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ASSET PURCHASE AGREEMENT
AMONG
OWOSSO CORPORATION
ASTRO AIR ACQUISITION CORP.
ASTRO AIR, INC.
XXX XXXXX
and
XXXXX PROPERTIES, INC.
DATED: April 2, 1998
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TABLE OF CONTENTS
Page
BACKGROUND........................................................................................................1
ARTICLE 1 - SALE AND PURCHASE OF ASSETS; PURCHASE PRICE...........................................................1
1.1. Purchase and Sale of Assets........................................................................1
1.2. Purchase Price. ..................................................................................3
1.3. Liabilities. .....................................................................................3
1.4. Allocation of Purchase Price. ....................................................................3
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF SELLER..............................................................4
2.1. Organization, Power, Standing and Qualification....................................................4
2.2. Power and Authority................................................................................4
2.3. Validity of Contemplated Transactions..............................................................4
2.4. Government and Third-Party Approvals...............................................................5
2.5. Title to Purchased Assets and Related Matters......................................................5
2.6. Other Representations Regarding Purchased Assets...................................................5
2.7. Financial Statements...............................................................................6
2.8. Absence of Undisclosed Liabilities.................................................................6
2.9. Certain Tax Matters................................................................................7
2.10. Litigation; Compliance with Laws..................................................................7
2.11. Employees.........................................................................................7
2.12. Overtime, Back Wage, Vacation, Discrimination, and Occupational Safety Claims.....................8
2.13. Insurance.........................................................................................8
2.14. Contracts.........................................................................................8
2.15. Other Transactions...............................................................................10
2.16. Product Liability Claims.........................................................................10
2.17. No Changes.......................................................................................10
2.18. Copies of Articles and Bylaws....................................................................11
2.19. Hazardous Substances.............................................................................11
2.20. Relationship With Customers and Suppliers........................................................11
2.21. Transactions With Affiliates.....................................................................11
2.22. Capital Expenditures.............................................................................12
2.23. Veracity of Statements...........................................................................12
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF BUYER..............................................................12
3.1. Power and Authority...............................................................................12
3.2. Conflict With Authority, Bylaws, Etc..............................................................12
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ARTICLE 4 - ACTIVITIES PRIOR TO CLOSING BY SELLER................................................................13
4.1. Operation of Business.............................................................................13
4.2. Access to Information.............................................................................14
4.3. Best Efforts......................................................................................14
4.4. Consents to Assignment............................................................................14
4.5. Benefit Plans.....................................................................................14
4.6. Notice of Change..................................................................................15
4.7. No Discussions....................................................................................15
4.8. Publicity.........................................................................................15
ARTICLE 5 - ACTIVITIES PRIOR TO CLOSING BY BUYER.................................................................15
5.1. Best Efforts......................................................................................15
5.2. Access to Information.............................................................................15
5.3. Confidentiality...................................................................................15
5.4. Employees.........................................................................................16
5.5. Transfer of Licenses..............................................................................16
ARTICLE 6 - CONDITIONS PRECEDENT TO CLOSING......................................................................16
6.1. Conditions to Obligation of Buyer to Close........................................................16
6.2. Conditions to Obligation of Seller to Close.......................................................18
ARTICLE 7 - INDEMNIFICATION......................................................................................19
7.1. By Seller.........................................................................................19
7.2. By Buyer..........................................................................................19
7.3. Procedures........................................................................................20
ARTICLE 8 - SURVIVAL OF REPRESENTATIONS AND WARRANTIES...........................................................20
ARTICLE 9 - THE CLOSING..........................................................................................21
9.1. Time and Place....................................................................................21
9.2. Conduct at Closing................................................................................21
ARTICLE 10 - CONDUCT OF SELLER AND BUYER AFTER CLOSING...........................................................22
10.1. Post-Closing Conduct Generally...................................................................22
10.2. Non-Competition..................................................................................23
10.3. Insurance........................................................................................24
ARTICLE 11 - BROKERAGE; EXPENSES.................................................................................24
ARTICLE 12 - TAXES...............................................................................................24
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ARTICLE 13 - TERMINATION.........................................................................................25
13.1. Events of Termination............................................................................25
13.2. Consequences of Termination......................................................................25
13.3. Expenses if No Closing...........................................................................26
ARTICLE 14 - MISCELLANEOUS.......................................................................................26
14.1. Entire Agreement; Amendments.....................................................................26
14.2. Headings.........................................................................................26
14.3. Gender; Number...................................................................................26
14.4. Exhibits and Schedules...........................................................................26
14.5. Severability.....................................................................................26
14.6. Notices..........................................................................................26
14.7. Waiver...........................................................................................27
14.8. Assignment.......................................................................................27
14.9. Successors and Assigns...........................................................................28
14.10. Governing Law...................................................................................28
14.11. No Benefit to Others............................................................................28
14.12. Counterparts....................................................................................28
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ASSET PURCHASE AGREEMENT
------------------------
This Asset Purchase Agreement (the "Agreement") is made this
2nd day of April, 1998, by and among OWOSSO CORPORATION, a Pennsylvania
corporation ("Parent"), ASTRO AIR ACQUISITION CORP., a wholly-owned subsidiary
of Parent ("Buyer"), ASTRO AIR, INC., a Texas corporation (the "Seller"),
XXXXX PROPERTIES, INC., a Texas corporation ("Xxxxx Properties"), and XXX
XXXXX, an individual residing in the State of Texas ("Dacus").
BACKGROUND
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Seller is engaged in the business of manufacturing
evaporator, condenser, and heater coils (the "Business"). Xxxxx Properties
owns the majority of the issued and outstanding shares of capital stock of
Seller.
Parent, through Buyer, desires to purchase, and Seller
desires to sell, substantially all of the assets and the liabilities of Seller
used in carrying out the Business of Seller, all upon the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual promises and covenants herein contained, and intending to be legally
bound, Parent, Buyer, Seller, Xxxxx Properties and Xxxxx agree as follows:
ARTICLE 1
SALE AND PURCHASE OF ASSETS; PURCHASE PRICE
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1.1. Purchase and Sale of Assets.
1.1..1. Purchased Assets. Subject to the terms and
conditions contained in this Agreement, at the Closing on the Closing Date (as
such terms are defined in Section 9.1 below), Seller shall sell, assign,
transfer, and deliver to Buyer and Buyer shall purchase from Seller, free and
clear of all security interests, liens, claims, and encumbrances (except those
which the Buyer has expressly agreed to assume herein) all of the assets that
are owned by or used in the Business as they shall exist at the Closing Date
(as defined in Section 9.1) (collectively "Purchased Assets") and excluding
only the Retained Assets as defined in Section 1.1.2. Without limiting the
generality of the foregoing, the "Purchased Assets" shall include the
following:
(a) Tangible Personal Property. All of Seller's
furniture, fixtures, machinery, equipment, tools, replacement parts and other
tangible personal property, wherever located (the "Purchased Tangible Personal
Property");
(b) Inventory. All of Seller's inventory
(including, without limitation, all raw materials, work in progress and items
in transit), wherever located (the "Purchased Inventory");
(c) Cash. All of Seller's cash and cash
equivalents, wherever located, including but not limited to bank and mutual
fund accounts and securities;
(d) Accounts Receivable. All of Seller's accounts
receivable and notes receivable created or arising in respect of the sale of
products or other assets of Seller;
(e) Customer Lists. All of Seller's customer lists
(the "Purchased Customer Lists");
(f) Existing Contracts. All of Seller's existing
contracts which relate to the Purchased Assets or the Business (the "Existing
Contracts");
(g) Leases. All of Seller's real estate and other
lease agreements, including any and all rights thereunder including, security
deposits (the "Purchased Leases");
(h) Name. Seller's corporate name "Astro Air"; and
(i) Intangible Assets. All of Seller's right,
title, and interest in and to Seller's industrial and intellectual property
rights, including but not limited to patents, patent applications, patent
rights, trademarks, trademark registrations, trademark registration
applications, trade names, service marks, copyrights, computer programs, trade
secrets, product related artwork, designs, shop drawings, models, production
procedures, technology and proprietary processes, and formulae, all franchise,
permits, and licenses (to the extent such are assignable), telephone numbers,
supplier and referral lists, advertising materials and data, blueprints,
methods and other similar know-how or rights or intangible assets used in the
operation of the Business, together with copies of all books, exclusive of
corporate records, minute books, and stock transfer ledgers, records, computer
software, files, papers, and other data of Seller relating to the operation of
the Business (the "Purchased Intangible Assets").
