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EXHIBIT 2.1
Execution Copy
ASSET PURCHASE AGREEMENT
DATED AS OF FEBRUARY 19, 1997
BETWEEN
XXXXX BROS. CORPORATION
AND
UNIONTOOLS, INC.
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TABLE OF CONTENTS
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PARTIES ................................................................................................1
RECITALS ...............................................................................................1
ARTICLE I - DEFINITIONS......................................................................................1
SECTION 1.01. Defined Terms.........................................................................1
ARTICLE II - PURCHASE AND SALE...............................................................................6
SECTION 2.01. Assets................................................................................6
SECTION 2.02. Assumed Liabilities...................................................................8
SECTION 2.03. Purchase Price........................................................................9
SECTION 2.04. Closing..............................................................................10
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER......................................................11
SECTION 3.01. Organization, Good Standing and
Authority of Seller.....................................................11
SECTION 3.02. No Conflict..........................................................................12
SECTION 3.03. No Consents or Approvals.............................................................12
SECTION 3.04. Financial Information................................................................12
SECTION 3.05. Right, Title and Interest in
Transferred Assets......................................................14
SECTION 3.06. Real Property........................................................................14
SECTION 3.07. Inventories..........................................................................15
SECTION 3.08. Other Tangible Personal Property.....................................................15
SECTION 3.09. Trade Names, Trademarks and
Copyrights..............................................................16
SECTION 3.10. Trade Secrets........................................................................17
SECTION 3.11. Computer Software; Other Intangible
Personal Property.......................................................17
(i)
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SECTION 3.12. Material Contracts...................................................................18
SECTION 3.13. Litigation...........................................................................19
SECTION 3.14. Compliance with Laws.................................................................19
SECTION 3.15. Labor Relations......................................................................20
SECTION 3.16. Employment and Compensation
Arrangements............................................................21
SECTION 3.17. Employee Benefit Plans and Benefit
Arrangements............................................................22
SECTION 3.18. Taxes................................................................................22
SECTION 3.19. Insurance............................................................................23
SECTION 3.20. Licenses, Franchises, Permits and
Authorizations..........................................................23
SECTION 3.21. Agreement Not In Breach of Other
Instruments.............................................................23
SECTION 3.22. Brokers..............................................................................24
SECTION 3.23. Full Disclosure......................................................................24
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER........................................................24
SECTION 4.01. Organization, Good Standing and
Authority of Buyer......................................................24
SECTION 4.02. No Conflict..........................................................................24
SECTION 4.03. No Consents or Approvals.............................................................25
SECTION 4.04. Absence of Litigation................................................................25
SECTION 4.05. Agreement Not In Breach of Other
Instruments.............................................................25
SECTION 4.06. Brokers..............................................................................25
ARTICLE V - ADDITIONAL AGREEMENTS...........................................................................25
SECTION 5.01. No Solicitation, Etc.................................................................25
SECTION 5.02. Conduct of Business Prior to the
Closing.................................................................26
(ii)
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SECTION 5.03. Approvals; Consents..................................................................26
SECTION 5.04. Access to Premises and Information...................................................27
SECTION 5.05. Employees............................................................................27
SECTION 5.06. Due Diligence; Right to Terminate....................................................27
SECTION 5.07. Proration and Sharing of Taxes.......................................................28
SECTION 5.08. Further Action.......................................................................29
SECTION 5.09. Assets After the Closing.............................................................29
SECTION 5.10. Consents to Transfer of the Material
Contracts...............................................................29
SECTION 5.11. Covenant Not to Compete..............................................................29
SECTION 5.12. Power of Attorney....................................................................30
SECTION 5.13. Uniform Commercial Code and Other
Lien Searches...........................................................31
SECTION 5.14. Worker Adjustment and Retraining
Notification Act........................................................31
SECTION 5.15. Licenses, Franchises, Permits and
Authorizations..........................................................31
SECTION 5.16. Molds................................................................................31
SECTION 5.17. Railroad Spur Access and Maintenance
Agreement...............................................................31
SECTION 5.18. Turn About Access and Maintenance
Agreement...............................................................32
ARTICLE VI - CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS...................................................32
SECTION 6.01. Representations and Warranties.......................................................32
SECTION 6.02. Performance of Covenants.............................................................33
SECTION 6.03. Authority............................................................................33
SECTION 6.04. Approval of Governmental Authorities.................................................33
SECTION 6.05. Purchase Price.......................................................................33
(iii)
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SECTION 6.06. Ancillary Agreements.................................................................33
SECTION 6.07. Buyer's Certificate..................................................................33
SECTION 6.08. Approval of Documentation............................................................33
SECTION 6.09. Consents.............................................................................33
SECTION 6.10. Access Agreements....................................................................34
ARTICLE VII - CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS...................................................34
SECTION 7.01. Representations and Warranties.......................................................34
SECTION 7.02. Performance of Covenants.............................................................34
SECTION 7.03. Authority............................................................................34
SECTION 7.04. Seller's Certificate.................................................................34
SECTION 7.05. Bulk Sales Laws......................................................................34
SECTION 7.06. Sales and Use Tax on Prior Sales.....................................................35
SECTION 7.07. Consents.............................................................................35
SECTION 7.08. Approval of Documentation............................................................35
SECTION 7.09. Approval of Governmental Authorities.................................................35
SECTION 7.10. No Material Adverse Change...........................................................35
SECTION 7.11. Interim Financial Statements.........................................................35
SECTION 7.12. Ancillary Agreements.................................................................35
SECTION 7.13. Key Employees........................................................................36
SECTION 7.14. Title Insurance......................................................................36
SECTION 7.15. Access Agreements....................................................................36
ARTICLE VIII - INDEMNIFICATION..............................................................................36
SECTION 8.01. Seller's Indemnity...................................................................36
SECTION 8.02. Buyer's Indemnity....................................................................36
SECTION 8.03. Claims for Indemnification...........................................................37
(iv)
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ARTICLE IX - GENERAL PROVISIONS.............................................................................38
SECTION 9.01. Termination..........................................................................38
SECTION 9.02. Specific Performance.................................................................38
SECTION 9.03. Survival of Representations and
Warranties..............................................................38
SECTION 9.04. Expenses.............................................................................39
SECTION 9.05. Notices..............................................................................39
SECTION 9.06. Amendment............................................................................39
SECTION 9.07. Waiver...............................................................................40
SECTION 9.08. Headings.............................................................................40
SECTION 9.09. Severability.........................................................................40
SECTION 9.10. Entire Agreement.....................................................................40
SECTION 9.11. Binding Agreement; Assignment........................................................40
SECTION 9.12. Governing Law........................................................................40
SECTION 9.13. [Intentionally Omitted]..............................................................41
SECTION 9.14. Counterparts.........................................................................41
SECTION 9.15. No Third Party Beneficiaries.........................................................41
SECTION 9.16. Publicity............................................................................41
SIGNATURE PAGE..............................................................................................42
LIST OF EXHIBITS............................................................................................43
LIST OF SCHEDULES...........................................................................................44
(v)
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This ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of February 19, 1997 between XXXXX BROS. CORPORATION, a Delaware
corporation ("Seller"), and UNIONTOOLS, INC., a Delaware corporation ("Buyer").
RECITALS
WHEREAS, Seller is engaged in the business (the "Business") of
manufacturing plastic forms by injection molding at Seller's injection molding
division (the "Facility") located in Hebron, Ohio.
WHEREAS, Seller desires to sell to Buyer the Business,
including substantially all of the assets of the Seller which comprise and are
necessary for the conduct of the Business (except those hereinafter specifically
excluded from such sale), and Buyer desires to acquire such Business and assets
from Seller and assume certain liabilities on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants, representations and warranties herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, unless
otherwise provided, the following terms shall have the meanings ascribed to them
below (such definitions to be equally applicable to both the singular and plural
forms of the terms defined):
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, governmental or other
regulatory or administrative agency or commission or arbitration tribunal.
"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations of the Securities Exchange Act of
1934.
"Ancillary Agreements" means the other agreements, documents
and instruments to be executed and delivered by Buyer and/or Seller pursuant
hereto, including, without limitation, the Assumption Agreement and the Xxxx of
Sale and Assignment.
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"Annual Financial Statements" mean (a) the profit and loss
statement of the Business and (b) the statement of fixed assets (including
depreciation) and inventory of the Business, each prepared in accordance with
Seller's internal standards, consistently applied, for a division of the same
type as the Business, for each of the Seller's fiscal years ended October 31,
1996, 1995 and 1994.
"Assumed Liabilities" means, and shall consist only of, the
Liabilities which are specifically identified in Section 2.02(a).
"Assumption Agreement" means an assumption agreement in
substantially the form of Exhibit A hereto.
"Xxxx of Sale and Assignment" means a xxxx of sale and
assignment in substantially the form of Exhibit B hereto.
"Blow Molding Division" means Seller's Blow Molding Division
at 0000 X'Xxxx Xxxxx, Xxxxxx, Xxxx 00000, known as Building 17 in the industrial
park where the Owned Realty is situated.
"Business" has the meaning set forth in the first recital.
"Business Combination Proposal" means any proposal or offer to
acquire the Business or any or all of the Transferred Assets other than as
contemplated by this Agreement.
"Business Day" means a day of the year on which banks are not
authorized to be closed in Columbus, Ohio.
"Buyer" has the meaning set forth in the preamble.
"Buyer's Auditors" means Ernst & Young LLP, independent
certified public accountants.
"Closing" and "Closing Date" have the meanings specified in
Section 2.04.
"Code" means the Internal Revenue Code of 1986, as amended.
"Employees" shall mean (i) all employees of Seller who, on the
Closing Date, are full-time employees whose employment relates solely to the
Business and who are at work on the Closing Date or any day within the five days
prior thereto, all of whom are set forth or referred to in part (a) of Schedule
3.16, as well as (ii) the employees of Seller who are set forth in part (b) of
Schedule 3.16.
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"Environmental Damages" means all claims, judgments, damages,
losses, penalties, fines, liabilities (including strict liability),
encumbrances, liens, costs and expenses of investigation and defense of claims,
whether or not any such claim is ultimately defeated, and of any good faith
settlement of judgment for such claims, of whatever kind or nature, contingent
or otherwise, matured or unmatured, foreseeable or unforeseeable, including
without limitation reasonable attorneys' fees and disbursements and consultants'
fees, any of which are incurred at any time as a result of the existence during
the period from the first date Seller owned the Owned Realty through the Closing
Date of Hazardous Materials upon, about or beneath the Owned Realty or migrating
or threatening to migrate from the Owned Realty, or the existence of a violation
of Environmental Requirements pertaining to the Owned Realty, or the
transportation of Hazardous Materials to, from or across the Owned Realty.
"Environmental Requirements" means all applicable present
statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises and similar items, of
all governmental agencies, departments or instrumentalities of the United
States, the states and political subdivisions thereof and all applicable
judicial and administrative and regulatory decrees, judgments and orders
relating to the protection of human health or the environment and including, but
not limited to, those pertaining to reporting, licensing, permitting,
investigation and remediation of emissions, discharges, releases or threatened
releases of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Excluded Assets" means all the assets of the Facility except
for the Transferred Assets, including without limitation the assets set forth in
Section 2.01(b).
"Facility" has the meaning set forth in the first recital.
