1
EXHIBIT 10.56
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
THE XXXXX GROUP, INC.
A DELAWARE CORPORATION
(PARENT)
GLASSMARKS, INC.
(BUYER)
XXXXXX X. XXXXX, INDIVIDUALLY
(OWNER)
AND
GLASS DOCTOR CORPORATION
A GEORGIA CORPORATION,
(SELLER)
DATED AS OF JULY 24, 1998
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TABLE OF CONTENTS
PAGE
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1-PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . 1
1.1 TRANSFER OF ASSETS . . . . . . . . . . . . . . . . . . . . . 1
1.2 EXCLUDED ASSETS . . . . . . . . . . . . . . . . . . . . . . 2
1.3 ASSUMED LIABILITIES . . . . . . . . . . . . . . . . . . . . 2
1.4 EXCLUDED LIABILITIES . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2-CONSIDERATION AND MANNER OF PAYMENT . . . . . . . . . . . . . . . 3
2.1 PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . 3
2.2 PAYMENT OF PURCHASE PRICE . . . . . . . . . . . . . . . . 3
ARTICLE 3-SELLER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 3
3.1 SELLER PARTIES AUTHORITY . . . . . . . . . . . . . . . . . 4
3.2 ORGANIZATION AND QUALIFICATION OF THE SELLER . . . . . . . 4
3.3 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 ARTICLES OF INCORPORATION, BYLAWS, OFFICERS AND
DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . 4
3.6 OPTIONS, ETC. . . . . . . . . . . . . . . . . . . . . . . 4
3.7 (RESERVED) . . . . . . . . . . . . . . . . . . . . . . . . 5
3.8 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . 5
3.9 ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . . . . . . . 5
3.10 INVENTORIES, ACCOUNTS RECEIVABLE AND PAYABLE . . . . . . . 5
3.11 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.12 MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . 6
3.13 REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . 6
3.14 PERSONAL PROPERTY . . . . . . . . . . . . . . . . . . . . 7
3.15 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . 7
3.16 COMPLIANCE WITH APPLICABLE LAWS; BULK TRANSFER LAWS . . . 7
3.17 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . 7
3.18 TRANSACTION NOT A BREACH . . . . . . . . . . . . . . . . . 8
3.19 CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . 8
(i)
3
3.20 INSURANCE POLICIES . . . . . . . . . . . . . . . . . . . . . 9
3.21 LICENSES AND PERMITS . . . . . . . . . . . . . . . . . . . . 10
3.22 EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . 10
3.23 HEALTH, SAFETY AND ENVIRONMENT . . . . . . . . . . . . . . 10
3.24 (RESERVED) . . . . . . . . . . . . . . . . . . . . . . . . 11
3.25 PERSONNEL AGREEMENTS, PLANS AND ARRANGEMENTS . . . . . . . 11
3.26 WORKERS' COMPENSATION . . . . . . . . . . . . . . . . . . 11
3.27 CUSTOMERS . . . . . . . . . . . . . . . . . . . . . . . . 11
3.28 AFFILIATE TRANSACTIONS . . . . . . . . . . . . . . . . . . 12
3.29 FRANCHISE REGULATIONS . . . . . . . . . . . . . . . . . . 12
3.30 NO MISREPRESENTATION . . . . . . . . . . . . . . . . . . . 12
ARTICLE 4-PARENT'S AND BUYER'S REPRESENTATIONS AND WARRANTIES . . . . . . . 12
4.1 ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . 12
4.3 TRANSACTION NOT A BREACH . . . . . . . . . . . . . . . . . 13
4.4 NO MISREPRESENTATION . . . . . . . . . . . . . . . . . . . 13
ARTICLE 5-CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1 TIME AND PLACE . . . . . . . . . . . . . . . . . . . . . . 13
5.2 DELIVERIES OF THE SELLER . . . . . . . . . . . . . . . . . 13
5.3 DELIVERIES OF BUYER . . . . . . . . . . . . . . . . . . . 14
5.4 LIEN SEARCHES . . . . . . . . . . . . . . . . . . . . . . 15
5.5 POST-CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 6-COVENANT NOT TO COMPETE . . . . . . . . . . . . . . . . . . . . . 15
6.1 OWNER'S KNOWLEDGE . . . . . . . . . . . . . . . . . . . . . 15
6.2 NON-COMPETE . . . . . . . . . . . . . . . . . . . . . . . 16
6.3 NON-SOLICITATION . . . . . . . . . . . . . . . . . . . . . 16
6.4 INTERFERENCE WITH RELATIONSHIPS . . . . . . . . . . . . . 16
6.5 CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . 16
6.6 PROPERTY OF THE SELLER/BUSINESS . . . . . . . . . . . . . 17
6.7 BLUE-PENCIL . . . . . . . . . . . . . . . . . . . . . . . 17
6.8 REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . 17
(ii)
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ARTICLE 7-POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . 17
7.1 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 17
7.2 TAX RETURNS . . . . . . . . . . . . . . . . . . . . . . . . 21
7.3 GUARANTY OF ROYALTIES . . . . . . . . . . . . . . . . . . . 21
7.4 SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 8-MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1 NOTICES, CONSENTS, ETC. . . . . . . . . . . . . . . . . . 22
8.2 PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . . . . . 23
8.3 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . 23
8.4 AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . 23
8.5 DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . 23
8.6 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . 23
8.7 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.8 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . 23
8.9 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.10 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . 23
8.11 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 24
8.12 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . 26
8.13 THIRD PARTIES . . . . . . . . . . . . . . . . . . . . . . 26
8.14 INTERPRETATIVE MATTERS . . . . . . . . . . . . . . . . . . 26
8.15 KNOWLEDGE . . . . . . . . . . . . . . . . . . . . . . . . 26
8.16 NO STRICT CONSTRUCTION . . . . . . . . . . . . . . . . . . 26
EXHIBITS
SCHEDULES
(iii)
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GLOSSARY OF DEFINED TERMS
"Accounts Receivable" . . . . . . . . . . . . . . . . . . . . . . Section 1.1.1
"Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
"Affiliate Transactions" . . . . . . . . . . . . . . . . . . . . . Section 3.28
"Aggregate Purchase Price . . . . . . . . . . . . . . . . . . . . Section 7.1.5
"Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
"Assumed Contracts" . . . . . . . . . . . . . . . . . . . . . . . Section 1.1.2
"Assumed Liabilities" . . . . . . . . . . . . . . . . . . . . . . . Section 1.3
"Bank" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2
"Books and Records" . . . . . . . . . . . . . . . . . . . . . . . Section 1.1.5
"Business" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Buyer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
"Buyer Indemnified Party" . . . . . . . . . . . . . . . . . . . . Section 7.1.1
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.1
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.1
"Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
"Confidential Information" . . . . . . . . . . . . . . . . . . . . Section 6.5
(iv)
6
"Defense Counsel" . . . . . . . . . . . . . . . . . . . . . . . . Section 7.1.3
"Defense Notice" . . . . . . . . . . . . . . . . . . . . . . . . Section 7.1.3
"Xxxxx Group" . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
"Employee Benefit Plans" . . . . . . . . . . . . . . . . . . . . Section 3.22
"Environmental and Safety Requirements" . . . . . . . . . . . . . Section 3.23.1
"ERISA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
"Excluded Assets" . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2
"Excluded Liabilities" . . . . . . . . . . . . . . . . . . . . . . Section 1.4
"Financial Statements" . . . . . . . . . . . . . . . . . . . . . . Section 3.8
"Franchise Laws" . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.29
"Franchised Business" . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
"Franchisee" . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
"Franchisee Affiliate" . . . . . . . . . . . . . . . . . . . . . . Section 8.11
"GAAP" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
"GMI" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
"Hazardous Wastes" . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
"Indemnified Party" . . . . . . . . . . . . . . . . . . . . . . . Section 7.1.3
"Indemnifying Party" . . . . . . . . . . . . . . . . . . . . . . Section 7.1.3
(v)
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"Leased Real Property" . . . . . . . . . . . . . . . . . . . . . . Section 3.13
"Liens" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
"Losses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.1.1
"Material Contracts" . . . . . . . . . . . . . . . . . . . . . . . Section 3.12
"Owner" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
"Parent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
"Permits" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.21
"Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
"Plan Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
"Proprietary Rights" . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1
"Purchased Assets" . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1
"Restricted Period" . . . . . . . . . . . . . . . . . . . . . . . . Section 6.2
"Rules" . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.18(a)
"Seller" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
"Seller Indemnified Party" . . . . . . . . . . . . . . . . . . . Section 7.1.2
"Seller Parties" . . . . . . . . . . . . . . . . . . . . . . . . . . Article 3
(vi)
8
"Seller Shares" . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.5
"Stock Purchase Agreement" . . . . . . . . . . . . . . . . . . . . Section 8.11
"Tax" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
"Tax Returns" . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
"Territory" . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.2
"Third Party Claim" . . . . . . . . . . . . . . . . . . . . . . . Section 7.1.3
"Transaction Documents" . . . . . . . . . . . . . . . . . . . . Section 8.11
"UFOC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.11
(vii)
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT ("AGREEMENT"), dated as of July __,
1998, by and among THE XXXXX GROUP, INC., a Delaware corporation ("XXXXX GROUP"
or "PARENT"), GLASSMARKS, INC., a Washington corporation and wholly-owned
subsidiary of Xxxxx Group ("GMI" or "BUYER"), GLASS DOCTOR CORPORATION, a
Georgia corporation (the "SELLER"), and XXXXXX X. XXXXX, an individual and the
sole shareholder of the Seller (the "OWNER"). Certain capitalized terms used
herein shall have the meaning given such terms in SECTION 8.11 below.
PREAMBLE
A. Seller is and has been a corporation engaged in the business of
awarding franchises for replacement glass installation service businesses
trading under the name Glass Doctor to Glass Doctor Franchisees and supporting
such Franchisees (the "BUSINESS").
B. Seller is wholly-owned by Owner, who holds one hundred percent
(100%) of the issued and outstanding capital stock of Seller.