1.1..2. Retained Assets. The term "Retained Assets" shall
mean the following assets, which shall be retained by Seller and not sold to
Buyer, anything herein to the contrary notwithstanding:
(a) Corporate Records. Seller's corporate seal,
minute books, stock books and other records relating exclusively to the
corporate organization of Seller and all tax returns and tax records;
(b) Automobiles. Seller's 1994 Volvo and 1995 Chevy
Blazer;
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(c) Promissory Note. The promissory note executed
by Xxxxx in favor of Seller on February 1, 1996; and
(d) Notes Receivable. Seller's notes receivable,
identified on Seller's financial statements as "Accounts Receivable-Other" and
representing promissory notes executed by Xxxxx Properties in favor of Seller
in the amount identified on Seller's balance sheet at Closing.
1.2. Purchase Price. The purchase price (the "Purchase Price") to be
paid by Buyer to Seller at the Closing for the Purchased Assets shall be Ten
Million Dollars less the value of the note described in Section 1.1.2(d)
herein, plus the assumption by Buyer of the Assumed Liabilities payable in
cash by delivery of a certified check at Closing. Buyer shall pay to Seller as
a deposit for application against the Purchase Price at Closing the amount of
$1,000,000 (the "Deposit") on April 13, 1998. If Closing has not occurred on
or before May 15, 1998 for any reason other than the failure to fulfill one of
the conditions to Buyer's obligation to consummate the transactions
contemplated by this Agreement contained in Section 6.1 (a "Buyer Condition")
and Seller elects to terminate this Agreement pursuant to Section 13.1.2,
13.1.4 or 13.1.5, Seller shall retain the Deposit as liquidated damages. If
the Agreement is terminated by Buyer pursuant to Section 13.1.2 or 13.1.3,
Seller shall promptly refund the Deposit to Buyer.
1.3. Liabilities. At the Closing, Buyer will assume all of Seller's
liabilities identified on Seller's 1997 Financial Statements (as defined
below), together with all Employee Liabilities, as defined hereinafter, and
all other liabilities of Seller arising between December 31, 1997 and the
Closing Date in the ordinary course of Seller's business excluding state and
federal income taxes, less all liabilities of Seller paid and discharged
between December 31, 1997 and the Closing Date in the ordinary course of
Seller's business, and less liabilities for the retained automobiles (the
"Assumed Liabilities"). Except for those Assumed Liabilities, Buyer shall not
assume any liabilities of Seller, contingent or otherwise, known or unknown,
arising from or related to the operation or activities of Seller, its
shareholders, directors, officers, agents or otherwise (the "Retained
Liabilities").
Employee Liabilities shall include all liabilities owed or owing to
Seller's employees, including but not limited to liabilities for wages,
employee benefits and related taxes, severance pay and related obligations.
1.4. Allocation of Purchase Price. Seller and Buyer agree that the
Purchase Price shall be allocated among the Purchased Assets in the manner
specifically set forth in or determined pursuant to Schedule 1.4, as
negotiated by the parties. Seller and Buyer further agree that each will
prepare and file their federal and any state or local income tax returns and
will prepare and file any notices or other filings required pursuant to
Section 1060 of the Internal Revenue Code of 1986, and that any such returns,
notices, or filings will be prepared based upon such allocation of the
Purchase Price.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller, Xxxxx Properties and Xxxxx, jointly and severally
(except where otherwise indicated), represent and warrant and, where
applicable, covenant as follows:
2.1. Organization, Power, Standing and Qualification. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of Texas, and has full corporate power and authority to
carry on its business as it is now being conducted and to own and operate the
properties and assets now owned and operated by it. Seller is duly qualified
to do business and is in good standing in all jurisdictions where the failure
to qualify or to be in good standing would have a material adverse effect upon
its financial condition, the conduct of its business or the ownership of its
property and assets, such jurisdictions being listed on Schedule 2.1 hereto.
2.2. Power and Authority. Seller, Xxxxx Properties and Xxxxx have the
power and authority to execute, deliver and perform this Agreement and the
other documents, instruments and agreements contemplated herein (the
"Collateral Documents") to which the Seller, Xxxxx Properties or Xxxxx (as the
case may be) is a party. Each of this Agreement and the Collateral Documents
is a valid and binding obligation of Seller, Xxxxx Properties and Xxxxx,
enforceable in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium, or similar laws
affecting the enforcement of creditors' rights generally.
2.3. Validity of Contemplated Transactions. Except with respect to
those consents required to be obtained in connection with the following and
set forth in Schedule 2.3 hereto, the execution, delivery and performance of
this Agreement and the Collateral Documents and the consummation of the
transactions contemplated hereby and thereby do not and will not contravene
any provision of the Articles of Incorporation or Bylaws of Seller; nor
violate, be in conflict with, or constitute a default under, cause the
acceleration of any payments pursuant to, or otherwise impair the validity or
effectiveness of any agreement, contract, indenture, lease, or mortgage, or
subject any property or asset of Seller, Xxxxx Properties or Xxxxx to any
indenture, mortgage, contract, commitment, or agreement, other than this
Agreement, to which Seller, Xxxxx Properties or Xxxxx is a party or by which
Seller or any of its assets is bound; or violate any provision of law, rule,
regulation, order, permit, or license to which Seller, Xxxxx Properties or
Xxxxx is subject.
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2.4. Government and Third-Party Approvals. Except for those approvals
set forth on Schedule 2.4 hereto, no consent by, approval or authorization of
or filing, registration or qualification ("Consent") with any federal, state
or local authority, or any corporation, person or other entity (including any
party to any contract or agreement with Seller) is required (i) for the
execution, delivery or performance of this Agreement by Seller, (ii) in
connection with Seller's consummation of the transactions contemplated hereby,
or (iii) in order to vest in Buyer good and marketable title in and to all of
the Purchased Assets upon the Closing.
2.5. Title to Purchased Assets and Related Matters. Except as
disclosed on Schedule 2.5 hereto, Seller has good, valid and marketable title
to all of the Purchased Assets, and all such Purchased Assets are held free
and clear of mortgages, liens, pledges, claims, charges, security interests,
or other encumbrances or limitations of any nature whatsoever, except (a)
liens for current taxes not delinquent or being contested in good faith by
appropriate proceedings (which, in the latter case, are disclosed on Schedule
2.5 hereto), and (b) mechanics', workmen's, materialmen's or other like liens
arising in the ordinary course of business with respect to obligations which
are not due (collectively "Permitted Liens").
2.6. Other Representations Regarding Purchased Assets.
2.6..1. Fixed Assets. The Purchased Fixed Assets are, and on
the Closing Date will be, free of latent defects known to Seller.
2.6..2. Inventory. Except as described on Schedule 2.6.2
hereto, the Purchased Inventory is of a quality usable or salable in the
ordinary course of business within two (2) years from the date hereof and all
items of inventory of raw materials are of a quality usable in the ordinary
course of business within one (1) year from the date hereof, in each instance
based upon Seller's historic performance. The value at which the Purchased
Inventory is carried on the books and records of Seller reflects the normal
inventory valuation policy utilized by Seller and is in accordance with
generally accepted accounting principles, consistently applied, and is stated
at the lower of cost or market. Seller does not hold any items of Purchased
Inventory on consignment or have title to any items of inventory in the
possession of others except as disclosed on Schedule 2.6.2.
2.6..3. Existing Contracts. Schedule 2.6.3 contains a true,
correct, and complete list of each of the Existing Contracts to be assumed by
Seller, together with any and all amendments thereto.
2.6..4. Customer Lists. The Purchased Customer Lists are,
and on the Closing Date will be, true and correct lists of Seller's customers
and include all customers to whom products are and have been sold within the
six (6) months preceding the execution of this Agreement.
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2.6..5. Leases. Schedule 2.6.5 contains a true, correct, and
complete list of each of the Purchased Leases to be assigned to Buyer on the
Closing Date, together with any and all amendments thereto. Except as
previously disclosed to Buyer in writing, there are no verbal understandings
that are not evidenced in writing in the Purchased Leases. Seller has not
received any notice of noncompliance with any applicable federal, state, local
or other law, rule, regulation, or procedure relating to the Purchased Leases.
All Purchased Leases of real property permit the Seller to use the premises to
operate the Business, and such use does not violate the terms of the Purchased
Leases. The information relating to the Purchased Leases attached hereto as
Schedule 2.6.5 setting forth the name of the lessor, the rent, and other
charges payable thereunder, including escalation or percentage rent,
advertising requirements, and other lease required expenses and the expiration
date thereof including any and all renewal options is true and correct in all
material respects taken as a whole.