"Financial Statements" means, collectively, the Annual
Financial Statements and the Interim Financial Statements.
"GAAP" means generally accepted accounting principles, applied
in a manner consistent with Seller's past practices as reflected in its
financial statements for its fiscal year ended October 31, 1996.
"Goodwill" means the intangible value of the Business on the
basis of its good customer relations, high employee morale and similar factors.
"Governmental Authority" means any court, agency, department,
ministry, commission, board or other administrative or
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governmental body of the United States, or any state, political subdivision or
jurisdiction thereof.
"Hazardous Materials" means any chemical substance, material
or waste which is defined as a "hazardous waste" or "hazardous substance" or
"pollutant or contaminant" under any federal, state or local statute, regulation
or ordinance or amendments thereto, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.) and the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.) and including, without limitation, petroleum and petroleum
products or byproducts, and any substance which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous and is regulated by any Governmental Authority.
"Impairments" has the meaning set forth in Section 3.06(a).
"Indemnified Damages" means any costs, losses, liabilities,
claims and expenses (reduced by any offsetting or related asset or service
received and any recovery from any third party, such as an insurer) including
reasonable legal fees and costs of investigation.
"Interim Financial Statements" mean (a) the profit and loss
statement of the Business and (b) the statement of fixed assets (including
depreciation) and inventory of the Business, each prepared in accordance with
Seller's internal standards, consistently applied, for a division of the same
type as the Business, for the two months ended December 31, 1996.
"Inventory" has the meaning set forth in Section 2.01(a)(ii).
"Inventory Value" shall mean the lower of cost (as determined
in a manner consistent with the past practices of Seller) or fair market value
of the Inventory, net of applicable reserves, calculated in accordance with
GAAP.
"Liabilities" means any and all debts, liabilities, losses,
claims, damages, costs, expenses and obligations, whether fixed or contingent,
or matured or unmatured, including, without limitation, those arising under any
law, rule, regulation, action, order or consent decree of any governmental
entity or any award of any arbitrator of any kind, and those arising under any
contract, commitment or undertaking.
"Material Contracts" has the meaning set forth in Section
3.12.
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"Main Spur" means the spur which attaches the public railroad
to Spur #1 and Spur #2 and the switching gear appurtenant thereto.
"Owned Realty" means the real property more particularly
described on Exhibit C attached hereto and made a part hereof, including,
without limitation, all easements related to the Turn About and for railroad
spurs to which the Business has access.
"Person" includes any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, limited liability
company, association, corporation, institution, party, entity or governmental
authority.
"Purchase Price" has the meaning set forth in Section 2.03.
"Railroad Spur Agreement" has the meaning set forth in Section
5.17.
"Relative Use", with respect to either party hereto and with
respect to either the Main Spur or Spur #2, a fraction, the numerator of which
is the number of rail cars that ran on such spur to such party's facility during
the immediately preceding six months and the denominator of which is the
aggregate number of rail cars that ran on such spur to that party's facility and
the other party's facility during the immediately preceding six months.
"Retained Liabilities" means all Liabilities of Seller other
than the Assumed Liabilities.
"Seller" has the meaning set forth in the preamble.
"Seller's Auditors" means Price Waterhouse LLP, independent
certified public accountants.
"Sewer Permit" means the Village of Hebron Sewer Permit
referred to in Schedule 3.20.
"Spur #1" means the railroad spur labeled "Spur #1" on Exhibit
D hereto.
"Spur #2" means the railroad spur labeled "Spur #2" on Exhibit
D hereto.
"Storm Water Permit" means Ohio EPA Storm Water General Permit
- Permit Number OHR001150, referred to in Schedule 3.20.
"Tax" means any income, gross receipts, transfer, gains,
sales, use, employment, franchise, profits, property or other taxes, fees, stamp
taxes and duties, assessments or charges of any kind whatsoever (whether payable
directly or by withholding), together with any interest and any penalties,
additions to tax or
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additional amounts imposed by any taxing authority with respect thereto.
"Trade Secrets" has the meaning set forth in Section 3.10(a).
"Transferred Assets" has the meaning set forth in Section
2.01(a).
"Turn About" means the concrete area, a portion of which is
located on the Owned Realty and the remaining portion of which is located on
adjacent real estate that will continue to be owned by Seller, which is used to
access the loading docks on the Owned Realty and on the real estate that will
continue to be owned by Seller.
"Turn About Agreement" has the meaning set forth in Section
5.18.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Assets.
(a) Transferred Assets. Subject to the terms set forth in this
Agreement, on the Closing Date, Seller agrees to convey, sell, transfer, assign
and deliver to Buyer, and Buyer agrees to purchase from Seller, all of the
properties, assets, business, rights, claims and contracts of every kind used
solely in the conduct of the Business or otherwise owned or used by Seller
solely in connection with the Business, other than the Excluded Assets (such
assets and properties of Seller are collectively referred to hereinafter as the
"Transferred Assets"), including, without limitation, the following assets:
(i) The Owned Realty and the improvements
thereon;
(ii) All inventories of raw materials used at the
Facility, finished goods produced at the Facility and work-in-process
at the Facility owned by Seller as of the Closing Date (collectively,
the "Inventory");
(iii) All tangible assets and properties of
Seller employed in the Business, including machinery and equipment,
tooling, tools, furniture, cooperage, office equipment, furnishings and
fixtures, including, without limitation, those which are listed in
Schedule 3.08;
(iv) All rights and claims existing on the
Closing Date under express or implied warranties from suppliers to
Seller or Seller's customers, relating to the Business;
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(v) All of Seller's right, title and interest in
and to each lease (capital and operating), license, contract, vendor
agreement, distribution right, right to advertising space and listings
in directories, purchase or sales order or commitment, whether written
or oral, relating solely to the Business, except for any right, title
or interest listed in Schedule 2.01(a);
(vi) All of Seller's right, title and interest in
and to all trade names, trademarks and trademark applications, service
marks and service xxxx applications, patents and patent applications,
copyrights and copyright applications (in each such case, whether
registered or to be registered in the United States of America or
elsewhere) applied for, issued to or owned by Seller and relating
solely to the Business, all intangible assets of Seller relating solely
to the Business, and all processes, inventions, trade secrets,
engineering or technical drawings, data and designs, formulas and past
and present customer lists owned by Seller in connection with the
Business or which Seller has the right to use relating to the Business
and all Goodwill and other intangibles relating to the Business,
including, without limitation, those which are listed in Schedules 3.09
and 3.10, provided that the names "Greif" and "Xxxxx Bros. Corporation"
are not being transferred;
(vii) The computer equipment and computer
software, including source codes, whether completed or under
development, and software licenses owned or held by Seller or which
Seller has the right to use which are necessary to Buyer's operation of
the Business and which are more particularly described and are limited
to those which are described in Schedule 3.11, it being agreed that not
all computer equipment is being sold;
(viii) Licenses, franchises, permits and
governmental authorizations relating to the Transferred Assets or the
operation of the Business, including, without limitation, those listed
in Schedule 3.20, but excluding those which are not assignable or
otherwise transferable and are so designated in Schedule 3.20; and
(ix) Originals or, to the extent originals are
not appropriate, copies of all of the following that relate solely to
the Transferred Assets and the Business: business tax records
(excluding corporate minute books and stock records), correspondence,
files, databases, employment, payroll, personnel and workers'
compensation records, environmental control records, sales, marketing
and advertising data and materials, and all other books, records,
documents and information relating to the Transferred Assets and the
Business, provided that upon request Seller may have copies of
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any of the foregoing and otherwise have access to the foregoing at
reasonable times during business hours.
(b) Excluded Assets. Notwithstanding anything to the contrary
in Section 2.01 hereof, Seller is not selling, and Buyer is not purchasing, any
of the following assets owned by Seller, all of which shall be retained by
Seller (such assets of Seller are hereinafter referred to collectively as the
"Excluded Assets"):
(i) All cash, notes and accounts receivable owned
by Seller;
(ii) The assets listed in the Excluded Assets
Schedule attached as Schedule 2.01(b) hereto;
(iii) Seller's minute books, seal, stock record
books, stock certificates and other similar corporate documents that
are not necessary for Buyer to operate the Business, provided that upon
request Buyer may have copies thereof;
(iv) The rights which accrue or will accrue to
Seller under or pursuant to this Agreement; and
(v) All other assets owned by Seller, including
those assets that are part of the Facility or the Business, that are
not specifically listed in Section 2.01(a).
SECTION 2.02. Assumed Liabilities.
(a) Assumed Liabilities. Buyer hereby assumes and shall
hereafter pay or perform, to the extent not paid or performed at the Closing
Date, and defend and hold Seller harmless from, all liabilities with respect to
Buyer's operation of the Business and ownership and use of the Transferred
Assets after the Closing (the "Assumed Liabilities").
(b) Buyer Not Responsible for Liabilities Except Assumed
Liabilities. Except for the assumption of the Assumed Liabilities as set forth
above, Buyer does not assume and shall not be obligated to pay, perform or
otherwise be responsible for any Retained Liabilities. Without limiting the
generality of the foregoing, it is hereby expressly acknowledged and agreed that
Buyer shall be deemed not to assume or be obligated to pay any of the following
Retained Liabilities:
(i) any liabilities of Seller to any director,
officer, shareholder or employee of Seller (including, without
limitation, any liabilities for severance or termination pay to former
employees) other than liabilities included on Schedule 2.02(a);
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(ii) any liabilities or expenses for Taxes of
Seller on income related to the sale of the Transferred Assets;
(iii) to the extent not expressly assumed
pursuant to Section 2.02(a), any liabilities or claims of any kind or
nature, fixed or contingent, asserted or unasserted, arising out of or
related to the operation of the Business or the Transferred Assets
prior to the Closing Date, including any claim for the breach of any
express or implied product warranty or any similar claim that relates
to any product manufactured or sold by Seller on or before the Closing
Date;
(iv) to the extent not expressly assumed pursuant
to Section 2.02(a), any liabilities of Seller arising out of or in
connection with any employee compensation or benefit plan or
arrangement of any kind;
(v) any claims or causes of action, brought by
any governmental agency or any Person whatsoever, arising from any
condition in existence on or before the Closing Date on any of the
premises where the Business has been conducted;
(vi) any liability of Seller to any Person the
existence of which constitutes a breach of any covenant, agreement,
representation, or warranty of Seller contained in this Agreement;
(vii) to the extent not expressly assumed
pursuant to Section 2.02(a), any liability or obligation (contingent or
otherwise) of Seller arising out of any threatened or pending
litigation; and
(viii) any indebtedness of Seller.
SECTION 2.03. Purchase Price.
(a) Consideration to be Paid at Closing. As consideration for
the purchase of the Transferred Assets and the covenant not to compete of
Seller, Buyer, in addition to assuming the Assumed Liabilities, shall pay to
Seller an aggregate purchase price of SIX MILLION SEVEN HUNDRED THOUSAND DOLLARS
($6,700,000) (the "Purchase Price"), subject to adjustment as provided in
subsection 2.03(b) hereof. SIX MILLION DOLLARS ($6,000,000) (the "Initial
Payment") shall be paid by Buyer to Seller at Closing by a bank wire transfer in
immediately available funds to an account designated by Seller at least two
Business Days before the Closing Date. EIGHT HUNDRED THOUSAND DOLLARS ($800,000)
of the Initial Payment shall be allocable to Inventory, subject to adjustment as
set forth in Section 2.03(b) hereof. In addition to the Purchase Price, Buyer
shall pay to Seller the portion of the Taxes allocated to Buyer in accordance
with the provisions of Section 5.07 hereof.
