EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is entered into
effective as of April ____, 1998 by and among (i) BRASSIE GOLF CORPORATION, a
Delaware corporation ("Brassie"); (ii) TALISMAN TOOLS INCORPORATED, a Rhode
Island corporation (the "Acquired Entity"); and (iii) XXXXXX X. XXXXX ("Xxxxx")
and XXXXX XXXXXXX ("Xxxxxxx") who are the sole shareholders of the Acquired
Entity (Xxxxx and Xxxxxxx) collectively, the "Sellers").
RECITALS
A. Sellers are presently the owners of all the shares of the
voting common capital stock of the Acquired Entity as represented by stock
certificates Nos. 1, and 2.
X. Xxxxxxx desire to sell all of their shares of stock of the Acquired
Entity ("Purchased Shares") and Brassie desires to purchase the Purchased Shares
from Sellers as a means of acquiring the Acquired Entity and its businesses,
rights and properties ("Business").
X. Xxxxxxx has determined that it is in the best interests of its
respective shareholders for Brassie to acquire all of the stock of the Acquired
Entity from the Sellers as provided herein in order to effectuate the
acquisition of the businesses of the Acquired Entity. Simultaneously with such
acquisition, the Sellers will then be issued shares of common stock of Brassie
as provided herein, in consideration for the Purchased Shares of the Acquired
Entity to be acquired.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
ACQUISITION; RELATED TRANSACTIONS; CLOSING
1.1 The Closing. Subject to the terms and conditions of this Agreement,
the consummation of the Acquisition (as defined below) and the other
transactions contemplated hereby shall be effective at 11:59 p.m., on April 20,
1998, and shall take place at the offices of Brassie in Tampa, Florida, or such
other place and time as the parties may otherwise agree (the "Closing"), and the
date of Closing is referred to herein as the "Closing Date."
1.2 Acquisition. At Closing on the Closing Date, and upon all of the
terms and subject to all of the conditions of this Agreement, Sellers shall
sell, assign, convey, transfer and deliver to Brassie, and Brassie shall
purchase for the consideration set forth in Section 1.3 below, all of
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the respective Sellers' right, title and interest, legal and equitable, in and
to the Purchased Shares, free and clear of any and all claims, liens or
encumbrances, except as otherwise provided in this Agreement (the
"Acquisition").
1.3 Purchase Price. For purposes of this Agreement, "Consideration"
means (a) promissory notes in the aggregate amount of Fifty Five Thousand and
NO/100 Dollars ($55,000.00) and (b) 150,000 shares of common stock, par value
$.001 per share, of Brassie (the "Brassie Common Stock").
1.4 Procedure at the Closing. At the Closing, the parties agree that
the following shall occur:
(a) The Acquired Entity and the Sellers shall have satisfied
each of the conditions set forth in Article VI and shall deliver to Brassie the
documents, certificates, consents and letters required by Article VI.
(b) Brassie shall have satisfied each of the conditions set
forth in Article VII and shall deliver the documents, certificates, consents and
letters required by Article VII.
(c) Sellers shall transfer to Brassie appropriate stock
assignments separate from certificate, representing the Purchased Shares of the
Acquired Entity being purchased hereunder.
(d) Brassie shall issue and deliver stock certificates
representing the Brassie Common Stock issuable pursuant to Section 1.3
registered in the name of each of the Sellers as allocated in accordance with
Schedule 1.4(d). The shares of Brassie Common Stock issuable pursuant to Section
1.3 are referred to herein as the Brassie Shares.
(e) Brassie shall deliver to Sellers two promissory notes in
the aggregate principal amount of Fifty-Five Thousand and No/100 Dollars
($55,000.00), in the form attached as Schedule 1.4(e).
(f) Brassie shall deliver to Xxxxxx Box Company a promissory
note in the aggregate principal amount of Thirty-Five Thousand Three and 62/100
Dollars ($35,003.62), in the form attached as Schedule 1.4(f).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF BRASSIE
As a material inducement to the Acquired Entity and the Sellers to
enter into this Agreement and to consummate the transactions contemplated
hereby, Brassie makes the following representations and warranties to the
Acquired Entity and the Sellers:
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2.1 Corporate Status. Brassie is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
authorized to do business in the State of Delaware, is qualified to do business
as a foreign corporation in all jurisdictions where it presently carries on
business, and has the requisite power and authority to own or lease its
properties and to carry on its business as presently conducted. There is no
pending or, to the knowledge of Brassie, threatened proceeding for the
dissolution, liquidation, insolvency or rehabilitation of Brassie.
