligating it to issue any such
shares or other convertible securities.
4.5.4 Other Actions. Without the prior written consent or approval
of Buyer, each of Seller and Subsidiary shall not (a) amend its certificate of
incorporation or by-laws; (b) declare, set aside or pay any dividend or
otherwise make a distribution with respect to any shares of capital stock of
Seller or Subsidiary, or repurchase, redeem or otherwise acquire any outstanding
shares of capital stock or other securities of, or other equity or ownership
interests in, Seller or Subsidiary; (c) amend any term of any outstanding
security of Seller or Subsidiary; (d) incur, assume or guarantee any
indebtedness for borrowed money other than in the ordinary course of business
and in amounts and on terms consistent with past practices, but in any event not
exceeding an aggregate of $5,000; (e) create or assume any Lien on any asset;
(f) make any loan, advance or capital contributions to or investment in any
person; (g) acquire any capital assets or any other investments; (h) sell,
lease, pledge, transfer or dispose of any capital assets other than in the
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ordinary course of business consistent with past practices; (i) enter into any
transaction or make any commitment or any contract or agreement relating to its
assets or business (including the acquisition or disposition of any assets) or
relinquish any contract or other right, in either case, material to Seller or
Subsidiary, other than transactions, commitments and relinquishments in the
ordinary course of business consistent with past practices and those
contemplated by this Agreement; (j) make or change any election in respect of
Taxes, adopt or change any method of accounting or accounting practice in
respect of Taxes, settle any claim in respect of Taxes, or consent to any
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes; (k) grant any severance or termination
pay to any director, officer or employee of Seller or Subsidiary, enter into any
employment, severance, management, consulting, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
director, officer or employee of Seller or Subsidiary, change the benefits
payable under existing severance or termination pay policies or employment,
severance, management, consulting or other similar agreements or change the
compensation, bonus or other benefits payable to directors, officers or
employees of Seller or Subsidiary, other than increases in the ordinary course
of business of the compensation of the employees of Seller or Subsidiary; (l)
enter into any partnership arrangements, joint development agreements or
strategic alliances; (m) transfer or license to any person or entity or
otherwise extend, amend or modify in any material respect any rights to the
Intellectual Property or enter into grants to future patent rights, other than
in the ordinary course of business; (n) make any grant of exclusive rights to
any third party; (o) enter into any transaction with any of the stockholders or
any affiliates of any of the stockholders, other than in the ordinary course of,
and pursuant to the reasonable requirements of, its business and upon terms that
are no less favorable to Seller or Subsidiary than Seller or Subsidiary could
obtain in a comparable transaction with a person who was not such a stockholder
or an affiliate of such a stockholder or other than as contemplated by this
Agreement; or (p) agree to do any of the foregoing.
4.5.5 Access. Seller and Subsidiary shall permit officers,
employees, agents, attorneys and accountants and other persons designated by
Buyer full access after reasonable notice during normal business hours to the
properties, books, contracts, commitments, tax returns, examination reports of
the Internal Revenue Service and other records of Seller or Subsidiary in
connection with and in furtherance of the transactions contemplated by this
Agreement. Unless prohibited by law or contract, such designees of Buyer shall
be furnished with true, accurate and complete copies of such contracts,
commitments and other records and all other information with respect to the
assets and business of Seller or Subsidiary as such designees may reasonably
request. Until the Closing Date, (a) Buyer shall keep all such information and
documentation disclosed by the Stockholders, Seller and/or Subsidiary hereunder
confidential; (b) Buyer shall treat such information and documentation with the
same degree of care and confidentiality that it affords its own trade secrets
and proprietary information and shall not make more than one copy of such
information or documentation; (c) Buyer shall not disclose or communicate to any
third party in any manner whatsoever any such information or documentation
supplied by the Stockholders, Seller and/or Subsidiary hereunder without the
prior written consent of the Stockholders; and (d) Buyer shall confine access to
such information and documentation to its attorney and/or accountant or other
individuals who are directly concerned with the evaluation of the acquisition of
the stock of Seller and Subsidiary and shall insure that every such individual
is informed that he or she is bound by the provisions of this Agreement.