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(b) Inventory Adjustment. On the Closing Date, Seller shall
conduct a full, tagged physical inventory, and a representative of Buyer may
attend and observe such inventory. Within ten (10) days after such physical
inventory, Seller shall prepare a calculation of Inventory Value based on such
physical inventory and deliver a copy thereof to Buyer and Buyers' Auditors for
review. Buyer shall have ten (10) days after receipt of such calculation to
review it and have it reviewed by Buyer's Auditors. If Buyer disagrees with such
calculation, Buyer and Seller shall resolve such disagreements within ten (10)
days thereafter. If the Inventory Value, as agreed on by Buyer and Seller, is
greater than $800,000, Buyer shall promptly pay Seller by bank wire transfer an
amount for the Inventory equal to the difference between the Inventory Value and
$800,000, provided that Buyer shall not be required to pay Seller more than
$700,000. If the Inventory Value, as agreed on by Buyer and Seller, is less than
$800,000, Seller shall promptly pay Buyer by bank wire transfer an amount equal
to the difference between $800,000 and the Inventory Value.
(c) Allocation of Purchase Price. The parties agree that the
Purchase Price shall be allocated among the Transferred Assets and the covenant
not to compete contained in Section 5.11 in accordance with Schedule 2.03(c).
Subject to the requirements of applicable law, such allocation (and any
amendments thereto by reason of adjustments to the purchase price hereunder)
shall be binding on the parties for purposes of filing any return, report or
schedule regarding Taxes arising from or in connection with Buyer's acquisition
of the Transferred Assets from Seller, and any such return, report or schedule
shall be consistent with such allocation. Buyer shall promptly furnish Schedule
2.03(c) after such time as an amount has been settled with respect to Inventory
Value.
SECTION 2.04. Closing.
(a) Time and Place. Subject to the terms and conditions of
this Agreement, the sale and purchase contemplated hereby shall take place at a
closing (the "Closing") at 10:00 a.m., local time, as soon as practicable after
all conditions for the Closing are satisfied or waived, at the offices of Vorys,
Xxxxx, Xxxxxxx & Xxxxx located at 00 Xxxx Xxx Xxxxxx, Xxxxxxxx, Xxxx, or at such
other time or on such other date or at such other place as Seller and Buyer may
mutually agree upon in writing (the day on which the Closing takes place being
the "Closing Date").
(b) Deliveries at the Closing by Seller. At the Closing,
Seller shall deliver to Buyer the Xxxx of Sale and Assignment and such
assignments, consents, and other instruments of transfer and powers of attorney
as are reasonably required to transfer to Buyer good and marketable title to the
Transferred Assets, free and clear of any claims, liens, trusts, encumbrances or
other rights or interests of any person other than the Impairments or as
otherwise expressly permitted by the terms of
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this Agreement. In particular, but without limiting the foregoing, Seller shall
deliver to Buyer at the Closing:
(i) The Xxxx of Sale and Assignment, duly executed by
Seller;
(ii) Certified resolutions of Seller's Board of
Directors approving the sale of the Business to Buyer;
(iii) A certification of non-foreign status executed
by Seller and satisfying the requirements of Section 1.1445-2(b)(2)(i)
of the United States Treasury Regulations promulgated under the Code;
(iv) A warranty deed with respect to the real estate
transferred, duly executed by Seller; and
(v) Such other documents as are required to
effectuate the transactions contemplated by this Agreement.
(c) Deliveries at the Closing by Buyer. At the Closing, Buyer
shall deliver to Seller:
(i) The Assumption Agreement, duly executed by Buyer;
(ii) Certified resolutions of Buyer's Board of
Directors approving the purchase of the Business from Seller;
(iii) Payment of the Initial Payment as provided in
Section 2.03;
(iv) The "sale for resale" certificate or a direct
pay permit number necessary to exempt the inventory that is part of the
Transferred Assets from Ohio sales tax; and
(v) Such other documents as are required to
effectuate the transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement, Seller
represents and warrants to Buyer as follows:
SECTION 3.01. Organization, Good Standing and Authority of
Seller. Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power to own its properties and carry on the Business as now owned and operated
by
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Seller. Seller is duly qualified to transact business as a foreign corporation
and is in good standing in each jurisdiction required for the conduct of the
Business, except where the failure so to qualify would not have a material
effect on the Business. Seller has all requisite corporate power and authority
to enter into this Agreement and each of the Ancillary Agreements to which it is
a party, to carry out its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Ancillary Agreements to which Seller is a
party have been duly authorized by all necessary corporate action on the part of
Seller, have been or will be duly executed and delivered by Seller, and this
Agreement and such Ancillary Agreements constitute or, upon execution and
delivery, will constitute, legal, valid and binding obligations of Seller,
enforceable against Seller in accordance with their terms.
SECTION 3.02. No Conflict. The execution, delivery and
performance by Seller of this Agreement and each of the Ancillary Agreements to
which Seller is a party do not and, subject to the receipt of consents to
assignments of contracts listed on Schedule 3.02, will not (a) violate or
conflict with any provision of the Articles of Incorporation or By-Laws of
Seller, (b) conflict with or violate any law (other than bulk sales or similar
laws), rule, regulation, order, writ, judgment, injunction, decree,
determination or award applicable to Seller, the Transferred Assets or the
Business, (c) except as would not materially affect Seller's ability to
consummate the transactions contemplated by this Agreement, violate any
provision of or result in any breach of, or constitute a default (or event
which, with the giving of notice or lapse of time, or both, would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument relating to the
Transferred Assets to which Seller is a party or by which Seller or any of such
Transferred Assets are bound or affected or (d) result in the creation of any
lien, security interest or encumbrance on the Transferred Assets.
SECTION 3.03. No Consents or Approvals. The execution,
delivery and performance by Seller of this Agreement and each of the Ancillary
Agreements to which Seller is a party do not, and will not, require any consent,
approval, authorization or other action by, or registration or filing with or
notification to, any governmental or regulatory authority or any third party,
except as disclosed on Schedule 3.03.
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SECTION 3.04. Financial Information.
(a) Financial Statements. Seller has previously furnished to
Buyer the Annual Financial Statements. The Annual Financial Statements (i) are
correct and complete in all material respects and were prepared in accordance
with the books and records of Seller; (ii) were prepared in accordance with
Seller's internal standards, consistently applied, for divisions of the same
type as the Business; (iii) fairly present the value of the Transferred Assets
and the results of the operations of the Business as at each relevant date
thereof and for the periods covered thereby; and (iv) with respect to contracts
and commitments relating to the Business, contain and reflect adequate reserves
for all reasonably anticipated material losses and costs and expenses in excess
of expected receipts.
(b) Absence of Certain Changes. Except as set forth in
Schedule 3.04(b), since October 31, 1996 there has not been (i) any transaction
by Seller relating to the Business not in the ordinary course of business as
conducted on such date; (ii) any material adverse change in the results of
operations, condition (financial or otherwise), assets or liabilities (whether
absolute, accrued or contingent or otherwise) of the Business, or occurrence of
any event or condition which to Seller's knowledge reasonably could result in
any such material adverse change; (iii) any damage, destruction or loss, whether
or not covered by insurance, that, individually or in the aggregate, has had a
material adverse effect on the results of operations, condition (financial or
otherwise), assets or properties of the Business; (iv) any sale or transfer of
any of Seller's assets relating to the Business, except sales in the ordinary
course of business of inventory or immaterial amounts of other tangible personal
property not required by the Business; (v) any mortgage, pledge or subjection to
lien, charge or encumbrance of any kind, of any of the assets of Seller relating
to the Business, except for liens for Taxes not due; (vi) any material amendment
or termination of any contract, agreement or license which is identified on
Schedule 3.12 hereto; (vii) any change in accounting methods or practices by
Seller or Seller's Auditors or any material alteration in the manner of keeping
the books, accounts or records of Seller except for changes, if any, required by
GAAP; (viii) any waiver or release of any material right or claim of Seller
relating to the Business; (ix) any commencement, notice or threat of
commencement of any material civil litigation or governmental proceeding against
or investigation of Seller relating to the Business; (x) any other event or
condition of any character which has had a material adverse effect on the
results of operations, condition (financial or otherwise), assets or properties
of the Business, or the occurrence of any event or condition which reasonably
could result in any such material adverse change; (xi) any material revaluation
by Seller of any of its assets relating to the Business; (xii) any increase in
the salary or other compensation or benefits payable or to become payable by
Seller to any of its Employees, or the declaration,
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payment or commitment or obligation of any kind for the payment by Seller of a
bonus or other additional salary or compensation or benefits to any such person
other than the year end adjustment to salaries of 3.15% for all salaried
employees effective January 1, 1997; or (xiii) any agreement by Seller to do any
of the foregoing or to cause any of the foregoing to occur.
SECTION 3.05. Right, Title and Interest in Transferred Assets.
Except as set forth in Schedule 3.05, Seller is the lawful owner of the
Transferred Assets, has good and marketable title thereto, and has the complete
and unrestricted power and the unqualified right to sell, transfer, assign and
deliver the Transferred Assets to Buyer. The Transferred Assets (excluding the
Owned Realty) will be transferred to Buyer on the Closing Date free and clear of
all liens, security interests, claims (including claims for Taxes), rights to
use or possess, other contractual restrictions and other charges and
encumbrances and, upon such transfer, Buyer will be vested with good and
marketable title to the Transferred Assets.
SECTION 3.06. Real Property.
(a) Seller has good and marketable title in fee simple to the
Owned Realty and to all plants, buildings and improvements thereon, free and
clear of any mortgage, lien, claim, charge, exception, imperfection of title,
encroachment, easement, right-of-way, squatters' right or encumbrance
(collectively, "Impairments"), except for those Impairments (i) which are
described in part 1 of Schedule 3.06, (ii) which, individually or in the
aggregate, are not material in character, amount or extent and do not have a
material adverse effect on the title, or the present use of, the property
subject thereto or affected thereby or do not otherwise materially impair the
Business; or (iii) which are liens for property taxes not yet due and payable.
With respect to Seller's ownership and use of the Owned Realty, the Impairments
described in (i) above which will remain on the Owned Realty at the time of sale
hereunder, individually and in the aggregate, are not material in character,
amount or extent and have not had a material adverse effect on the present use
of the property subject thereto or affected thereby and have not otherwise
materially impaired the Business. Subject to such Impairments, on the Closing
Date, Buyer will be vested with good and marketable title to the Owned Realty.
The legal descriptions of the Owned Realty set forth on part 1 of Schedule 3.06
are complete and correct descriptions of such real property, its location and
limits and Seller's rights therein and are in each case sufficient to locate the
records pertaining to such Owned Realty in the offices in the jurisdictions
where such Owned Realty is located where public records concerning Owned Realty
are kept. True and complete copies of the deeds, title insurance policies,
surveys, mortgages, agreements and other documents granting or relating to
Seller's ownership of such Owned Realty have previously been delivered to Buyer.
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(b) No part of the Business is located on real property under
which Seller is a lessee or sublessee.