2.6..6. Intangible Assets. The Purchased Intangible Assets
constitute all of Seller's intangible assets related to operation of the
Business. No claim is pending or threatened to the effect that (i) the present
or past operations of the Business infringe upon or conflict with the asserted
rights of any other person in respect of any intangible asset or (ii) any
intangible asset is invalid or unenforceable. No contract, agreement or
understanding with any party exists that would impede or prevent the
assignment to Buyer of the entire right, title, and interest of Seller in and
to the Purchased Intangible Assets. None of the patents, trademarks, trade
names, service marks, copyrights, computer programs, trade secrets or
proprietary processes, and formulae included within the Purchased Intangible
Assets infringes on the rights of third parties.
2.7. Financial Statements. Seller has delivered to Buyer financial
statements consisting of a balance sheet as of December 31, 1997, 1996, 1995,
and for the years then ended, income statements and statements of cash flow
(such balance sheets, income statements and statements of cash flow being
referred to herein collectively as the "Financial Statements"). Each of the
Financial Statements has been or, with respect to the year ended December 31,
1997, (the "1997 Financial Statements"), will be audited by Xxxx X.
Xxxxxxxxxxx, P.C., independent certified public accountants. The Financial
Statements are true and correct in all material respects, are in accordance
with the applicable books and records of Seller and, to the Knowledge of
Seller, as defined hereinafter, have been prepared in conformity with
generally accepted accounting principles, consistently applied during the
related periods, and present fairly the financial condition of Seller and the
results of its operations for the respective periods ended on such dates.
Insofar as it applies to Seller, the term "Knowledge" shall mean the
actual knowledge of Seller and its executive officers and such information as
any of such individuals would have in the event such individual exercised due
and diligent inquiry into said matter.
2.8. Absence of Undisclosed Liabilities. To the Knowledge of Seller,
Seller has no material liabilities or obligations except for (i) those
reflected or reserved against (which reserves are adequate) in the Financial
Statements, (ii) those incurred, consistent with past business practices,
reasonably and in the ordinary course of its business, since December 31, 1997
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(the "Financial Statement Date") and (iii) those which are specifically
disclosed in this Agreement or in Schedule 2.8 hereto. There is no basis for
the assertion against Seller as of the Financial Statement Date of any
material liability not reflected or reserved against in Seller's balance
sheets as of such date or as disclosed by this Agreement.
2.9. Certain Tax Matters. For any period ending on or before the
Closing (as defined in Section 9.1), Seller has duly and timely filed or will
file all federal, state, and local tax returns, declarations, and reports,
estimates, information returns and statements (collectively, "Returns")
required to be filed or sent by it or on its behalf and all such Returns are
or will be true, correct and complete, true, correct and complete copies of
which Returns have been delivered to Buyer prior to the date hereof. Seller
has paid in full all Taxes (as defined hereafter) and any penalties with
respect to the Returns and any penalties entered with respect thereto, due and
payable for any period ending on or before the Financial Statement Date.
Except as set forth in Schedule 2.9, no deficiencies for any Taxes have been
asserted in writing or assessed against Seller which remain unpaid and which
individually or in the aggregate are material to the financial condition of
Seller or which constitute or which with the passage of time may constitute a
lien or charge against the Purchased Assets.
As used herein, the term "Taxes" shall include all federal, state,
and local taxes, including income, excise, withholding, property, franchise,
gross receipt and other taxes.
2.10. Litigation; Compliance with Laws. Except as set forth in
Schedule 2.10 attached hereto, there is no suit, action, claim, arbitration,
administrative or legal or other proceeding, or governmental or other
investigation pending or, to Seller's Knowledge, threatened against or
affecting Seller, whether or not covered by insurance; nor does there exist
any failure to comply with, nor any default under, any law, ordinance,
requirement, regulation, or order applicable to Seller, nor any violation of
or default with respect to any order, writ, injunction, judgment, or decree of
any court or federal, state or local department, official, commission,
authority, board, bureau, agency, or other instrumentality issued or pending
against Seller which might have a material adverse effect on the financial
condition, business, results of operations, or the Purchased Assets. Seller
has obtained all permits, licenses, zoning variances approvals, and other
authorization necessary for the complete operation of its business as
presently operated, and there are none. There have been no illegal kickbacks,
bribes or political contributions made by the Seller.
2.11. Employees. Seller employs only those full-time and part-time
employees, and retains only those contractors, whose names, positions, and
salaries are listed on Schedule 2.11. Seller does not have any written, or to
the best of its knowledge oral or implied, employment contracts with any of
its employees and, unless otherwise disclosed prior to Closing, no bonus,
profit sharing, pension, group insurance, or other employee benefit plans of
any kind. Seller has no collective bargaining or other agreements with any
labor union or similar employee group with regard to the Business, and no
union has been certified as a bargaining agent for its employees.
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2.12. Overtime, Back Wage, Vacation, Discrimination, and Occupational
Safety Claims. Except as disclosed on the attached Schedule 2.12, there are no
outstanding claims against Seller (whether under federal or state law, under
any employment agreement, or otherwise) asserted by any present or former
employee of Seller on account of or for (i) overtime pay, other than overtime
pay for work done during the current payroll period; (ii) wages or salary for
any period other than the current payroll period; (iii) any amount of vacation
pay or pay in lieu of vacation time, other than vacation time or pay in lieu
thereof earned in or in respect of the current fiscal year; or (iv) any
violation of any statute, ordinance or regulation relating to minimum wages or
maximum hours of work. No person or party has asserted or threatened to assert
any claims against Seller under or arising out of any statute, ordinance or
regulation relating to discrimination or occupational safety in employment or
employment practices (including, without limitation, the Occupational Safety
and Health Act of 1970, as amended, the Fair Labor Standards Act, as amended,
Title VII of the Civil Rights Act of 1964, as amended, or the Age
Discrimination in Employment Act of 1967, as amended).
2.13. Insurance. All inventories, machinery, equipment, buildings,
improvements, and other tangible assets owned or leased by Seller are, and
between the date hereof and the Closing Date (as defined in Section 9.1) will
be, insured against fire and casualty under the policies and in the amounts
and types of coverage set forth in Schedule 2.13 attached hereto and such
policies are, and between the date hereof and the Closing Date will be,
outstanding and duly in force and the premiums thereon fully paid when and as
the same are due and payable. Schedule 2.13 attached hereto is a true and
correct schedule of all policies of fire, liability, and other forms of
insurance, pursuant to which Seller or any of its assets are insured (whether
or not held by Seller) or with respect to which Seller directly or indirectly
pays all or part of the premium.
2.14. Contracts. Except as listed and described on Schedule 2.14,
Seller is not a party to any written or oral:
2.14..1. Agreement or commitment with any present or former
shareholder, director, officer, employee, or consultant or for the employment
of any person, including any consultant;
2.14..2. Agreement, commitment, or arrangement with any
labor union or other representative of employees;
2.14..3. Agreement or commitment to sell or supply products
or to perform services which obligates Seller to sell products or perform
services on terms not limited as to quantity but limited as to price which is
not cancelable on thirty (30) days notice or less without penalty;
2.14..4. Representative, distribution, or sales agency
agreement, contract or commitment;
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2.14..5. Note, debenture, mortgage, pledge, charge, security
agreement, bond, conditional sale agreement, equipment trust agreement, letter
of credit agreement, loan agreement, or other contract or commitment for
borrowing or lending of money (including, without limitation, loans to or from
officers, directors or any member of their immediate families), agreement or
arrangements for a line of credit or guarantee, pledge or undertaking of the
indebtedness of any other person;
2.14..6. Agreement, contract or commitment limiting or
restraining it from engaging or competing in any lines of business with any
person;
2.14..7. License, franchise, distributorship or other
similar agreement, including those which relate in whole or in part to any
patent, trademark, trade name, service xxxx, or copyright or to any ideas,
technical assistance or other know-how of or used by Seller;
2.14..8. Profit sharing, stock purchase, stock option,
pension, retirement, long-term disability, hospitalization, insurance, or
similar material plans providing employee benefits;
2.14..9. Other agreement requiring payments or other
consideration by or from Seller in excess of Ten Thousand Dollars ($10,000.00)
during the remainder of its term; or
2.14..10. Other material agreement, contract, or commitment
not made in the ordinary course of business.
(All of the foregoing agreements, contracts, commitments,
leases, and other instruments, documents and undertakings being called the
"Contracts").
