EXHIBIT 10.11
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into this 24th day of March, 1997, by and between CP DISTRIBUTORS, INC., a
Florida corporation (the "Purchaser"), and CARRIER CORPORATION, a Delaware
corporation (the "Seller").
RECITALS
A. The Seller uses the Assets (as defined in SECTION 1.1) in the
conduct of the businesses owned and operated by the Seller at the distribution
facilities for residential and light commercial HVAC products located in (a)
North Kansas City, Missouri, Springfield, Missouri, Wichita, Kansas and Lenexa,
Kansas (the "Comfort Products Business") and (b) Omaha, Nebraska, Lincoln,
Nebraska, Des Moines, Iowa and Sioux Falls, South Dakota (the "NAO Central
Plains Business" and, together with the Comfort Products Business, the
"Business").
B. The Seller desires to transfer and deliver the Assets to the
Purchaser, and the Purchaser desires to purchase, acquire and accept delivery of
the Assets from the Seller and assume, satisfy and discharge certain liabilities
of the Seller which are attributable to the Business, on the terms and subject
to the conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual benefits to be
derived hereby and the representations, warranties, covenants and agreements
herein contained, the Purchaser and the Seller hereby agree, intending to be
legally bound, as follows:
II.
PURCHASE OF ASSETS
A. PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions of
this Agreement, the Seller agrees to transfer and deliver to the Purchaser, and
the Purchaser agrees to purchase, acquire and accept delivery of the following
assets used by the Seller in connection with the Business, but specifically
excluding any of the Excluded Assets set forth in SECTION 1.2 hereof (the
"Assets"):
1. Subject to the terms of the Real Property Leases and
Equipment Leases (as defined herein), furniture, fixtures, equipment and other
tangible personal property
used by the Seller in the Business as set forth on the fixed asset list attached
hereto as SCHEDULE 1.1(A), including, without limitation, leasehold improvements
identified on the books and records of the Business;
2. Inventories of Carrier-branded, Xxxxxx-branded,
Xxxxx-branded, and Totaline-branded ("Branded") and non-Branded equipment,
components, parts and supplies used by the Seller in the Business which are on
hand as of the Closing as set forth on SCHEDULE 1.1(B) attached hereto,
excluding any equipment, components, parts and accessories which are sold in the
ordinary course of business on or prior to the Closing;
3. Accounts and notes receivable of the Business as set forth
on SCHEDULE 1.1(C) attached hereto, whether or not reflected on the financials
of the Business, including, without limitation, freight claims and accounts
payable by independent distributors (the "Receivables");
4. Prepaid expenses and assets of the Business as set forth
on SCHEDULE 1.1(D) attached hereto, including, without limitation, prepaid
rentals, taxes (excluding taxes based on or measured by net income) and
deposits;
5. Subject to the consent of the lessor where required, leases
of office, warehouse, or store premises currently occupied by Seller in
connection with the Business as set forth on SCHEDULE 1.1(E) attached hereto
(the "Real Property Leases");
6. Equipment leased by Seller for the Business as set forth on
SCHEDULE 1.1(F) attached hereto, with respect to which Purchaser shall, subject
to the consent of the lessor where required, accept an assignment of such leases
and assume Seller's obligations thereunder or enter into such other arrangements
as will transfer the benefits and obligations related thereto to Purchaser (the
"Equipment Leases");
7. Permits, licenses, approvals, customer contracts, supply
contracts, and other contracts, bids, offers, quotes, purchase orders,
commitments and arrangements to which Seller is a party or otherwise subject in
connection with the Business as of the Closing Date (collectively, the
"Contracts"), to the extent transferable and assignable, but excluding any
agreements between Seller and operating units of Seller and its parent or
agreements pertaining to employees of Seller and intercompany arrangements which
shall terminate as of the Closing Date;
8. Subject to the provisions of SECTION 5.16 hereof, certain
books, records, papers, files, customer lists, referral lists and advertising
materials of the Seller relating to the Business and/or the Assets which is
located on the premises of the Business;
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and
9. The xxxxx cash held at locations of the Business as of the
Closing Date.
B. EXCLUDED ASSETS. Notwithstanding anything to the contrary in SECTION
1.1 hereof, it is specifically understood and agreed by the parties hereto that
the Seller is not selling, and the Purchaser is not purchasing, the following
assets used by the Seller in connection with the Business (the "Excluded
Assets"):
1. All insurance policies of the Seller obtained or maintained
by or on behalf of the Business and all rights thereunder and all rights or
refunds or loss adjustment claims or credits as may exist under self-insurance
programs maintained or established with respect to the Business;
2. All tax refunds, tax claims, rights to carrybacks or
carryforwards, and claims for tax credits, deductions, or other tax benefits of
Seller or its Affiliates (as defined in SECTION 8.3 hereof) in respect of the
Business for all tax periods ending on or before the Closing Date;
3. All assets relating to or arising out of any employee
benefit plans, including pension, savings or health plans maintained by Seller
or its parent or for employees of the Business;
4. All rights to the patents, trademarks, tradenames,
servicemarks and other intellectual property owned by Seller, including the
trade names "Carrier", "Xxxxx", "Xxxxxx", and "Totaline", and the rights to use
such names (alone or in conjunction with other words), and the logos, slogans or
marks of Seller, except as otherwise specifically permitted by the Distributor
Agreements;
5. All checks and drafts of Seller, all of Seller's records
and files, banking records, tax returns, accounting records and such other
similar books and records located at offices of Seller other than those of the
Comfort Products Business or the NAO Central Plains Business (the "Corporate
Files"), including, without limitation, such books and records as may relate to
the Business to the extent the same are archived documents (not stored in
actively maintained or accessed file systems), or documents which constitute
compilations or consolidations of documents located at facilities of the
Business or studies or analyses of the Business, its prospects or its personnel;
6. Except as set forth in SECTION 5.4 hereof, all computer
hardware and software used in connection with ROADS system and all software
licensed to Seller by
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The Climatic Corporation;
7. All indemnity and contribution rights granted to or owed by
third parties with respect to liabilities and obligations pertaining to the
Business that do not constitute Assumed Liabilities (as defined herein) and any
and all rights or assets arising from and directly related to the defense,
release, compromise, discharge or satisfaction by Seller of such liabilities and
obligations;
8. All cash and cash equivalents and deposit accounts of the
Business other than xxxxx cash;
9. Except as set forth in SECTION 5.17 hereof, all lease
agreements pertaining to the vehicles heretofore used in connection with the
Business and all rights to use such vehicles;
10. All receivables, notes or accounts which have been
assigned, purchased or transferred to Carrier Distribution Credit Corporation
("CDCC") or for which CDCC has given value, and all chattel paper, notes,
security agreements, financing agreements, guarantees and similar agreements
pertaining thereto and rights arising therefrom and any rights or benefits
related thereto, and all receivables due from CDCC at Closing as set forth on
SCHEDULE 1.2(J) attached hereto;
11. All intercompany arrangements, which shall terminate as
of the Closing Date, all intercompany freight claims, the ROADS hardware and
software, and intercompany receivables; and
12. All bank accounts utilized by Seller with respect to the
Business.
C. METHOD OF CONVEYANCE. The Assets shall be transferred to Purchaser
at Closing pursuant to the following instruments of conveyance (collectively,
the "Instruments of Conveyance"):
1. The sale, transfer, conveyance, assignment and delivery by
the Seller of the Assets to the Purchaser hereunder shall be effected on the
Closing Date by Seller's delivery of a xxxx of sale in the form attached hereto
as EXHIBIT 1.3(A).
2. Each of the Real Property Leases shall be transferred to
Purchaser pursuant to assignment and assumption agreements in the form attached
hereto as EXHIBIT 1.3(B).
3. The Contracts and Equipment Leases (except for those for
which
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Seller and Purchaser executed sublease agreements at Closing) shall be
transferred to Purchaser pursuant to an assignment and assumption agreement in
the form attached hereto as EXHIBIT 1.3(C).
D. LIMITATIONS ON TRANSFER.
1. Anything herein to the contrary notwithstanding, no
contract, agreement, commitment or arrangement, lease, license or permit which
would otherwise constitute one of the Contracts, the Equipment Leases, the Real
Property Leases or the permits, shall be deemed transferred or assigned to
Purchaser pursuant to this Agreement, if the attempted transfer or assignment of
same to Purchaser without the consent or approval of another party or
governmental entity would be ineffective or would constitute a breach thereof or
a violation of any law or regulation or would, in any other way, have a Material
Adverse Effect on the rights of Seller (or Purchaser as a transferee or
assignee) thereunder (the "Unassigned Contracts"). If such consent or approval
is not obtained, or if any attempted assignment would be ineffective or
constitute such a breach or violation or so affect such rights, then Purchaser
and Seller shall, with respect thereto, enter into any other reasonable
arrangement, including a subcontracting, subleasing or agency arrangement,
designed to provide Purchaser with the benefit of the Unassigned Contracts,
transfer to Purchaser the performance obligations or full economic risk,
expenses and costs associated therewith and indemnify Seller with respect
thereto. In any event, Purchaser shall fully indemnify Seller with respect to
all liabilities and obligations arising out of the Unassigned Contracts.