2.2 Corporate Power and Authority. Brassie has the corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. Brassie has
taken all corporate action necessary to authorize its execution and delivery of
this Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby.
2.3 Enforceability. This Agreement has been duly executed and delivered
by Brassie and constitutes its legal, valid and binding obligation enforceable
against Brassie in accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
2.4 Brassie Common Stock. Upon consummation of the transactions
contemplated hereby and the issuance and delivery of certificates representing
the Brassie Shares as provided in this Agreement, the Brassie Shares will be
validly issued, fully paid, non-assessable shares, but unregistered and
restricted under the Securities Act, and listed on the National Association of
Securities Dealers Automated Quotations ("Nasdaq") and tradeable only in
accordance with Rule 144 or such other available exemption as maybe promulgated
under the Securities Act.
2.5 Capitalization. As of the date hereof, the authorized capital stock
of Brassie consists of 50,000,000 shares of Brassie Common Stock and 1,000,000
shares of Brassie Preferred Stock, and 2,040 shares of Brassie Common Stock
48,343,526 are validly issued and outstanding and 2,040 shares of Brassie
Preferred Stock are issued or outstanding.
2.6 No Violation. The execution and delivery of this Agreement by
Brassie, the performance by Brassie of its respective obligations hereunder and
the consummation by Brassie of the transactions contemplated by this Agreement
will not (a) contravene any provision of the Certificates or Articles of
Incorporation or Bylaws of Brassie, (b) violate or conflict with any law,
statute, ordinance, rule, regulation, decree, writ, injunction, judgment, ruling
or order of any Governmental Authority or of any arbitration award which is
either applicable to, binding upon, or enforceable against Brassie, (c) conflict
with, result in any breach of, or constitute a default (or an event which would,
with the passage of time or the giving of notice or both, constitute a default)
under, or give rise to a right to terminate, amend, modify, abandon or
accelerate, any Contract which is applicable to, binding upon or enforceable
against Brassie, (d) result in or require the creation or imposition of any Lien
upon or with respect to any of the property or assets of
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Brassie, (e) give to any individual or entity a right or claim against Brassie,
which would have a Material Adverse Effect on Brassie, or (f), except as
specifically set forth on Schedule 2.6, require the consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, any court or tribunal or any other Person, including, without
limitation, (i) pursuant to the Exchange Act and the Securities Act and
applicable inclusion requirements of Nasdaq, (ii) filings required under the
securities or blue sky laws of the various states, (iii) any filings or consents
required to be made or obtained by Brassie or (iv) any governmental permits or
licenses required to operate the businesses of the Acquired Entity.
2.7 Reports and Financial Statements. From January 1, 1997 to the date
hereof and at all other material times, except where failure to have done so did
not and would not have a Material Adverse Effect on Brassie, Brassie has filed
all reports, registrations and statements, together with any required amendments
thereto, that it was required to file with the SEC, including, but not limited
to Forms 10-K, Forms 10-Q, Forms 8-K and proxy statements (collectively, the
"Brassie Reports"). As of their respective dates (but taking into account any
amendments filed prior to the date of this Agreement), the Brassie Reports
complied in all material respects with all the rules and regulations promulgated
by the SEC and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of Brassie included in the Brassie
Reports comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP consistently applied during
the periods presented (except, as noted therein, or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present
(subject, in the case of the unaudited statements, to normal audit adjustments)
the financial position of Brassie and its consolidated subsidiaries as of the
date thereof and the results of their operations and their cash flows for the
periods then ended.
2.8 No Commissions. Brassie has not incurred any obligation for any
finder's or broker's or agent's fees or commissions or similar compensation in
connection with the transactions contemplated hereby.