Except as disclosed on Schedule 2.14, to the Knowledge of
Seller (i) each of the Contracts is valid and enforceable in accordance with
its terms, (ii) the parties thereto are in compliance with the provisions
thereof, (iii) no party is in default in the performance, observance or
fulfillment of any obligation, covenant or condition contained therein, (iv)
no event has occurred which with or without the giving of notice or lapse of
time, or both, would constitute a default thereunder and (v) Seller's rights
under the Contracts are transferable by Seller to Buyer without restriction
except for the Consents. None of the Contracts contains any provisions which
would cause Buyer to be liable to the other party thereto for any amount (or
any increased price for goods or services being provided by the other party
thereto) in the event Buyer either does not assume such Contract from Seller
or does assume such Contract from Seller and thereafter terminates such
Contract, or, in the case of a supply contract with a vendor, reduces
purchases from such vendor in comparison with past purchases by Seller. To
Seller's Knowledge, none of the terms or provisions of any of the Contracts
materially adversely affects the prospects, conditions, affairs, or operations
of Seller or the Business, including restrictions on Seller's ability to
compete.
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2.15. Other Transactions. Except as disclosed on Schedule 2.15
hereto, Seller has not, since the Financial Statement Date, (a) operated its
business except in the ordinary course of business, (b) incurred any debts,
liabilities or obligations except in the ordinary course, (c) discharged or
satisfied any liens or encumbrances, or paid any debts, liabilities or
obligations, except in the ordinary course of business, (d) mortgaged, pledged
or subjected to lien or other encumbrance any of its assets, tangible or
intangible, except in the ordinary course of business, (e) sold or transferred
any of its tangible assets, or canceled any debts or claims, except, in each
case, in the ordinary course of business, or (f) suffered any extraordinary
losses or waived any rights of substantial value.
2.16. Product Liability Claims. Seller has delivered to Buyer a
narrative of incidents, events and claims under all policies of product
liability insurance relating to the Business. Seller is an insured under all
policies of insurance relating to product liability listed on Schedule 2.16
for and against covered claims for product liability based on events occurring
prior to the Closing Date (as defined in Section 9.1), which insurance
coverage will continue in effect after the Closing Date. The above-described
coverage is adequate considering Seller's claims history and the industry
taken as a whole.
2.17. No Changes. Since the Financial Statement Date, and except as
disclosed to Buyer in writing as soon as any such events have occurred, there
has not been:
2.17..1. Any materially adverse change in the financial or
other condition, assets, liabilities or business of Seller, except changes
described in Schedule 2.17 hereto, none of which individually or in the
aggregate has been materially adverse to the Business;
2.17..2. Any damage, destruction or loss (whether or not
covered by insurance) or any condemnation by governmental authorities which
has or may adversely affect the business, prospects or any property of Seller;
2.17..3. Any strike, lockout, labor trouble or any event or
condition of similar character adversely affecting the business or prospects
of Seller;
2.17..4. Any declaration, setting aside or payment of any
dividend or other distribution in respect of any of Seller's shares of stock,
or any direct or indirect redemption, purchase or other acquisition of any
such shares; or
2.17..5. Any increase in the compensation payable or to
become payable by Seller to any of its officers, employees or agents, or any
known payment or arrangement made to or with any thereof, other than salary
reviews and increases taking effect after the Financial Statement Date, all of
which were consistent with Seller's past practices, except as disclosed to
Buyer in writing as soon as any such events have occurred.
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2.18. Copies of Articles and Bylaws. Seller's Articles of
Incorporation (certified by the Secretary of State of the jurisdiction of
incorporation) and Bylaws (certified by the Secretary of Seller) to which
Buyer has been provided copies, are correct and remain in effect as at the
date of this Agreement. Except as set forth in Schedule 2.18, there are no
other material books and records of Seller to which Buyer has not been
provided access.
2.19. Hazardous Substances. Except as listed on Schedule 2.19 to
Seller's Knowledge: (i) none of Seller's assets has been used for the
manufacture, storage, transportation, deposit, disposal, treatment, handling,
production, processing or recycling of toxic, dangerous or hazardous
substances nor is there any tank or facility for the storage of hazardous
substances located on or in Seller's assets; (ii) there are no asbestos
materials on or in Seller's assets creating, or likely to create, a hazardous
condition; (iii) there is not now nor has there been any activity on or in
Seller's assets which would subject Seller or the Buyer to liens, damages,
penalties, injunctive relief or cleanup costs under any federal, state or
local law, or under any civil action respecting hazardous substances; (iv)
Seller has complied with each, and is not in violation of any, federal, state
or local law, statute, regulation, permit provision or ordinance, relating to
the generation, handling, storage, transportation, treatment or disposal of
chemicals, substances (the "Environmental Laws"); and (v) Seller has obtained
and complied with all necessary permits and other approvals, including interim
status under the Reserve Conservation and Recovery Act, as amended ("RCRA"),
necessary to store, treat, dispose of and otherwise handle hazardous wastes
and hazardous substances. To Seller's Knowledge, no portion of Seller's assets
constitutes any of the following "environmentally sensitive areas": (1) a
wetland or other "water of the United States" for purposes of Section 404 of
the Federal Clean Water Act, 33 U.S.C. section 1344, or any similar area
regulated under any state law; (2) a 100-year floodplain; or (3) a portion of
the coastal zone for purposes of the federal Coastal Zone Management Act, 16
U.S.C. sections 1451-1464. To Seller's knowledge, the assets of Seller are
free from the presence of unacceptable levels of radon gas or the presence of
the radioactive decay products of radon. A "hazardous substance" shall mean
that term as defined in the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. section 9601, et seq., as amended, and dangerous,
regulated toxic or hazardous substances, petroleum products, or similar terms
under any other applicable state, federal or local law and any regulations
thereunder.
2.20. Relationship With Customers and Suppliers. None of Seller's
customers has given notice terminating, canceling, materially reducing, or
threatening to terminate, cancel, or materially reduce any contract or
purchase or relationship with Seller, and Seller is not aware of any material
deterioration of any such relationship. None of Seller's suppliers for the
past two fiscal years has given notice terminating, canceling, materially
reducing, or threatening to terminate, cancel, or materially reduce any
contract or supply relationship with the Seller, and Seller is not aware of
any material deterioration of any such relationship.
2.21. Transactions With Affiliates. Except as set forth in Schedule
2.21, no employee or affiliate of Seller, nor any officer or director of the
company or any affiliate thereof, (i) owns or has a material interest in any
asset used by Seller in the operation of the Business, (ii) has any direct or
indirect interest of any nature whatsoever in any person which markets or
provides the
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same type of services as those which Buyer will provide by purchasing the
Business, (iii) provides or causes to be provided any assets, services or
facilities used or held for use in connection with the Business.
2.22. Capital Expenditures. Except as set forth in Schedule 2.22, no
capital expenditures are required in connection with the Business or the
assets owned by Seller in order for Seller to operate the Business in the
manner in which it is currently being operated.
2.23. Veracity of Statements. No representation or warranty by
Seller, Xxxxx Properties or Xxxxx contained in this Agreement and no statement
contained in any certificate, schedule or other instrument furnished to Buyer
pursuant hereto or in connection with the transactions contemplated hereby,
contains any untrue statement of a material fact or omits to state a material
fact to Seller's, Xxxxx Properties' or Xxxxx' Knowledge.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Parent and Buyer hereby represent and warrant jointly and
severally (except where otherwise indicated), and, where applicable, covenant
as follows:
3.1. Power and Authority. Parent and Buyer each have full power and
authority to enter into this Agreement and the Collateral Documents to which
Parent or Buyer (as the case may be) is a party and to perform all covenants
and undertakings herein and therein set forth; the execution and delivery of
this Agreement and the Collateral Documents to which Parent or Buyer (as the
case may be) is a party, and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action on the
part of Parent and Buyer; and each of this Agreement and the Collateral
Documents to which Parent or Buyer (as the case may be) is a party is a valid
and binding obligation of such party, enforceable in accordance with their
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws affecting the rights of creditors
generally.
3.2. Conflict With Authority, Bylaws, Etc. Neither the execution and
delivery of this Agreement and the Collateral Documents to which Parent or
Buyer (as the case may be) is a party, nor the consummation of the
transactions contemplated hereby and thereby in the manner herein provided
will violate, be in conflict with, constitute a default under, cause the
acceleration of any payments pursuant to, or otherwise impair the good
standing, validity, and effectiveness of any lease, license, permit,
authorization, or approval applicable to Parent or Buyer (as the case may be)
or violate any provision of law, rule, regulation, order, or permit to which
Parent or Buyer is subject.