2. In making the conveyance of the Assets to Purchaser as
contemplated by this Agreement, Seller is doing so on an "AS IS" and "WHERE IS"
basis and except for the representations and warranties expressly made by Seller
in this Agreement or in the agreements delivered by Seller in connection with
the consummation of transactions contemplated hereby, SELLER IS NOT MAKING ANY
REPRESENTATION, WARRANTY OR GUARANTEE WHATSOEVER, WHETHER EXPRESSED OR IMPLIED,
ARISING BY LAW OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO THE
DESIGN, CONDITION, CAPACITY, VALUE, UTILITY, PERFORMANCE, QUALITY, OR
DOCUMENTATION OF ANY ASSETS OR THE BUSINESS, OR THE COLLECTIBILITY OF ANY
ACCOUNTS, THE ENFORCEABILITY OF ANY LEASE OR CONTRACT, OR REGARDING THE
VIABILITY OR CONTINUED SUCCESS OF THE BUSINESS, IN CONNECTION WITH THE SALE,
ASSIGNMENT, LEASE, SUBLEASE, OR TRANSFER OF THE ASSETS OR THE BUSINESS, NOR IS
SELLER MAKING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO THE ASSETS. Nonetheless, the inventory sold
herein shall be sold subject to the terms and conditions of the Distributor
Agreements executed by the Purchaser in connection with this Agreement.
3. Purchaser has been given the opportunity to make an
independent
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examination of the Assets and is relying on said independent examination at its
own risk. The parties have negotiated the Purchase Price extensively and in part
may have used the available financial statements of the Business as the basis
for some of the negotiations. However, notwithstanding the use of such financial
statements, and such matters as the level of reserves as may have been
established for obsolescence, bad debts or contingent liabilities of the
Business, no representation with respect thereto is being made by Seller herein
or in connection herewith, and other than the adjustments contemplated under
SECTION 2.3 hereof, no adjustments are to be made with respect to the Purchase
Price for the Assets on or after the Closing as a result of what is or is not
reflected therein.
E. RECONVEYANCE. Purchaser shall reconvey to Seller any assets that are
intended to be Excluded Assets but which are nonetheless conveyed to Purchaser
at Closing as a result of inadvertence, oversight, operation of law or whatever
cause. Such reconveyance shall be on a similar basis as the Seller's conveyance
of the Assets to Purchaser.
F. ASSUMED LIABILITIES. From and after the Closing Date, the Purchaser
hereby agrees to assume, satisfy and discharge the following liabilities,
duties, requirements, responsibilities and obligations of the Seller which are
attributable to the Business, as and when the same shall become due (the
"Assumed Liabilities"):
1. All trade payables arising out of or relating to the
Business as set forth on SCHEDULE 1.6(A) attached hereto, whether or not
reflected on the financials of the Business;
2. All liabilities arising out of or relating to the Real
Property Leases;
3. All liabilities and obligations arising out of or relating
to the Contracts, including Contracts which are not disclosed on SCHEDULE 3.8
attached hereto if Purchaser has assumed the benefit of or received value in
connection with any such Contracts;
4. All liabilities and obligations arising out of the
Equipment Leases and the permits;
5. All liabilities and obligations arising out of or relating
to collection actions or efforts relating to the Receivables;
6. All liabilities or obligations to credit or make payment to
customers of the Business with respect to sale, service, pricing, promotion or
collection related matters or disputes;
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7. All obligations and liabilities to pay commissions earned
by employees of the Business on sales that are completed after the Closing Date
(that is, payment is received after the Closing Date but an offer was made prior
to the Closing Date);
8. The Business has had an arrangement with CDCC wherein the
Business has undertaken certain obligations with respect to dealer inventories
financed by CDCC. Purchaser hereby agrees, as of the Closing Date, to assume all
obligations and duties of the Business with respect to inventories sold prior to
Closing and with respect to CDCC floor plan arrangements in effect on the
Closing Date. Purchaser will enter into a new agreement with CDCC with respect
to post-Closing sales of goods. A list of dealers for which inventories have
been financed by CDCC is set forth in SCHEDULE 1.6(H) hereto (the "CDCC Financed
Dealer List");
9. All liabilities and obligations arising out of or relating
to the Dealer Promotions established by the Business as set forth in SECTION 5.6
hereof;
10. All liabilities and obligations arising out of or relating
to customer advances received by the Business and all liabilities and
obligations of the Business to pay customer credits, including all those
reflected on the financial statements of the Business as of the Closing Date;
11. All liabilities and obligations arising out of product
warranty claims with respect to the Business or predecessors to the Business,
whether made before, on or after the Closing Date, whether or not disclosed or
reserved or reflected on the books and records or financial statements of the
Business and whether based on expressed or implied warranty, including claims
involving returns and allowances without regard to the date of shipment or sale
of the product in question or whether the product was discontinued prior to the
Closing Date;
12. All liabilities and obligations arising out of or relating
to recourse agreements or obligations applicable to receivables or accounts or
notes of the Business or receivables, accounts or notes assigned or transferred
to CDCC;
13. All liabilities and obligations of the Business arising in
the ordinary course and relating to the purchase and sale of products, whenever
incurred or accrued, other than Seller's obligations owed to employees of the
Business which accrued prior to the Closing Date and liabilities specifically
allocated under this Agreement;
14. All liabilities and obligations of Seller accrued through
the Closing Date for the payment to persons employed in the Business, for
accrued vacation pay, accrued sick days or any other absences from work for
which Seller would be obligated to pay an employee of the Business; provided,
however, that Seller shall give Purchaser a credit
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against the Purchase Price equal to the total amount of vacation days accrued by
Employees of the Business during the first three (3) months of calendar year
1997 in the amount set forth on SCHEDULE 1.6(N) attached hereto; and
15. All liabilities and obligations arising out of or relating
to the operation of the Business on or after the Closing Date, it being
understood however that notwithstanding any of the assumptions made in this
Section, Purchaser is not assuming liabilities arising out of the Excluded
Assets.
G. EXCLUDED LIABILITIES. Except for the Assumed Liabilities, the
parties hereto acknowledge and agree that (a) the Purchaser shall not assume,
satisfy, discharge or otherwise be responsible for any liability, obligation,
debt or commitment of the Seller of any kind or nature whatsoever, whether
absolute or contingent, accrued or unaccrued, asserted or unasserted, known or
unknown or otherwise, including but not limited to any liabilities, obligations,
debts or commitments of the Seller arising out of or incurred with respect to
this Agreement and the transactions contemplated hereby (the "Excluded
Liabilities") and (b) all of the Excluded Liabilities shall remain the sole,
exclusive and absolute responsibility of the Seller.
III.
PURCHASE PRICE
A. PURCHASE PRICE. In reliance on the representations, warranties,
agreements and covenants of the Seller made herein, and as full consideration
for the Assets to be sold, transferred, conveyed or delivered by the Seller to
the Purchaser pursuant to this Agreement, the Purchaser agrees to pay to the
Seller an aggregate purchase price equal to the sum of the following (the
"Purchase Price"):
1. the book value of the Assets, less (i) reserves for
obsolete and damaged inventories, doubtful accounts and depreciation, and (ii)
the book value of all Assumed Liabilities as reflected on the financial
statements of the Business (such difference being hereinafter referred to as the
"Net Asset Value"); plus
2. the product obtained by multiplying the Net Asset Value
times thirty percent (30%) (the "Goodwill Value").
B. PAYMENT OF PURCHASE PRICE.
1. At Closing, the Seller shall deliver to the Purchaser an
itemization of the Purchase Price in the form attached hereto as SCHEDULE 2.2,
calculated in the
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manner set forth in SECTION 2.1 hereof.
2. At the Closing, the Purchaser shall deliver the Purchase
Price to the Seller, in immediately available funds by wire transfer to Chase
Manhattan Bank, N.A., New York, New York ABA #000000000 for the "Account of
Carrier Corporation NAO account #XXXXXX," or to such other account as Seller may
specify in writing at least two (2) Business Days (as defined in SECTION 8.3
hereof) prior to the Closing.