(c) To the best of Seller's knowledge, the buildings and
improvements owned by Seller as part of the Business, and the operation and
maintenance thereof as now operated and maintained, do not (i) contravene any
zoning or building law or ordinance or other administrative regulation or (ii)
violate any restrictive covenant or any provision of federal, state or local
law, the effect of which materially interferes with or prevents the continued
use of such properties for the purposes for which they are now being used, or
would materially affect the value thereof. All of the plants, buildings,
structures and equipment owned by Seller and used in the Business are in good
operating condition and in a state of reasonable maintenance and repair to the
extent necessary for the efficient operation of the Business.
(d) There exists no pending or, to the best knowledge of
Seller, threatened condemnation, eminent domain or similar proceeding with
respect to, or which could affect, any Owned Realty or buildings or improvements
thereon.
SECTION 3.07. Inventories. Except as set forth on Schedule
3.07 hereto, Seller has good and merchantable title to its inventories of raw
materials, finished goods, parts and supplies used in the Business, as of the
date hereof, free and clear of all security interests, liens, claims and
encumbrances or any adverse rights whatsoever; all inventories of finished goods
used in the Business consist of items that have been manufactured in accordance
with, and which meet, applicable industry standards; all inventories used in the
Business are correctly marked with respect to class and character in accordance
with applicable specifications and if tested will meet the indicated class and
character; and each class or type of inventory of finished goods used in the
Business is usable and salable without discount from the prices generally
charged for like material of the same quality in the ordinary course of
business, subject to obsolescence and write-downs consistent with Seller's
experience in its fiscal year ended October 31, 1996.
SECTION 3.08. Other Tangible Personal Property. Schedule 3.08
hereto sets forth (i) a description and the location of each item of tangible
personal property (other than inventory described in Section 3.07 hereof and
Excluded Assets) owned by Seller or in the possession of Seller and used in the
Business that is being sold to Buyer; and (ii) an identification and description
of each material lease of personal property used in the Business under which
Seller is a lessee or a lessor, copies of which have been made available to
Buyer. With respect to the foregoing personal property:
(a) Each of the leases described in Schedule 3.08 is in full
force and effect and is a valid and binding obligation of
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Seller, and Seller has no knowledge that any such lease is not a valid and
binding obligation of each of the other parties thereto;
(b) Seller is not, nor does Seller have knowledge that any
other party is, in default with respect to any material term or condition of any
such lease or any other agreement related to such properties, nor has any event
occurred which, through the lapse of time or the giving of notice, or both,
would constitute a default thereunder or would cause the acceleration of any
obligation of any party thereto or the creation of a lien or encumbrance upon
any asset of Seller;
(c) Each item of tangible personal property used in the
current conduct of the Business is in good operating and usable condition and
repair, subject to normal and reasonable wear and tear; however, Seller makes no
other warranties, express or implied, including any warranty of merchantability
or fitness for a particular purpose; and
(d) Seller has good and merchantable title to and is in
possession of all items of tangible personal property owned or leased by Seller
and used in the Business, free and clear of all liens, pledges, charges,
security interests, restrictions, prior assignments and encumbrances of any
kind, except for property taxes not yet due and payable and except as set forth
on Schedule 3.05.
SECTION 3.09. Trade Names, Trademarks and Copyrights. Schedule
3.09 hereto is a list of all trade names, trademarks, service marks and
copyrights and their registrations or applications, owned solely by Seller or in
which Seller has any rights or licenses and used solely in the Business,
together with a brief description of each. Except as set forth in Schedule 3.09,
to the best knowledge of Seller, no person has infringed or is infringing on any
such trade name, trademark, service xxxx or copyright. To the best knowledge of
Seller, Seller, in its operation of the Business, has not infringed, and is not
now infringing, on any trade name, trademark, service xxxx or copyright
belonging to any other person, firm or corporation. Except as set forth in
Schedule 3.09, Seller is not a party to any license agreement or arrangement,
whether as licensor, licensee, franchiser, franchisee or otherwise, with respect
to any trademarks, service marks, trade names or any copyrights, or applications
or registrations for such items, used in the Business. To the best knowledge of
Seller, Seller owns, or holds adequate licenses, free and clear of any liens or
encumbrances, to use, and has full right to use, all trademarks, service marks,
trade names and copyrights necessary for Seller to conduct the Business as now
conducted by it and all such items are listed in Schedule 3.09, and such use
does not and will not conflict with, infringe on or otherwise violate any rights
of others. Seller has the right to sell or assign to Buyer all such owned
trademarks, trade names, service marks and copyrights, and all such licenses and
other rights. All trade names, trademarks, service marks, copyrights and
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licenses listed in Schedule 3.09 are registered or recorded (except as otherwise
disclosed therein) in all jurisdictions material to the Business where failure
to register or record could materially impair Seller's ownership of, or right to
use, such item. All such registrations and recordings are in full force and
effect and no governmental proceeding, including the possible revocation or
cancellation of any such registration, is pending or, to the best knowledge of
Seller, threatened.
SECTION 3.10. Trade Secrets.
(a) Schedule 3.10 hereto is a true and complete list, without
extensive or revealing descriptions, of Seller's trade secrets which are
material to the conduct of the Business, including all material customer (active
and inactive) lists, vendor lists and arrangements therewith, processes,
know-how, computer program and routines and other technical data (collectively,
"Trade Secrets"). The specific location of each Trade Secret's documentation,
including its complete description, specifications, charts, procedures and other
material relating to it, is also set forth in Schedule 3.10. To the extent
necessary for Buyer's conduct of the Business, each Trade Secret's documentation
is current, accurate and sufficient in detail and content to identify and
explain it and to allow its full and proper use by Buyer without reliance on the
special knowledge or memory of others.
(b) Seller is the sole owner of each Trade Secret owned by it,
free and clear of any liens, encumbrances, restrictions or legal or equitable
claims of others, except as specifically stated in Schedule 3.10. Seller has
taken reasonable security measures to protect the secrecy, confidentiality and
value of the Trade Secrets; any of its employees and any other persons who,
either alone or in concert with others, developed, invented, discovered,
derived, programmed or designed the Trade Secrets, or who have knowledge of or
access to information relating to them, have been put on notice and, if
appropriate, have entered into agreements that the Trade Secrets are proprietary
to Seller and are not to be divulged or misused.
(c) To the best knowledge of Seller, all of the Trade Secrets
have not been used, divulged or appropriated to the detriment of Seller.
SECTION 3.11. Computer Software; Other Intangible Personal
Property. Schedule 3.11 hereto identifies the computer software and computer
programs owned by Seller or used by Seller in the conduct of its Business which
is necessary to Buyer's operation of the Business, and to the extent used by
Seller pursuant to a license or other authorization of a third party, describes
such license or other authorization and which is being sold by Seller to Buyer.
To the best of Seller's knowledge, with respect to any such computer software
and programs owned by Seller, such is owned free and clear of all liens,
pledges, charges, security interests,
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restrictions, prior arrangements and encumbrances of any kind, including without
limitation, any claim of any present or former employee of Seller who may have
developed or participated in the development of any such computer software or
program or any portion thereof. Such license or other authorization pursuant to
which Seller is entitled to use any computer software or program is in full
force and effect, is a valid and binding obligation of the parties thereto, is
identified on Schedule 3.11 hereto, is included in the Transferred Assets, and
is assignable to Buyer without the consent of any third party except as
otherwise described in Schedule 3.11 hereto. Schedule 3.11 hereto also lists and
describes any and all interests of Seller in any intangible personal property
used in the Business and not listed in Schedule 3.09 or 3.10.
SECTION 3.12. Material Contracts.
(a) Schedule 3.12 hereto lists each lease, license, contract,
vendor agreement, distribution right, right to advertising space and listings in
directories, purchase or sales order and commitment, whether written or oral
(collectively, the "Material Contracts"), (other than any of the foregoing
specifically disclosed under other sections of this Article) to which Seller is
a party, or by which it or any of its properties are bound, which relates to the
Business and (i) involves expenditures or income in excess of $50,000 per year
and which are not cancelable within 30 calendar days, (ii) is otherwise material
in nature or amount or (iii) is necessary for the continued operation of the
Business as presently conducted. With respect to each such Material Contract:
(i) Each Material Contract is in full force and
effect and is a valid and binding agreement of Seller and, to the best
knowledge of Seller, of the other parties thereto;
(ii) Seller has fulfilled all material
obligations required pursuant to such Material Contract to have been
performed by Seller on its part prior to the date hereof, and Seller
has no reason to believe that it will not be able to fulfill, when due,
all of Seller's obligations under such Material Contract which remain
to be performed after the date hereof;
(iii) To the best knowledge of Seller, there is
no default or event that with notice or lapse of time, or both, would
constitute a default by any other party to such Material Contract; and
(iv) Seller has not received notice that any
party to such Material Contract intends to cancel or terminate such
Material Contract or to exercise or not exercise any options
thereunder.
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(b) Except for the Material Contracts listed in Schedule 3.12,
copies of which have been furnished or made available to Buyer, Seller is not a
party to, nor is any of Seller's property bound by, any distributor's or
manufacturer's representative or agency agreement, any output or requirements
agreement, any agreement that restricts Seller's right to engage in business or
any other agreement that is unusual in nature or amount or that calls for the
payment by Seller of consideration of more than $50,000 per year and which is
not cancelable within 30 calendar days.
SECTION 3.13. Litigation. Except as set forth in Schedule
3.13, there is no Action pending or, to the best knowledge of Seller,
threatened, against or affecting the Business or based upon any theory of
product liability with regard to products produced by the Business. The matters
set forth in Schedule 3.13 hereto, if decided adversely to Seller, will not
result in a material adverse change in the Business. Seller has furnished or
made available to Buyer copies of all relevant court papers and other documents
relating to the matters set forth in Schedule 3.13 hereto. Seller is not in
default with respect to any order, writ, injunction or decree relating to the
Business of any federal, state, local or foreign court, department, agency or
instrumentality. Except as set forth in Schedule 3.13, Seller is not currently
engaged in any legal action to recover material amounts of money due to it or
damages sustained by it arising out of the Business.
SECTION 3.14. Compliance with Laws. Except as set forth in
Schedule 3.14:
(a)(i) Seller is in full compliance with all
Environmental Requirements applicable to operations on and the
conditions of the Owned Realty or the Facility. The Seller has no basis
to expect, and has not received, any actual or threatened order, notice
or other communication from any Governmental Authority or third party
of any actual or potential violation or failure to comply with any
Environmental Requirement, or of any actual or threatened obligation to
undertake or bear the costs of any Environmental Damages with respect
to the Owned Realty or the Facility.
(ii) There are no pending or, to the knowledge of
Seller, threatened claims, encumbrances or other restrictions of any
nature, resulting from any Environmental Damages or arising under or
pursuant to any Environmental Requirement with respect to or affecting
the Owned Realty or the Facility.
(iii) Seller has no basis to expect and has not
received any citation, directive, inquiry, notice, order, summons,
warning or other communication that relates to Hazardous Materials or
any actual or potential violation or failure to comply with any
Environmental Requirement or of any
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alleged, actual or potential obligation to undertake or bear the costs
of any Environmental Damages with respect to the Owned Realty or the
Facility or with respect to any property or facility to which hazardous
materials generated, manufactured, refined, transferred, imported, used
or processed by Seller at the Facility have been transported, treated,
stored, handled, transferred, disposed, recycled or received.