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4.5.6 Notices of Certain Events. Seller and Subsidiary shall
promptly notify Buyer of:
4.5.6.1 any notice or other communication from any person
alleging that the consent of such person is or may be required in connection
with the transactions contemplated by this Agreement;
4.5.6.2 any notice or other communication from any
Governmental Authority in connection with the transactions contemplated by this
Agreement;
4.5.6.3 any actions, suits, claims, investigations or
proceedings commenced relating to or involving or otherwise affecting Seller or
Subsidiary that relate to the consummation of the transactions contemplated by
this Agreement; and
4.5.6.4 any matter arising and discovered after the date of
this Agreement that, if existing or known on the date of this Agreement, would
have been required to be disclosed pursuant to this Agreement or that
constitutes a breach or prospective breach of this Agreement by Seller,
Subsidiary or the Stockholders.
4.6 No Press Pledge. Neither the Buyer, Parent, Seller, Subsidiary or
the Stockholders shall issue any press release regarding the transactions
contemplated by this Agreement without obtaining the prior written consent of
the other parties hereto.
ARTICLE 5
CONDITIONS OF CLOSING
5.1 Conditions to Obligations of Buyer. Consummation by Buyer of the
transactions contemplated by this Agreement is subject to the fulfillment on or
prior to the Closing Date of each of the following conditions:
5.1.1 Representations and Warranties. The representations and
warranties of Seller, Subsidiary and the Stockholders contained herein
(including the Schedules hereto) and in any other Transaction Document shall be
true and correct as of the date hereof, as of the Effective Date and as of the
Closing Date; provided, that the representations and warranties contained in
Sections 2.11, 2.15, 2.16, 2.17, 2.19 and 2.21 of this Agreement shall be true
as of date hereof and as of the Closing Date.
5.1.2 Covenants. Each of Seller, Subsidiary and the Stockholders,
as the case may be, shall have performed or complied with all obligations,
agreements and covenants required to be performed or complied with by him or it
hereunder prior to or on the Closing Date.
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5.1.3 Certificate. Buyer shall have received a certificate from
Seller, Subsidiary and the Stockholders as to their compliance with Sections
5.1.1, 5.1.2, 5.1.11 and 5.1.14 hereof.
5.1.4 No Adverse Change. In the sole opinion of Buyer, there shall
not have occurred since the date of execution and delivery of this Agreement any
adverse change in the business, operations, results of operations, or condition,
financial or otherwise, of Seller and Subsidiary.
5.1.5 Tax Refund. Seller and Subsidiary shall have executed and
delivered an Assignment of Tax Refund in the form attached hereto as Exhibit
5.1.5 and related UCC-1 financing statements in favor of Buyer. In the event
that the Assignment of Tax Refund is deemed invalid or unenforceable in whole or
in part, Seller, Subsidiary and the Stockholders agree to promptly make a cash
payment to Buyer in the amount that would otherwise be due to Buyer thereunder
in the absence of such invalidity or unenforceability.
5.1.6 Employment Agreement. Buyer and Beer shall have executed and
delivered an Employment Agreement on terms acceptable to Buyer and Beer (the
"Employment Agreement").
5.1.7 Consents and Permits. Seller, Subsidiary and the Stockholders
shall have delivered to Buyer all consents, Permits and authorizations necessary
with respect to them for consummation of the transactions contemplated by this
Agreement.
5.1.8 Leased Property. Buyer and Seller shall have entered into a
sublease for the premises located at 0000 Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxx
00000 (the "Lease"). The term of the Lease shall be for five (5) years (with the
right of termination thereof by Buyer at any time upon giving Seller at least
four (4) months' written notice at any time after the first two (2) months of
such Lease). Parent shall have guaranteed the obligations of Buyer pursuant to
the Lease.
5.1.9 Outstanding Debt. Upon payment by Buyer to the Bank of the
amount described in Section 5.2.11 below, the Bank shall at Closing execute and
deliver a release of Buyer, Parent and all of their respective affiliates and
all officers, directors, employees, agents and advisors of Buyer, Parent and all
of their respective affiliates from any further liability or obligation with
respect thereto.