C. PURCHASE PRICE ADJUSTMENT.
1. Within forty-five (45) Business Days following the Closing
Date, Xxxxxx Xxxxxxxx, LLP (the "Auditor") shall have conducted, in accordance
with GAAP (as defined in SECTION 8.3 hereof) and Generally Accepted Auditing
Standards, an audit of the Purchase Price for the limited purpose of confirming
(i) that the reserves for obsolete and damaged inventories, doubtful accounts
and depreciation are, in the aggregate, adequate, and (ii) that the accounts for
the Assets and Assumed Liabilities are presented fairly in all material
respects. To the extent the audit reveals that the reserves, in the aggregate,
are inadequate or over-reserved or that the Assets and Assumed Liabilities are
materially misstated, the Auditor shall deliver to the Purchaser and Seller a
report detailing the discrepancies and the corresponding adjustment to the
Purchase Price (whether upward or downward), together with supporting
documentation (the "Auditor's Report").
2. If either the Purchaser or the Seller disagrees with any
adjustment to the Purchase Price set forth in the Auditor's Report, the
Purchaser or the Seller, as the case may be, may within twenty (20) Business
Days after receipt thereof deliver a written notice to the other disagreeing
with such adjustment. Any such notice of disagreement shall specify in
reasonable detail those items or amounts comprising the adjustment to the
Purchase Price as to which such party disagrees and the basis of such
disagreement. If no such notice of disagreement is timely delivered, the
adjustment to the Purchase Price as set forth in the Auditor's Report shall be
final and binding on the parties hereto.
3. If a notice of disagreement shall be timely delivered
pursuant to SECTION 2.3(B) hereof, the parties shall, during the ten (10)
Business Days following such delivery, use their reasonable best efforts to
reach agreement on the disputed items. If such an agreement is reached, the
Purchase Price as so agreed shall be final and binding on the parties hereto. If
the parties are unable to reach such agreement, a Big Six accounting firm, not
then performing services for the Seller or the Purchaser and which has not done
so for the past three (3) years, to which the parties mutually agree (the
"Accounting Referee") shall be retained to promptly review the Auditor's Report
and the disputed items or amounts. The Accounting Referee shall deliver to the
Seller and the Purchaser, as promptly as practicable, a report setting forth the
adjustments, if any, to the Purchase Price and the calculations supporting such
adjustments. The report of the Accounting Referee shall be final and binding
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upon the parties hereto and the Purchase Price, as determined by the Accounting
Referee, shall be final and binding on the parties hereto. The cost of the
Accounting Referee's review and report shall be borne equally by the Purchaser
and the Seller.
4. If the adjusted Purchase Price, as determined by the
Accounting Referee or as agreed upon by the parties (as the case may be),
exceeds the Purchase Price, then the Purchaser shall pay the amount of such
excess to the Seller, as an adjustment to the Purchase Price, in the manner and
with interest as provided in this SECTION 2.3(D). If the Purchase Price exceeds
the adjusted Purchase Price, as determined by the Accounting Referee or as
agreed upon the parties (as the case may be), then the Seller shall pay the
amount of such excess to the Purchaser, as an adjustment to the Purchase Price,
in the manner and with interest as provided in this SECTION 2.3(D). Any payments
pursuant to this SECTION 2.3(D) shall be made by wire transfer (to an account at
a United States bank designated in writing by the Purchaser or to an account at
a United States Bank designated in writing by the Seller, as the case may be) of
immediately available funds on the second Business Day following the date on
which the adjusted Purchase Price is finally determined (either by the
Accounting Referee or as agreed upon by the parties, as the case may be) or on
the twentieth (20th) Business Day after the receipt of the Auditor's Report, in
the event that neither the Purchaser nor the Seller disagrees with the
adjustments to the Purchase Price as set forth therein. The amount of any such
payment shall bear interest for the period from and including the Closing Date
to but excluding the payment date at the rate of six percent (6%), calculated on
the basis of a 365 day year and the actual number of days for which the payment
is due.
D. PURCHASE PRICE ALLOCATION. The Purchase Price shall be allocated
among the Assets in accordance with Section 1060 of the Internal Revenue Code of
1986, as amended (the "Code") and the regulations promulgated thereunder. The
allocation of the Purchase Price shall be agreed upon by the Seller and the
Purchaser within thirty (30) days after the resolution of any adjustments to the
Purchase Price as set forth in SECTION 2.3 hereof; provided, however, that the
Purchaser and Seller shall make a good faith estimate of the Purchase Price
allocation at Closing on Form 8594. The Seller and the Purchaser agree to file
timely all returns required under Code Section 1060 and the regulations
promulgated thereunder based on the allocations agreed to by the parties and
further agree that they will not take any position inconsistent therewith on any
Tax Return (as defined in SECTION 3.9), report or other document of any kind or
in the course of any audit, examination or other proceeding by any federal,
state, local or other taxing authority (or other governmental authority), court
or tribunal.
E. PRORATIONS AND ADJUSTMENTS. The operation of the Business and all
income and expenses attributable thereto through the Closing shall be for the
account of the Seller and thereafter shall be for the account of the Purchaser.
Expenses such as power and utility charges, property assessments, rents, license
fees, dues, subscriptions and other charges, real property taxes, ad valorem or
personal property taxes and all other items of
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income and expense (unless specifically provided otherwise in this Agreement)
relating to the Business shall be prorated between the Seller and the Purchaser
as of the Closing Date. All prorations shall be made and the Purchase Price
shall be adjusted insofar as feasible on the Closing Date. In the event that the
Purchaser or the Seller shall receive invoices or bills after the Closing Date
for expenses incurred prior to the Closing Date that were not prorated in
accordance with this SECTION 2.5, then the Purchaser or the Seller, as the case
may be, shall promptly notify the other party as to the amount of the expense
subject to proration and the responsible party shall pay its portion of such
expense without interest (or, in the event such expense has been paid on behalf
of the responsible party, reimburse the other party for its portion of such
expense without interest). All prorations shall be resolved by the parties
within thirty (30) days after the resolution of any adjustments to the Purchase
Price as set forth in SECTION 2.3 hereof.
IV.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby makes the following representations and warranties to
the Purchaser:
A. CORPORATE ORGANIZATION. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full corporate power and authority to (a) carry on and operate the Business
as it is now being conducted and (b) own and lease the Assets. With respect to
the operation of the Business, Seller is duly qualified or licensed to do
business, in good standing, in the jurisdictions set forth on SCHEDULE 3.1
attached hereto.
B. AUTHORIZATION, ETC. The Seller has corporate power and authority to
enter into this Agreement and the agreements and documents contemplated hereby
and perform its obligations hereunder and thereunder. All corporate and other
actions required to be taken by Seller to authorize it to execute and deliver
this Agreement and to carry out the transactions contemplated hereby have been
duly and properly taken. Upon execution and delivery of this Agreement, and all
other agreements contemplated hereby, by the parties hereto and thereto, this
Agreement and all other agreements contemplated hereby shall constitute the
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with their respective terms, except as limited by
bankruptcy, insolvency, reorganization, arrangement, moratorium or similar laws
relating to or affecting the rights of creditors, and subject to the effect of
general principles of equity, including without limitation concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief, regardless of
whether considered in a proceeding in equity or at law.
C. NO VIOLATION. The execution, delivery and performance by the Seller
of
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this Agreement, and all other agreements contemplated hereby, and the
fulfillment of and compliance with the respective terms hereof and thereof by
the Seller, do not and will not violate, conflict with or result in a breach of
the terms, conditions or provisions of (i) the articles of incorporation or
bylaws of the Seller, or (iii) any material Regulation or Order (as such terms
are defined in SECTION 8.3 hereof) applicable to the Business.
X. XXXX-XXXXX-XXXXXX FILING. Seller has filed the Notification and
Report Forms and related material that it is required to file with the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice under the HSR Act (as defined in SECTION 8.3 hereof) in connection with
the transaction contemplated hereby. In connection therewith, Seller shall make
such further filings or information submissions pursuant thereto that may be
necessary, proper or advisable.
E. FINANCIAL INFORMATION. To the knowledge of Seller, SCHEDULE 3.5
attached hereto sets forth, in all material respects, (i) the gross margin of
the Business, and (ii) the sales of the Business for the years ended December
31, 1996, December 31, 1995, and December 31, 1994.
F. ACCOUNTS RECEIVABLE. To the knowledge of Seller, the accounts
receivable reflected in the unaudited financial statements of the Business arise
out of bona fide sales and deliveries of goods or the performance of services by
the Business.
G. EMPLOYEES. SCHEDULE 3.7 attached hereto sets forth a list of the
Seller's employees who perform services for, or on behalf of, the Business (the
"Employees") and the job title, service dates and current rate of compensation
of each such Employee. The Seller is not a party to any collective bargaining
agreement or other labor agreement relating to the Business or employees of the
Business.