C. Seller and Owner on the one hand and Xxxxx Group and Buyer on the
other hand wish to enter into an agreement for the acquisition by Buyer of
certain of the assets of Seller that are core to Seller's Business, including
the goodwill associated therewith.
D. Immediately prior to the execution and delivery of this Agreement,
Seller and Owner will enter into a Stock Purchase Agreement (defined in SECTION
8.11) with Xxxxx Group, relating to the acquisition of all of the capital stock
of GMI from Owner. Upon execution and consummation of the Stock Purchase
Agreement and the transactions contemplated thereby, GMI shall no longer be an
Affiliate of Seller and Owner for purposes of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants of the
parties as hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties hereto
hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Transfer of Assets. Seller hereby agrees to sell, assign,
transfer, convey and deliver to Buyer at the Closing, and Owner shall authorize
Seller to sell convey, assign, transfer and deliver to Buyer, all of Seller's
right, title and interest in and to certain core assets, properties, and rights
of Seller relating to the Business (all of such core assets, properties and
rights hereinafter collectively referred to as the "PURCHASED ASSETS"). The
Purchased Assets shall include the types of assets listed below generally, and
shall not include the Excluded Assets as defined below.
1.1.1 Seller's accounts receivable, including, but not
limited to all notes receivable (whether or not contingent), as detailed in
Schedule 3.10-B, as revised pursuant to Section 5.5 ("ACCOUNTS RECEIVABLE,"
which specifically excludes any accounts receivable from any Seller
Affiliates).
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1.1.2 Seller's rights, benefits and privileges pursuant to
or arising from those contracts, franchise agreements, as amended, and related
contracts, agreements, instruments and licenses entered into in conjunction
therewith that are expressly assumed by Buyer and listed in Schedule 1.1.2
("ASSUMED CONTRACTS"). A Purchase Price reduction shall be made at Closing for
any royalty rebates agreed to by Seller under any franchise agreement
amendment.
1.1.3 (Reserved)
1.1.4 All of Seller's Proprietary Rights, except for any
Proprietary Rights that constitute off the shelf computer software.
1.1.5 Originals or true copies of all of the books and
records, data and information relating to the Business ("BOOKS AND RECORDS"),
including without limitation, all general, financial and accounting records,
purchase orders and invoices, sales orders and sales order log books,
correspondence and miscellaneous records with respect to Franchisees, potential
Franchisees, customers and supply sources and all other general correspondence,
records, books and files now owned or hereafter acquired by Seller with respect
to the Business, as well as the Books and Records of Seller Affiliates to the
extent that they relate to the business, provided, however, this shall not
include payroll records and records of dividend distributions and extraordinary
salary or other disbursements since March 31, 1998, to which Buyer shall have
access if reasonably necessary.
1.1.6 All franchise, operations and other manuals,
memoranda, notes, lists, records and other documentation or papers (and all
copies thereof), including such items stored in computer memories, or
microfiche or by any other means related to the Business and/or the
Franchisees.
1.1.7 All the goodwill relating to the Business.
1.2 Excluded Assets. Any assets of the Seller that are not part
of the Purchased Assets shall be "EXCLUDED ASSETS," including, but not limited
to all leases, and those items specifically identified in Schedule 1.2, and
shall be retained by Seller and shall not be transferred pursuant to this
Agreement.
1.3 Assumed Liabilities. Buyer shall assume no liabilities from
Seller or its Affiliates except for obligations assumed in connection with the
Assumed Contracts and certain non-Affiliate accounts payable as listed in
Schedule 3.10-C (collectively, "ASSUMED LIABILITIES"). With respect to the
Assumed Contracts, Assumed Liabilities shall in all cases be limited to, and
Buyer assumes absolutely no liability or obligation other than, the obligation
to perform as required under the Assumed Contracts as of the Closing Date and
thereafter. It is the intent of the Buyer and Seller that Buyer shall not
assume any liability or obligation to any Franchisee or any third-party that in
any way arises from or is related to any tortuous act or omission, or any other
act or omission that results in a breach of any written or oral agreement or
violation of law, of or by Seller, Owner or any of their Affiliates, whether
known or unknown, fixed or unfixed, xxxxxx or inchoate, accrued, absolute,
contingent or otherwise, and whether such act or omission occurred prior to or
after the assumption of such Assumed Contracts. Buyer shall assume at Closing
and subsequently pay, honor and discharge in accordance with the terms thereof,
the Assumed Liabilities.
2
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1.4 Excluded Liabilities. Notwithstanding anything to the
contrary contained in this Agreement or in any Transaction Document, and
regardless of whether such liability is disclosed in this Agreement or any
other place, in any of the Transaction Documents or on any Schedule or Exhibit
hereto or thereto, Buyer does not and will not assume any liability or
obligation of any kind (except for Assumed Liabilities) of the Seller or any
Affiliate or any Employee Benefit Plan or any obligation relating to the
Business, use of the Purchased Assets, or the performance by Seller or its
Affiliates under any contract or agreement, whether absolute or contingent,
accrued or unaccrued, asserted or unasserted, known or unknown or otherwise
(collectively, the "EXCLUDED LIABILITIES"). The parties intend that Seller
shall retain, assume, agree to pay, perform and discharge and in every way be
responsible for all Excluded Liabilities, including all debts, liabilities and
obligations of Seller and all Affiliates of the foregoing of any kind or nature
whatsoever (and specifically including all liabilities under the Assumed
Contracts that are not expressly assumed by Buyer within the Assumed
Liabilities defined in the preceding SECTION 1.3), arising out of, relating to,
resulting from, or caused by any transaction, status, event, condition,
occurrence or situation relating to, arising out of or in connection with the
Business, the Purchased Assets existing, arising or occurring on or prior to
the Closing Date.
ARTICLE 2
CONSIDERATION AND MANNER OF PAYMENT
2.1 Purchase Price. The aggregate purchase price for the
Purchased Assets (the "PURCHASE PRICE") is Five Hundred Thousand Dollars
(U.S.$500,000) to be paid as provided for in SECTION 2.2.
2.2 Payment of Purchase Price. The Purchase Price shall be paid
at the Closing as follows:
Xxxxx Group will pay to the Seller, by wire transfer of
immediately available funds to the Seller's account maintained at Gwinnett
National Bank (the "BANK"), an amount equal to Five Hundred Thousand Dollars
(U.S.$500,000), less an amount of Twenty-Five Thousand Dollars (U.S.$25,000)
necessary to satisfy certain royalty rebates agreed to between Seller and
certain Franchisees; and provided, further, that the Seller shall issue an
irrevocable instruction to the Bank that upon receipt of the adjusted purchase
price into Seller's account, Bank shall immediately pay off the total
outstanding amount due under a certain term note held by the Bank and release
the Purchased Assets from all security interests, liens and encumbrances held
by the Bank.
ARTICLE 3
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller and Owner (collectively, "SELLER PARTIES") hereby represent and
warrant to Buyer as of the Closing Date hereof as follows:
3.1 Seller Parties Authority. The Seller has full corporate
power, right and authority and the Owner has full legal power, right and
authority to enter into and perform his or its obligations under this Agreement
and each of the Transaction Documents to which they are a party. This Agreement
and each of the Transaction Documents to which a Seller Party is a party have
been duly executed and delivered by each Seller Party, and constitute the valid
and binding obligations, enforceable against each Seller Party in accordance
with their respective terms. Except as set forth in Schedule 3.1, no
3
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permits, approvals or consents of or notifications to (a) any governmental
entities or (b) any other Persons are necessary in connection with the
execution, delivery and performance by each Seller Party of this Agreement and
the Transaction Documents to which each Seller Party is a party and the
consummation by each Seller Party of the transactions contemplated hereby and
thereby.
3.2 Organization and Qualification of the Seller. The Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Georgia. The Seller has full corporate power and
authority to carry on its businesses as it is now being conducted and to own or
hold under lease the properties and assets it now owns or holds under lease.
All of the jurisdictions in which the Seller is licensed or qualified to
conduct business are set forth in Schedule 3.2. Except as set forth in
Schedule 3.2, there are no other jurisdictions in which Seller's conduct of the
Business or its ownership of assets requires such qualification under
applicable law. The minute books of the Seller contain complete and correct
copies of the minutes of each meeting and each action by written consent of its
Boards of Directors or shareholders and the stock ledger of the Seller contains
a complete and correct record of all issuances and transfers of capital stock
of the Seller. True and complete copies of such corporate minute books and
records have been delivered to Buyer's counsel. Seller will take such action
as may be necessary to ensure that its name is changed within ten (10) days of
Closing to one that does not contain the terms "Glass" or "Doctor."
3.3 Subsidiaries. The Seller does not have, directly or
indirectly, any ownership in any Person.
3.4 Articles of Incorporation, Bylaws, Officers and Directors.
Complete and correct copies of the Seller's charter documents and all
amendments thereof to date, certified by the Secretary of State of Georgia, and
the bylaws as amended to date, certified by Owner and another officer of the
Seller have been or are being delivered to Xxxxx Group prior to or at the
Closing. Schedule 3.4 contains a complete and correct list of all of the
officers and directors of the Seller immediately prior to the Closing.
3.5 Capital Stock. The Seller has one million five hundred
thousand (1,500,000) authorized shares of Common Stock, of which ten thousand
(10,000) shares are issued and outstanding ("SELLER SHARES"). All of the
Seller Shares have been duly authorized and validly issued, are fully paid and
nonassessable. Owner is the beneficial and record owner of all the Seller
Shares, free and clear of any Liens whatsoever.
3.6 Options, etc. Other than the Seller Shares held by the Owner,
the Seller does not have outstanding any stock or other securities convertible
into or exchangeable for shares of its capital stock or containing profit
participation features, and the Seller does not have outstanding any options,
warrants or rights to subscribe for or to purchase its capital stock or any
stock or securities convertible into or exchangeable for its capital stock and
there is no obligation, commitment or agreement of any character to which any
Seller Party is a party, by which the Seller is obligated to issue, deliver or
sell or cause to be issued, delivered or sold, additional shares of capital
stock of the Seller or obligating Seller to grant, extend, accelerate the
vesting of or enter in to any such option, warrant, equity security, call
right, commitment or agreement. The Seller is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock or any warrants, options or other rights to acquire
its capital stock. There are no voting agreements, voting trusts or other
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agreements (including, without limitation, contractual or statutory preemptive
rights or cumulative voting rights), commitments or understandings with respect
to the voting or transfer of the capital stock of the Seller.