5.1.10 Intentionally Omitted.
5.1.11 No Injunction, Etc. There shall be no legal proceeding then
pending or threatened or any legal requirement proposed, promulgated, enacted or
applicable to the transactions contemplated hereby which seeks to or does (a)
restrain, delay, invalidate, or otherwise prohibit or otherwise make illegal
this Agreement or its consummation in whole or in part, or (b) obtain material
damages or any other material relief arising out of the execution, delivery or
performance of this Agreement.
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5.1.12 Opinion of Counsel. Schlanger, Mills, Xxxxx & Xxxxxxxxx,
L.L.P., counsel to Seller, Subsidiary and the Stockholders, shall have delivered
to Buyer an opinion, dated the Closing Date, substantially in the form of
Exhibit 5.1.12 hereto.
5.1.13 Assignment and Assumption Documents. Seller, Subsidiary
and/or Buyer, as appropriate, shall have executed assignment and assumption
documents in form and content mutually satisfactory to the parties, including,
without limitation, a Xxxx of Sale substantially in the form of Exhibit
5.1.13(a) hereto (the "Xxxx of Sale"), an Assumption Agreement substantially in
the form of Exhibit 5.1.13(b) hereto (the "Assumption Agreement"), trademark
assignments substantially in the form of Exhibit 5.1.13(c) hereto (the
"Trademark Assignments"), copyright assignments substantially in the form of
Exhibit 5.1.13(d) hereto, and UCC-3 financing statements assigning the Financing
Statements to Buyer (the "UCC-3s").
5.1.14 Material Customer. No material customer of Seller or
Subsidiary shall have ceased to do business or shall have substantially reduced
its business relationship with Seller or Subsidiary and Seller and Subsidiary
shall not have received any notice to such effect.
5.1.15 Financing. Buyer shall have received financing to effectuate
the transactions contemplated by this Agreement from a lender satisfactory to
Buyer in its sole discretion.
5.1.16 Deliveries. All deliveries required to be made under this
Agreement to Buyer on or before the Closing Date shall have been received by
Buyer.
5.1.17 Creditors. The Major Creditors shall have each agreed to
accept twenty-five percent (25%) of all amounts owed by Seller to it in full
satisfaction of all amounts owed by Seller to such creditor and shall deliver to
Seller and Buyer a general release in substantially the form of Exhibit 5.1.17
hereto.
5.1.18 Cash Surrender Value. Buyer shall have received (a) the Cash
Surrender Values of the Excluded Policies other than the Pledged Cash Surrender
Value, and (b) all documentation deemed necessary by Buyer to assign to Buyer
all rights in the Pledged Cash Surrender Value.
5.1.19 Due Diligence. Buyer shall have been satisfied in its sole
discretion with the results of all due diligence conducted in connection with
this Agreement and the other Transaction Documents, including, without
limitation, with respect to the amounts to be paid by Buyer to the Bank as set
forth in Section 5.2.11 below.
5.2 Conditions to Obligations of Seller, Subsidiary and the
Stockholders. Consummation by Seller, Subsidiary and the Stockholders of the
transactions contemplated by this Agreement is subject to the fulfillment on or
prior to the Closing Date of each of the following conditions:
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5.2.1 Representations and Warranties. The representations and
warranties of Buyer contained herein and in any other Transaction Document shall
be true and correct as of the date hereof, the Effective Date and the Closing
Date.
5.2.2 Covenants. Buyer shall have performed or complied with all
obligations, agreements and covenants required to be performed or complied with
by it hereunder prior to or on the Closing Date.
5.2.3 Certificate. Seller, Subsidiary and the Stockholders shall
have received a certificate of the President of Buyer as to compliance with
Sections 5.2.1, 5.2.2 and 5.2.4 above.
5.2.4 No Injunction, Etc. There shall be no legal proceeding then
pending or threatened or any legal requirement proposed, promulgated, enacted or
otherwise applicable to the transactions contemplated hereby which seeks to or
does (a) restrain, delay, invalidate, or otherwise prohibit or otherwise make
illegal this Agreement or its consummation in whole or in part, or (b) obtain
material damages or any other material relief arising out of the execution,
delivery or performance of this Agreement.