H. CONTRACTS. A list of certain written Contracts to which Seller is
subject in connection with the Business is set forth on SCHEDULE 3.8 attached
hereto, copies of which have been provided to the Purchaser.
I. TITLE AND RELATED MATTERS. The Seller has good and marketable title
to the Assets (including, without limitation, the inventory), free and clear of
Liens (as defined in SECTION 8.3 hereof), except for (i) Liens reflected in the
financial statements of the Business or the notes thereto, (ii) statutory Liens
for current taxes and assessments not yet due and payable, (iii) minor defects
or encumbrances which do not materially impair use or value, and (iv) matters
and assets set forth on SCHEDULE 3.9 attached hereto. Subject to the Real
Property Leases, Equipment Leases, and permits, at the Closing Purchaser will
acquire good and valid title to the Assets (other than inventories sold or
disposed of in the ordinary course of business) free and clear of any Liens
except for the Liens to which the Assets are currently subject as set forth
above.
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J. LITIGATION. Except as disclosed on SCHEDULE 3.10 attached hereto,
there is no Claim (as defined in SECTION 8.3 hereof) pending against the
Business which, if adversely determined, would adversely affect the Business or
the Assets, nor is there any Order outstanding against the Business having a
Material Adverse Effect on the Business or the Assets.
K. TAX MATTERS.
1. With respect to the Business, the Seller has filed or
caused to be filed on a timely basis with the appropriate Authorities, federal,
state, local and other returns and reports in respect of Taxes (as defined
below) that are required to be filed on or before the Closing Date (the "Tax
Returns").
2. With respect to the Business, the Seller (i) has paid or
caused to be paid on a timely basis Taxes, assessments, fees and other
governmental charges required to be paid as of the Closing Date as shown on the
Tax Returns, (ii) has reserved on its books of account and/or financial
statements an amount sufficient to satisfy Taxes accrued, but not paid, as of
the Closing Date and (iii) shall timely pay, after the Closing Date, Taxes,
assessments, fees and other governmental charges accrued, but unpaid, as of the
Closing Date.
3. There are no liens, claims or other encumbrances upon the
Assets for any Taxes due under any Tax Return or for any Taxes due that are not
shown on any Tax Return.
4. For purposes of this Agreement, the term "Taxes" shall be
understood and interpreted to include any tax or similar governmental charge,
impost or levy (including, without limitation, income taxes, franchises taxes,
transfer taxes or fees, gross receipts taxes, value added taxes, employment
taxes, excise taxes, import taxes, ad valorem taxes, real and personal property
taxes, intangibles taxes, stamp taxes, withholding taxes, payroll taxes, minimum
taxes, sales and use taxes and windfall profits taxes), together with any
related penalties, fines, additions to tax and/or interest imposed by any
Authority (as defined in SECTION 8.3 hereof).
L. COMPLIANCE WITH LAW AND APPLICABLE GOVERNMENT REGULATIONS. Seller
has not received written notification of any failure to comply with any
Regulations applicable to the Business which would have a Material Adverse
Effect on the Business or the Assets as of the Closing Date that have not been
or will not be remedied and resolved by Seller or the Business prior to the
Closing Date if practicable. Seller has not received any written notice
regarding any violations of any Regulations or Orders relating to the Business
or the operation thereof enforced by any Authority claiming jurisdiction over
the Business, which violations would have a Material Adverse Effect on the
Business or the Assets as of the Closing Date.
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M. BROKERAGE. The Seller has not employed any broker, finder, advisor,
consultant or other intermediary in connection with this Agreement or the
transactions contemplated by this Agreement who is or might be entitled to any
fee, commission or other compensation from the Seller or its Affiliates, upon or
as a result of the execution of this Agreement or the consummation of the
transactions contemplated hereby.
N. CLAIMS. To the best of Seller's knowledge and recognizing that all
employees of the Business with particular knowledge of a Claim may have become
or will become employees of Purchaser, SCHEDULE 3.14 attached hereto sets forth
Claims seeking damages in excess of $50,000, other than collection claims and
service and concession claims arising in the ordinary course of business,
related to the Business of which Seller has received written notice.
O. DISCLAIMER. Seller's representations and warranties are subject to
and qualified by any relevant fact or facts disclosed in the Agreement, and the
schedules thereto, or any other document prepared by Seller and delivered to
Purchaser at Closing or pursuant to this Agreement. Disclosures made in the
schedules to this Agreement, or in such other documents, shall be deemed to be
disclosures made by Seller for all purposes with respect to this Agreement. The
inclusion by Seller in any particular schedule of items that may not be needed
or required to be given so as to make a representation or warranty true, correct
or not misleading shall not be construed as an indication that all items of
similar scope and degree are required or have been included in every other
schedule and shall be deemed to be included for the sole purpose of providing
additional information to the Purchaser. Purchaser acknowledges and agrees that
a representation or warranty made by the Seller will be deemed to have been
breached only if the principals of Purchaser had actual or constructive
knowledge of facts that rendered the representation untrue, and to the extent
Purchaser has actual or constructive knowledge of a fact or facts that should be
disclosed by Seller so as to make a representation or warranty true and correct
and not misleading, Seller shall not be deemed to be in breach of such
representation or warranty by reason of its failure to disclose such facts, and
further, to the extent representations are made to Seller's knowledge, such
knowledge will be deemed to mean the knowledge of the officers of Seller and its
Employees whose names are set forth on SCHEDULE 3.15 attached hereto.
V.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby makes the following representations and warranties
to the Seller:
A. CORPORATE ORGANIZATION, ETC. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of
14
incorporation with full corporate power and authority to carry on its business
as it is now being conducted and to own, operate and lease its properties and
assets. The Purchaser is duly qualified or licensed to do business, in good
standing, in the jurisdictions set forth on SCHEDULE 4.1 attached hereto.
B. AUTHORIZATION, ETC. The Purchaser has full corporate power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The Board of Directors of the Purchaser has duly authorized
the execution, delivery and performance of this Agreement, and the other
agreements and transactions contemplated hereby, and no other corporate
proceedings on the part of the Purchaser are necessary to authorize this
Agreement or the transactions contemplated hereby. Upon execution and delivery
of this Agreement and all other agreements contemplated hereby by the parties
hereto and thereto, this Agreement, and all other agreements contemplated
hereby, shall constitute the legal, valid and binding obligations of the
Purchaser, enforceable against it in accordance with their respective terms.
C. NO VIOLATION. The execution, delivery and performance by the
Purchaser of this Agreement, and all other agreements contemplated hereby, and
the fulfillment of and compliance with the respective terms hereof and thereof
by the Purchaser, do not and will not violate, conflict with or result in a
breach of the terms, conditions or provisions of (i) the articles of
incorporation, bylaws or any other organizational document of the Purchaser, or
(iii) any material Regulation or Order applicable to Purchaser.
D. FURTHER ASSURANCES. Purchaser does not know of any fact or condition
which would render Seller's representations and warranties made under this
Agreement untrue, incorrect or misleading.
X. XXXX-XXXXX-XXXXXX FILING. Purchaser has filed the Notification and
Report Forms and related material that it is required to file with the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice under the HSR Act in connection with the transaction contemplated
hereby. In connection therewith, Purchaser shall use its best efforts to obtain
an early termination of the applicable waiting period and shall make any further
filings or information submissions pursuant thereto that may be necessary,
proper or advisable.
F. NO ACTIVITY. Except for activities in connection with its formation
and arrangements with its lenders necessary to acquire the Assets at Closing,
Purchaser has transacted no business and entered into no agreements relative to
the Business.
G. FINANCING. Purchaser has cash on hand, or has received written
commitments from lenders, sufficient to enable Purchaser to acquire the Assets
at Closing and any such loan commitments remain in effect. Based upon reasonable
judgment and study,
15
Purchaser has determined that Purchaser is solvent and will have adequate
capital to sustain the operations of the Business and retire Purchaser's
anticipated obligations as they come due during the reasonably foreseeable
period after the Closing Date.
H. TAX AND OTHER MATTERS. Purchaser has independently investigated the
tax effect of this transaction, as well as the legal ramifications of same, has
consulted with and has relied only upon its own expert advisers, accountants,
and attorneys, and Seller has made no representations regarding taxes or other
matters to induce Purchaser to enter into this transaction.
VI.
COVENANTS AND AGREEMENTS
The Purchaser and the Seller covenant and agree as follows:
A. FURTHER ASSURANCES. If at any time after the Closing Date the
Purchaser or Seller shall consider or be advised that any further deeds,
assignments or assurances in law or in any other things are necessary,
desirable, advisable or proper to effectuate the transactions contemplated by
this Agreement, the Purchaser or Seller, as appropriate, shall execute and
deliver all such proper deeds, assignments and assurances in law and do all
things necessary, desirable or proper to carry out and fulfill the purpose and
intent of this Agreement and the other agreements contemplated hereby.