2.9 Accuracy of Information Furnished. No representation, statement or
information contained in this Agreement (including, without limitation, the
various Schedules attached hereto) or any agreement executed in connection
herewith or in any certificate delivered pursuant hereto or thereto or made or
furnished to the Sellers or their representatives by Brassie, contains or shall
contain any untrue statement of a material fact or omits or shall omit any
material fact necessary to make the information contained therein not
misleading. Brassie has provided the Acquired Entity or the Sellers with true,
accurate and complete copies of all documents listed or described in the various
Schedules attached hereto.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE ACQUIRED ENTITY AND SELLERS
As a material inducement to Brassie to enter into this Agreement and to
consummate the transactions contemplated hereby, the Acquired Entity and the
Sellers, jointly and severally make the following representations and warranties
to Brassie:
3.1 Corporate Status. The Acquired Entity is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Rhode Island and has the requisite power and authority to own or lease its
properties and to carry on its business as now being conducted. The Acquired
Entity is not required to qualify to do business as a foreign corporation in any
jurisdiction. The Acquired Entity has fully complied with all of the
requirements of any statute governing the use and registration of fictitious
names, and has the legal right to use the names under which it operates its
businesses. There is no pending or threatened proceeding for the dissolution,
liquidation, insolvency or rehabilitation of the Acquired Entity.
3.2 Power and Authority. The Acquired Entity has the corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder, and to consummate the transactions contemplated hereby. The Acquired
Entity has taken all corporate action necessary to authorize the execution and
delivery of this Agreement, the performance of its obligations hereunder, and
the consummation of the transactions contemplated hereby. Each of the Sellers
have the requisite competence and authority to execute and deliver this
Agreement, to perform his respective obligations hereunder and to consummate the
transactions contemplated hereby.
3.3 Enforceability. This Agreement has been duly executed and delivered
by the Acquired Entity and by each of the Sellers, and constitutes the legal,
valid and binding obligation of each of them, enforceable against each of them
in accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
3.4 Capitalization. Schedule 3.4(a) sets forth, as of the date hereof,
with respect to the Acquired Entity (a) the number of authorized shares of each
class of its capital stock, (b) the number of issued and outstanding shares of
each class of its capital stock and (c) the number of shares of each class of
its capital stock which are held in treasury. All of the issued and outstanding
shares of capital stock of the Acquired Entity (i) have been duly authorized and
validly issued and are fully paid and nonassessable, (ii) were issued in
compliance with all applicable state and federal securities laws and (iii) were
not issued in violation of any preemptive rights or rights of first refusal or
similar rights. Except for those matters provided on Schedule 3.4(b) which the
Sellers agree shall be terminated at or before the Closing, no preemptive rights
or rights of first refusal or similar rights exist with respect to any shares of
capital stock of the Acquired Entity and no such rights arise by virtue of or in
connection with the transactions contemplated hereby;
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there are no outstanding or authorized rights, options, warrants, convertible
securities, subscription rights, conversion rights, exchange rights or other
agreements or commitments of any kind that could require the Acquired Entity to
issue or sell any shares of its capital stock (or securities convertible into or
exchangeable for shares of its capital stock); there are no outstanding stock
appreciation, phantom stock, profit participation or other similar rights with
respect to the Acquired Entity; there are no proxies, voting rights or other
agreements or understandings with respect to the voting or transfer of the
capital stock of the Acquired Entity; the Acquired Entity is not obligated to
redeem or otherwise acquire any of its outstanding shares of capital stock.
3.5 Shareholders of the Acquired Entity. Schedule 3.5(a) sets forth,
with respect to the Acquired Entity (i) the name, address and federal taxpayer
identification number of the Sellers, and the number of outstanding shares of
each class of its capital stock owned by the Sellers as of the close of business
on the date of this Agreement; and (ii) the name, address and federal taxpayer
identification number of, and number of shares of each class of its capital
stock beneficially owned by each beneficial owner of outstanding shares of
capital stock (to the extent that record and beneficial ownership of any such
shares or interests are different). The Sellers constitute the record and
beneficial holders of all issued and outstanding shares of capital stock of the
Acquired Entity, and the Sellers own such shares as is set forth on Schedule 3.5
free and clear of all Liens, restrictions and claims of any kind, except for
claims under those shareholder agreements listed on Schedule 3.5(b), which
claims, the Sellers agree, shall be terminated at or before the Closing.