(iv) Seller has not generated, stored, used,
released, treated or disposed of any Hazardous Material on the Owned
Realty or at the Facility except in full compliance with all
Environmental Requirements.
(v) Seller timely obtained and has kept current, as
appropriate, all permits, notifications, and authorizations required
under any environmental law or any activity conducted on the Owned
Realty or at the Facility by Seller or any other Person.
(vi) There are no underground storage tanks or gas
or oil xxxxx on the Owned Realty.
(b) Seller has complied with all requirements of the
Occupational Safety and Health Act and its state equivalents and
regulations promulgated under any such legislation, and with all
orders, judgments and decrees of any tribunal under such legislation
that apply to the Business.
(c) Seller has not directly or indirectly paid or
delivered any fee, commission or other money or property, however
characterized, to any finder, agent, government official or other
party, in the United States or any other country, that is in any manner
related to the Business, the payment or delivery of which was illegal
under any federal, state or local law of the United States or any other
country having jurisdiction.
(d) Seller has complied with, and is not in violation
of, any other applicable federal, state or local statute, law or
regulation applicable to, or affecting the operation of, the Business.
SECTION 3.15. Labor Relations. Except as set forth on Schedule
3.15:
(i) No Employee is covered by a collective
bargaining agreement and there is not now, nor has there occurred at
any time during the past three years, any union representation
activities respecting Employees. Seller has not experienced any work
stoppage or slow down within the last three years.
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(ii) No proceedings or claims by Employees are
pending or, to the best knowledge of Seller, threatened against Seller
with respect to any violation or alleged violation of any applicable
federal, state or local laws, rules and regulations prohibiting
discrimination on any basis, including, without limitation, on the
basis of race, color, religion, sex, national origin, age or
disability.
(iii) No proceedings or claims by or relating to
Employees are pending or, to the best knowledge of Seller, threatened
against Seller with respect to any violation or alleged violation of
any applicable federal, state or local laws, rules and regulations
relating to the employment of labor, including, without limitation,
those related to wages, hours and collective bargaining. Seller has
made all payments and withholdings of taxes and other sums as required
by appropriate governmental authorities and has withheld and paid to
the appropriate governmental authorities, or is holding for payment not
yet due to such authorities, all amounts required to be withheld from
Employees and is not liable for any arrears of wages, taxes, penalties
or other sums for failure to comply with any laws, rules or regulations
relating to the foregoing.
SECTION 3.16. Employment and Compensation Arrangements.
(a) Schedule 3.16 hereto identifies each (i) pension, profit
sharing, deferred compensation, bonus, stock option, stock purchase or incentive
plan or agreement, written or oral, applicable to Employees, except for such
plans or arrangements listed in Schedule 3.17; and (ii) retainer, consulting,
severance, employment or similar contract or agreement, written or oral,
applicable to Employees, to which Seller is a party or by which it is bound.
Seller has delivered to Buyer copies of all such plans and agreements, as they
are currently in effect. Seller is not, and, to the best of its knowledge, no
other party thereto is, in default with respect to any material term or
condition thereof, nor has any event occurred which, with the lapse of time or
the giving of notice, or both, would constitute a material default thereunder or
would cause the acceleration of any material obligation of any party thereto, or
the creation of a lien or encumbrance upon any asset of Seller.
(b) All obligations of Seller relating to Employees, whether
arising by operation of law, by contract or past custom, for payments by Seller
to trusts or other funds or to any governmental agency with respect to workers
compensation, unemployment compensation, social security or any other benefits
for its employees with respect to employment of said Employees through the date
hereof have been paid or adequate accruals thereof have been made and are
reflected in the Financial Statements. All obligations of Seller with respect to
such Employees, whether arising by operation of law, by contract, by past custom
or
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otherwise, for salaries, vacation and holiday pay, sick pay, bonuses, other
forms of compensation or other benefits payable to such employees in respect of
the services rendered by any of them prior to the date hereof have been paid or
adequate accruals therefor have been made and are reflected in the Financial
Statements; provided that with respect to accrued but unpaid vacations through
the Closing Date, Seller shall either (i) pay Buyer the aggregate amount of such
accrual or (ii) pay each Employee the portion of such aggregate accrual
attributable to such Employee.
(c) Schedule 3.16 also sets forth a true and complete list, as
of February __, 1997, of the names and current salaries or compensation rates of
all Employees and of all agents and representatives of Seller. Those Employees
who are at work on the Closing Date or any day within five days prior thereto
are set forth or referred to in part (a) of Schedule 3.16, and those other
Employees being offered employment by Buyer are set forth in part (b) of
Schedule 3.16.
SECTION 3.17. Employee Benefit Plans and Benefit Arrangements.
Schedule 3.17 lists each (i) "Employee Benefit Plan," as such term is defined in
Section 3(3) of ERISA, whether written or oral, that provides or authorizes
benefits to any Employee and (ii) "Benefit Arrangement" which means each
contract, agreement, policy, practice or commitment, whether written or oral,
that provides or authorizes employee benefits to any Employee, other than
Employee Benefit Plans.
Except as set forth on Schedule 3.17, (i) each Employee
Benefit Plan and each Benefit Arrangement complies with, and has been operated
in accordance with, all applicable law, including, without limitation, the
provisions of ERISA, in all material respects, and (ii) no event has occurred in
connection with any Employee Benefit Plan or Benefit Arrangement which has, will
or may result in any fine, penalty, assessment or other liability for which
Seller, any Affiliate of Seller or transferee of the assets of Seller may be
responsible, whether by reason of operation of law or contract.
SECTION 3.18. Taxes.
(a) There are no outstanding assessments for Taxes otherwise
due that if not paid on a timely basis would result, on or after the Closing
Date, in any liens for Taxes on any of the Transferred Assets.
(b) Except as otherwise disclosed on Schedule 3.18, none of
the Transferred Assets is tax-exempt use property within the meaning of Section
168(h) of the Code, and none of the Transferred Assets is property that is or
will be required to be treated as being owned by another person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in
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effect immediately before the enactment of the Tax Reform Act of 1986.
(c) Seller is not a foreign person within the meaning of
Section 1445(b)(2) of the Code.
SECTION 3.19 Insurance. Schedule 3.19 sets forth a true and
correct list of all insurance policies of any nature whatsoever maintained by
Seller which relate to the Business, all of which are in full force and effect.
Seller is in compliance with all material requirements of such policies. All of
the customarily commercially insurable properties and assets of Seller that
constitute Transferred Assets are covered by effective insurance in amounts at
least equal to their fair market value and such insurance provides protection
against all liabilities, claims, losses and risks as are generally insured
against by comparable businesses. There are no outstanding requirements or
recommendations by any insurance company that issued any such policy or by any
governmental authority which requires or recommends any change in the conduct of
the Business, or any repairs or other work to be done on or with respect to any
of the properties of Seller related to the Business. Seller has not received any
notice or other communication from any insurance company within the three years
preceding the date hereof canceling or materially amending any insurance
policies on or relating to the Transferred Assets, and to the best knowledge of
Seller, no such cancellation or amendment nor any material increase of premiums
is threatened with respect to the policies listed in Schedule 3.19 hereto.
Except as set forth in Schedule 3.19, no claim is pending under any policy
listed in Schedule 3.19.
SECTION 3.20. Licenses, Franchises, Permits and
Authorizations. Schedule 3.20 hereto lists all licenses, franchises, permits and
authorizations held by Seller which constitute all of the licenses, franchises,
permits and authorizations necessary for the lawful conduct of the Business, and
specifically notes any such licenses, franchises, permits and authorizations
that are not assignable. Seller has previously delivered copies of such
licenses, franchises, permits and authorizations to Buyer. Seller has not
violated, nor is in material violation of, any of the terms and conditions of
such licenses, franchises, permits and authorizations. As of the Closing Date,
to the best knowledge of Seller, no change will have occurred in the facts or
circumstances reported or assumed in the application for or the granting of such
licenses, franchises, permits or authorizations, and each such license,
franchise, permit and authorization will be in full force and effect.
SECTION 3.21. Agreement Not In Breach of Other Instruments.
Except as set forth in Schedule 3.21, the execution and delivery of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby will not result in or constitute any of the following:
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(a) a default or an event that, with the giving of notice or lapse of time, or
both, would be a default, breach or violation of the Articles of Incorporation
or By-Laws of Seller or any Material Contract, promissory note, indenture,
mortgage, deed of trust or other material agreement, instrument or arrangement
to which Seller is a party or by which it or its properties are bound; (b) an
event that would permit any party to terminate any Material Contract; or (c) the
creation or imposition of any lien, charge or encumbrance on any of the
Transferred Assets.
SECTION 3.22. Brokers. No person or entity is entitled to any
brokerage commission, finder's fee or like payment from Seller in connection
with the transactions contemplated by this Agreement, other than Xxxx Xxxxx.
SECTION 3.23. Full Disclosure. To the best of Seller's
knowledge, the representations and warranties made by Seller and the information
provided by Seller to Buyer in this Agreement, including its Schedules and its
Exhibits, do not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated herein or therein, or
necessary to make the statements and facts contained herein or therein, in light
of the circumstances in which they are made, not false or misleading. Copies of
all documents heretofore or hereafter delivered or made available to Buyer
pursuant to this Agreement were or will be complete and accurate copies of such
documents.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BUYER
As an inducement to Seller to enter into this Agreement, Buyer
represents and warrants to Seller as follows:
SECTION 4.01. Organization, Good Standing and Authority of
Buyer. Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to enter into this Agreement and each of the Ancillary
Agreements to which it is a party, to carry out its obligations hereunder or
thereunder, and to consummate the transactions contemplated hereby or thereby.
The execution, delivery and performance of this Agreement and the Ancillary
Agreements to which Buyer is a party have been duly authorized by all necessary
corporate action on the part of Buyer, have been or will be duly executed and
delivered by Buyer, and this Agreement and such Ancillary Agreements constitute
or, upon execution and delivery, will constitute, legal, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their terms.
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SECTION 4.02. No Conflict. The execution, delivery and
performance by Buyer of this Agreement and each of the Ancillary Agreements to
which it is a party do not, and will not, (a) violate or conflict with the
Articles of Incorporation or By-Laws of Buyer, (b) conflict with or violate any
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award applicable to Buyer or (c) except as would not materially affect the
ability of Buyer to consummate the transactions contemplated by this Agreement,
result in any breach of, or constitute a default (or event which with the giving
of notice or lapse of time, or both, would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of any lien or other encumbrance on any of the assets or
properties of Buyer pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument relating to
such assets or properties to which Buyer is a party or by which any of such
assets or properties is bound or affected.
SECTION 4.03. No Consents or Approvals. Except as set forth on
Schedule 4.03, no authorization, consent or approval of any public body,
authority or any third party is necessary for the consummation by Buyer of the
transactions contemplated by this Agreement.
SECTION 4.04. Absence of Litigation. No Action is pending or
threatened against Buyer which seeks to delay or prevent the consummation of the
transactions contemplated hereby or which may adversely affect or restrict
Buyer's ability to consummate the transactions contemplated hereby.
SECTION 4.05. Agreement Not In Breach of Other Instruments.