5.2.5 Deliveries. All deliveries required to be made under this
Agreement by Buyer to Seller, Subsidiary and the Stockholders on or before the
Closing Date shall have been received by the Stockholders.
5.2.6 Employment Agreement. Buyer and Beer shall have executed and
delivered the Employment Agreement.
5.2.7 Consents and Permits. The Buyer shall have delivered to
Seller, Subsidiary and the Stockholders all consents, Permits and authorizations
necessary for consummation by the Buyer and Parent of the transactions
contemplated by this Agreement.
5.2.8 Assignment and Assumption Documents. Seller, Subsidiary
and/or Buyer, as appropriate, shall have executed assignment and assumption
documents in form and content mutually satisfactory to the parties, including,
without limitation, the Xxxx of Sale, the Assumption Agreement, the Trademark
Assignments and the UCC-3s.
5.2.9 Outstanding Debt. The outstanding principal, interest,
penalties and all other sums due by Seller and/or Subsidiary to the Bank shall
be paid in full by Buyer at Closing and the Bank shall at Closing execute and
deliver a release of Cash, Beer and Xxxxx of any and all liability or obligation
with respect to such debt (including without limitation the termination and
cancellation of their respective personal guarantees of Cash, Beer and Xxxxx of
such debt).
5.2.10 Opinion of Counsel. Xxxxx Xxxxxx Xxxxxxxxx Xxxxx Tischman
Xxxxxxx & Xxxxx, counsel to Buyer, shall have delivered to Seller and Subsidiary
an opinion, dated the Closing Date, substantially in the form of Exhibit 5.2.11
hereto.
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5.2.11 Promissory Note. Xxxxxx Xxxxx Xxxxxxxxx shall have executed
and delivered a Promissory Note to each of the Stockholders in form and
substance satisfactory to Xx. Xxxxxxxxx and the Stockholders pursuant to which
Xx. Xxxxxxxxx will assume the loans by the Stockholders to Seller in the amounts
set forth on Schedule 5.2.11.
ARTICLE 6
TERMINATION
6.1 Right to Terminate. This Agreement may be terminated by (a) mutual
written consent of the parties hereto, or (b) written notice from either (i)
Buyer to Seller, Subsidiary and the Stockholders, or (ii) Seller to Buyer if the
Closing has not been consummated within seven (7) business days after the date
of execution and delivery of this Agreement.
6.2 Effect of Termination. In the event of the termination of this
Agreement, each party hereto shall have all rights and remedies to the extent
such termination arises from a misrepresentation, breach of warranty or breach
of covenant.
ARTICLE 7
SURVIVAL; INDEMNIFICATION
7.1 Survival. The covenants, agreements, representations and warranties
of the parties hereto contained in this Agreement shall survive the Closing (a)
indefinitely with respect to those made pursuant to Sections 2.1, 2.2, 2.3 and
2.4 above, (b) until the later of the third anniversary of the Closing Date or
the expiration of the applicable statute of limitations with respect to those
made pursuant to Sections 2.18, 2.23 and 2.24 above, and (c) until twenty-one
(21) months after the Closing Date with respect to all others; provided, that
covenants and agreements contained in this Agreement to be performed following
the Closing Date shall continue in effect as specified herein. Notwithstanding
the preceding sentence (other than the proviso), any claim or liability
regarding any covenant, agreement, representation or warranty arising prior to
the termination of the covenant, agreement, representation or warranty in
respect of which indemnity may be sought under Section 7.2 shall survive such
termination pursuant to the preceding sentence if written notice of the
inaccuracy or breach thereof giving rise to such right to indemnity shall have
been given to party against whom such indemnity may be sought prior to such
time.