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ARTICLE 4
ACTIVITIES PRIOR TO CLOSING BY SELLER
-------------------------------------
4.1. Operation of Business. Prior to the Closing Date (as defined in
Section 9.1), Seller shall conduct its business only in the ordinary course
and in connection therewith and, to the extent consistent therewith, shall use
its best efforts to preserve its business organization intact and maintain its
existing relations with customers, suppliers, employees and business
associates. Between the date of this Agreement and the Closing, except as
agreed by prior written consent of Buyer:
4.1..1. Seller shall conduct its business, operations,
activities, and practices in the usual and ordinary course, consistent with
past practices;
4.1..2. Seller shall not take or suffer or permit any action
which would render untrue any of the representations or warranties of Seller
herein contained, and shall not omit to take any action the omission of which
would render untrue any such representation or warranty;
4.1..3. Seller shall preserve its business organization
intact; keep available to itself and to Buyer the present services of its
employees (other than employees who are terminated or who resign in the
ordinary course of business); preserve for itself and Buyer the goodwill of
Seller's suppliers and customers and others with whom business relationships
exist; maintain its tangible property in substantially the same condition as
it now exists, ordinary wear and tear excepted; maintain the insurance
policies identified on Schedule 3.18 in full force and effect; and maintain in
full force and effect all agreements, licenses, permits, authorizations and
approvals necessary for the operation of the Business; and refrain from hiring
or newly employing any additional technical or sales personnel;
4.1..4. Seller shall not grant or otherwise make, or agree
to grant or otherwise make, any increase in the compensation payable or to
become payable by it to any of its employees except in the ordinary course of
business, consistent with past practices;
4.1..5. Seller shall not declare or make any dividend or
other payment or distribution, directly or indirectly, on or with respect to
its capital stock or redeem or otherwise acquire, directly or indirectly, any
shares of its capital stock;
4.1..6. Seller shall not sell or dispose of (otherwise than
in the ordinary course of business) any of its assets (other than obsolete
assets or assets to be replaced concurrently with such disposition);
4.1..7. Seller shall not merge or consolidate with any other
corporation or entity; acquire or agree to acquire any corporation,
association, partnership, joint venture, or other entity; or enter into any
agreement not in the ordinary course of business; and
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4.1..8. Seller shall not cancel, waive, or modify any claims
or rights owned by, or running in favor of, Seller, which claims or rights
will be transferred to Buyer.
4.2. Access to Information. Prior to Closing (as defined in Section
9.1), Seller, Xxxxx Properties and Xxxxx will cooperate fully with Buyer and
shall provide Buyer and its accountants, counsel, and other representatives,
during normal business hours, full access to the books, records, and Purchased
Assets and full opportunity to discuss Seller's business, affairs, assets,
industrial processes, and trade secrets with its officers, employees,
customers, suppliers and independent accountants, and furnish to Buyer and its
representatives copies of such documents, records, and information with
respect to the affairs of Seller as Buyer or its representatives may
reasonably request. In addition to the foregoing right of access and
information, Buyer may designate on-site observers of the business and
operations of Seller, which observers shall be permitted such access to
Seller's business and operations as Buyer may reasonably request and shall be
fully informed by it concerning all of its assets, operation, and business
affairs.
4.3. Best Efforts. Subject to the other provisions of this Agreement,
Seller, Xxxxx Properties and Xxxxx will use their best efforts to cause the
conditions listed in Section 6.1 hereof to be satisfied on the Closing Date
(as defined in Section 9.1).
4.4. Consents to Assignment. Prior to the Closing Date, Seller shall
obtain all Consents required for the effective and valid assignment of the
Purchased Leases and Existing Contracts to permit them to be assumed by Seller
and assigned to Buyer hereunder. On or before the Closing Date, Seller shall
have paid or made provision for the payment of all amounts owed by Seller as
of the Closing Date under the terms of such leases and contracts and otherwise
cured any and all defaults thereunder.
4.5. Benefit Plans. Between the date hereof and the Closing Date,
Seller shall maintain in full force and effect the Benefit Plans as they
pertain to Seller's employees or former employees subject to modification
based upon Buyer's due diligence, and, in connection therewith:
4.5..1. Plan Changes. Except as may be required by law or as
may be necessary to continue the qualified status under Section 401 of the
Code, Seller shall not adopt, terminate, amend, extend, or otherwise change
any Benefit Plan without the prior written consent of Buyer, and Seller shall
give Buyer prior written notice of Seller's intention to take any such action
required by law or necessary to continue the qualified status of any Benefit
Plans as they pertain to Seller's employees or its former employees; and
4.5..2. Contributions and Payments. Seller shall not make,
cause to be made, or agree to make any contribution, award, or payment under
any Benefit Plans as they pertain to Seller's employees or former employees,
except at the time and to the extent required by the written terms thereof,
without the prior written consent of Buyer.
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4.6. Notice of Change. Seller, Xxxxx Properties and Xxxxx will
promptly notify Buyer of the existence or happening of any fact, event or
occurrence prior to the Closing Date and of which Seller or any of its
employees, officers, directors, stockholders, or other representatives, Xxxxx
Properties or Xxxxx has Knowledge which may alter the accuracy of completeness
of any representation or warranty contained in Article 2 of this Agreement.
4.7. No Discussions. Unless and until this Agreement is terminated
pursuant to Article 13 hereof, Seller, Xxxxx Properties and Xxxxx will not,
and will not authorize or permit any of Seller's employees, officers,
directors, or other representatives to, enter into, participate in, request,
solicit or engage in any discussions, negotiations, understandings, agreements
or other communications with any person or entity other than Buyer relating to
offers, inquiries, negotiations or proposals with respect to the sale of the
assets or any capital stock of Seller, or any type of business combination
transaction. Seller will promptly notify Buyer of any such offer, inquiry,
negotiation or proposal which it may receive.
4.8. Publicity. The initial press release relating to the
transactions contemplated hereby shall be a joint press release and thereafter
Seller and Buyer shall consult with each other in issuing any press releases
or otherwise making public statements with respect to the transactions
contemplated hereby and in making any filings with any federal or state
governmental or regulatory agency. The parties hereto shall not issue any such
press release or make any such public statement or filing prior to such
consultation, except as may be required by law.
ARTICLE 5
ACTIVITIES PRIOR TO CLOSING BY BUYER
------------------------------------
5.1. Best Efforts. Subject to the other conditions of this Agreement,
Parent and Buyer will use their best efforts to cause the conditions listed in
Section 6.2 hereof to be satisfied on the Closing Date (as defined in Section
9.1).
5.2. Access to Information. Buyer shall provide Seller with
information concerning Buyer's financing arrangements as well as other
information reasonably requested by Seller regarding Buyer's ability to
consummate the transactions contemplated herein, as may be. Seller shall not
disclose any such information to any other person or entity without the prior
written consent of Buyer.
5.3. Confidentiality. Except as otherwise required by law, or as may
be necessary or appropriate to enforce Parent's or Buyer's rights hereunder,
Parent and Buyer shall retain in confidence, and shall cause its advisors to
retain in confidence, all information obtained pursuant to investigations made
by Buyer or its advisors pursuant to Section 5.2 hereof (the "Confidential
Information"). The parties agree that the Confidential Information shall not
include information which (i) was or becomes generally available to the public
other than as a result of a disclosure by Buyer or its advisors, (ii) was or
becomes available to Buyer of its advisors on a non-
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confidential basis from a source other than Seller or Seller's
representatives, provided that such source is not bound by a confidentiality
agreement or (iii) was, or in the future is, developed independently by Buyer
or its advisors without reference to the information furnished by Seller or
Seller's representatives. The parties understand and agree that all of the
Confidential Information supplied to Buyer or its advisors is provided on the
understanding that such Confidential Information remains the property of
Seller and that all copies and originals will be returned to Seller promptly
upon its request after termination of this Agreement pursuant to Article 13
hereof. This Section 5.3 shall terminate upon consummation of the transaction
contemplated hereby.
5.4. Employees. Buyer intends to offer employment to all or
substantially all of Seller's employees and shall provide Seller prior to
Closing a list of current employees of Seller to whom Buyer intends to offer
employment. Seller shall continue to pay all Employee Liabilities until
Closing.
5.5. Transfer of Licenses. Buyer assumes responsibility for taking
all necessary action, at its own expense, to obtain, transfer, or continue any
licenses, permits, or other governmental approvals necessary to the operation
of the Business. Seller agrees to cooperate fully in the obtaining,
transferring, or continuing of such licenses, permits, or approvals.