3.7 (Reserved) .
3.8 Financial Statements. Seller has previously delivered to
Buyer audited financial statements of the Seller for the years ended March 31,
1995, 1996 and 1997 and unaudited financial statements for the year ended March
31, 1998 ("FINANCIAL STATEMENTS"). Except as set forth in Schedule 3.8, each
of the Financial Statements is complete and correct in all material respects,
is consistent with the books and records of the Seller (which, in turn, are
accurate and complete in all material respects) and fairly presents the
Seller's financial condition, assets and liabilities as of their respective
dates and the results of operations and cash flows for the periods related
thereto in accordance with GAAP, except that the 1998 unaudited Financial
Statements lack the footnote disclosure and normal recurring accruals otherwise
required by GAAP, none of which, if provided, would reflect a material adverse
change in the operations or financial condition of the Seller.
3.9 Absence of Undisclosed Liabilities. Seller does not have any
material debts, liabilities or obligations of any nature (whether accrued,
absolute, contingent, direct, indirect, perfected, or otherwise and whether due
or to become due, or, to the Owner's knowledge, inchoate or unliquidated)
arising out of transactions entered into at or prior to the Closing, or any
transaction, series of transactions, action or inaction at or prior to the
Closing, or any state of facts or condition existing at or prior to the Closing
(regardless of when such liability or obligation is asserted), including but
not limited to liabilities or obligations on account of Taxes or governmental
charges or penalties, interest or fines thereon or in respect thereof, except
(a) to the extent specifically reflected and accrued for or reserved against in
the Financial Statements, or (b) for liabilities specifically delineated on
Schedule 3.9. Without limiting the foregoing, all obligations to be fulfilled
at or prior to Closing have been paid as agreed with respect to the stock
purchase agreements entered into between Seller, on the one hand, and former
franchisees Baker, Bixler, Xxxxx and Xxxxxxxx on the other hand, which
agreements are not be assigned to or assumed by Buyer or Xxxxx Group.
3.10 Inventories, Accounts Receivable and Payable.
(a) Inventories. Seller has no inventory.
(b) Accounts Receivable. Schedule 3.10-B sets forth a
correct and complete list of each of the Seller's non-Affiliate
Accounts Receivable on the Closing as reflected in the Financial
Statements and through the Closing Date, subject to the post-Closing
adjustment referenced below. All such Accounts Receivable are valid
and have arisen in the ordinary course of business and, to Seller's
knowledge, are not subject to any counterclaim or set-off. Schedule
3.10-B shall be subject to a post-Closing audit and update to the
reasonable satisfaction of Xxxxx Group and Buyer in accordance with
the terms of Section 5.5, to ensure such Schedule accurately reflects
all Accounts Receivable as of the Closing Date.
(c) Accounts Payable. Schedule 3.10-C sets forth a
correct and complete list of the each of Seller's non-Affiliate
accounts payable on the Closing Date as reflected in the
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Financial Statements and through the Closing Date, subject to the
post-Closing adjustment referenced below. The Seller's Accounts
Payable have arisen in bona-fide arm's length transactions in the
ordinary course of the Seller's business consistent with past
practice. Schedule 3.10-C shall be subject to a post-Closing audit and
update to the reasonable satisfaction of Xxxxx Group and Buyer in
accordance with the terms of Section 5.5, to ensure such Schedule
accurately reflects all Accounts Payable as of the Closing Date, it
being understood that the total Accounts Payable set forth in Schedule
3.10-C after the post- Closing audit shall not be more than one
hundred ten percent (110%) of amount reflected in such Schedule on the
Closing Date.
3.11 Taxes. Except as set forth on Schedule 3.11, Seller has paid
when due all Taxes (as defined in SECTION 8.11), license fees and other charges
imposed upon its business, properties or assets and has timely filed all Tax
Returns and related documents required to be filed with any governmental
authority. None of the Seller Parties have any knowledge of any basis for the
assertion of any claim relating or attributable to Taxes which, if adversely
determined, would result in any Lien on the assets of Seller or otherwise have
a material adverse effect on Seller.
3.12 Material Contracts. Schedule 3.12 is a correct and complete
list of every material written contract, agreement, obligation, relationship or
commitment, and to the knowledge of Seller Parties, every material oral
contract, commitment, obligation, agreement or relationship, to which Seller is
a party or by which the Seller is bound and which cannot be cancelled with
thirty (30) days notice or less without penalty or obligation (the "MATERIAL
CONTRACTS"), correct and complete copies of which previously have been
furnished to Buyer. Except as set forth on Schedule 3.12, the Seller is not in
default, and no event has occurred that is known or should be known to Seller
or Owner, which with the giving of notice or the passage of time or both would
constitute a default by the Seller, under any Material Contracts, and, no event
has occurred which with the giving of notice or the passage of time or both
would constitute such a default by any party to any such Material Contract.
3.13 Real Property. The Seller does not own any real property and
therefore is not required to possess any permits, licenses or certificates or
file any notices related to owning or leasing any real property. The Seller
has valid leasehold interests in all of the real property which it holds under
the leases described in Schedule 3.13, (collectively, the "LEASED REAL
PROPERTY"), in each case free and clear of all Liens, except for Liens for
current property taxes not yet due and payable, easements, or zoning or other
restrictive ordinances imposed or enforced by governmental authority which do
not or would not have a material adverse effect on the Leased Real Property.
The Leased Real Property constitutes all real properties used or occupied by
the Seller in connection with the Business or reflected on the Financial
Statements.
3.14 Personal Property. Seller has or will have at Closing, good
and marketable title to all of the Purchased Assets (excluding Proprietary
Rights which are covered in SECTION 3.17), free and clear of any Liens, except
for Liens for current property Taxes not yet due and payable and Liens
disclosed on Schedule 3.14. Except as set forth in Schedule 3.14, none of the
Purchased Assets are held under any lease, license, security agreement,
conditional sales contract or other title retention or security arrangement or
is located other than on the premises of the Seller.
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3.15 Litigation. Except as set forth in Schedule 3.15, there is no
suit, action, proceeding, investigation, claim or order pending or, to the
knowledge of Seller, threatened against either Seller Party or any Affiliate
(or any of the officers, directors or key employees of the Seller or Owner), or
to which either Seller Party is otherwise a party, which if adversely
determined would adversely affect the Seller, its assets or the Business,
before any court, or before any governmental department, commission, board,
agency, or instrumentality; nor, is there any reasonable basis that is known or
should be known by Seller or Owner for any such action, proceeding or
investigation. Neither Seller nor Owner is subject to any judgment, order or
decree of any court or governmental agency; nor has received any opinion or
memorandum or legal advice from legal counsel retained by a either Seller Party
to the effect that either one of them is exposed, from a legal standpoint, to
any liability which may be material to the Business or its assets; and neither
Seller Party is engaged in any legal action to recover monies due either of
them or for damages sustained by either of them in any way related to the
Business or its assets. Except as set forth on Schedule 3.15, there were no
litigation matters to which Owner or any Affiliates (relating to the assets and
properties of the Seller or the Business), or Seller was a party during the
three (3) years preceding the date of this Agreement.
3.16 Compliance with Applicable Laws; Bulk Transfer Laws. Neither
Seller nor Owner is in material violation of or out of material compliance with
any law, regulation or requirement applicable to it or the conduct, ownership,
use, occupancy or operation of the Business or the Leased Real Property, nor
has either Seller Party received notice (written or oral) of any such violation
or non-compliance (except where any such violations or non-compliance would not
individually or in the aggregate have a material adverse effect on such Seller
Party, the Business or its assets.
3.17 Intellectual Property. Schedule 3.17 contains a complete and
correct list of all patented or registered Proprietary Rights owned by the
Seller and all pending patent applications and applications for the
registration of other Proprietary Rights owned, licensed or filed by the
Seller. Schedule 3.17 also contains a complete and correct list of all trade
or corporate names used by the Seller, a complete and correct list of all
copyrighted materials and the dates such copyrights attached to such materials
(based either on statutory or common law) and a complete and correct list of
all licenses, franchises, area development rights and other rights granted by
the Seller to any third party with respect to Proprietary Rights and licenses
and other rights granted by any third party to the Seller. Except as set forth
on Schedule 3.17, (a) the Seller owns and possesses all right, title and
interest in and to, or has a valid license to use, all of the Proprietary
Rights necessary for the operation of the Business as presently conducted; (b)
no claim by any third party contesting the validity, enforceability, use or
ownership of any such Proprietary Rights has been made, is currently
outstanding or, to the knowledge of any Seller Parties, threatened, and, to the
knowledge of any Seller Parties, there is no reasonable basis for any such
claim; (c) neither any Seller Party nor any registered agent of a Seller Party
has received any notices of, nor is aware of any reasonable basis for an
allegation of, any infringement or misappropriation by, or conflict with, any
third party with respect to such Proprietary Rights, nor has any Seller Party
or any registered agent received any claims of infringement or misappropriation
of or other conflict with any Proprietary Rights of any third party; and (d) to
the knowledge of the Seller Parties, no Seller Party has infringed,
misappropriated or otherwise violated any Proprietary Rights of any third
parties, and the Seller Parties are not aware of any infringement,
misappropriation or conflict which will occur as a result of the continued
operation of the Seller's Business as presently conducted or as currently
proposed by the Seller to be conducted.