7.2 Indemnification by Seller, Subsidiary and the Stockholders. Seller,
Subsidiary and the Stockholders hereby jointly and severally agree to indemnify,
defend, protect, and hold harmless each of Buyer, Parent, their respective
affiliates, and all officers, directors, employees, agents and advisors of
Buyer, Parent and their respective affiliates (each in its capacity as an
indemnified party, a "Buyer Indemnitee") at all times from and after the date of
this Agreement from and against all claims, damages, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses net of income
tax benefits to such Buyer Indemnitee in the current year (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation) (collectively "Damages") incurred by such Buyer Indemnitee as a
result of or arising out of (a) any breach of any representation or warranty of
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Seller, Subsidiary, or the Stockholders set forth herein, or in any certificate
or other document delivered in connection herewith with respect to which a claim
for indemnification is brought by a Buyer Indemnitee hereunder, (b) any breach
or nonfulfillment by Seller, Subsidiary or the Stockholders, or any
noncompliance by Seller, Subsidiary or the Stockholders with any, covenant,
agreement, or obligation of Seller, Subsidiary or the Stockholders contained
herein, or in any certificate or other document delivered in connection
herewith, or (c) any Excluded Liability.
7.3 Indemnification by Buyer and Parent. Buyer and Parent hereby
jointly and severally agree to indemnify, defend, protect and hold harmless
Seller, Subsidiary, their respective affiliates (including the Stockholders),
and all officers, directors, employees, agents and advisors of Seller,
Subsidiary and their respective affiliates (each in its capacity as an
indemnified party, a "Seller Indemnitee") at all times from and after the date
of this Agreement from and against all Damages incurred by any of Seller
Indemnitees as a result of or arising out of (a) any breach of any
representation or warranty of the Buyer or Parent set forth herein, or in any
certificate or other document delivered in connection herewith with respect to
which a claim for indemnification is brought by any Stockholder, and/or (b) any
breach or nonfulfillment by the Buyer or Parent or any noncompliance by the
Buyer or Parent with any covenant, agreement or obligation contained herein or
in any certificate or other document delivered in connection herewith, or (c)
any Assumed Liability.
7.4 Third Person Claims. Promptly after a Buyer Indemnitee or a
Stockholder entitled to indemnification hereunder has received notice of or has
knowledge of any claim by a person not a party to this Agreement ("Third
Person") or the commencement of any action or proceeding by a Third Person, such
Buyer Indemnitee or Stockholder, as the case may be, shall, as a condition
precedent to a claim pursuant to this Article 7, give the Buyer, Parent or
Stockholders, as the case may be, required to indemnify such Buyer Indemnitee or
Stockholder pursuant to this Article 7 notice of such claim or the commencement
of such action or proceeding; provided, however, that the failure to give such
notice will not affect such Buyer Indemnitee or Stockholder's right to
indemnification hereunder with respect to such claim, action or proceeding
except to the extent actually prejudiced by such failure to give notice. The
Buyer Indemnitee or Stockholder, as the case may be, shall be entitled to
indemnification under this Article 7 for the reasonable fees and expenses of its
counsel for any period during which the indemnifying parties have not assumed
the defense of any claim. It is understood and agreed that in situations where
failure to settle a claim expeditiously could have an adverse effect on the
indemnified party, the failure of the indemnifying parties to object thereto
within five (5) business days of receipt of notice thereof shall be deemed to
constitute consent to such settlement for purposes of this Article 7.
ARTICLE 8
MISCELLANEOUS
8.1 Amendments. This Agreement may be amended, modified or supplemented
by, and only by, written agreement executed and delivered by the parties hereto
at any time prior to the Closing with respect to any of the terms contained
herein.
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8.2 Notices. Any and all notices or other communications required or
permitted under this Agreement shall be in writing and shall be deemed
sufficient when sent by confirmed facsimile transmission or federal express,
mailed by United States certified mail, return receipt requested ("Certified
Mail") or delivered in person against receipt, to the party and its counsel to
whom it is to be given at their addresses set forth on Schedule 8.2 or to such
other address as a party shall have furnished in writing in accordance with the
provisions of this Section 8.2. Any such notice shall conclusively be deemed to
have been received three (3) days after mailing by Certified Mail.
8.3 Counterparts; Construction; Joint Effort; No Third Party
Beneficiaries. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. The headings herein are for convenience of
reference only, do not constitute a part of this Agreement, and shall not be
deemed to limit or affect any of the provisions hereof. All personal pronouns
used in this Agreement and in any other Transaction Document, whether used in
the masculine, feminine or neuter gender, include all other genders; the
singular includes the plural and vice versa. All references herein to Articles,
Sections or Subsections refer to the corresponding Articles, Sections or
Subsections of this Agreement unless specific reference is made to Articles,
Sections or Subsections of another document.