ARTICLE 6
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
6.1. Conditions to Obligation of Buyer to Close. The obligation of
Buyer to consummate the transaction contemplated under this Agreement on the
Closing Date (as defined in Section 9.1) shall be subject to the satisfaction
or the waiver by Buyer of the following conditions on or prior to the Closing
Date:
6.1..1. Representations and Warranties; Compliance with
Agreement. The representations and warranties of Seller, Xxxxx Properties and
Xxxxx set forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, and Seller shall have performed all covenants and agreements to
be performed by it under this Agreement on or prior to the Closing Date and
shall have delivered to the Buyer a certificate to such effect, dated the
Closing Date, which certificate shall be in form and substance satisfactory to
Buyer and its counsel;
6.1..2. Opinion of Counsel for the Seller. Norman, Thrall,
Angle & Guy, counsel for Seller, shall have delivered to Buyer their favorable
opinion, dated the Closing Date and in the form set forth in Exhibit 6.1.2;
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6.1..3. Opinion of Accountants. Deloitte and Touche LLP,
accountants for the Buyer, shall have reviewed Seller's 1997 Financial
Statements and shall have delivered to Buyer their favorable opinion, dated
the Closing Date, concluding that the Financial Statements have been prepared
in conformity with generally accepted accounting principles, consistently
applied, and present fairly the condition of Seller and the results of its
operations for the period represented;
6.1..4. Litigation Affecting Closing. On the Closing Date,
no proceeding shall be pending or threatened before any court or governmental
agency in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby, and no investigation that might result in
any such suit, action or proceeding shall be pending or threatened;
6.1..5. Required Consents. The parties (other than Seller)
to any other contract, commitment or agreement to which Seller is a party, any
governmental agency or body or any other person, firm or corporation which
owns or has authority to grant any franchise, license, permit, easement, right
or other authorization necessary for the business or operations of Seller, and
any governmental body or regulatory agency having jurisdiction over Buyer or
Seller, to the extent that their consent or approval is required under the
pertinent debt, lease, contract, commitment or agreement or other document or
instrument or under applicable laws, rules or regulations for the consummation
of the transaction contemplated hereby in the manner herein provided, shall
have granted such consent or approval, which shall include all Consents;
6.1..6. No Material Damage to Business. The Purchased Assets
shall not have been and shall not be threatened to be materially adversely
affected in any way as a result of fire, explosion, earthquake, disaster,
accident, labor dispute, any action by any governmental authority, flood,
drought, embargo, riot, civil disturbance, uprising, activity of armed forces
or act of God;
6.1..7. Approval of Buyer; Corporate Matters. All actions,
proceedings, resolutions, instruments and documents required to carry out this
Agreement or incidental hereto and all other related legal matters shall have
been approved by Buyer, in the exercise of its reasonable judgment, and Buyer
or its counsel shall have been furnished with certified copies, satisfactory
in form and substance to Buyer in the exercise of its reasonable judgment, of
all such corporate records of Seller, and of the proceedings of such persons
authorizing the execution, delivery and performance of this Agreement as Buyer
shall reasonably require;
6.1..8. Xxxx-Xxxxx-Xxxxxx Compliance. To the extent
applicable, Seller must have complied with the filing requirements of the
Xxxx-Xxxxx-Xxxxxx Act (the "HSR Act") as modified by the Bankruptcy Code, and
either (i) the Federal Trade Commission or the Antitrust Division shall have
taken no action in respect to such filing, and the waiting period prescribed
by the HSR Act, as modified by the Bankruptcy Code, shall have expired, or
(ii) the Federal Trade Commission and/or Antitrust Division shall have
otherwise indicated their consent to the transactions contemplated hereby;
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6.1..9. Review of Records. Prior to Closing, Buyer shall
have been permitted access to the facilities, books, and records of Seller,
including, without limitation, the opportunity to observe and verify the fixed
assets and to review purchase orders and sales commitments open on the Closing
Date pursuant to which Seller is purchasing services, supplies, or other goods
from third parties or pursuant to which Seller is designing, manufacturing,
selling, or providing services, products, or other goods to third parties,
respectively, and the obligations of Seller under which Buyer is assuming;
6.1..10. Limit on Debt. The amounts owing on Seller's
outstanding third party bank or similar institutional debt shall not exceed
$3,100,000; and
6.1..11. Real Estate Lease. Xxxxx Properties shall have
entered into an agreement with Buyer to lease 0000 Xxxxx Xxxxxx Xxxxxx and
0000 Xxxxx Xxxxxx Xxxxxx, both of Jacksonville, Texas to Buyer under the terms
and provisions of the lease agreement attached in Exhibit 6.1.11 hereto.
6.1..12. Audited 1997 Financial Statements. Seller shall
have delivered the audited 1997 Financial Statements which shall conform in
all material respects with the unaudited 1997 Financial Statements.
6.2. Conditions to Obligation of Seller to Close. The obligation of
Seller to consummate the sale of it assets on the Closing Date (as defined in
Section 9.1) shall be subject to the satisfaction of the following conditions
on or prior to the Closing Date:
6.2..1. Representations and Warranties. The representations
and warranties of Buyer set forth in this Agreement shall be true and correct
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date, Buyer shall have performed all covenants and
agreements to be performed by it under this Agreement on or prior to the
Closing Date, and Buyer shall have delivered to Seller a certificate to such
effect, dated the Closing Date, which certificate shall be in form and
substance satisfactory to Seller and its counsel;
6.2..2. Opinion of Counsel for the Buyer. Xxxxxx Xxxxxxxx
LLP, counsel for Buyer, shall have delivered to Seller their opinion, dated
the Closing Date and in the form set forth in Exhibit 6.2.2;
6.2..3. Litigation Affecting Closing. On the Closing Date,
no proceeding shall be pending or threatened before any court or governmental
agency in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the consummation of the
transaction contemplated hereby, and no investigation that might eventuate in
any such suit, action or proceeding shall be pending or threatened;
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6.2..4. Approval of Seller; Corporate Matters. All actions,
proceedings, resolutions, instruments and documents required to carry out this
Agreement or incidental hereto and all other related legal matters shall have
been approved on the Closing Date by Seller, in the exercise of their
reasonable judgment, and Seller shall have been furnished with certified
copies, satisfactory in form and substance to Seller in the exercise of their
reasonable judgment, of all such records of Buyer and Seller and of the
proceedings of Buyer and Seller authorizing their execution, delivery and
performance of this Agreement as Seller shall reasonably require;
6.2..5. Consulting Agreement. Buyer shall have entered into
an agreement with Xxxxx Properties to retain Xxxxx Properties as a management
consultant under the terms and provisions of the consulting agreement attached
in Exhibit 6.2.5 hereto; and
6.2..6. Real Estate Lease. Buyer shall have entered into an
agreement with Xxxxx Properties to lease 0000 Xxxxx Xxxxxx Xxxxxx and 0000
Xxxxx Xxxxxx Xxxxxx, both of Jacksonville, Texas from Xxxxx Properties under
the terms and provisions of the lease agreement attached in Exhibit 6.1.11
hereto.
ARTICLE 7
INDEMNIFICATION
---------------
7.1. By Seller. To the extent and in the manner herein provided,
Seller, Xxxxx Properties and Xxxxx (collectively, the "Indemnitors") shall,
jointly and severally, indemnify, defend, and hold harmless Buyer from and
against any and all damages, losses, obligations, deficiencies, liabilities,
claims, encumbrances, penalties, costs, and expenses, including expenses
related to investigation and defense including reasonable attorneys' fees
(collectively, "Losses"), which Buyer may suffer or incur, resulting from,
related to, or arising out of (i) any misrepresentation, breach of warranty or
nonfulfillment of any of the covenants of Seller, Xxxxx Properties or Xxxxx in
this Agreement or from any misrepresentation in or omission from any Schedule
to this Agreement, certificate, financial statement, or from any other
document furnished or to be furnished to Buyer hereunder; (ii) any claims for
the payment of Taxes in excess of the respective amounts specifically reserved
therefor on 1997 Financial Statements or have previously been paid; (iii) any
claims asserted against the Buyer or the Purchased Assets and alleged to arise
out of any act, omission, obligation, or liability of Seller's or any of its
officers, employees, or other agents; and (iv) the Retained Liabilities.