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3.18 Transaction Not a Breach. Except as set forth in Schedule
3.18, neither the execution and delivery of this Agreement and the Transaction
Documents by any Seller Party nor the performance by any of them of the
transactions contemplated hereby or thereby will:
(a) violate or conflict with or result in a breach of any
provision of any law, statute, rule, regulation, order, permit,
judgment, injunction, decree or other decision (collectively, "RULES")
of any court or other tribunal or any governmental entity or agency
binding on any Seller Party or their respective properties, or
conflict with or result in the breach of any of the terms, conditions
or provisions thereof;
(b) constitute a default under the charter documents or
the bylaws of the Seller or of any Material Contract listed or
required to be listed on Schedule 3.12;
(c) constitute an event which would permit any party to
terminate, or accelerate the maturity of any indebtedness or other
obligation under, any lease or other Material Contract listed or
required to be listed on Schedule 3.12;
(d) result in the creation or imposition of any Lien upon
the Seller's capital stock or assets; or
(e) require any authorization, consent, approval,
exemption or other action by or notice to any court or administrative
or governmental body pursuant to the charter or bylaws of the Seller
or any Rules.
3.19 Conduct of Business.
3.19.1 Conduct in Ordinary Course. Except as set forth on
Schedule 3.19 or otherwise provided in this Agreement, since March 31, 1998 and
through the Closing Date, the Seller has conducted its business only in the
ordinary course of business consistent with past custom and practice, and has
incurred no liabilities other than in the ordinary course of business
consistent with past custom and practice and there has been no material adverse
change in the assets, condition (financial or otherwise), operating results,
Franchisee, employee or customer relations, business activities or business
prospects of the Seller. Without limitation of the foregoing and except as
described herein or set forth on Schedule 3.19, since March 31, 1998, Seller
has not:
(a) sold, assigned or transferred any of the assets of
the Business, except for sales of inventory in the ordinary course of
business or mortgaged, pledged or subjected them to any Lien, charge
or other restriction, except for Liens for current property taxes not
yet due and payable;
(b) sold, assigned, transferred, abandoned or permitted
to lapse any licenses or permits which, individually or in the
aggregate, are material to the Business or any portion thereof, or any
of the Proprietary Rights or other intangible assets, or disclosed any
material proprietary confidential information to any person, granted
any license or sublicense of any rights under or with respect to any
Proprietary Rights;
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(c) made or granted any increase in, or amended or
terminated, any existing plan, program, policy or arrangement,
including, without limitation, any Employee Benefit Plan or
arrangement or adopted any new Employee Benefit Plan or arrangement,
or entered into any new collective bargaining agreement or
multiemployer plan;
(d) conducted its cash management customs and practices
(including the timing of collection of receivables and payment of
payables and other current liabilities) and maintained its books and
records other than in the usual and ordinary course of business
consistent with past custom and practice;
(e) suffered any extraordinary loss, damage, destruction
or casualty loss to the Business or waived any rights of material
value, whether or not covered by insurance and whether or not in the
ordinary course of business;
(f) amended or authorized the amendment of its charter
documents or bylaws;
(g) entered into any other material transaction, other
than in the ordinary course of business consistent with past custom
and practice; or
(h) committed to any of the foregoing.
3.19.2 No Illegal Payments. The Seller has not at any time
made or committed to make any payments for illegal political contributions or
made any bribes, kickback payments or other illegal payments.
3.19.3 Operation of Franchised Businesses. Immediately
prior to Closing, neither Seller, Owner or any Affiliate operates any
Franchised Businesses directly or indirectly except through SEL, Inc., an
Affiliate of Seller and Owner, in the Atlanta metropolitan area.
3.20 Insurance Policies. Schedule 3.20 is a correct and complete
list and description, including policy numbers, of all insurance policies owned
by the Seller, correct and complete copies of which policies or binders have
previously been delivered to Xxxxx Group. Such policies are in full force and
effect, and the Seller is not in default under any of them. No Seller Party
has received any notice of cancellation or intent to cancel or increase or
intent to increase premiums with respect to such insurance policies nor, to the
knowledge of any Seller Parties, is there any basis for any such action.
Schedule 3.20 also contains a list of all pending claims with any insurance
company and any instances within the previous three years of a denial of
coverage of any Seller Parties by any insurance company.
3.21 Licenses and Permits. The Seller holds or can obtain without
undue expense or delay, all the permits, licenses, including, without
limitation, licenses, franchises and approvals of governmental authorities and
agencies (including state approval of franchise registrations applications)
necessary or material for the current conduct, ownership, use, occupancy or
operation of the Business or the Leased Real Property, all of which are
identified on Schedule 3.21 ("PERMITS"). The Seller is in compliance in all
material respects with such Permits, all of which are in full force and effect,
and neither the Seller nor the Owner has received any notices (written or oral)
to the contrary.
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3.22 Employee Benefit Plans. Except as set forth in Schedule 3.22,
neither the Seller nor any Plan Affiliate has maintained, sponsored, adopted,
made contributions to or obligated itself to make contributions to or to pay
any benefits or grant rights under or with respect to any "Employee Pension
Benefit Plan" (as defined in Section 3(2) of ERISA), "Employee Welfare Benefit
Plan" (as defined in Section 3(1) of ERISA), "multi-employer plan" (as defined
in Section 3(37) of ERISA), plan of deferred compensation, medical plan, life
insurance plan, long-term disability plan, dental plan or other plan providing
for the welfare of any of the Seller's employees or former employees or
beneficiaries thereof, personnel policy (including but not limited to vacation
time, holiday pay, bonus programs, moving expense reimbursement programs and
sick leave), excess benefit plan, bonus or incentive plan (including but not
limited to stock options, restricted stock, stock bonus and deferred bonus
plans), salary reduction agreement, change-of-control agreement, employment
agreement, consulting agreement or any other benefit, program or contract
(collectively, "EMPLOYEE BENEFIT PLANS"), whether or not written or pursuant to
a collective bargaining agreement, which could give rise to or result in the
Seller or such Plan Affiliate having any debt, liability, claim or obligation
of any kind or nature, whether accrued, absolute, contingent, direct, indirect,
known or unknown, perfected or inchoate or otherwise and whether or not due or
to become due. Correct and complete copies of all Employee Benefit Plans
previously have been furnished to Xxxxx Group. The Employee Benefit Plans are
in compliance with governing documents and agreements and with applicable laws.
3.23 Health, Safety and Environment.
3.23.1 Compliance with Environmental and Safety Requirements.
The Seller is in compliance with all applicable federal, state and local laws,
rules, regulations, ordinances and requirements relating to public health and
safety, transportation, worker health and safety and pollution and protection
of the environment, all as amended or hereafter amended ("ENVIRONMENTAL AND
SAFETY REQUIREMENTS"), except where failure to so comply would not have a
material adverse effect on the Seller, the Business or its assets, and the
Seller possesses all required permits, licenses and certificates, and has filed
all notices or applications, required thereby.
3.23.2 No Hazardous Wastes. The Seller has never generated,
transported, treated, stored, or disposed of any Hazardous Wastes at any site,
location or facility, except in compliance with Environmental and Safety
Requirements, and to his knowledge, no such Hazardous Wastes are present on, in
or under the Leased Real Property, and to his knowledge, the Leased Real
Property does not contain (including without limitation, containment by means
of any underground storage tank) any Hazardous Waste, except in compliance with
Environmental and Safety Requirements.
3.23.3 No Actions or Proceedings. None of the Seller Parties
have been subject to, or received any notice (written or oral) of any private,
administrative or judicial action, or any notice (written or oral) of any
intended private, administrative, or judicial action relating to the presence
or alleged presence of Hazardous Wastes in, under or upon any real property
owned or used by the Seller or its Affiliates, and, to the knowledge of the
Seller Parties, other than as set forth on Schedule 3.23, there is no
reasonable basis for any such notice or action; and there are no pending or
threatened actions or proceedings (or notices of potential actions or
proceedings) from any governmental agency or any other entity regarding any
matter relating to health, safety or protection of the environment.
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3.23.4 Other Condition. No facts, events or conditions with
respect to the past or present operations or facilities of the Seller or the
Business exist which could reasonably be expected to interfere with or prevent
continued compliance with, or could give rise to any common law or statutory
liability or otherwise form the basis of any claim, action, suit, proceeding,
hearing or investigation against or involving the Seller or the Business under
any Environmental and Safety Requirement based on any such fact, event or
circumstance, including, without limitation, liability for cleanup costs,
personal injury or property damage.
3.24 (Reserved.)
3.25 Personnel Agreements, Plans and Arrangements. Except as
listed in Schedule 3.25, neither the Seller nor any Affiliate is a party to or
obligated in connection with the Business with respect to any outstanding
contracts with current or former employees, agents, consultants, or advisers.
The Seller and each of its Affiliates has complied in all material respects
with all applicable laws relating to the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining and the payment of social security and other taxes. Except as set
forth in Schedule 3.25 there are no administrative charges or court complaints
pending or, to the knowledge of Seller or Owner, threatened against the Seller
or any Affiliate before the U.S. Equal Employment Opportunity Commission or any
state or federal court or agency concerning alleged employment discrimination
or any other matters relating to the employment of labor that would have a
material adverse effect on the Seller, the Business or its assets.
3.26 Workers Compensation. Schedule 3.26 sets forth as of March
31, 1998 all expenses, obligations, duties and liabilities relating to any
claims by employees and former employees (including dependents and spouses) of
the Seller or any Affiliate (or their respective predecessors, if any) made
since March 31, 1997, and the extent of any specific accrual on or reserve
therefor set forth on the Financial Statements, for costs, expenses and other
liabilities under any workers compensation laws, regulations, requirements or
programs. Except as set forth on Schedule 3.26, to the knowledge of the Seller
Parties, no claims, injuries, fact, event or condition exists which would give
rise to a material claim by employees and former employees (including
dependents and spouses) of the Seller or its Affiliates under any workers
compensation laws, regulations, requirements or programs. Since March 31,
1998, there has been no material change, other than in the ordinary course of
business, in the information disclosed in Schedule 3.26.
3.27 Customers. The books and records of the Seller delivered to
Buyer contain a complete and accurate list of the customers (including
Franchisees) of the Seller who have purchased services and/or goods from the
Seller within no less than the last twenty four (24) months.