3.6 No Violation. Except for any approvals or consents required with
respect to those Material Contracts (as defined in Section 3.23) expressly
identified on Schedule 3.23 as requiring the consents of third parties, the
execution and delivery of this Agreement by the Acquired Entity and the Sellers,
the performance by the Acquired Entity and the Seller of their obligations
hereunder and the consummation by them of the transactions contemplated by this
Agreement will not (a) contravene any provision of the Articles of Incorporation
or Bylaws or other organizational or governing document of the Acquired Entity,
(b) violate or conflict with any law, statute, ordinance, rule, regulation,
decree, writ, injunction, judgment or order of any Governmental Authority or of
any arbitration award which is either applicable to, binding upon or enforceable
against the Acquired Entity and Sellers, (c) conflict with, result in any breach
of, or constitute a default (or an event which would, with the passage of time
or the giving of notice or both, constitute a default) under, or give rise to a
right of payment under or the right to terminate, amend, modify, abandon or
accelerate, any Material Contract which is applicable to, binding upon or
enforceable against the Acquired Entity or the Sellers, (d) result in or require
the creation or imposition of any Lien upon or with respect to any of the
properties or assets of the Acquired Entity of the Sellers, (e) give to any
individual or entity a right or claim against the Acquired Entity or the Sellers
or (f) require the consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Authority, any court or tribunal or any
other Person, except any applicable SEC and other filings required to be made by
Brassie.
3.7 Records of the Acquired Entity. The copies of the Articles of
Incorporation, Bylaws and other documents and agreements of the Acquired Entity
which were provided to Brassie are true, accurate, and complete and reflect all
amendments made through the date of this
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Agreement. The minute books and other records of corporate actions for the
Acquired Entity made available to Brassie for review were correct and complete
as of the date of such review, no further entries have been made through the
date of this Agreement, such minute books and records contain the true
signatures of the persons purporting to have signed them, and such minute books
and records contain an accurate record of all corporate actions of the
shareholder and directors (and any committees thereof) of the Acquired Entity
taken by written consent or at a meeting or otherwise since incorporation or
formation. All corporate actions by the Acquired Entity have been duly
authorized or ratified. All accounts, books, ledgers and official and other
records of the Acquired Entity are accurate and complete, and there are no
inaccuracies or discrepancies of any kind contained therein. The stock ledger of
the Acquired Entity, as previously made available to Brassie, contains accurate
and complete records of all issuances, transfers and cancellations of shares of
the capital stock of the Acquired Entity.
3.8 Financial Reports. The Acquired Entity has delivered to Brassie all
federal and state tax returns of the Acquired Entity filed for the fiscal years
ended December 31, 1995 and December 31, 1996, and December 31, 1997 and
management's financial and profit and loss statements for the period ending
December 31, 1997, copies of which are attached as Schedule 3.8 (the "Financial
Reports"). The Financial Reports fairly present the financial position of the
Acquired Entity at each of the dates thereof and the results of operations for
the periods covered thereby. The books and records of the Acquired Entity fully
and fairly reflect all of its transactions, properties, assets and liabilities.
There are no material special or non-recurring items of income or expense during
the periods covered by the Financial Reports, and the balance sheets included in
the Financial Reports do not reflect any write-up or revaluation increasing the
book value of any assets. The Financial Reports reflect all adjustments
necessary for a fair presentation of the financial information contained
therein, subject, in the case of unaudited statements, to normal audit
adjustments.
3.9 No Changes. Except as set forth on Schedule 3.9, since
December 31, 1997, there has not been any:
(a) transaction by the Acquired Entity or any Seller except in
the ordinary course of business conducted as of that date;
(b) material adverse change in the financial condition,
liabilities, assets or results of operation of the business of the Acquired
Entity;
(c) indebtedness or liability, whether accrued, absolute,
contingent or otherwise incurred by the Acquired Entity except in the ordinary
course of business;
(d) default under any indebtedness of the Acquired Entity, or
any event which with the lapse of time or the giving of notice, or both, would
constitute such a default;
(e) amendment or termination of any Contract, lease or license
to which the Acquired Entity is a party;
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(f) material increase in compensation paid, payable or to
become payable by the Acquired Entity to any of its employees;
(g) extraordinary losses (whether or not covered by insurance)
or waiver by the Acquired Entity of any extraordinary rights of value;
(h) commitment to or liability to any labor organization;
(i) lowering of the prices charged by the Acquired Entity for
goods or services in a manner not consistent with past practices;
(j) notice from any customer as to the customer's intention
not to conduct business with the Acquired Entity, the result of which loss or
losses of business, individually or in the aggregate, has had, or could
reasonably be expected to have, a material adverse effect on the business; or
(k) other event or condition of any character, other than
those matters generally known to the public, that has or might reasonably have
an adverse effect on the Acquired Entity's or the business' Assets, financial
condition, or business.