The execution and delivery of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby will not result in or
constitute a default or an event that, with the giving of notice of lapse of
time or both, would be a default, breach or violation of the Articles of
Incorporation of Bylaws of Buyer.
SECTION 4.06. Brokers. No person or entity is entitled to any
brokerage commission, finder's fee or like payment from Buyer in connection with
the transactions contemplated by this Agreement, other than Xxxx Xxxxx.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. No Solicitation, Etc. Seller agrees that,
between the date hereof and either the Closing Date or the termination of this
Agreement in accordance with the terms of Section 5.06 or 9.01, Seller shall
not, directly or indirectly,
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(i) encourage, initiate or solicit the submission of a Business Combination
Proposal, (ii) enter into any agreement with respect to any Business Combination
Proposal or (iii) participate in any way in discussions or negotiations with, or
furnish any information to, any Person in connection with, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Business Combination
Proposal.
SECTION 5.02. Conduct of Business Prior to the Closing. Seller
agrees that, between the date of this Agreement to and including the Closing
Date, except as permitted by the prior written consent of Buyer and as
contemplated by this Agreement: (i) the Business shall continue to be conducted
in, and Seller shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; (ii) Seller shall use
its best efforts to (v) preserve the Business substantially intact, (w) maintain
the Transferred Assets in customary repair, order and condition (subject to
ordinary wear and tear) and maintain in full force and effect all insurance
relating to the Transferred Assets, (x) comply with all governmental and
regulatory requirements applicable to the Business or the Transferred Assets,
(y) keep available the services of substantially all of the present employees of
Seller involved in the Business and (z) preserve the present relationships of
the Business with customers, suppliers and other Persons with which the Business
has significant business relations; and (iii) Seller shall not:
(i) encumber any material asset, property or right of
Seller relating to the Business or enter into any transaction or make
any contract or commitment relating to the Transferred Assets except in
the ordinary course of business;
(ii) enter into any employment contract with an
Employee which is not terminable without cost or other liability to
Seller or any successor thereof;
(iii) enter into or amend any contract or agreement
relating to the Business (x) which cannot be performed within three
months or less or (y) which involves the expenditure of over $10,000,
except for sales and purchase contracts in the ordinary course of
business;
(iv) transfer any assets of Seller relating to the
Business to any shareholder; or
(v) agree to do any of the above.
SECTION 5.03. Approvals; Consents.
(a) Each of Buyer and Seller will use its best efforts to
obtain or cause to be obtained all necessary consents,
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approvals, authorizations or other actions by, or filings with, or notifications
to, any governmental or regulatory authority or any Person listed on Schedule
5.10, in connection with the consummation of the sale and transfer by Seller of
the Transferred Assets and the transactions contemplated hereby.
(b) Each of Buyer and Seller will use its best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective, as soon as reasonably practicable, the
transactions contemplated by this Agreement.
SECTION 5.04. Access to Premises and Information.
(a) Subject to the provisions of Section 5.04(b), from the
date hereof, Seller shall, and shall cause its officers, directors, employees
and authorized agents, to provide to Buyer and its officers, employees and
authorized agents full access to Seller's officers, employees, authorized
agents, offices and other facilities and to all books and records during normal
business hours and in a manner not unreasonably disruptive to the operation of
the Business, and shall promptly furnish to Buyer all financial and operating
data and other information regarding the Business and the Transferred Assets as
Buyer may from time to time reasonably request.
(b) Until the Closing, all information relating to Seller
obtained by Buyer and its authorized representatives in connection with the
transactions contemplated hereby shall be kept confidential by Buyer and shall
not be used by it for any purpose other than in connection with the transactions
contemplated hereby; provided, however, that the foregoing shall not apply to
(i) any information generally available to the public on the date hereof or
which becomes generally available to the public through no fault of Buyer, but
only from and after the date such information becomes so available, and (ii) any
information obtained by Buyer from a third party having the right to disclose
such information.
SECTION 5.05. Employees. On the Closing Date, Buyer agrees to
offer to employ the Employees, at substantially the same salary and wage rate
levels as in effect on the Closing Date. With regard to benefits, subject to
applicable law, Buyer shall offer Employees so hired benefits consistent with
those extended to its Employees on the Closing Date. Seller makes no
representation or warranty that any of the employees will accept Buyer's offer
of employment. In addition, Seller makes no representation or warranty that any
of the Employees that are covered by a collective bargaining agreement will be
removed from coverage under such collective bargaining agreement as a result of
the sale of the Business to Buyer and Buyer's hiring of such Employees.
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SECTION 5.06. Due Diligence; Right to Terminate.
(a) Buyer shall promptly conduct its due diligence review of
the Business including, without limitation, the books and records, financial and
operating data and other information regarding the Business and the Transferred
Assets as Buyer may reasonably request.
(b) In the event that Buyer determines in good faith during
the course of its due diligence investigation (i) that any of the
representations and warranties in this Agreement are false or incorrect in any
material respect or (ii) the existence of facts or conditions concerning the
results of operations, condition (financial or otherwise), assets or liabilities
(whether absolute, accrued or contingent or otherwise) or prospects of the
Business, or the occurrence of any event or condition which, in Buyer's
discretion, have had or are reasonably likely to have a material adverse effect
on the results of operations, condition (financial or otherwise), assets or
liabilities (whether absolute, accrued or contingent or otherwise) or prospects
of the Business, or make it impracticable to proceed with the transactions
contemplated by this Agreement, whether or not such facts or conditions are
within Seller's control, then Buyer may elect to terminate this Agreement by
providing Seller with written notice thereof on or before the Closing Date.
(c) If Buyer elects to terminate this Agreement pursuant to
subsection (b) above, neither party shall have any indemnification or other
obligations or liability to the other party hereto as a result of such
termination or the events that gave rise to it, other than pursuant to Section
5.04(b).
SECTION 5.07. Proration of Taxes. Buyer agrees to execute and
deliver to Seller at the Closing any certificates or other documents that Seller
may reasonably request to document any exemption from Ohio sales tax. Seller
agrees to assume liability for and to pay for all transfer and documentary taxes
and fees imposed with respect to instruments of conveyance in the transactions
contemplated hereby. Seller agrees to assume liability for and pay for any
personal property taxes assessed against it on the Transferred Assets, except
that Buyer agrees to pay to Seller an amount equal to $20,000 with respect to
such taxes. In addition, Seller and Buyer agree to prorate any real property
taxes on the Transferred Assets. Such proration shall (a) be made on the basis
of the most recent real tax xxxx received by Seller prior to the Closing Date
(each, a "Tax Xxxx") and (b) make Seller liable for all such taxes through the
Closing Date and Buyer liable for all such taxes from and after the Closing
Date. Specifically, with respect to each Tax Xxxx, Buyer shall pay to Seller an
amount equal to (x) the amount of such Tax Xxxx attributable to the Transferred
Assets multiplied by (y) a fraction, the numerator of which is the number of
days remaining in calendar year 1997 as of the Closing Date and the denominator
of
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which is 365. Amounts with respect to personal or property taxes for which Buyer
is responsible under this paragraph shall be an addition to the Purchase Price
and shall be delivered to Seller at Closing. Seller shall be responsible for
making payment of all such Taxes as are contemplated by this paragraph to the
appropriate taxing authorities.
SECTION 5.08. Further Action. Each of the parties hereto shall
execute such documents (including, without limitation, the Ancillary Agreements)
and other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby or, at or after the Closing, to evidence the consummation of the
transactions consummated pursuant to this Agreement and each of the Ancillary
Agreements, upon the terms and subject to the conditions hereof and thereof.
Each of the parties hereto shall take, or cause to be taken, all actions and to
do, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement and each of the Ancillary Agreements and to
obtain in a timely manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings.
SECTION 5.09. Assets After the Closing. If Seller shall, at
any time after the Closing, receive any Transferred Assets, or any payments
relating thereto (including any payments in respect of the Material Contracts
but excluding payments on accounts receivable), it shall promptly deliver such
assets or property to Buyer.
SECTION 5.10. Consents to Transfer of the Material Contracts.
Schedule 5.10 hereto lists and describes all Persons whose authorization is
required to effect the sale and delivery of all of the Transferred Assets as
contemplated by this Agreement.
SECTION 5.11. Covenant Not to Compete.
(a) Subject to the Closing having occurred, without the prior
written consent of Buyer, Seller will not, directly or indirectly, (i) engage in
any business, activity or operation that competes in the business of
manufacturing or selling plastic spools within the United States or (ii)
approach or seek Restricted Business (as defined below) from any Customer (as
defined below), refer Restricted Business from any Customer to any enterprise or
business, or be paid commissions based on sales to any Customer by any
enterprise or business where such sales constitute Restricted Business; provided
that, if Seller has engaged in, is engaged in or becomes engaged in any
Restricted Business with any Person at any time before or after the Closing Date
but prior to the time such Person becomes a Customer and such Person does not
become a Customer until after the Closing Date, the foregoing restrictions
contained in this paragraph shall not apply to any business between
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Seller and such Person. Seller shall not, directly or indirectly, induce,
solicit, aid or assist any other person to induce or solicit, employees,
salespersons, agents, consultants, distributors, representatives, advisors,
customers or suppliers of the Business to terminate, curtail or otherwise limit
their employment or business relations with the Business.
(b) The covenant not to compete contained in paragraph (a)
shall extend for a period of two (2) years from the Closing Date, or until such
earlier time as Buyer, its successors or assigns, shall cease to carry on or
have an interest in the Business and the Transferred Assets. Nothing in this
covenant not to compete shall prohibit Seller from selling product to, and
otherwise engaging in business with, Seller's affiliates and other divisions of
Seller.
(c) If any one or more of the provisions contained in this
Section 5.11 shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the validity, legality and enforceability of any other
provisions of this Agreement. Such invalid, illegal or unenforceable provision
or provisions shall be deemed to be modified to the extent necessary to render
it, or them, valid, legal and enforceable, and if no such modification shall
render it, or them, valid, legal and enforceable, then this Section 5.11 shall
be construed as if not containing the provision or provisions held to be
invalid, illegal or unenforceable, and the rights and obligations of the parties
shall be construed and enforced accordingly.
(d) For purposes of this Section, the following terms shall
have the following meanings:
(i) "Restricted Business" means any business that is
competitive with the Business.
(ii) "Customer" means any Person which (A) is
currently provided goods or services by the Business, (B) has been
provided goods or services by the Business during the 5-year period
prior to the date hereof or (C) which shall be provided with goods or
services by the Business during the 2-year period from the date
hereof.
SECTION 5.12. Power of Attorney. On the Closing Date, Seller
will, by appropriate instrument, constitute and appoint Buyer and its successors
and assigns, the true and lawful attorneys for Seller, with full power of
substitution, in the name of Seller but on behalf of and for the benefit of and
at the expense of Buyer, to institute and prosecute, in the name of Seller or
otherwise, all proceedings which Buyer may in good xxxxx xxxx proper in order to
collect, assert or enforce any claim, right or title of any kind in or to the
Transferred Assets, to defend and compromise any and all actions, suits or
proceedings in respect of
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any of such Transferred Assets, and to do all such acts and things in relation
thereto as Buyer in good faith shall deem advisable. The foregoing powers are
and shall be coupled with an interest and shall be irrevocable by Seller or by
Seller's dissolution or in any manner or for any reason. Buyer shall retain for
its own account any amounts collected pursuant to the foregoing powers,
including any sums payable in respect thereof, and Seller shall promptly pay to
Buyer, when received, any amounts which shall be received by Seller in respect
of the Transferred Assets as provided herein.