3.28 Affiliate Transactions. Schedule 3.28 sets forth the parties
to and the date, nature and amount of each transaction involving the transfer
of any cash, property or rights to or from the Seller from, to or for the
benefit of any Affiliate or former Affiliate of the Seller ("AFFILIATE
TRANSACTIONS") during the two (2) year period preceding the date of this
Agreement and existing commitments of the Seller to engage in the future in any
Affiliate Transactions. Each Affiliate Transaction was effected on terms
equivalent to those which would have been established in an arms-length
negotiation, except as disclosed on Schedule 3.28.
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3.29 Franchise Regulations. Each of the Seller Parties have
materially complied with any and all applicable federal and state laws and
regulations ("FRANCHISE LAWS") governing the offer and sale of franchises and
business opportunities, and all state laws governing the Seller's relationship
with Franchisees and licensees. Each of the Assumed Contracts were entered
into with the respective Franchisee in accordance with the Franchise Laws
governing the offer and sale of franchises in effect at the time of the offer
of a Franchise and the execution of the respective Franchise Agreement.
Without limiting the foregoing, Franchisees Xxxxxxxxx, Dawson, Eby, Xxxxxxx and
Lindzey were offered franchises in strict compliance with all state and federal
laws governing the offer and sale of franchises. Further, without limiting the
foregoing, there is no liability arising out of or related to the Franchise
Agreements entered into with Xxxxx Xxxxxxxxxx, Xxxxx Xxxxxx, Xxxxxxx Xxxxx,
Xxxxxxx and Time Kisieleski, Xxxxx Xxxxx, Xxx Xxxxx and Don and Xxxxx Xxxxx, or
the termination or expiration of such agreements.
3.30 No Misrepresentation. None of the representations and
warranties of Seller set forth in this Agreement, in any of the certificates,
schedules, lists, documents, exhibits, or other instruments delivered, or to be
delivered, to Xxxxx Group as contemplated by any provision hereof (including,
without limitation, the Transaction Documents), contain any untrue statement of
a material fact or omit a material fact necessary to make the statements
contained herein or therein not misleading. There is no material fact that is
known, or that should be known to the Seller or Owner, which has not been
disclosed to Xxxxx Group and which materially adversely affects or could
reasonably be anticipated to materially adversely affect the Business or
Seller's or any Affiliate's ability to consummate the transactions contemplated
hereby.
ARTICLE 4
PARENT'S AND BUYER'S REPRESENTATIONS AND WARRANTIES
Xxxxx Group hereby represents and warrants to Seller as of the Closing
Date as follows:
4.1 Organization. Xxxxx Group is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
4.2 Authorization. Each of Xxxxx Group and Buyer has full power,
right and authority to enter into and perform its obligations under this
Agreement and each of the Transaction Documents to which it is a party. The
execution, delivery and performance of this Agreement and each of the
Transaction Documents to which Xxxxx Group and/or Buyer is a party have been
duly and properly authorized by all requisite corporate action in accordance
with applicable law and with the Certificate of Incorporation and bylaws of
each of Xxxxx Group and Buyer, respectively. This Agreement and each of the
Transaction Documents to which each of Xxxxx Group and Buyer is a party have
been duly executed and delivered by Xxxxx Group and Buyer and are the valid and
binding obligation of Xxxxx Group and Buyer and are enforceable against each of
them in accordance with their respective terms. No permits, approvals or
consents of or notifications to (i) any governmental entities or (ii) any other
Persons are necessary in connection with the execution, delivery and
performance by Xxxxx Group and Buyer of this Agreement and the Transaction
Documents and the consummation by Xxxxx Group and Buyer of the transactions
contemplated hereby or thereby.
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4.3 Transaction Not a Breach. The execution, delivery and
performance of this Agreement and the Transaction Documents by each of Xxxxx
Group and Buyer will not violate and conflict with, or result in the breach of
any of the terms, conditions, or provisions of Xxxxx Group's or Buyer's
respective Certificates of Incorporation or Bylaws or of any contract,
agreement, mortgage, or other instrument or obligation of any nature to which
either of them is bound.
4.4 No Misrepresentation. None of the representations and
warranties of Xxxxx Group and Buyer set forth in this Agreement or in any of
the certificates, schedules, lists, documents, exhibits, or other instruments
delivered, or to be delivered, to the Seller as contemplated by any provision
hereof (including, without limitation, the Transaction Documents), contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements contained herein or therein not misleading.
ARTICLE 5
CLOSING
5.1 Time and Place. The closing of the transactions that are the
subject of this Agreement (the "CLOSING") shall occur via mail on July 24, 1998
(the "CLOSING DATE") or at such other time or in such other manner as the
parties hereto shall mutually agree.
5.2 Deliveries of the Seller. At or prior to the Closing, Seller
will execute and deliver or cause to be executed and delivered to Buyer:
(a) one or more General Assignments and Bills of Sale in a
form reasonably acceptable to Xxxxx Group and Buyer, conveying in the
aggregate all of Seller's owned personal property included in the
Purchased Assets;
(b) UCC-3 Termination Statements and Releases executed
by each secured party creditor which has a perfected security interest
in any of the Purchased Assets, represented by Seller Parties to be
Gwinnett National Bank only;
(c) Certificates of Good Standing, dated not more than
thirty (30) days prior to the Closing Date, with respect to the
Seller, issued by the Secretary of State of Georgia and by the
Secretary of State of each jurisdiction in which the Seller is
qualified to do business as a foreign corporation, as set forth in
Schedule 3.2 (with telephonic confirmation on the Closing Date).
(d) any required third-party consents, filings, and
certificates from Seller or any third party (including any
governmental authority or agency) relating to the sale of the
Purchased Assets and the Assumed Liabilities;
(e) an opinion of Seller's counsel dated as of the Closing
Date, in form and substance satisfactory to Buyer, a form or which is
attached hereto as Exhibit 5.2-E;
(f) a Secretary's Certificate of the Seller, together with
copies of the Seller's Certificate of Incorporation, Bylaws, and
resolutions of Seller and Board of
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Directors of the Seller authorizing the execution and delivery of this
Agreement and the Transaction Documents and the performance of the
Seller's obligations under this Agreement and the Transaction
Documents, each such item certified by the secretary of the Seller as
having been duly and validly adopted and in full force and effect;
(g) a duly executed Franchise Agreement, and any and all
amendments thereto, between the Seller on the one hand, and SEL, Inc.
and any other Affiliated Franchisee, respectively, on the other hand,
or their respective successors in interest;
(h) a duly executed Trademark License Termination
Agreement executed by Seller's Affiliate, Glass Doctor, Inc., in the
form attached hereto as Exhibit 5.2-H;
(i) a fully executed Stock Purchase Agreement;
(j) an Amendment from each Franchisee and licensee of the
Seller, in a form acceptable to Xxxxx Group (except for the
Franchisees operating in Arizona and Broward County, Florida);
(k) all manuals related to or used in connection with the
offer, sale and support of Franchised Businesses, including but not
limited to, all operations manuals, personnel manuals, accounting
manuals, training manuals, news letters, and other materials, in any
and all media;
(l) a Release in the form attached hereto as Exhibit 5.2-L
executed by Seller and its Affiliates (except GMI); and
(m) such other documents and instruments as Buyer or its
counsel reasonably shall deem necessary to consummate the transactions
contemplated hereby.
All documents delivered to Buyer shall be in form and substance
reasonably satisfactory to Xxxxxx Xxxxxx & Xxxxx, counsel for Buyer.
5.3 Deliveries of Buyer. At the Closing, Buyer will deliver to
Seller simultaneously with the delivery of the items referred to in SECTION 5.2
above:
(a) the payment of the cash portion of the Purchase Price
subject to deduction of any holdback as provided in SECTION 2.2;
(b) one or more Assignment and Assumption Agreements in
a form reasonably acceptable to Xxxxx Group and Seller, evidencing the
assignment and assumption of the rights and obligations assigned and
assumed hereby;
(c) within 10 days of Closing, a Certificate of Good
Standing dated no later than July 29, 1998, with respect to Xxxxx
Group, issued by the Secretary of State of Delaware;
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(d) a Secretary's Certificate of each of Buyer and Xxxxx
Group, together with copies of their Certificates of Incorporation,
Bylaws, and resolutions of each of Xxxxx Group's and Buyer's
respective Boards of Directors authorizing the execution and delivery
of this Agreement and the Transaction Documents and the performance of
the Xxxxx Group's and Buyer's obligations under this Agreement and the
Transaction Documents, each such item certified by their respective
Secretaries as having been duly and validly adopted and in full force
and effect;
(e) an opinion of Buyer's counsel dated as of the Closing
Date, and such other documents and instruments as Seller or his
counsel reasonably shall deem necessary to consummate the transactions
contemplated hereby.
All documents delivered to Seller shall be in form and substance
reasonably satisfactory to the counsel for Seller.
5.4 Lien Searches. Within ten (10) days after Closing, Seller
shall provide Buyer with the results of all lien searches (including UCC, tax,
judgment and other relevant searches) showing that there were no financing
statements, judgments, taxes or other Liens outstanding against the Seller or
any of its assets as of the Closing Date, except those contained in Schedule
3.14, in form and manner required by Buyer or its lenders.
5.5 Post-Closing Matters. Within fifteen (15) days after Closing,
all matters identified in Schedule 5.5, items 1 through 9, shall be resolved
and all actions to be taken shall be completed to the reasonable satisfaction
of Xxxxx Group. In the event that all such matters are not resolved or all
such actions are not taken, for each day beyond the fifteenth day after Closing
that items remain unresolved or actions remain not taken, Xxxxx Group shall
postpone the first installment due under the Term Note referenced in the Stock
Purchase Agreement by one (1) day.