B. NON-COMPETITION AND TRANSFER RESTRICTION. At the Closing, the Seller
and Purchaser shall enter into a Non-Competition and Transfer Restriction
Agreement, in a form acceptable to Purchaser and Seller, which shall prohibit
the distribution of competing products by Purchaser and its Affiliates in the
territory serviced by the Business and shall impose restrictions on the sale,
transfer, disposition or closure of the Business by Purchaser following the
Closing Date. Purchaser acknowledges and agrees that the Non-Competition and
Transfer Restriction Agreement is essential and material to Seller entering into
this Agreement and the Distributor Agreements with Purchaser, and Seller will
not enter into this Agreement and the Distributor Agreements without the
Non-Competition and Transfer Restriction Agreement.
C. EMPLOYEES.
1. The Purchaser hereby agrees that the Employees listed on
SCHEDULE 3.7 attached hereto, will remain employees of the Business and that
Purchaser shall offer employment to such Employees immediately following the
Closing Date at the salary
16
levels (or higher) and subject to comparable employee benefits and rights under
existing employment agreements or arrangements in effect with Seller immediately
prior to the Closing Date, as set forth on SCHEDULE 3.7 attached hereto.
Employees shall be fully vested in Purchaser's health insurance plan on the
effective date of hire, with no exclusions for pre-existing conditions.
Purchaser shall not terminate the Employees for a period of one hundred eighty
(180) days following the Closing Date, except for just and sufficient cause, or,
in the event Purchaser shall terminate any Employee without cause during such
180 day period, Purchaser shall pay such Employee in accordance with the
severance policies of Seller as set forth on SCHEDULE 5.3 attached hereto.
2. After the Closing Date, the Purchaser will give to each
Employee the same service credit with the Purchaser as each such Employee
previously earned up to the Closing Date for purposes of determining the
Employee's eligibility to participate in, vesting under, benefit accrual under,
eligibility for early distribution of benefits from and eligibility for early
retirement or any other subsidized benefit provided for in any employee benefit
plan, practice or policy established, maintained or contributed to by the
Purchaser in which such Employee is eligible to participate; PROVIDED that the
Purchaser is permitted to do so under applicable Regulations without any
liability to the Purchaser.
3. The Purchaser shall allow Employees to take, during the one
(1) year period after the Closing, all vacation days earned by the Employees and
accrued by the Seller, but unused by the Employees prior to the Closing.
4. The Purchaser and the Seller agree that, subject to the
indemnification obligations of Purchaser pursuant to SECTION 7.3 hereof, the
Purchaser shall have responsibility for (i) workers' compensation Claims
occurring on or after the Closing Date and (ii) all other liabilities and
obligations pertaining to the Employees and employment related matters occurring
on or after the Closing Date. All liabilities pertaining to the Employees and
employment related matters occurring prior to the Closing Date shall be the sole
responsibility of the Seller, except to the extent to which Seller is entitled
to seek indemnification from Purchaser hereunder.
D. COMPUTER ASSISTANCE. From and after the Closing Date until December
31, 1997, Seller shall, upon written request of Purchaser, allow Purchaser to
continue to utilize the ROADS computer system hardware and software for the
period and on the terms set forth in EXHIBIT 5.4 hereto (the "ROADS Agreement")
but Seller shall have no liability for services provided under the ROADS
Agreement. With respect to software used for the accounts payable, this software
is owned by The Climatic Corporation, and Purchaser should seek a license
directly from The Climatic Corporation if it desires to continue using such
software. Nothing contained in this Agreement shall constitute a license of or
authorization to use such software.
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E. DISTRIBUTOR AGREEMENTS.
1. At the Closing, the Seller will enter into two distributor
agreements, in the form provided by Seller (the "Distributor Agreements"), for
Carrier, Xxxxx and Xxxxxx products: (a) one for the Comfort Products Business
(Carrier and Xxxxx brand products) and (b) one for NAO Central Plains Business
(Carrier, Xxxxx and Xxxxxx brand products). The Distributor Agreements will have
a term of two years, be non-exclusive, and grant to the Purchaser the right to
distribute the relevant residential and light commercial products in the trade
areas specified therein.
2. From and after the Closing, the Purchaser shall conduct the
distribution operations of the Business and its relationship with various
operating entities of Seller in accordance with the Distributor Agreements and
the policies and procedures related thereto and the Marketing Plan attached to
such Distributor Agreements. All other agreements, arrangements or commitments
between or among the Business and Seller or its parent or one or more Affiliates
of Seller or its parent, United Technologies Corporation ("UTC"), shall
terminate as of Closing, except as expressly provided in this Agreement.
F. DEALER PROMOTIONS. From and after the Closing Date:
1. Purchaser shall be responsible for all obligations,
whenever incurred, for which the Business was not invoiced prior to the Closing
Date, in connection with Dealer Incentive Programs for dealers served by the
Business.
2. Purchaser shall be responsible for all distributor
obligations of the Business under consumer rebate programs and extended warranty
programs with respect to any equipment installed by dealers regardless of
installation date, and any other similar program pending as of the Closing Date.
3. Purchaser shall be responsible for the distributor portion
of all Advertising Program obligations whenever incurred with respect to the
Business.
4. It is understood and agreed that although there is no
retention by Seller of any responsibility as described in subsections (a)
through (c) above, Purchaser shall carry out administrative functions with
respect to such programs, at least through the end of the applicable program
year, on a basis consistent with the past practice of the Business, accept the
burdens and benefits of the programs, and fulfill the Business' obligations to
its customers and to end-users as contemplated by the programs.
5. It is further understood and agreed that Purchaser's
agreement to
18
perform and discharge all of the Assumed Liabilities above shall continue in
full force and effect in the event that Purchaser shall cease to be a
distributor of Carrier, Xxxxx and/or Xxxxxx Branded products for any reason
whatsoever.
G. ADVERTISING.
1. Seller agrees to assign all of its rights to its current
telephone numbers and yellow page and other advertising with respect to the
Business to Purchaser, and Purchaser agrees to assume and pay any and all
charges with respect thereto not paid by the Business prior to the Closing Date,
except that the actual charges for telephone calls and monthly service shall be
pro-rated in accordance with SECTION 2.5 hereof.
2. To the extent permitted by the telephone company and
subject to whatever conditions the telephone company may impose, Seller will
cooperate with Purchaser in signing such documents as Purchaser may reasonably
request in order to obtain for Purchaser the right to use the telephone numbers
currently assigned to the Business by the telephone company.
H. PRICING, SPECIAL QUOTES AND CLAIMS.
1. With respect to all pricing programs in effect for the
Business as of the Closing Date, Seller shall continue to honor such programs
subsequent to the Closing in accordance with their respective terms and
conditions until the respective expiration dates of such programs, except with
respect to programs specifically modified by this Agreement.
2. Any special quotes or job quotes extended to the Business
with respect to Branded equipment scheduled to be delivered on or after the
Closing Date will be honored as Purchaser pricing claims within the limits of
the respective quotes and subject to Seller's normal terms with respect to the
filing of pricing claims.
I. FLOOR PLAN INVENTORY. Purchaser shall enter into at Closing the
standard Distributor Floor Plan Agreement with CDCC with respect to additions to
dealer inventories financed by CDCC subsequent to the Closing Date. Purchaser
shall assume responsibility to CDCC for all dealer inventories financed by CDCC
with respect to the Business and for dealerships serviced by the Business,
including all guarantees and obligations of the Business which have been
instituted pursuant to arrangements with CDCC, the payment of accrued interest
to CDCC on floor planned equipment, and the repurchase of any repossessed
equipment floor planned by dealers. Purchaser shall assume all the duties and
obligations of the Business, if any, with relation to CDCC floor plan
arrangements in effect on the Closing Date.
J. NAME CHANGE. As soon as possible but no later than six (6) months
19
after the Closing Date, Purchaser shall identify itself as the owner of the
Business and all properties related thereto and shall place its name in a
prominent position viewable by the public on all of the leased or subleased
property, all business records and other sales or advertising relating material
(including materials used for the packaging of any product) received by
Purchaser hereunder. Purchaser shall use its best efforts promptly to cause the
appropriate telephone companies to change the listing of all telephone numbers
used by the Business to Purchaser's name.
K. PERMITS. Purchaser shall, as soon as possible after the Closing
Date, obtain in its own name all permits, licenses and approvals necessary to
operate the Business and will immediately identify itself on all waste disposal
bills of lading and certificates as owners of the Business.