SECTION 5.13. Uniform Commercial Code and Other Lien Searches.
To the extent that Buyer conducts a UCC-1 search or other lien search in the
state and county in which Seller conducts the Business and such search indicates
the existence of a security interest or other lien on any of the Transferred
Assets, Seller shall promptly obtain a termination or, to the extent such
security interest or lien extends to assets in addition to the Transferred
Assets, a release of the Transferred Assets from such security interest or lien.
SECTION 5.14. Worker Adjustment and Retraining Notification
Act. Buyer agrees to indemnify and hold harmless Seller from any and all claims
arising under the Worker Adjustment and Retraining Notification ("WARN") Act as
a result of actions by Buyer from and after the Closing Date.
SECTION 5.15. Licenses, Franchises, Permits and
Authorizations. Seller agrees to maintain the effectiveness with respect to the
Facility of the Sewer Permit and Storm Water Permit, in each case from the date
hereof until such time as Buyer is able to secure a separate sewer permit from
the Village of Hebron or an Ohio EPA Storm Water General Permit, respectively,
for the Facility. Buyer agrees to use its best efforts to secure such permits as
soon as practicable following the Closing Date and agrees to indemnify and hold
harmless Seller from any and all claims arising as a result of Buyer's operation
of the Business under the Storm Water Permit and Sewer Permit from and after the
Closing Date.
SECTION 5.16. Molds. Seller will use its best efforts to
enable Buyer to take possession of all injection molds at the Closing, including
such injection molds as constitute Excluded Assets, and will take all necessary
steps as are reasonable, including such steps as Buyer may reasonably request,
to allow Buyer's use of such molds in the continuing operations of the Business
from the date of the Closing.
SECTION 5.17. Railroad Spur Access and Maintenance Agreement.
At the Closing, Seller and Buyer shall enter into a Railroad Spur Access and
Maintenance Agreement (the "Railroad Spur Agreement"), in a form mutually
agreeable, which provides substantially as follows:
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(a) Buyer shall have sole access to and responsibility for
maintenance of Spur #1.
(b) With respect to the Main Spur and the portion of Spur #2
that crosses behind the Blow Molding Division's real property, Buyer and Seller
shall each (i) pay for the maintenance of the Main Spur and such portion of Spur
#2, respectively, an amount equal to the total amount of maintenance for the
Main Spur or such portion of Spur #2 multiplied by that party's Relative Use of
the Main Spur or such portion of Spur #2 and (ii) have access to the Main Spur
and such portion of Spur #2.
(c) Buyer shall have sole access to and responsibility for
maintenance of that portion of Spur #2 that crosses behind the Owned Realty.
(d) Buyer and Seller each grant the other party such easements
as are necessary, and shall grant the other party such appropriate rights as the
other party shall reasonably request, to provide the access contemplated by, and
give public record of, the Railroad Spur Agreement.
SECTION 5.18. Turn About Access and Maintenance Agreement. At
the Closing, Seller and Buyer shall enter into a Turn About Access and
Maintenance Agreement (the "Turn About Agreement"), in a form mutually
agreeable, which provides substantially as follows:
(a) Buyer and Seller each shall have access to all of the Turn
About, including that portion of the Turn About that is located on the other's
property.
(b) Buyer and Seller shall share equally the maintenance costs
of all the Turn About.
(c) Buyer and Seller each grant the other party such easements
as are necessary, and shall grant the other party such appropriate rights as the
other party shall reasonably request, to provide the access contemplated by, and
give public record of, the Turn About Agreement.
ARTICLE VI
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment or waiver, at
or prior to the Closing, of each of the following conditions:
SECTION 6.01. Representations and Warranties. The
representations and warranties of Buyer contained in this Agreement
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(including the Schedules and Exhibits hereto) or in any agreement, certificate
or document delivered in connection herewith, including the Ancillary Agreements
to which Buyer is a party, shall be true and correct in all material respects on
the Closing Date with the same effect as if made on and as of the Closing Date.
SECTION 6.02. Performance of Covenants. Each of the
obligations of Buyer to be performed on or before the Closing Date pursuant to
the terms of this Agreement and the Ancillary Agreements shall have been duly
performed in all material respects on or before the Closing Date.
SECTION 6.03. Authority. All actions required to be taken by,
or on the part of, Buyer to authorize the execution, delivery and performance of
this Agreement and the Ancillary Agreements shall have been duly and validly
taken by the Board of Directors of Buyer.
SECTION 6.04. Approval of Governmental Authorities. No claim,
action, suit, investigation or other proceeding shall be pending or threatened
before any court or governmental agency which presents a substantial risk of the
restraint or prohibition of the transactions contemplated by this Agreement. All
approvals of governmental agencies necessary for the consummation of the
transactions contemplated by this Agreement shall have been obtained and shall
be in full force and effect.
SECTION 6.05. Purchase Price. Seller shall have received the
Initial Payment by wire transfer in immediately available funds to an account
designated by Seller.
SECTION 6.06. Ancillary Agreements. Buyer shall have executed
and delivered to Seller the Ancillary Agreements to which Buyer is a party,
including, without limitation, the Assumption Agreement and such other
instruments effecting or evidencing the assumption of Assumed Liabilities
contemplated hereby.
SECTION 6.07. Buyer's Certificate. Seller shall have been
furnished with a certificate (dated as of the Closing Date and in form and
substance reasonably satisfactory to Seller) executed by (i) the President of
Buyer certifying as to the fulfillment of the conditions specified in Section
6.01 and 6.02 and (ii) the Secretary of Buyer certifying as to the fulfillment
of the condition specified in Section 6.03 and the incumbency of each officer of
Buyer who has executed this Agreement or any Ancillary Agreement.
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SECTION 6.08. Approval of Documentation. The form and
substance of all certificates, instruments and other documents delivered to
Seller under this Agreement shall be satisfactory in all reasonable respects to
Seller and its counsel.
SECTION 6.09. Consents. All agreements and consents of third
parties, including, without limitation, all consents from licensors, vendors,
lessors and other parties to agreements with Seller, to the consummation of the
transactions contemplated by this Agreement, or otherwise pertaining to matters
covered by it, which are material to the continued conduct of the Business after
the consummation of such transactions and the absence of which would result in a
breach of contractual obligations by Seller, shall have been obtained by Seller
and delivered to Buyer.
SECTION 6.10. Access Agreements. Buyer and Seller shall have
entered into the Railroad Spur Agreement and the Turn About Agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment or waiver, at
or prior to the Closing, of each of the following conditions:
SECTION 7.01. Representations and Warranties. The
representations and warranties of Seller contained in this Agreement (including
the Schedules and Exhibits hereto) or in any agreement, certificate or document
delivered in connection herewith, including the Ancillary Agreements to which
Seller is a party, shall be true and correct in all material respects on the
Closing Date with the same effect as if made on and as of the Closing Date.
SECTION 7.02. Performance of Covenants. Each of the
obligations of Seller to be performed by it on or before the Closing Date
pursuant to the terms of this Agreement and the Ancillary Agreements shall have
been duly performed in all material respects on or before the Closing Date.
SECTION 7.03. Authority. All actions required to be taken by,
or on the part of, Seller to authorize the execution, delivery and performance
of this Agreement and the Ancillary
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Agreements shall have been duly and validly taken by the Board of Directors of
Seller.
SECTION 7.04. Seller's Certificate. Buyer shall have been
furnished with a certificate (dated as of the Closing Date and in form and
substance reasonably satisfactory to Buyer) executed by (i) the President of
Seller certifying as to the fulfillment of the conditions specified in Sections
7.01 and 7.02 and (ii) the Secretary of Seller certifying as to the fulfillment
of the condition specified in Section 7.03 and the incumbency of each officer of
Seller who has executed this Agreement or any Ancillary Agreement.
SECTION 7.05. Bulk Sales Laws. Buyer and Seller agree that,
because Ohio's bulk sales law was repealed on August 15, 1996, no action is
necessary with respect to bulk sales in connection with the sale of the
Transferred Assets to Buyer.
SECTION 7.06. Sales and Use Tax on Prior Sales. Seller shall
furnish any documentation that Buyer may reasonably request as evidence that all
sales and use tax liabilities of Seller accruing before the Closing Date have
been fully satisfied or provided for.
SECTION 7.07. Consents. All agreements and consents of third
parties, including, without limitation, all consents from licensors, vendors,
lessors and other parties to agreements with Seller, for the consummation of the
transactions contemplated by this Agreement, or otherwise pertaining to matters
covered by it, which are material to the continued conduct of the Business after
the consummation of such transactions, shall have been obtained by Seller and
delivered to Buyer or shall have been taken and proof thereof provided to Buyer
by Seller.
SECTION 7.08. Approval of Documentation. The form and
substance of all certificates, instruments and other documents delivered to
Buyer under this Agreement shall be satisfactory in all reasonable respects to
Buyer and its counsel.
SECTION 7.09. Approval of Governmental Authorities. No claim,
action, suit, investigation or other proceeding shall be pending or threatened
before any court or governmental agency which presents a substantial risk of the
restraint or prohibition of the transactions contemplated by this Agreement. All
approvals of governmental agencies necessary for the consummation of the
transactions contemplated by this Agreement shall have been obtained and shall
be in full force and effect.
SECTION 7.10. No Material Adverse Change. During the period
from the date hereof to the Closing Date, there shall not have occurred any
material adverse change in the Business.
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SECTION 7.11. Interim Financial Statements. Seller shall have
furnished Buyer with complete copies of the Interim Financial Statements. The
Interim Financial Statements (i) are correct and complete in all material
respects and were prepared in accordance with the books and records of Seller;
(ii) were prepared in accordance with Seller's internal standards, consistently
applied, for divisions of the same type as the Business; (iii) fairly present
the value of the Transferred Assets and the results of the operations of the
Business as at the relevant date thereof and for the period covered thereby; and
(iv) with respect to contracts and commitments relating to the Transferred
Assets, contain and reflect adequate reserves for all reasonably anticipated
material losses and costs and expenses in excess of expected receipts.
SECTION 7.12. Ancillary Agreements. Seller shall have executed
and delivered to Buyer the Ancillary Agreements to which Seller is a party,
including, without limitation, the Xxxx of Sale and Assignment, the warranty
deed and such other instruments effecting or evidencing Buyer's assumption of
Assumed Liabilities contemplated hereby.
SECTION 7.13. Key Employees. Xxxx Xxxxx and Xxxxx Xxxxxxxxx
shall have agreed to terms of employment with Buyer beginning on the Closing
Date.
SECTION 7.14. Title Insurance. Buyer shall have received an
irrevocable commitment for title insurance covering the Owned Realty from
Chicago Title Insurance Company in the amount of One Million Dollars
($1,000,000), at Seller's expense, which commitment shall contain no exceptions
other than the Impairments.