ARTICLE 6
COVENANT NOT TO COMPETE
6.1 Owner's Knowledge. Owner agrees and acknowledges that in
order to assure that the Business will retain its value as a "going concern,"
it is necessary that Owner undertake not to utilize his present special
knowledge of the Seller's Business to compete with the Buyer or any of the
Buyer's Franchisees or licensees after the acquisition, except as permitted
under any new Franchise Agreement between the Buyer or other Affiliate of Xxxxx
Group and the Owner or any Franchise Affiliate of the Owner. Owner further
acknowledges that (a) Buyer will be engaged in the Business; (b) Owner
possesses extensive knowledge and a unique understanding of the Business as
well as (subsequent to the transactions contemplated by this Agreement) the
proprietary and confidential information concerning Buyer and the Business; (c)
the agreements and covenants contained in this SECTION 6.1 are essential to
protect Buyer and its Affiliates and the value of the Business and are a
condition precedent to Buyer's willingness to purchase and pay for the
Purchased Assets and enter into any Franchise Agreement with any Franchisee
Affiliate; (d) Buyer would be irreparably damaged if Owner were to provide
services or any products to any person or entity in violation of the provisions
of this Agreement; (e) Owner has a means to support himself and his dependents
other than by engaging in the
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Business without Buyer's or its Affiliates approval and the provisions of this
SECTION 6.1 will not impair such ability.
6.2 Non-Compete. Owner hereby agrees that for the five (5) year
period beginning on the Closing Date (the "RESTRICTED PERIOD"), he shall not
engage in or own any interest in any business, including any existing
Affiliate, that engages in or owns, invests in, operates, manages or controls
any venture or enterprise that directly or indirectly engages or proposes to
engage in the Business or any business competitive with the Seller or Buyer
within the United States, including its territories and possessions (the
"TERRITORY"), except pursuant to a Franchise Agreement with the Buyer or other
Affiliate of the Xxxxx Group.
6.3 Non-Solicitation. Without limiting the generality of the
provisions of SECTION 6.2, Owner hereby agrees that, during the Restricted
Period, he will not and he will not permit any of his Affiliates to directly or
indirectly, solicit, or participate as employee, agent, consultant,
stockholder, director, partner or in any other individual or representative
capacity, in any business which solicits business from any person, firm,
corporation or other entity which was a customer of the Seller or its
Franchisees or Affiliates (existing or future) or licensees during the two (2)
year period preceding the Closing Date of this Agreement and/or during the
Restricted Period, or from any successor in interest to any such person, firm,
corporation or other entity for the purpose of securing business or contracts
related to the Business, except pursuant to a Franchise Agreement.
6.4 Interference with Relationships. During the Restricted
Period, Owner shall not and shall not permit any Affiliate to, directly or
indirectly, as an employee, agent, consultant, stockholder, director, co-
partner or in any other individual or representative capacity: (i) without the
prior written consent of Buyer or Xxxxx Group, employ or engage, recruit or
solicit for employment or engagement, any person who currently is or was
employed by the Seller or its Affiliate, or otherwise seek to influence or
alter any such person's relationship with Buyer or the Xxxxx Group, except for
any former employee who is terminated by Buyer or an Affiliate of Buyer at
least six months prior to the commencement of such employment with any Seller
Party or (ii) solicit or encourage any present or future customer, supplier or
Franchisee or licensee of the Seller or Buyer to terminate or otherwise alter
his, her or its relationship with the Buyer or its Affiliates.
6.5 Confidential Information. During the Restricted Period and
thereafter, Owner shall and shall cause its Affiliate to, keep secret and
retain in strictest confidence, and shall not, without the prior written
consent of Buyer, furnish, make available or disclose to any third party or use
for the benefit of himself or any third party, any Confidential Information.
As used in this Agreement, "CONFIDENTIAL INFORMATION" shall mean any
information relating to the business or affairs of, Buyer, the Seller,
Franchisees or the Business, including but not limited to information relating
to financial statements, customer identities, potential customers, employees,
franchisees, suppliers, servicing methods, equipment, programs, strategies and
information, analyses, profit margins, or other proprietary information used by
Buyer and/or the Seller in connection with the Business; provided, however,
that Confidential Information shall not include any information which is in the
public domain or becomes known in the industry through no wrongful act on the
part of a Seller Party. Each of the Seller Parties hereby acknowledges that
the Confidential Information is vital, sensitive, confidential and proprietary
to Buyer.
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6.6 Property of the Seller/Business. All manuals, memoranda,
notes, lists, records and other documentation or papers (and all copies
thereof), including such items stored in computer memories, or microfiche or by
any other means, which will become Buyer's property (after the consummation of
transactions contemplated by this Agreement), are and shall be Buyer's property
and shall be delivered to Buyer promptly on the request of Buyer. Owner
acknowledges that any such items are and have been a "work for hire" and any
copyrights in any of the forgoing were property of the Seller and upon
consummation of this transaction will be the property of Buyer.
6.7 Blue-Pencil. If any court of competent jurisdiction shall at
any time deem the term of this Agreement or any particular restrictive covenant
contained in this ARTICLE 6.1 too lengthy or the Territory too extensive, the
other provisions of this ARTICLE 6.1 shall nevertheless stand, the Restricted
Period herein shall be deemed to be the longest period permissible by law under
the circumstances and the Territory herein shall be deemed to comprise the
largest territory permissible by law under the circumstances. The court in
each case shall reduce the time period and/or Territory to permissible duration
or size.
6.8 Remedies. Owner acknowledges and agrees that the covenants
set forth in this ARTICLE 6.1 are reasonable and necessary for the protection
of Buyer's business interests, that irreparable injury will result to Buyer if
any Seller Party breaches any of the terms of said restrictive covenants, and
that in the event of actual or threatened breach of any such restrictive
covenants, Buyer will have no adequate remedy at law. Each Seller Party
accordingly agrees that in the event of any actual or threatened breach by
either of them or any Affiliate of any of the covenants set forth in this
ARTICLE 6, Buyer and Xxxxx Group shall be entitled to immediate temporary
injunctive and other equitable relief, including suspension of payments under
the Term Note, without bond and without the necessity of showing actual
monetary damages, subject to hearing as soon thereafter as possible. Nothing
contained herein shall be construed as prohibiting Buyer and Xxxxx Group from
pursuing any other remedies available to it for such breach or threatened
breach, including the recovery of any damages which it is able to prove.
ARTICLE 7
POST-CLOSING COVENANTS
7.1 Indemnification.
7.1.1 Indemnification by Seller and Owner. From and after
the Closing, each of the Seller Parties jointly and severally agrees to
indemnify, defend and save Buyer and Xxxxx Group and their respective
Affiliates and Plan Affiliates, and each of their respective officers,
directors, employees, agents, Employee Benefit Plans, and fiduciaries, plan
administrators or other parties dealing with any such plans (each, a "BUYER
INDEMNIFIED PARTY"), forever harmless from and against, and to promptly pay to
a Buyer Indemnified Party or reimburse a Buyer Indemnified Party for, any and
all liabilities (whether contingent, fixed or unfixed, liquidated or
unliquidated, or otherwise), obligations, deficiencies, demands, claims, suits,
actions, or causes of action, assessments, losses, costs, expenses, interest,
fines, penalties, actual or punitive damages or costs or expenses of any and
all investigations, proceedings, judgments, environmental analyses,
remediations, settlements and compromises (including reasonable fees and
expenses of attorneys, accountants and other experts) (individually and
collectively,
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the "LOSSES") sustained or incurred by any Buyer Indemnified Party relating to,
resulting from, arising out of or otherwise by virtue of any of the following:
(a) any misrepresentation or breach of a representation
or warranty made herein or in the Transaction Documents by any of the
Seller Parties or any one of their respective Affiliates or non-
compliance with or breach by any of them of any of the covenants or
agreements contained in this Agreement or the Transaction Documents to
be performed by Seller, Owner, or any of their respective Affiliates;
(b) any violations of or obligations under Environmental
and Safety Requirements by or of the Seller or of its Affiliates to
the extent existing or arising on or prior to the Closing;
(c) any action, demand, proceeding, investigation or
claim (whenever made) by any third party (including governmental
agencies) against or affecting Buyer or the Purchased Assets which, if
successful, would give rise to, demonstrate or evidence the existence
of or relate to a misrepresentation or breach of any of the
representations, warranties or covenants of the any of the Seller
Parties;
(d) any action, demand, proceeding, investigation or claim
(whenever made) by any third party against or affecting Buyer (with
respect to the Business or the Purchased Assets) or the Purchased
Assets relating to any personal injury or property damage caused, or
alleged to be caused, by any goods sold, delivered or serviced by any
Seller Party prior to the Closing Date;
(e) any and all claims or other demands of any nature
asserted against Purchaser arising out of the failure of the parties
to comply with any applicable UCC bulk transfer law and any costs
incurred by Xxxxx Group, Buyer or the Affiliates of either, with
respect to such claims and demands.
(f) any claim or assertion against the Buyer as to the
Excluded Liabilities; or
(g) any claim for payment of fees and/or expenses as a
broker or finder in connection with the origin, negotiation, execution
or consummation of this Agreement based upon any alleged agreement
between the claimant and the Owner, or the Seller.
7.1.2 Indemnification by Buyer. From and after the
Closing, Buyer and Xxxxx Group, jointly and severally, agree to indemnify,
defend and save Owner, Seller and their respective Affiliates, and their
respective officers, directors, employees, trustees and agents (each, a "SELLER
INDEMNIFIED PARTY") forever harmless from and against, and to promptly pay to a
Seller Indemnified Party or reimburse a Seller Indemnified Party for, any and
all Losses actually sustained or incurred by any Seller Indemnified Party
relating to, resulting from, arising out of or otherwise by virtue of any of
the following:
(a) any misrepresentation or breach of a representation
or warranty made herein or in the Transaction Documents by Buyer or
Xxxxx Group, or non-compliance with or breach
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by Buyer or Xxxxx Group of any of the covenants or agreements
contained in this Agreement or the Transaction Documents to be
performed by Buyer or Xxxxx Group;
(b) any action, demand, proceeding, investigation or
claim (whenever made) by any third party (including governmental
agencies) against or affecting Seller or its Affiliates which, if
successful, would give rise to or evidence the existence of or relate
to a misrepresentation or breach of any of the representations,
warranties or covenants of Buyer or Xxxxx Group;
(c) any claim for payment of fees and/or expenses from a
broker or finder in connection with the origin, negotiation, execution
or consummation of this Agreement based upon any alleged agreement
between the claimant and Buyer; or
(d) any and all claims, liabilities, losses, damages,
costs and expenses (including attorneys' fees and court costs), which
any Seller Indemnified Party may incur arising out of Buyer's failure
to timely pay, perform, discharge or otherwise satisfy all liabilities
and obligations included in the Assumed Liabilities, referred to in
Section 1.3 and identified in Schedule 1.3.