L. FORWARDING OF PAYMENTS. From and after the Closing Date:
1. Any payment of monies to which Seller is entitled but which
is made instead to Purchaser for whatever reason shall be promptly and in good
faith forwarded to Seller by Purchaser in the manner directed by Seller.
2. Any payment of monies to which Purchaser is entitled but
which is made instead to Seller for whatever reason shall be promptly and in
good faith forwarded to Purchaser by Seller in the manner directed by Purchaser.
M. TERMINATION OF INTERCOMPANY ARRANGEMENTS. Prior to the date hereof,
the Business has benefitted from a number of arrangements with Seller or its
parent, UTC, and their respective Affiliates, including the use of Seller's cash
management system, coverage under insurance policies obtained by Seller or
self-insurance programs established by Seller, the use of certain financial and
accounting services provided by Seller and certain credit and guaranty
facilities and the like and the financial support provided to customers of the
Business by Seller. Except as otherwise specifically provided for in this
Agreement as between Purchaser and Seller or its Affiliates, all such
intercompany arrangements shall terminate effective upon the Closing Date.
N. GUARANTY. At the Closing, Purchaser's parent company, Watsco, Inc.,
shall execute and deliver to Seller a Guaranty, in a form acceptable to Seller,
pursuant to which Watsco, Inc. shall irrevocably and unconditionally guarantee
to Seller the full and faithful performance by Purchaser or its Affiliates of
any and all liabilities, duties and obligations of Purchaser and its Affiliates
set forth in or contemplated by this Agreement.
O. PUBLIC ANNOUNCEMENTS. Neither the Seller nor the Purchaser, nor any
representative or shareholder of either of them, shall disclose any of the terms
of this
20
Agreement or the transaction contemplated hereby to any third party without the
prior written consent of the Purchaser and Seller, unless such disclosure is
required by applicable law; provided, however, that any information that has
been disclosed to any third party in accordance with this Section shall no
longer be deemed confidential and shall not be subject to further restrictions
on disclosure.
P. ACCESS AGREEMENT. For a period of ten (10) years following the
Closing Date, Purchaser and Seller shall each provide the other with access to
the books, records, papers, files and other documents relating to the Business
transferred to Seller pursuant to this Agreement (the "Documents"). The party
desiring such access to Documents in possession of the other party shall provide
the other party with reasonable notice of its need for access to the Documents,
and the parties shall cooperate with respect to the review and copying of the
Documents so as to cause minimal disruption of such other party's ongoing
business operations. In the event that the Purchaser does not desire to maintain
such Documents on the premises of the Business or at another location in which
Seller may obtain access to the Documents, Purchaser shall package the Documents
(or true and complete copies thereof) in a form reasonably requested by Seller
and send the Documents to Seller for storage at Seller's facilities.
Q. LEASED VEHICLES. Purchaser may, subject to the lease agreements and
consent of the lessor where required, purchase the leased vehicles used by
Seller in connection with the Business by paying in full at Closing, or as soon
thereafter as practicable, the amount necessary to purchase the vehicles from
the lessor, including any tax, title, license and other fees imposed in
connection with the sale of such vehicles. To the extent the purchase of the
leased vehicles is not consummated at Closing, Purchaser shall provide Seller
with proof of insurance covering the use of such vehicles at Closing, which
proof shall include a certificate of insurance naming Seller as an additional
insured and showing non-owner coverage as primary coverage.
R. CFC COMPLIANCE. Purchaser represents, covenants, and certifies that
it is aware of and shall comply with the United States Environmental Protection
Agency regulations set forth in 40 CFR ss.82.154, as amended, relating to the
purchase of refrigerants after November 14, 1994, and that any Class I or Class
II substances purchased pursuant to this Agreement shall be purchased only for
eventual resale to certified technicians or to appliance manufacturers or, if
charged into existing appliances, shall only be charged into the appliances by
certified technicians.
VII.
CLOSING
A. CLOSING. A closing of the transactions contemplated by this
Agreement (the "Closing") shall be held on or before March 24, 1997 (or if later
within three (3) Business
21
Days of the date that all conditions to the Closing have been satisfied or
waived), at 10:00 am. at the offices of Xxxxx & Xxxxxxx located at 000 X. Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000 or on or at such other date, time and/or place
mutually agreed upon in writing by the parties hereto (the "Closing Date").
B. CLOSING DELIVERIES. At the Closing,
1. the Seller shall deliver or cause to be delivered to the
Purchaser:
a. the Instruments of Conveyance required by SECTION
1.3;
b. a certificate, certified by an assistant secretary
of Seller, as to the resolutions adopted by the directors of the Seller in
connection with this Agreement and the incumbency of certain authorized
representatives of the Seller who shall be signing the Agreement and related
documents on behalf of the Business;
c. certificates issued by the appropriate
governmental authorities evidencing the good standing, with respect to both the
conduct of business and the payment of all franchise taxes, of the Seller as a
corporation organized under the laws of the State of Delaware; and
d. an opinion of counsel to Seller (addressed to
Purchaser), dated the Closing Date, which may rely on certificates of the
officers or other authorized representatives of Seller, certificates issued by
Authorities, and/or an opinion from Xxxxxxx Xxxxxxx, Assistant General Counsel
of Seller;
e. the Distributor Agreements required by
SECTION 5.5;
f. the Non-Competition and Transfer Restriction
Agreement required by SECTION 5.2;
g. evidence of any consents to assignment of the
Contracts obtained by Seller; and
h. such other certified resolutions, documents and
certificates as are required to be delivered by the Seller pursuant to the
provisions of this Agreement.
2. The Purchaser shall deliver to the Seller:
a. the Purchase Price specified in SECTION 2.2(b);
22
b. the Instruments of Conveyance required by
SECTION 1.3;
c. a certificate, by the secretary of the Purchaser,
as to the resolutions adopted by the directors of the Purchaser in connection
with this Agreement, and the incumbency of certain officers of the Purchaser;
d. certificates issued by the appropriate
governmental authorities evidencing the good standing, with respect to both the
conduct of business and the payment of all franchise taxes, of the Purchaser as
a corporation organized under the laws of the State of Florida; and
e. an opinion of counsel to Purchaser (addressed to
Seller), dated the Closing Date, which may rely on certificates of the officers
of Purchaser and/or certificates issued by Authorities;
f. the Distributor Agreements required by SECTION
5.5;
g. the Non-Competition and Transfer Restriction
Agreement required by SECTION 5.2;
h. the Guaranty of Watsco, Inc. required by SECTION
5.14;
i. evidence of any consents to assignment of the
Contracts obtained by Purchaser;
j. written evidence that all waiting periods
applicable to the consummation of the transactions contemplated hereby under the
HSR Act have expired or terminated;
k. if Purchaser is exercising its right to purchase
the leased vehicles pursuant to SECTION 5.17 hereof, payment in full of the
amount necessary to purchase the vehicles from the lessor, including any tax,
title, license and other fees imposed in connection with the sale, or the
appropriate certificate of insurance covering the use of such vehicles by
Purchaser on and after the Closing Date; and
l. such other certified resolutions, documents and
certificates as are required to be delivered by the Purchaser pursuant to the
provisions of this Agreement.
VIII.
23
SURVIVAL OF TERMS; INDEMNIFICATION
A. SURVIVAL. All of the terms and conditions of this Agreement,
together with the representations, warranties and covenants contained herein or
in any instrument or document delivered or to be delivered pursuant to this
Agreement, shall survive the execution of this Agreement and the Closing;
provided, however, that (a) the agreements and covenants (other than the
indemnification provisions set forth in this ARTICLE VII and the representations
and warranties, which shall survive as provided below) set forth in this
Agreement shall survive and continue until all obligations set forth therein
shall have been performed and satisfied; (b) the Tax indemnification agreements
provided in SECTION 7.2 shall survive and continue until the expiration of the
applicable statute of limitations; (c) the environmental indemnification
agreements provided in SECTION 7.2 shall survive and continue with respect to
each property leased by Seller pursuant to the Real Property Leases until the
expiration of the current term specified under each such Real Property Lease;
(d) the representations and warranties with respect to title to the Assets of
the Seller in SECTION 3.9 hereof shall continue and survive without limitation;
and (e) all other representations and warranties, and the agreements of the
Sellers and the Purchaser to indemnify each other set forth in this ARTICLE VII,
shall survive and continue until, and all Claims with respect thereto shall be
made prior to, April 15, 1998, except for representations, warranties and
indemnities for which an indemnification Claim shall be pending as of April 15,
1998, in which event such indemnities shall survive with respect to such Claim
until the final disposition thereof.