3.10 Liabilities. The Acquired Entity has no liabilities or
obligations, whether accrued, absolute, contingent or otherwise, except (a) to
the extent reflected on the Acquired Entity's Financial Reports and not paid or
discharged, (b) liabilities incurred in the ordinary course of business
consistent with past practice since the date of the Acquired Entity's Financial
Reports (none of which relates to any breach of contract, breach of warranty,
tort, infringement or violation of law, or which arose out of any action, suit,
claim, governmental investigation or arbitration proceeding), and (c)
liabilities incurred in the ordinary course of business prior to the date of the
Acquired Entity's Financial Reports which, in accordance with GAAP consistently
applied, were not required to be recorded thereon and which, in the aggregate,
are not material (the liabilities and obligations referenced in (a), (b) and (c)
above are referred to as the "Designated Liabilities"). Schedule 3.10 lists, for
the Acquired Entity, (i) all indebtedness of the Acquired Entity for borrowed
money and for capitalized equipment leases, and (ii) the account numbers and
names of each bank, broker or other depository institution and the names of all
persons authorized to withdraw funds from each such account.
3.11 Litigation. Except as provided on Schedule 3.11, there is no
action, suit or other legal or administrative proceeding or governmental
investigation pending, or, to the knowledge of the Acquired Entity and the
Sellers, threatened, anticipated or contemplated (i) against, by or affecting
the Acquired Entity or the Sellers (relating to the transactions herein or to
the Acquired Entity), or the Acquired Entity's properties or assets, except for
routine customer claims and complaints arising in the ordinary course consistent
with past practice which involve amounts less than $10,000 individually or
$75,000 in the aggregate, or (ii) which question the validity or enforceability
of this Agreement or the transactions contemplated hereby, and there is no basis
for any of the foregoing. There are no outstanding orders, decrees or
stipulations issued by any
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Governmental Authority in any proceeding to which the Acquired Entity is or was
a party which have not been complied with in full or which continue to impose
any material obligations on the Acquired Entity.
3.12 Environmental Matters.
(a) To the best of the Acquired Entity's and the Sellers'
knowledge, the Acquired Entity is and has at all times been in full compliance
with all Environmental Laws governing its business, operations, properties and
assets, including, without limitation: (i) all requirements relating to the
Discharge and Handling of Hazardous Substances; (ii) all requirements relating
to notice, record keeping and reporting; (iii) all requirements relating to
obtaining and maintaining Licenses (as defined herein) for the ownership by the
Acquired Entity of its properties and assets and the operation of its business
as presently conducted and the use by the Acquired Entity of the Company Owned
Properties (as defined in Section 3.13); and (iv) all applicable writs, orders,
judgments, injunctions, governmental communications, decrees, informational
requests or demands issued pursuant to, or arising under, any Environmental
Laws.
(b) There are no (and there is no basis for any)
non-compliance orders, warning letters, notices of violation (collectively
"Notices"), claims, suits, actions, judgments, penalties, fines, or
administrative or judicial investigations of any nature or proceedings
(collectively "Proceedings") pending or threatened against or involving the
Acquired Entity, its businesses, operations, properties or assets issued by any
Governmental Authority or third party with respect to any Environmental Laws or
Licenses issued to the Acquired Entity thereunder in connection with, related to
or arising out of the ownership by the Acquired Entity of its properties or
assets or the operation of its businesses, which have not been resolved to the
satisfaction of the issuing Governmental Authority or third party in a manner
that would not impose any obligation, burden or continuing liability on Brassie
in the event that the transactions contemplated by this Agreement are
consummated.
(c) To the best of the Acquired Entity's and the Sellers'
knowledge, the Acquired Entity has not at any time Discharged, nor has it at any
time allowed or arranged for any third party to Discharge, Hazardous Substances
to, at or upon: (i) any location other than a site lawfully permitted to receive
such Hazardous Substances; (ii) any parcel of real property owned or leased at
any time by the Acquired Entity (including, without limitation, the Company
Owned Properties (as defined in Section 3.13), except in compliance with
applicable Environmental Laws; or (iii) any site which, pursuant to CERCLA or
any similar state law has been placed on the National Priorities List or its
state equivalent, or the Environmental Protection Agency or any relevant state
agency has notified the Acquired Entity that it has proposed or is proposing to
place on the National Priorities List or its state equivalent. To the best of
the Acquired Entity's and the Sellers' knowledge, there has not occurred, nor is
there presently occurring, a Discharge, or threatened Discharge of any Hazardous
Substance on, into or directly beneath the surface of any real property owned or
leased at any time by the Acquired Entity.