8.4 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by and against the
parties hereto and their respective successors and assigns; provided, however,
that Seller, Subsidiary and the Stockholders may not assign, delegate or
otherwise transfer any of their rights or obligations under this Agreement or
under any other Transaction Document.
8.5 Governing Law; to Jurisdiction. This Agreement and the other
Transaction Documents other than (a) the Promissory Notes referred to in Section
5.2.11, above and (b) the issue as to whether or not a purchaser may rely on the
financial statements prepared by an accountant for a seller (collectively, the
"Texas Issues"), shall be governed by and construed in accordance with the laws
of New Jersey, without regard to the conflicts of law principles thereof. The
Texas Issues shall be governed by and construed in accordance with the laws of
Texas, without regard to the conflicts of law principles thereof. The parties
hereby consent to the jurisdiction of the courts of the State of New Jersey with
respect to all matters relating to this Agreement or any of the other
Transaction Documents.
8.6 Entire Agreement; Amendments; Waivers. This Agreement, together
with the other Transaction Documents and Schedules and Exhibits hereto and
thereto, constitutes the entire understanding of the parties and supersedes any
prior agreements or understandings, written or oral, between or among the
parties hereto with respect to the subject matter hereof. No amendment of,
waiver or consent under, or other modification of this Agreement shall be valid
or binding upon the party against whom same is desired to be enforced unless
made in writing and executed by such party. No consent or waiver, express or
implied, by a party to or of any breach by any other party in the performance by
it of any of its obligations hereunder on any one occasion shall be deemed or
construed to be a consent or waiver to or of the breach in the performance by
such party of the same or any other obligation of such party hereunder on any
other occasion. Failure on the part of any party to complain of any act or
failure to act of any other party hereunder or to declare any other party in
default, irrespective of how long such failure continues, shall not constitute a
waiver by a party of its rights hereunder.
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8.7 Survival of Agreements. Subject to the limitations set forth in
Section 7.1, all of the representations, warranties, covenants and agreements of
all of the parties contained in this Agreement (including in any Schedule or
Exhibit) and/or in any other Transaction Document shall survive the execution,
delivery and performance of this Agreement and each other Transaction Document.
8.8 Severability. If any provision of this Agreement or the application
thereof to any person or circumstance(s) shall be invalid or unenforceable to
any extent, (a) the remainder of this Agreement and the application of such
provision to other person(s) or circumstance(s) shall not be affected thereby,
and (b) each such provision shall be enforced to the greatest extent permitted
by applicable legal requirements. The parties agree that if a court invalidates
or renders unenforceable any provision hereof, it is their intent that such
court either reduce the scope, duration or other aspects of such provision to
the maximum extent enforceable or replace any such provision with a valid and
enforceable provision that comes closest to expressing the intention of the
invalid or unenforceable provision to the maximum extent permitted by law and
this Agreement shall be fully enforceable as so modified.
8.9 Further Assurances. Without limiting the generality of any
provisions of this Agreement, each party shall from time to time prior to, on
and/or after the Closing Date cooperate and take such action as may be
reasonably requested by another party in order to carry out the provisions and
purposes of this Agreement and the transactions contemplated hereby.
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IN WITNESS WHEREOF, the undersigned have signed this Asset Purchase
Agreement as of the day and year first written above.
Witness/Attest: AVIV, INC., a Delaware corporation (Buyer)
________________________ By:______________________________
D.G. JEWELLERY OF CANADA LTD. (Parent)
________________________ By:______________________________
AVIV, INC., a Texas corporation (Seller)
________________________ By:______________________________
NEW YORK GOLD & DIAMOND EXCHANGE,
INC., a Texas corporation (Subsidiary)
________________________ By:______________________________
------------------------ ------------------------
Gadi Beer
------------------------ ------------------------
Xxxxx Xxxxx
------------------------ ------------------------
Xxxxxx Xxxx
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