B. INDEMNIFICATION BY THE SELLER. Subject to this ARTICLE VII, the
Purchaser and its officers, directors, employees, shareholders, partners,
representatives and agents shall be indemnified and held harmless by the Seller
against and in respect of any and all damage, loss, deficiency, liability,
obligation, commitment, claim, demand, action or cause of action, assessment,
Tax, cost or expense (including, without limitation, all interest penalties and
fees and expenses of counsel) (collectively, the "Losses") resulting from, or in
respect of, any of the following (collectively, the "Indemnifiable Claims"):
1. A material misrepresentation, breach of warranty, or
non-fulfillment of any obligation on the part of the Seller under this
Agreement, any document relating thereto or contained in any schedule or exhibit
to this Agreement or from any material misrepresentation in or omission from any
certificate, schedule, other agreement or instrument by the Seller hereunder;
provided, however, that Purchaser's sole remedy for a material breach of any
representation or warranty hereunder shall be limited to seeking indemnification
hereunder for actual monetary damages sustained by Purchaser as a direct result
of such breach and Purchaser shall have no other remedies, at law or in equity;
2. Liabilities of the Seller existing prior to the Closing
Date which are not (i) reflected and reserved against in the financial
statements of the Business, or (ii) otherwise adequately disclosed in this
Agreement or the schedules or exhibits thereto, or (iii)
24
Assumed Liabilities; provided, however, that Seller shall not be required
to indemnify Purchaser for any undisclosed liability if Purchaser has assumed
the benefit of or received value in connection with any such liability;
3. Tax liabilities of Seller, together with any interest or
penalties thereon or related thereto, through the Closing Date which are imposed
on Purchaser under theories of successor liability, excluding any Tax liability
arising out of or in conection with the transaction described in this Agreement;
4. Environmental liabilities imposed by any Authority relating
to any of the properties of the Business leased pursuant to the Real Property
Leases, including any interest or penalties thereon or related thereto, which
liabilities arise out of or relate to occurrences prior to the Closing Date, but
excluding any amount for which there is an adequate accrual and reserve on the
financial statements of the Business; and
5. Any other Claims arising out of or relating to occurrences
in connection with the conduct and operation of the Business prior to the
Closing Date, other than liabilities and obligations of the Business arising in
the ordinary course and relating to the purchase and sale of products, whenever
incurred or accrued.
C. LIMITATION. Notwithstanding SECTION 7.2:
1. There shall be no liability of Seller for indemnification
under SECTION 7.2 hereof unless, and solely to the extent that, the aggregate
amount of all Indemnifiable Claims exceed $250,000 (the "Indemnification
Threshold"), and then only to the extent such Indemnifiable Claims exceed the
Indemnification Threshold; provided, however, that the Seller's liability for
indemnification shall not be subject to the Indemnification Threshold in
connection with (i) indemnification liabilities arising out of any material
breach of the representations and warranties made by the Seller in Sections 3.1,
3.2, 3.9 and 3.13 hereof, and (ii) indemnification liabilities arising pursuant
to Sections 7.2(c) and 7.2(d) hereof.
2. In no event shall Seller's obligations and liabilities
under SECTION 7.2 hereof exceed the Purchase Price, as adjusted pursuant to
SECTION 2.3 hereof.
D. INDEMNIFICATION BY THE PURCHASER. Subject to this ARTICLE VII, the
Seller and its officers, directors, employees, shareholders, partners,
representatives and agents shall be indemnified and held harmless by the
Purchaser against and in respect of any and all Losses resulting from, or in
respect of, any of the following (collectively, the "Indemnifiable Claims"):
1. A material misrepresentation, breach of warranty, or
non-fulfillment of any obligation on the part of the Purchaser under this
Agreement, any document
25
relating thereto or contained in any schedule or exhibit to this Agreement, or
from any material misrepresentation in or omission from any certificate,
schedule, other agreement or instrument by the Purchaser hereunder;
2. Claims arising out of or relating to the Assumed
Liabilities;
3. Claims arising out of or relating to the operation of the
Business on and after the Closing Date;
4. Changes by Purchaser on and after the Closing Date in the
level of benefits, severance pay plans and level of salary, wages and sundry
compensation practices for employees of the Business hired by Purchaser;
5. Claims against Seller by any person arising out of or
relating to any Claim of discrimination or other wrongful failure to hire of any
employee of the Business on or after the Closing Date;
6. Tax liabilities arising out of or in connection with the
transaction described in this Agreement, including, without limitation, all
sales, use, recordation, documentary taxes and fees and other transfer taxes
imposed by any Authority, and any penalties, fines, additions to tax and/or
interest imposed by any Authority in connection with such Taxes, but excluding
any income taxes of Seller arising out of or in connection with this Agreement;
and
7. Claims arising out of or relating to the leased vehicles
used in connection with the Business on and after the Closing Date.
E. THIRD-PARTY CLAIMS.
1. Except as otherwise provided in this Agreement, the
following procedures shall be applicable with respect to Indemnifiable Claims
asserted by third parties. Promptly after receipt by the party or parties
seeking indemnification hereunder (hereinafter referred to as the "indemnitee")
of notice of the commencement of any (a) Tax audit or proceeding for the
assessment of Tax by any taxing authority or any other proceeding likely to
result in the imposition of a Tax liability or obligation or (b) any action or
the assertion (whether by legal process or otherwise) of any Claim by an
indemnitee against which Claim the other party or parties to this Agreement
(hereinafter referred to as the "indemnitor") is, or may be, required under this
Agreement to indemnify such indemnitee, the indemnitee will, if a Claim thereon
is to be, or may be, made against the indemnitor, notify the indemnitor in
writing of the commencement or assertion thereof and give the indemnitor a copy
of such Claim, process and all legal pleadings. The indemnitor shall have the
right to participate in the defense of such action with counsel of reputable
standing. The indemnitor shall have the
26
right to assume the defense of such action unless (w) such action may result in
injunctions or other equitable remedies in respect of the indemnitee or its
business; (x) such action may result in liabilities which, taken with other then
existing Claims under this ARTICLE VII, would not be fully indemnified
hereunder; (y) such action may have an adverse impact on the business or
financial condition of the indemnitee after the Closing Date (including, without
limitation, an effect on the Tax liabilities, earnings or ongoing business
relationships of the indemnitee); or (z) there are defenses available to the
indemnitee which are in conflict with those available to the indemnitor. The
indemnitor and the indemnitee shall cooperate in the defense of such Claims. In
the case that the indemnitor shall assume or participate in the defense of such
audit, assessment or other proceeding as provided herein, the indemnitee shall
make available to the indemnitor all relevant records and take such other action
and sign such documents as are necessary to defend such audit, assessment or
other proceeding in a timely manner. If the indemnitee shall be required by
judgment or a settlement agreement to pay any amount in respect of any
obligation or liability against which the indemnitor has agreed to indemnify the
indemnitee under this Agreement, the indemnitor shall promptly reimburse the
indemnitee in an amount equal to the amount of such payment plus all reasonable
expenses (including, without limitation, legal fees and expenses) incurred by
such indemnitee in connection with such obligation or liability subject to this
ARTICLE VII.
2. Prior to paying or settling any Claim against which an
indemnitor is, or may be, obligated under this Agreement to indemnify an
indemnitee, the indemnitee must first supply the indemnitor with a copy of a
final court judgment or decree holding the indemnitee liable on such claim or
failing such judgment or decree, and must first receive the written approval of
the terms and conditions of such settlement from the indemnitor. An indemnitor
shall have the right to settle any Claim against the indemnitee, subject to the
prior written approval of the indemnitee, which approval shall not be
unreasonably withheld.
3. An indemnitee shall have the right to employ its own
counsel in any case, but the fees and expenses of such counsel shall be at the
expense of the indemnitee unless (a) the employment of such counsel shall have
been authorized in writing by the indemnitor in connection with the defense of
such action or Claim, (b) the indemnitor shall not have employed, or is
prohibited under this SECTION 7.5 from employing, counsel in the defense of such
action or Claim, or (c) such indemnitee shall have reasonably concluded that
there may be defenses available to it which are contrary to, or inconsistent
with, those available to the indemnitor, in any of which events such fees and
expenses of not more than one additional counsel for the indemnified parties
shall be borne by the indemnitor.