7.2. By Buyer. From and after the Closing Date (as defined in Section
9.1), Buyer agrees to indemnify, defend, and hold harmless Seller from and
against (i) any and all Losses, which Seller may suffer or incur, resulting
from, related to, or arising out of any misrepresentation, breach of warranty,
or nonfulfillment of any of the covenants or agreements of Buyer in this
Agreement; (ii) any misrepresentation in or omission from any certificate or
document furnished or to be furnished to Seller hereunder and any and all
suits, actions, investigations, proceedings, demands, assessments, audits,
judgments, and claims arising out of any of the foregoing; (iii) any
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and all Losses resulting from, related to, or arising out of the operation of
the Business after Closing Date; and (iv) any and all Losses resulting from,
related to, or arising out of the Assumed Liabilities.
7.3. Procedures. Promptly after acquiring knowledge of any such
Losses or Claims against which Indemnitors have indemnified Buyer or against
which Buyer has indemnified Seller, or as to which either Buyer or Seller
(herein, a "Party") may be liable, Indemnitors or Buyer, as the case may be,
shall give to the other Party written notice thereof; provided, however, that
failure to give notice shall not relieve the indemnifying Party of any
liability it may have to the indemnified Party if such failure does not
materially prejudice the indemnifying Party. In the event of any such Loss or
Claim, (i) the indemnifying Party shall have the right to assume the defense
thereof and shall not be liable to such indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by such
indemnified Party in connection with the defense thereof, provided however
that the indemnifying Party shall have waived its right to contest its
obligation to indemnify the indemnified Party for all Losses or damages with
respect to such Claim; (ii) if the indemnifying Party fails to assume such
defense or counsel for the indemnifying Party advises that there are issues
which raise conflicts of interest between the indemnifying Party, on the one
hand, and the indemnified Party, on the other hand, the indemnified Party may
retain one counsel satisfactory to it, and the indemnifying Party shall pay
all reasonable fees and expenses of such counsel promptly as statements
therefor are received; (iii) the indemnifying Party shall receive from the
indemnified Party all necessary and reasonable cooperation in said defense
including, but not limited to, the services of employees who are familiar with
the transactions out of which any such Loss or Claim may have arisen; and (iv)
the indemnifying Party shall not be liable for any settlement effectuated
without its prior written consent.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
------------------------------------------
All representations and warranties made by Seller and Buyer
in this Agreement or pursuant hereto shall survive the Closing (as defined in
Section 9.1) hereunder, notwithstanding any investigation made by or on behalf
of Seller or Buyer prior to or after the Closing Date (as defined in Section
9.1).
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ARTICLE 9
THE CLOSING
-----------
9.1. Time and Place. The closing (the "Closing") of the transactions
contemplated hereby (the "Closing Date") shall be held on or before May 15,
1998 at 9:00 a.m., at the offices of Xxxxxx Xxxxxxxx LLP, 3000 Two Xxxxx
Square, 00xx & Xxxx Xxxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, or at such
earlier time as the conditions to closing in Article 6 shall have been
satisfied and at such other place as shall be mutually agreeable to the Buyer
and the Seller.
9.2. Conduct at Closing.
9.2..1. Conduct of Seller. Subject to the fulfillment of all
of the conditions set forth in Section 6.2 and the delivery of all
certificates and opinions required thereby, except such conditions,
certificates, and opinions as may be waived by Buyer in writing, Seller shall
deliver to Buyer:
(a) the Purchased Customer Lists;
(b) such bills of sale, assignments and other
instruments of transfer or conveyance in form and substance reasonably
satisfactory to Buyer's counsel, as Buyer may reasonably request to convey to
Buyer good and marketable title to the Purchased Assets owned by Seller and
otherwise to transfer all of Seller's right, title and interest in and to the
Purchased Assets;
(c) an amendment to Seller's Articles of
Incorporation certified by the Secretary of State amending the corporate name
of Seller to a name dissimilar to "Astro Air" or Articles of Merger, adopted
by Seller and Xxxxx Properties and certified by the Secretary of State,
merging Seller into Xxxxx Properties;
(d) the certificate required by Section 6.1.1 hereof;
(e) the opinion of counsel required by Section
6.1.2 hereof; and
(f) a certificate dated the Closing Date and signed
on behalf of Seller by its Secretary attaching (a) (i) a true and correct copy
of the Company's Articles of Incorporation, (ii) a true and correct copy of
the By-Laws of Seller, (iii) the resolutions by the Board of Directors and the
stockholders of Seller authorizing the actions taken and authorizing the
officers of Seller to execute all documents and instruments to be executed and
delivered by Seller in connection with the purchase of the assets, and (iv)
certificates of good standing certified by the Secretaries of State or other
appropriate officials of those states in which Seller does business; and (b)
specimen signatures of the incumbent officers of Seller executing this
Agreement and the documents executed and delivered pursuant to or in
connection with this Agreement.
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9.2..2. Conduct of Buyer. Subject to the fulfillment of all
of the conditions set forth in Section 6.1 and the delivery of all
certificates and opinions required thereby, except such conditions as may be
waived by the Seller in writing, on the Closing Date, Buyer shall deliver to
Seller:
(a) evidence of the payment provided for in Section
1.2 hereof;
(b) such assumption agreements, in form and
substance reasonably satisfactory to Seller's counsel, as Seller may
reasonably request to evidence and effect Buyer's assumption of the Assumed
Liabilities;
(c) the certificate required by Section 6.2.1
hereof;
(d) the opinion of counsel required by Section
6.2.2 hereof;
(e) the executed consulting agreement required by
Section 6.2.6 hereof;
and
(f) a certificate dated the Closing Date and signed
on behalf of Buyer by its Secretary attaching (a) (i) a true and correct copy
of Buyer's Articles of Incorporation, (ii) a true and correct copy of the
By-Laws of Buyer, (iii) the resolutions by the Board of Directors of Buyer
authorizing the actions taken and authorizing the officers of Buyer to execute
all documents and instruments to be executed and delivered by Buyer in
connection with the purchase of the assets, and (iv) certificates of good
standing certified by the Secretary of State of the Commonwealth of
Pennsylvania; and (b) specimen signatures of the incumbent officers of Buyer
executing this Agreement and the documents executed and delivered pursuant to
or in connection with this Agreement.
ARTICLE 10
CONDUCT OF SELLER AND BUYER AFTER CLOSING
-----------------------------------------
10.1. Post-Closing Conduct Generally. Buyer and Seller will cooperate
upon and after the Closing Date in effecting the orderly transfer of the
Purchased Assets to Buyer. In addition, after the Closing Date, at the request
of either Party and at the requesting Party's expense, but without additional
consideration, the other Party shall execute and deliver from time to time
such further instruments of assignment, conveyance and transfer, shall
cooperate in the conduct of litigation and the processing and collection of
insurance claims, and shall take such other actions as may reasonably be
required to convey and deliver more effectively to Buyer the Purchased Assets
or to confirm and perfect the Buyer's title to the Purchased Assets, and
otherwise to accomplish the orderly transfer of ownership of the Purchased
Assets to Buyer as contemplated by this Agreement.
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10.2. Non-Competition. For a period of five (5) years from and after
the Closing Date (the "Restricted Period"), Xxxxx Properties and Xxxxx
individually and collectively covenant and agree and shall sign and deliver to
Buyer at Closing an Acknowledgment and Agreement to that effect that, without
the prior written consent of Buyer, they shall not do any of the following
directly or indirectly:
10.2..1. engage or participate in any business activity
competitive with the Business, as same are conducted during the Restricted
Period;
10.2..2. become interested in (as owner, stockholder,
lender, partner, co-venturer, director, officer, employee, agent, consultant
or otherwise) any person, firm, corporation, association or other entity
engaged in any business that is competitive with the Business as conducted
during the Restricted Period or become interested in (as owner, stockholder,
lender, partner, co-venturer, director, officer, employee, agent, consultant
or otherwise) any portion of the business of any person, firm, corporation,
association or other entity where such portion of such business is competitive
with the Business as conducted during the Restricted Period with respect to
any employment hereunder with respect to any period thereafter.
Notwithstanding the foregoing, neither Xxxxx Properties nor Xxxxx may hold
more than five percent (5%) of the outstanding securities of any class of any
publicly-traded securities of a company that is engaged in activities
referenced in Section 10.2 hereof;
10.2..3. influence or attempt to influence any supplier,
customer or potential customer of Seller to terminate or modify any written or
oral agreement or course of dealing with Seller; or
10.2..4. influence or attempt to influence any person to
either (i) terminate or modify his employment, consulting, agency,
distributorship or other arrangement with Seller, or (ii) employ or retain, or
arrange to have any other person or entity employ or retain, any person who
has been employed or retained by Seller as an employee, consultant, agent or
distributor at anytime during the twelve (12) month period immediately
preceding the termination of the Restricted Period.