7.1.3 Indemnification Procedure for Third Party Claims. In
the event that subsequent to the Closing any person or entity entitled to
indemnification under this Agreement (an "INDEMNIFIED PARTY") asserts a claim
for indemnification or receives notice of the assertion of any claim or of the
commencement of any action or proceeding by any entity that is not a party to
this Agreement or an Affiliate of a party to this Agreement (including, but not
limited to any domestic or foreign court or governmental authority, federal,
state or local) (a "THIRD PARTY CLAIM") against such Indemnified Party, against
which a party to this Agreement is required to provide indemnification under
this Agreement (an "INDEMNIFYING PARTY"), the Indemnified Party shall give
written notice together with a statement of any available information regarding
such claim to the Indemnifying Party within sixty (60) days after learning of
such claim (or within such shorter time as may be necessary to give the
Indemnifying Party a reasonable opportunity to respond to such claim). The
Indemnifying Party shall have the right, upon written notice to the Indemnified
Party (the "DEFENSE NOTICE") within thirty (30) days after receipt from the
Indemnified Party of notice of such claim, which notice by the Indemnifying
Party shall specify the counsel it will appoint to defend such claim ("DEFENSE
COUNSEL"), to conduct at its expense the defense against such claim in its own
name, or if necessary in the name of the Indemnified Party; provided, however,
that the Indemnified Party shall have the right to approve the Defense Counsel,
which approval shall not be unreasonably withheld, and in the event the
Indemnifying Party and the Indemnified Party cannot agree upon such counsel
within ten days after the Defense Notice is provided, then the Indemnifying
Party shall propose an alternate Defense Counsel, which shall be subject again
to the Indemnified Party's approval. If the parties still fail to agree on
Defense Counsel, then, at such time, each of the Indemnifying and Indemnified
Parties shall choose an arbitrator who, in turn shall select a third
arbitrator, and the three arbitrators shall select Defense Counsel.
(a) In the event that the Indemnifying Party shall fail
to give the Defense Notice, it shall be deemed to have elected not to
conduct the defense of the subject claim, and in such event the
Indemnified Party shall have the right to conduct such defense in good
faith and to compromise and settle the claim without prior consent of
the Indemnifying Party and the
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Indemnifying Party will be liable for all costs, expenses, settlement
amounts or other Losses reasonably paid or incurred in connection
therewith.
(b) In the event that the Indemnifying Party does deliver
a Defense Notice and thereby elects to conduct the defense of the
subject claim, the Indemnified Party will cooperate with and make
available to the Indemnifying Party such assistance and materials as
it may reasonably request, all at the expense of the Indemnifying
Party, and the Indemnified Party shall have the right at its expense
to participate in the defense assisted by counsel of its own choosing,
provided that the Indemnified Party shall have the right to compromise
and settle the claim only with the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld
or delayed.
(c) Without the prior written consent of the Indemnified
Party, the Indemnifying Party will not enter into any settlement of
any Third Party Claim or cease to defend against such claim, if
pursuant to or as a result of such settlement or cessation, (i)
injunctive or other equitable relief would be imposed against the
Indemnified Party, or (ii) such settlement or cessation would lead to
liability or create any financial or other obligation on the part of
the Indemnified Party for which the Indemnified Party is not entitled
to indemnification hereunder.
(d) The Indemnifying Party shall not be entitled to
control, and the Indemnified Party shall be entitled to have sole
control over, the defense or settlement of any claim to the extent
that claim seeks an order, injunction or other equitable relief
against the Indemnified Party which, if successful, could materially
interfere with the business, operations, assets, condition (financial
or otherwise) or prospects of the Indemnified Party (and the
reasonable cost of such defense shall constitute an amount for which
the Indemnified Party is entitled to indemnification hereunder).
(e) If a decision is made to settle a Third Party Claim,
which offer the Indemnifying Party is permitted to settle under this
SECTION 7.1.3, and the Indemnifying Party desires to accept and agree
to such offer, the Indemnifying Party will give written notice to the
Indemnified Party to that effect. If the Indemnified Party fails to
consent to such firm offer within fifteen (15) calendar days after its
receipt of such notice, the Indemnified Party may continue to contest
or defend such Third Party Claim and, in such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will
not exceed the amount of such settlement offer, plus costs and
expenses paid or incurred by the Indemnified Party through the end of
such fifteen (15)-day period.
(f) Any judgment entered or settlement agreed upon in the
manner provided herein shall be binding upon the Indemnifying Party,
and shall conclusively be deemed to be an obligation with respect to
which the Indemnified Party is entitled to prompt indemnification
hereunder.
7.1.4 Failure to Give Timely Notice. A failure by an
Indemnified Party to give timely, complete or accurate notice as provided in
SECTION 7.1.3 will not affect the rights or obligations of any party hereunder
except and only to the extent that, as a result of such failure, any party
entitled to receive such notice was deprived of its right to recover any
payment under its applicable insurance
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coverage or was otherwise directly and materially damaged as a result of such
failure to give timely notice.
7.1.5 Survival of Representations, Warranties and
Covenants; Limits on Indemnification Obligations. Notwithstanding any right of
Xxxxx Group to fully investigate the affairs of Seller, Owner and the Business,
and notwithstanding any knowledge of facts determined or determinable by Xxxxx
Group pursuant to such investigation or right of investigation, Xxxxx Group has
the right to rely fully upon the representations, warranties, covenants and
agreements of the Seller Parties contained in this Agreement or in any
certificate delivered pursuant to any of the foregoing. All such
representations, warranties, covenants and agreements shall survive the
execution and delivery of this Agreement for a period of three years from the
Closing Date. The maximum liability of Seller to indemnify the Buyer
Indemnified Parties pursuant to this SECTION 7.1 and the maximum liability of
Buyer to indemnify Seller Indemnified Parties pursuant to this SECTION 7.1
shall, in each case, be limited to an aggregate amount equal to the Purchase
Price plus the "purchase price" defined in and paid pursuant to the Stock
Purchase Agreement (this sum is referred to herein as the "AGGREGATE PURCHASE
PRICE"); provided, however, that the total aggregate indemnification liability
for either the Buyer or Seller under both this Agreement and the Stock Purchase
Agreement shall not exceed the Aggregate Purchase Price. An Indemnified Party
shall be entitled to seek indemnification pursuant to this SECTION 7.1: (i) on
December 31 and June 30 of each year; and (ii) when the aggregate amount of all
such Losses claimed directly and pursuant to Third Party Claims under this
Agreement and the Asset Purchase Agreement exceeds an amount equal to Twenty-
Five Thousand Dollars (U.S.$25,000), at either of which points the Indemnifying
Party shall be liable to the Indemnified Parties for the entire amount of all
such Losses claimed as of that time.
7.2 Tax Returns. Seller shall timely file and Owner shall cause
Seller to timely file all federal state and local Tax Returns of the Seller and
have paid or will pay all Taxes owed by or with respect to the Seller. After
the Closing, Xxxxx Group and Buyer on the one hand and Seller and Owner on the
other hand, will make available to the other as reasonably requested, all
information, records or documents relating to the liability for Taxes of Seller
for all periods prior to or including the Closing Date and will preserve such
information records or documents until the expiration of any applicable statue
of limitations or extensions thereof.
7.3 Guaranty of Royalties. Owner guarantees that royalties paid
by SEL, Inc. or any Affiliate successors or assigns operating a Franchised
Business in the Atlanta area, to Buyer shall be One Hundred Eighty Six Thousand
Dollars (U.S.$186,000) for the two (2) year period following Closing. In the
event that such royalties are less than Ninety Three Thousand Dollars
(U.S.$93,000) in the first or second year following Closing (after adjusting
for any credit in the second year, as described below), Xxxxx Group shall
deduct the difference between Ninety Three Thousand Dollars (U.S.$93,000) and
the amount paid to Buyer from the next installment(s) due on the Term Note
payable under the Stock Purchase Agreement. In the event that such royalties
are greater than Ninety Three Thousand Dollars (U.S.$93,000) in the first year
following Closing, such overage shall be credited towards the royalties
collected in the second year following Closing.
7.4 Setoff. In addition to and not as a limitation of any of the
other remedies available to Buyer and Xxxxx Group hereunder, Xxxxx Group shall
be entitled to offset against the principal amount remaining on the Term Note
under the Stock Purchase Agreement any indemnifiable
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Losses, which are liquidated in amount and as to which there is no reasonable
dispute, including Excluded Liabilities or otherwise. In the event of such a
setoff, the quarterly payments of principal and interest shall be recalculated
based upon the new principal balance remaining after necessary deductions.
ARTICLE 8
MISCELLANEOUS
8.1 Notices, Consents, etc. Any notices, consents or other
communication required to be sent or given hereunder by any of the parties
shall in every case be in writing and shall be deemed properly served if (a)
delivered personally, (b) sent by registered or certified mail, in all such
cases with first class postage prepaid, return receipt requested, (c) delivered
by a recognized overnight courier service, or (d) sent by facsimile
transmission to the parties at the addresses as set forth below or at such
other addresses as may be furnished in writing.
(a) If to Owner or Seller: Xxxxxx X. Xxxxx
26813 000xx Xxxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxxx X. Xxxxxxx, Esq.
Xxxxx, Xxxxxxxx & Xxxxxxx, L
1230 Peachtree Street, N.E.
Suite 3100, Promenade II
Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
(b) If to Xxxxx Group: The Xxxxx Group, Inc.
0000 X. Xxxxxxxxxx Xxxxx Xxxxx
Xxxx, XX 00000
Attention: General Counsel
Tel: (000)000-0000
Fax: (000) 000-0000
with a copy to: Xxxx X. Xxxxxxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxx
0000 Xxxxxx Xxxxxxxxx Xxxxxx, XX
Xxxxx 000, Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Date of service of such notice shall be (i) the date such notice is personally
delivered, (ii) three (3) days after the date of mailing if sent by certified
or registered mail, (iii) one day after date of delivery to the
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overnight courier if sent by overnight courier or (iv) the next succeeding
business day after transmission by facsimile.