F. ASSISTANCE BY PURCHASER. In the event any Claim relating to the
Business or Assets arises after the Closing Date and constitutes a Claim for
which Purchaser is not otherwise obligated to indemnify Seller under this
Agreement, Purchaser shall, on reasonable notice, fully cooperate, assist and
cause its employees to fully cooperate and assist Seller in defending such
Claim. Such cooperation and assistance shall include providing personnel to
27
assist in the production of documents and to participate in consultations,
depositions and trial to the same extent as they would if Purchaser was a party
to or responsible for the dispute in question. Seller shall pay Purchaser for
all out-of-pocket expenses incurred by its employees solely for the purposes of
providing the cooperation and assistance required under the foregoing
provisions, such as travel expenses and an allocated amount of the salary of
Purchaser's employees reflecting time spent providing such cooperation and
assistance. Purchaser shall use its best efforts and cause its employees to use
their best efforts to preserve any attorney-client privilege which may exist
with respect to such assistance. Purchaser shall cooperate and timely assist
Seller in obtaining information for various authorities, including such
information needed for accounting and tax workbooks, responses to audit
requests, other filings to tax authorities, and other information necessary to
comply with applicable Regulations. Seller shall reimburse Purchaser for
reasonable out-of-pocket expenses actually incurred by Purchaser solely for
purposes of providing the cooperation and assistance required hereunder.
IX.
MISCELLANEOUS PROVISIONS
A. AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented only by a written agreement
signed by the Seller and the Purchaser.
B. ENTIRE AMENDMENT. This Agreement, including the schedules and
exhibits hereto and the documents, certificates and instruments referred to
herein, embodies the entire agreement and understanding of the parties hereto in
respect of the transactions contemplated by this Agreement and supersedes all
prior agreements, representations, warranties, promises, covenants,
arrangements, communications and understandings, oral or written, express or
implied, between the parties with respect to such transactions. There are no
agreements, representations, warranties, promises, covenants, arrangements or
understandings between the parties with respect to such transactions, other than
those expressly set forth or referred to herein.
C. CERTAIN DEFINITIONS.
1. As used in this Agreement, the following terms shall have
the meanings set forth below:
"AFFILIATE" means, with regard to any Person, (i) any Person, directly
or indirectly, controlled by, under common control of, or controlling such
Person, (ii) any Person, directly
28
or indirectly, in which such Person holds, of record or beneficially, five
percent (5%) or more of the equity or voting securities, or (iii) any Person
that possesses, of record or beneficially, five percent (5%) or more of the
combined voting rights for all classes of equity securities of such Person.
"AUTHORITY" means any governmental, regulatory or administrative body,
agency, arbitrator or authority, any court or judicial authority, any public,
private or industry regulatory agency, arbitrator authority, whether
international, national, federal, state or local.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
day on which banks in Miami, Florida are authorized or obligated by law or
executive order to close.
"CLAIM" means any written claim, obligation, liability, expense,
lawsuit, demand, suit, inquiry, hearing, notice of a violation, litigation,
proceeding, arbitration, or other dispute, whether civil, criminal,
administrative or otherwise, whether pursuant to contractual obligations or
otherwise.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"LIEN" means any security interest, lien, mortgage, pledge,
hypothecation, encumbrance, easement, restriction or interest of another Person
of any kind or nature.
"MATERIAL ADVERSE EFFECT" means any circumstances, state of facts or
matters which has, or might reasonably be expected to have, a material adverse
effect on the operations, properties, assets, condition (financial or
otherwise), results, plans, strategies or prospects of the Business, in the
aggregate.
"ORDER" means any decree, judgment, award, order, consent decree,
settlement agreement, injunction, rule, or consent of or by an Authority.
"PERSON" means any corporation, partnership, joint venture, company,
syndicate, organization, association, trust, entity, Authority or natural
person.
"REGULATION" means any law, statute, rule, regulation, ordinance,
requirement, announcement or other binding action of or by an Authority.
D. NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or mailed, first class certified mail
with postage paid or by
29
overnight receipted courier service:
1. If to the Seller, to:
Carrier Corporation
Xxxxxxx Xxxxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
with a copy to:
Xxxxx & Xxxxxxx
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
or to such other person or address as the Sellers shall furnish by notice to the
Purchaser in writing.
2. If to the Purchaser to:
CP Distributors Inc.
0000 Xxxxx Xxxxxxxx Xxxxx Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx
with a copy to:
Greenberg, Traurig, Hoffman,
Lipoff, Xxxxx & Quentel, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxx, Esq.
or to such other person or address as the Purchaser shall furnish by notice to
the Sellers in writing.
E. WAIVER OF COMPLIANCE, CONSENTS. Any failure of any party hereto to
comply with any obligation, covenant, agreement or condition herein may be
waived in writing by the other parties hereto, but such waiver or failure to
insist upon strict compliance
30
with such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of any party
hereto, such consent shall be given in writing.
F. ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties,
except that the Purchaser may assign its rights, interests and obligations
hereunder to any wholly owned Subsidiary, and may grant Liens or security
interests in respect of its rights and interests hereunder without the prior
approval of the Seller.
G. GOVERNING LAW. The Agreement shall be governed by the internal laws
of the State of Florida as to all matters, including but not limited to matters
of validity, construction, effect and performance.
H. CONSENT TO JURISDICTION; SERVICE OF PROCESS. In the event the
Purchaser shall bring a legal action against Seller in connection with any Claim
arising out of or relating to this Agreement and the transactions contemplated
hereby, Purchaser shall file such action in the state or federal courts located
in Onondaga County, New York. In the event the Seller shall bring a legal action
against Purchaser in connection with any Claim arising out of or relating to
this Agreement and the transactions contemplated hereby, Seller shall file such
action in the state or federal courts located in Dade County, Florida. Each
party irrevocably submits to the jurisdictions set forth above and hereby agrees
not to assert, by way of motion, as a defense, or otherwise in any such suit,
action or proceeding that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is improper
or that this Agreement or the subject matter hereof may not be enforced by such
courts.
I. INJUNCTIVE RELIEF. The parties hereto agree that in the event of a
breach of any provision of this Agreement, the aggrieved party or parties may be
without an adequate remedy at law. The parties therefore agree that in the event
of a breach of any provision of this Agreement, the aggrieved party or parties
may elect to institute and prosecute proceedings in any court of competent
jurisdiction to enforce specific performance or to enjoin the continuing breach
of such provision, as well as to obtain damages for breach of this Agreement. By
seeking or obtaining any such relief, the aggrieved party shall not be precluded
from seeking or obtaining any other relief to which it may be entitled.
J. COUNTERPARTS. 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.
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K. HEADINGS. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
L. BINDING EFFECT. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the signatories to this
Agreement and each of their respective successors and permitted assigns.
M. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any party hereto, upon any breach or default of any
other party under this Agreement, shall impair any such right, power or remedy
of such party nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any party hereto of any breach or default under this Agreement, or
any waiver on the part of any party of any provisions or conditions of this
Agreement must be made in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and
not alternative.
N. SEVERABILITY. Unless otherwise provided herein, if any provision of
this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
O. EXPENSES. All fees, costs and expenses (including, without
limitation, legal, auditing and accounting fees, costs and expenses) incurred in
connection with considering, pursuing, negotiating, documenting or consummating
this Agreement and the transactions contemplated hereby shall be borne and paid
solely by the party incurring such fees, costs and expenses.
P. ATTORNEYS' FEES. If any legal action is brought for the enforcement
of any of the provisions of this Agreement, the prevailing party or parties
shall be entitled to recover from the other party or parties, upon final
judgment on the merits, reasonable attorneys' fees, court costs and all other
costs and expenses incurred in bringing such action (including, without
limitation, attorneys' fees incurred at trial, during any appeal or during
negotiations).
Q. EXHIBITS AND SCHEDULES. The Exhibits and Schedules referred to in
this Agreement are attached hereto and incorporated herein by this reference and
made a part hereof. Disclosure of a specific item in any one Schedule shall be
deemed to be a disclosure for all purposes to which such disclosure relates,
whether or not disclosed in each and every
32
Schedule hereto.
R. TRANSFER TAXES. The Purchaser shall bear the expense of, and shall
pay, any and all sales, use, recordation, documentary taxes and fees and other
transfer taxes arising out of or in connection with this transaction and shall
execute and deliver to Seller such certificates of resale or similar
documentation to support available exemptions from tax in the form and substance
reasonable satisfactory to Seller.
S. BULK SALES. The Purchaser and the Seller acknowledge that the Seller
does not intend to comply with the Bulk Sale Acts of Iowa, Kansas, Missouri,
Nebraska or South Dakota in connection with the transaction contemplated by this
Agreement. The Seller hereby agrees to indemnify and hold the Purchaser harmless
from and against any loss, damage, liability or expense resulting from the
Seller's failure to comply with said Acts.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CP DISTRIBUTORS INC., a
Florida corporation
By: /s/ Xxxxx Xxxxx
----------------------
Name: Xxxxx Xxxxx
Title: President
CARRIER CORPORATION, a
Delaware Corporation
By: /s/ Xxxxxxx Xxxxxxxx
----------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice-President
34