It is further understood and agreed that the obligations
under this Section shall remain in effect for the entire five-year period
indicated, notwithstanding any termination of this Agreement during such
period due to a breach hereof by the Seller.
It is also understood and agreed that, in the event of a
continuing material breach of this Section, Buyer shall be entitled to an
injunction restraining such breach. The exercise by Buyer of any or all such
rights shall not be construed as prohibiting Buyer from pursuing any other
right or remedy it may have with respect to such breach, including the
recovery of damages.
If any of the provisions of this Section 10.2 are held to be
in any respect an unreasonable restriction upon Xxxxx Properties or Xxxxx,
then they shall be deemed to extend only over the maximum period of time,
geographic area, or range of activities as to which they
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may be enforceable. In the event that Xxxxx Properties or Xxxxx (as the case
may be) shall be in violation of the restrictive covenants in this Section
10.2, then the Restricted Period shall be extended for a period of time equal
to the period of time during which such breach shall occur; and, in the event
that Buyer should be required to seek relief from such breach in any court,
board of arbitration or other tribunal, then the Restricted Period shall be
extended for the period of time required for the pendency of such proceedings,
including all appeals.
10.3. Insurance. To the extent that claims pending under Seller's
property, occupational hazard or other insurance policies prior to Closing are
not transferrable and to the extent that Seller, or Xxxxx Properties if Seller
is merged into Xxxxx Properties, receives distribution on such pending claims
after Closing, Seller or Xxxxx Properties (as the case may be) shall
immediately turn over any and all such distributions to Buyer together with
any and all related correspondence from the insurer.
ARTICLE 11
BROKERAGE; EXPENSES
-------------------
Neither of the Parties, nor, where applicable, any of their
respective shareholders, officers, directors, or employees, has employed or
will employ any broker, agent, finder, or consultant or has incurred or will
incur any liability for any brokerage fees, commissions, finders' fees, or
other fees, in connection with the negotiation or consummation of the
transactions contemplated by this Agreement.
Except as otherwise expressly provided in this Agreement,
each Party agrees to bear all the respective costs, fees and expenses of any
character incurred by such Party including all attorneys' fees and expenses,
in connection with this Agreement or the transactions contemplated hereby.
ARTICLE 12
TAXES
-----
Seller shall pay any applicable sales, documentary, use,
filing, transfer, and other taxes payable as a result of the transfer of the
Purchased Assets.
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ARTICLE 13
TERMINATION
-----------
13.1. Events of Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated by written notice
of termination at any time before the Closing Date only as follows:
13.1..1. Mutual Consent. By mutual consent of Seller and
the Buyer;
13.1..2. Prior to Closing Date. By Seller or Buyer if the
other shall have (a) misstated any representation or been in breach of any
warranty contained herein or (b) been in breach of any covenant, undertaking
or restriction contained herein and such misstatement of breach has not been
cured by the earlier of (i) thirty (30) days after the giving of notice to
such party of such misstatement or breach of (ii) the Closing Date, and in any
event such other party shall not be in breach of such other party's
obligations hereunder;
13.1..3. By Buyer. Provided that the Buyer is not in
material default hereunder, if all of the conditions precedent set forth in
Section 6.2 hereof have not been met prior to May 15, 1998;
13.1..4. By Seller. Provided that the Seller is not in
material default hereunder, if all of the conditions precedent set forth in
Section 6.1 hereof have not been met prior to May 15, 1998; and
13.1..5. By Either Party. Provided that such party is not in
material default hereunder, by either party if the Closing does not occur on
or before May 15, 1998.
13.2. Consequences of Termination. If this Agreement is validly
terminated pursuant to Section 14.1 and the transactions contemplated hereby
are not consummated as described above, this Agreement shall become void and
of no further force and effect except for the provisions in Section 1.2
respecting the retention or refund of the Deposit; provided, however, that if
Buyer terminates this Agreement because any of the conditions contained in
Section 6.1 have not been satisfied or if Seller terminates this Agreement
because any of the conditions contained in Section 6.2 have not been satisfied
then the terminating party shall have the right to pursue all of its legal
remedies for breach of contract and damages; provided further that if this
Agreement is validly terminated pursuant to Section 13.1 and the transactions
contemplated hereby are not consummated as described above, the provisions of
Section 5.3 relating to the obligation of Buyer to keep confidential and not
to use certain information obtained by it from Seller and to return documents
and copies thereof to Seller and the provisions of Section 13.3 relating to
responsibility for expenses shall survive. No party hereto shall have any
liability to any other party in respect of a valid termination of this
Agreement pursuant to Section 13.1, except to the extent set forth above and
in Section 1.2.
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13.3. Expenses if No Closing. If the Closing does not occur and the
transactions contemplated hereby are not consummated, then, subject to the
right of a non-defaulting party to recover costs and expenses from a
defaulting party pursuant to Section 13.2, all costs and expenses incurred in
connection with this Agreement shall be paid by the person incurring such
expenses, i.e., by Buyer if incurred by Buyer and by Seller if incurred by
Seller.
ARTICLE 14
MISCELLANEOUS
-------------
14.1. Entire Agreement; Amendments. This Agreement, together with the
Collateral Documents, constitutes the entire understanding among the Parties
with respect to the subject matter contained herein and supersedes any prior
understandings and agreements among them respecting such subject matter. This
Agreement may be amended, supplemented, and terminated only by a written
instrument duly executed by all of the Parties.
14.2. Headings. The headings in this Agreement are for convenience of
reference only and shall not affect its interpretation.
14.3. Gender; Number. Words of gender may be read as masculine,
feminine, or neuter, as required by context. Words of number may be read as
singular or plural, as required by context.
14.4. Exhibits and Schedules. Each Exhibit and Schedule referred to
herein is incorporated into this Agreement by such reference.
14.5. Severability. If any provision of this Agreement is held
illegal, invalid, or unenforceable, such illegality, invalidity, or
unenforceability will not affect any other provision hereof. This Agreement
shall, in such circumstances, be deemed modified to the extent necessary to
render enforceable the provisions hereof.
14.6. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given to the person if delivered personally
or upon sending a copy thereof by first class or express mail, postage
prepaid, or by telegram (with messenger service specified), or reputable
courier services, charges prepaid, or by facsimile, to such party's address
(or to such party's facsimile number).
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If to Parent or Buyer, to:
Owosso Corporation
The Triad Building
0000 Xxxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Xx., President
Fax Number: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxxx LLP
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, III, Esq.
Fax Number: (000) 000-0000
If to Seller, Xxxxx Properties or Xxxxx, to:
Xxx Xxxxx, President
Astro Air, Inc.
X.X. Xxx 0000
Xxxxxxxxxxxx, XX 00000
Fax Number: (000) 000-0000
With a copy to:
Norman, Thrall, Angle & Guy
X.X. Xxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xx. Xxxxxx Angle, Esq.
Fax Number: (000) 000-0000
Notice of any change in any such address shall also be given in the manner set
forth above. Whenever the giving of notice is required, the giving of such
notice may be waived by the Party entitled to receive such notice.
14.7. Waiver. The failure of any Party to insist upon strict
performance of any of the terms or conditions of this Agreement will not
constitute a waiver of any of its rights hereunder.
14.8. Assignment. No Party may assign any of its rights or delegate
any of its obligations hereunder without the prior written consent of the
other Parties hereto.
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14.9. Successors and Assigns. This Agreement binds, inures to the
benefit of, and is enforceable by the successors and assigns of the Parties,
and does not confer any rights on any other persons or entities.
14.10. Governing Law. This Agreement shall be construed and enforced
in accordance with the law of the Commonwealth of Pennsylvania.
14.11. No Benefit to Others. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit
of the parties hereto and their successors and assigns, and they shall not be
construed as conferring and are not intended to confer any rights on any other
persons.
14.12. Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. The execution of this Agreement by any party hereto will not
become effective until counterparts hereof have been executed by all the
parties hereto. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other
counterparts.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
OWOSSO CORPORATION
/s/ Xxxxxx X. Xxxxxx, Xx.
By:____________________________
Title: President
ASTRO AIR ACQUISITION CORP.
/s/ Xxxxxx X. Xxxxxx, Xx.
By:____________________________
Title: President
ASTRO AIR, INC.
/s/ Xxx Xxxxx
By:____________________________
Title: President
[EXECUTIONS CONTINUED ON NEXT PAGE]
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XXXXX PROPERTIES, INC.
/s/ Xxx Xxxxx
By:____________________________
Title: President
/s/ Xxx Xxxxx
-------------------------------
Xxx Xxxxx
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