SECTION 7.15. Access Agreements. Seller and Buyer shall have
entered into the Railroad Spur Agreement and the Turn About Agreement.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Seller's Indemnity. Seller shall, up to a
maximum aggregate payment of $2,000,000 for a period of two years after the
Closing, indemnify, defend, save and hold harmless Buyer and its successors and
assigns, and their employees, representatives, officers, directors and agents
from and against any and all Indemnified Damages arising out of or resulting
from (a) any breach or inaccuracy in any representation or warranty made by
Seller in this Agreement or any Schedule or Exhibit to, or in any certificate or
other document furnished by Seller pursuant to, this Agreement, or (b) any
breach of any covenant requiring performance after the Closing Date, or (c) any
claims against, or liabilities or obligations of, Seller not specifically
assumed by
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Buyer pursuant to this Agreement. Notwithstanding the foregoing, Seller shall
not be liable for any Indemnified Damages pursuant to clause (a) of the
preceding sentence until the amount thereof exceeds $250,000 and then Seller
shall be liable for the excess; provided, however, that Seller shall be liable
for the full amount of Indemnified Damages pursuant to clauses (b) and (c) of
the preceding sentence up to the maximum aggregate payment of $2,000,000 listed
above.
SECTION 8.02. Buyer's Indemnity. Buyer shall, up to a maximum
aggregate payment of $2,000,000, for a period of two years after the Closing,
indemnify, defend, save and hold harmless Seller and its successors and assigns,
and their employees, representatives, officers, directors and agents from and
against any and all Indemnified Damages arising out of or resulting from (a) any
breach or inaccuracy in any representation or warranty made by Buyer in this
Agreement or any Schedule or Exhibit to, or in any certificate or other document
furnished by Buyer pursuant to, this Agreement, or (b) any breach of any
covenant requiring performance after the Closing Date, including without
limitation, Buyer's performance of the Assumed Liabilities. Notwithstanding the
foregoing, Buyer shall not be liable for any Indemnified Damages pursuant to
clause (a) of the preceding sentence until the amount thereof exceeds $250,000
and then Buyer shall be liable for the excess; provided, however, that Buyer
shall be liable for the full amount of Indemnified Damages pursuant to clause
(b) of the preceding sentence.
SECTION 8.03. Claims for Indemnification. Whenever any claim
for indemnification shall arise under this Article VIII, the party asserting
such claim (the "Indemnified Party") shall notify the other party (the
"Indemnifying Party") of the claim and, when known, the facts constituting the
basis for such claim. In the event of any claim for indemnification hereunder
resulting from or in connection with legal proceedings by a third party, such
notice shall also specify, if known, the amount or an estimate of the amount of
the liability arising therefrom. If any lawsuit is filed or instituted against
the Indemnified Party asserting any claim for which the Indemnifying Party may
be responsible hereunder, written notice thereof shall be given to the
Indemnifying Party as promptly as practicable; and if the Indemnifying Party
shall acknowledge in writing that the Indemnifying Party shall be responsible
and liable for payment of all costs, losses, liabilities, claims and expenses in
connection with such lawsuit, then the Indemnifying Party shall be entitled, if
the Indemnifying Party so elects (subject to the Indemnified Party's written
consent which may be withheld by the Indemnified Party to the extent that the
Indemnified Party's rights under any other contested matter or any aspect of the
Indemnified Party's ongoing business operations may be prejudiced materially by
the Indemnified Party's lack of control over such lawsuit), to take control of
the defense and investigation of such lawsuit and to employ and engage attorneys
of its own choice to handle and defend the same, at the Indemnifying Party's
cost, risk and expense; and
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the Indemnified Party shall cooperate in all reasonable respects, at the
Indemnifying Party's cost, risk and expense, with the Indemnifying Party and
such attorneys in the investigation, trial and defense of such lawsuit and any
appeal arising therefrom; provided, however, that the Indemnified Party may, at
its own cost, participate in any such investigation, trial and defense of any
such lawsuit and any appeal arising therefrom. Unless authorized in the
Indemnified Party's consent, the Indemnifying Party shall not consent to a
settlement of, or the entry of any judgment arising from, any such claim or
legal proceeding, without the prior written consent of the Indemnified Party,
which shall not be unreasonably withheld. If the Indemnifying Party does not
assume the defense of any such claim or litigation resulting therefrom in
accordance with the terms hereof, the Indemnified Party may defend against such
claim or litigation in such manner as it may deem appropriate, including,
without limitation, settling such claim or litigation, after giving notice of
the same to the Indemnifying Party, on such terms as the Indemnified Party may
deem appropriate. If the Indemnifying Party seeks to question the manner in
which the Indemnified Party defended such claim or litigation or the amount of
or other nature of any such settlement, the Indemnifying Party shall have the
burden to prove by a preponderance of the evidence that the Indemnified Party
did not defend such claim in a reasonably prudent manner.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Termination. This Agreement may be terminated at
any time prior to the Closing: (i) by the mutual written consent of Seller and
Buyer; (ii) by Seller if any of the conditions set forth in Article VI shall not
have been satisfied or waived prior to Closing; (iii) by Buyer if any of the
conditions set forth in Article VII shall not have been satisfied or waived
before Closing; (iv) by either party hereto, if the Closing does not occur on or
prior to February 28, 1997; or (v) by Buyer pursuant to Section 5.06 hereof;
provided, however, that the party seeking termination pursuant to clause (ii),
(iii) or (iv) is not in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement. In the event
that this Agreement is terminated as provided above, this Agreement shall become
void and of no further force and effect, except for Article VIII and Sections
5.04(b), 9.04 and 9.13, and other than pursuant to such provisions, there shall
be no liability on the part of either party hereto; provided, however, that
nothing in this Section 9.01 or elsewhere in this Agreement shall release either
party from any liability for breach of this Agreement.
SECTION 9.02. Specific Performance. The parties hereto agree
that money damages would not be a sufficient remedy for a breach of this
Agreement or the Ancillary Agreements by Seller or
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Buyer because of the difficulty of ascertaining the amount of damages that will
be suffered in connection therewith, that each party would be irreparably
damaged in the event any obligation of the other party under this Agreement or
the Ancillary Agreements is not performed in accordance with its specific terms
and that each party shall be entitled to equitable relief (including injunction
and specific performance) in any action instituted in any court of the United
States or any state thereof having subject matter jurisdiction, as a remedy for
any breach or to prevent any breach of this Agreement or the Ancillary
Agreements. Such remedies shall not be deemed to be exclusive remedies for a
breach or anticipatory breach of this Agreement or the Ancillary Agreements, but
shall be in addition to all other remedies available at law or equity.
SECTION 9.03. Survival of Representations and Warranties. The
respective representations and warranties of Buyer and Seller contained herein,
in the Ancillary Agreements, or in writing in any certificates or other
documents delivered in connection herewith prior to or at the Closing, shall
survive the execution and delivery of this Agreement and the Closing for a
period of two years.
SECTION 9.04. Expenses. Subject to Section 7.14, all costs and
expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the Ancillary Agreements shall be paid by the party incurring such costs and
expenses, whether or not the Closing shall have occurred; provided that any fees
payable to Xxxx Xxxxx in connection with this Agreement shall be paid in equal
part by each of Buyer and Seller.
SECTION 9.05. Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made as of the date delivered if delivered personally or by
telecopy or fifteen (15) days after being mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice, except that notices of changes of address shall be effective upon
receipt):
(a) if to Seller: Xxxxx Bros. Corporation
000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn.: Xxxxxxx X. Xxxxxx, Xx.
Telephone: 000-000-0000
Telecopier: 000-000-0000
with a copy to: Vorys, Xxxxx, Xxxxxxx and Xxxxx
00 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn.: Xxxxxx X. Ruby
Telephone: 000-000-0000
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Telecopier: 000-000-0000
(b) if to Buyer: UnionTools, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000-0000
Attn: Xxxx Xxxxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
with a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx, 00xx Xx.
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
SECTION 9.06. Amendment. Subject to applicable law, no
provision of this Agreement may be amended, modified, supplemented or waived
except by written agreement duly executed by Buyer and Seller.
SECTION 9.07. Waiver. At any time prior to the Closing, either
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties made by the other party and contained
herein or in any document delivered by the other party pursuant hereto and (c)
waive compliance by the other party hereto with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party to be bound thereby.
SECTION 9.08. Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 9.09. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the greatest
extent possible.
SECTION 9.10. Entire Agreement. This Agreement and the
Ancillary Agreements constitute the entire agreement between Seller and Buyer
and supersede and cancel all prior agreements and
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undertakings, both written and oral, with respect to the subject matter hereof.
SECTION 9.11. Binding Agreement; 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 operation of law or otherwise, by any party hereto without
the prior written consent of the other party; provided, however, that Buyer may
assign this Agreement and all of its rights, interests and obligations hereunder
to any Affiliate of Buyer but that in such event Buyer shall remain a guarantor
of the performance by such Affiliate of its obligations hereunder.
SECTION 9.12. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Ohio applicable
to contracts executed and to be performed wholly in Ohio, without regard to
principles of conflicts of laws.
SECTION 9.13. [Intentionally Omitted].
SECTION 9.14. Counterparts. This Agreement may be executed in
one or more counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties.
SECTION 9.15. No Third Party Beneficiaries. Nothing express or
implied in this Agreement is intended to confer upon any Person, other than
Buyer and Seller and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
SECTION 9.16. Publicity. Buyer and Seller shall consult with
each other before issuing any press release or announcement concerning the
transactions contemplated by this Agreement; provided, however, that if Seller
is required by law to make any such disclosure prior to agreement with Buyer
regarding its contents, it shall be permitted to do so.
[The remainder of this page has been left intentionally blank.]
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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
XXXXX BROS. CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman and Chief
Executive Officer
UNIONTOOLS, INC.
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
Title: President & CEO
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LIST OF EXHIBITS
Exhibit A Assumption Agreement
Exhibit B Xxxx Of Sale and Assignment
Exhibit C Description of Real Property Transferred
Exhibit D Diagram of Rail Spurs
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LIST OF SCHEDULES
Schedule 2.01(a) Excluded Contracts
Schedule 2.01(b) Excluded Assets
Schedule 2.02(a) Schedule of Assumed Liabilities
Schedule 2.03(c) Allocation of Purchase Price
Schedule 3.02 Conflicts
Schedule 3.03 Consents or Approvals (Seller)
Schedule 3.04(b) Certain Changes
Schedule 3.05 Right, Title and Interest in Transferred
Assets
Schedule 3.06
Part 1 Owned Realty
Part 2 Leased Realty: None
Schedule 3.07 Liens on Inventory
Schedule 3.08 Other Tangible Personal Property
Schedule 3.09 Trade Names, Trademarks, Service Marks
and Copyrights
Schedule 3.10 Trade Secrets
Schedule 3.11 Computer Software, Computer Programs and
Other Intangible Personal Property
Schedule 3.12 Material Contracts
Schedule 3.13 Litigation
Schedule 3.14 Compliance with Laws
Schedule 3.15 Labor Relations
Schedule 3.16 Employment and Compensation Arrangements;
Employees
Schedule 3.17 Employee Benefit Plans
Schedule 3.18 Taxes
Schedule 3.19 Insurance
Schedule 3.20 Licenses, Franchises, Permits and
Authorizations
Schedule 3.21 Breach of Other Agreements
Schedule 4.03 Consents or Approvals (Buyer)
Schedule 5.10 Consents to Transfer of Material Contracts
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