8.2 Public Announcements. No party shall make any public
announcement or filing with respect to the transactions provided for herein
without the prior consent of the other parties hereto subject to applicable
disclosures required to be made by Buyer under federal securities law. To the
extent reasonably feasible, any press release or other announcement or notice
regarding the transactions contemplated by this Agreement shall be made jointly
by the parties.
8.3 Severability. The unenforceability or invalidity of any
provision of this Agreement shall not affect the enforceability or validity of
any other provision.
8.4 Amendment and Waiver. This Agreement may be amended, or any
provision of this Agreement may be waived, provided that any such amendment or
waiver will be binding on Buyer only if such amendment or waiver is set forth
in a writing executed by Buyer, and provided that any such amendment or waiver
will be binding upon Seller only if such amendment or waiver is set forth in a
writing executed by Seller and Owner. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as
a waiver of any other breach.
8.5 Documents. Each party will execute all documents and take
such other actions as any other party may reasonably request in order to
consummate the transactions provided for herein and to accomplish the purposes
of this Agreement.
8.6 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original but all
of which 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
hereto and delivered to the other.
8.7 Expenses. Except as paid prior to the date hereof or
otherwise specifically provided herein, each of the parties shall pay all costs
and expenses incurred or to be incurred by it, him or her, as the case may be,
in negotiating and preparing this Agreement and in closing and carrying out the
transactions contemplated by this Agreement.
8.8 Construction. This Agreement shall be construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the laws
of the State of Texas, without giving effect to provisions thereof regarding
conflict of laws.
8.9 Headings. The subject headings of Articles and Sections of
this Agreement are included for purposes of convenience only and shall not
affect the construction or interpretation of any of its provisions.
8.10 Assignment. This Agreement is intended to bind and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. This Agreement will not be assignable or
delegable by any party without the prior written consent of the other parties;
provided, however, that nothing in this Agreement will limit Buyer's ability to
assign its
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rights or delegate its responsibilities, liabilities, and obligations under
this Agreement to any person at any time without the consent of the other
parties, except that Buyer shall not be released from any payment obligation
and shall remain liable to Seller for any such payment obligation to the same
extent as any assignee.
8.11 Definitions. For purposes of this Agreement, the following
terms have the meaning set forth below:
"AFFILIATE" means an affiliate as defined in Rule 405 under
the Securities Act of 1933, as amended, and includes any past and
present Affiliate of a Person. With respect to Seller, Affiliate also
includes, but is not limited to, the following entities: Just Ask,
Inc., Glass Doctor Corporation, Royalties International, LLC,
Marketing Promotion, Inc., SEL, INC., Glass Doctor, Inc., Glass Doctor
of Maryland, Inc., Oklahoma Glass Company, Glass Doctor of Texas,
Inc., Glass Doctor of Arizona, Inc., Glass Doctor of Pennsylvania,
Inc., Glass Doctor of Washington, Inc., Glass Doctor of Nevada, Inc.,
Glass Doctor of Utah, Inc., and Wendroff Management, Inc.,
"CODE" means the Internal Revenue Code of 1986, as amended.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended.
"FRANCHISED BUSINESS" means a glass replacement installation
services business of the type described in the Seller's Uniform
Franchise Offering Circular, dated January 20, 1998 ("UFOC") doing
business as "Glass Doctor" or similar name and using the trademarks
described in the UFOC or similar marks.
"FRANCHISEE" means any Person awarded the right to operate a
Franchised Business, and any Person awarded such right subsequent to
this Agreement.
"FRANCHISEE AFFILIATE" means an Affiliate of the Seller and/or
the Owner which currently operates or has been awarded the right to
operate a business similar to the Franchised Business.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board (or any successor authority) that are applicable as of the date
of determination, consistently applied.
"HAZARDOUS WASTES" means (A) hazardous materials, hazardous
substances, extremely hazardous substances or hazardous wastes, as
those terms are defined by the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq., and any other
Environmental and Safety Requirements; (B) petroleum, including
without limitation, crude oil or any fraction thereof which is liquid
at standard conditions of temperature and pressure (60
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degrees Fahrenheit and 14.7 pounds per square inch absolute); (C) any
radioactive material, including, without limitation, any source,
special nuclear, or by-product material as defined in 42 U.S.C. 2011
et seq.; (D) asbestos in any form or condition; and (E) any other
material, substance or waste to which liability or standards of
conduct may be imposed under any Environmental and Safety
Requirements.
"LIENS" means any claims, liens, charges, restrictions,
options, preemptive rights, mortgages, hypothecations, assessments,
pledges, encumbrances or security interests of any kind or nature
whatsoever.
"PERSON" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated association,
corporation, entity or government (whether Federal, state, county,
city or otherwise, including, without limitation, any instrumentality,
division, agency or department thereof).
"PLAN AFFILIATE" means any person or entity with which the
Seller constitutes (or has ever constituted) all or part of a
controlled group of corporations, a group of trades or businesses
under common control or an affiliated service group, as those terms
are defined in Section 414 of the Code.
"PROPRIETARY RIGHTS" means all patents, patent applications,
patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice); all trademarks, service marks,
trade dress, trade names and corporate names; all registered and
unregistered statutory and common law copyrights; all registrations,
applications and renewals for any of the foregoing; all trade secrets,
confidential information, ideas, formulae, compositions, know-how,
manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, plans,
improvements, proposals, technical and computer data, documentation
and software, financial, business and marketing plans, and franchisee,
customer and supplier lists and related information and all other
proprietary rights.
"STOCK PURCHASE AGREEMENT" means that certain Stock Purchase
Agreement among Buyer, Glassmarks, Inc. and Owner and its Affiliates.
"TAX" means any federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, windfall profit,
environmental, customs, duties, real property, personal property,
capital stock, social security, unemployment, disability, payroll,
license, employee or other withholding, or other tax, of any kind
whatsoever, including any interest, penalties or additions to tax or
additional amounts in respect of the foregoing; the foregoing shall
include any transferee or secondary liability for a Tax and any
liability assumed by agreement or arising as a result of being (or
ceasing to be) a member of any Affiliated Group (or being included (or
required to be included) in any Tax Return relating thereto).
"TAX RETURNS" means returns, declarations, reports, claims for
refund, information returns or other documents (including any related
or supporting Schedules, statements or
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information) filed or required to be filed in connection with the
determination, assessment or collection of any Taxes of any party or
the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"TRANSACTION DOCUMENTS" means all agreements and instruments
contemplated by and being delivered pursuant to or in connection with
this Agreement at Closing.
8.12 Entire Agreement. This Agreement, the Preamble and all the
Schedules attached to this Agreement (all of which shall be deemed incorporated
in the Agreement and made a part hereof) set forth the entire understanding of
the parties with respect to the subject matter hereof, and shall not be
modified or affected by any offer, proposal, statement or representation, oral
or written, made by or for any party in connection with the negotiation of the
terms hereof, and may be modified only by instruments signed by all of the
parties hereto.
8.13 Third Parties. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person or entity,
other than the parties to this Agreement and their respective permitted
successors and assigns, any rights or remedies under or by reason of this
Agreement.
8.14 Interpretative Matters. Unless the context otherwise requires,
(a) all references to Articles, Sections or Schedules are to Articles, Sections
or Schedules in this Agreement, (b) each accounting term not otherwise defined
in this Agreement has the meaning assigned to it in accordance with GAAP, and
(c) words in the singular or plural include the singular and plural and
pronouns stated in either the masculine, the feminine or neuter gender shall
include the masculine, feminine and neuter and the term "including" shall mean
by way of example and not by way of limitation.
8.15 Knowledge. Where any representation or warranty of a Seller
Party contained in this Agreement is expressly qualified by reference "to the
knowledge of," it refers to the knowledge of Owner and/or the directors,
officers and senior managers of the Seller and its Affiliates as to the
existence or absence of facts that are the subject of such representations and
warranties after consultation with and due inquiry of all of the directors,
officers and senior managers of the Seller which is assumed to have been made
and acknowledged by Owner, it being understood that Owner has not made any
other independent investigation or consulted with any outside third parties,
other than the Seller's accountants and legal counsel.
8.16 No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
OWNER:
______________________
Xxxxxx X. Xxxxx
SELLER: BUYER:
GLASS DOCTOR CORPORATION THE XXXXX GROUP, INC.
By: _________________________ By: _______________________________
Xxxxxx X. Xxxxx, President Xxxxxx Xxxxxxx, President & CEO
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EXHIBITS
Exhibit 5.2-E Form of Opinion
Exhibit 5.2-H Form of Trademark License Termination
Agreement
Exhibit 5.2-L Form of Release
SCHEDULES
Schedule 1.1 Purchased Assets
Schedule 1.1.2 Assumed Contracts
Schedule 1.2 Excluded Assets
Schedule 3.1 Enforceability/Required Consents
Schedule 3.2 Jurisdictions Where Qualified/Minute Book
Schedule 3.4 Officers and Directors
Schedule 3.8 Financial Statements
Schedule 3.9 Liabilities
Schedule 3.10-A Inventory
Schedule 3.10-B Accounts Receivable
Schedule 3.10-C Accounts Payable
Schedule 3.11 Taxes
Schedule 3.12 Material Contracts
Schedule 3.13 Leased Real Property
Schedule 3.14 Personal Property
Schedule 3.15 Litigation
Schedule 3.17 Intellectual Property
Schedule 3.19 Conduct in Ordinary Course
Schedule 3.20 Insurance Policies
Schedule 3.21 Licenses and Permits
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Schedule 3.22 Employee Benefit Plans
Schedule 3.23 Hazardous Wastes
Schedule 3.24 Salaries
Schedule 3.25 Personnel Agreements, Plans and Arrangements
Schedule 3.26 Workers' Compensation
Schedule 3.28 Affiliate Transactions
Schedule 5.5 Post-Closing Matters