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(d) Schedule 3.12 identifies, for the prior five (5) years,
(i) all environmental audits, assessments or occupational health studies
undertaken by any Governmental Authority, the Acquired Entity or the Sellers or
their agents or representatives, or any third party, relating to or affecting
the Acquired Entity or the Company Owned Properties; (ii) all ground, water,
soil, air or asbestos monitoring undertaken by the Acquired Entity, the Sellers
or their agents or representatives thereof or undertaken by any Governmental
Authority or any third party, relating to or affecting the Company Owned
Properties or any real property owned or leased at any time by the Acquired
Entity; (iii) all material written communications between the Acquired Entity
and any governmental authority arising under or relative to Environmental Laws
including, but not limited to, all Notices issued to the Acquired Entity or the
Sellers and pertaining to the Company Owned Properties; and (iv) all outstanding
citations issued under OSHA, or similar state or local statutes, laws,
ordinances, codes, rules, regulations, orders, rulings or decrees, relating to
or affecting the Acquired Entity or any real property owned or leased at any
time by the Acquired Entity.
(e) For purposes of this Section, the following terms shall
have the meanings ascribed to them below:
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing, migrating or emitting, as any of such terms may
further be defined in any Environmental Law, into or through any medium
including, without limitation, ground water, surface water, land, soil
or air in violation of law.
"Environmental Laws" means all federal state, regional or
local statutes, laws rules, regulations, codes, ordinances, orders,
plans, injunctions, decrees, rulings, licenses, and changes thereto, or
judicial or administrative interpretations thereof, or similar laws,
but only to the extent currently in existence, any of which govern,
purport to govern, or relate to pollution, protection of the
environment, public health and safety, air emissions, water discharges,
waste disposal, hazardous or toxic substances, solid or hazardous
waste, occupational, health and safety, as any of these terms are or
may be defined in such statutes, laws, rules, regulations, codes,
orders, ordinances, plans, injunctions, decrees, rulings, licenses, and
changes thereto, or judicial or administrative interpretations thereof,
including, without limitation: the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C. ss.
9601, et. seq., (herein, collectively, "CERCLA"); the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act
of 1976 and subsequent Hazardous and Solid Waste Amendments of 1984, 42
U.S.C. ss. 6901 et. seq., (herein, collectively, "RCRA"); the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. ss. 1801, et. seq.,
(the "Hazardous Materials Transportation Act"); the Clean Water Act, as
amended, 33 U.S.C. ss. 1311, et. seq., (the "Clean Water Act"); the
Clean Air Act, as amended, 42 U.S.C. ss. 7401-7642, (the "Clean Air
Act"); the Toxic Substances Control Act, as amended, 15 U.S.C. ss. 2601
et. seq., (the "Toxic Substances Control Act"); the Federal
Insecticide, Fungicide, and Rodenticide Act as amended, 7 U.S.C. ss.
136-136y ("FIFRA"); the Emergency Planning and Community Right-to-Know
Act of 1986 as
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amended 42 U.S.C. ss. 11001, et. seq., (Title III of XXXX) ("EPCRA");
and the Occupational Safety and Health Act of 1970, as amended, 29
U.S.C. ss. 651, et. seq., ("OSHA").
"Handle" means any manner of generating, accumulating,
storing, treating, disposing of, transporting, transferring, labeling,
handling, manufacturing or using, as any of such terms may further be
defined in any Environmental Law.
"Hazardous Substances" shall be construed broadly to include
any toxic or hazardous substance, material or waste, and any other
contaminant, pollutant or constituent thereof, whether liquid, solid,
semi-solid, sludge and/or gaseous, including without limitation,
chemicals, compounds, by-products, pesticides, asbestos containing
materials, petroleum or petroleum products, and polychlorinated
biphenyls, the presence of which requires investigation or remediation
under any Environmental Laws or which are or become regulated, listed
or controlled by, under or pursuant to any Environmental Laws, or which
has been or shall be determined or interpreted at any time by any
Governmental Authority to be a hazardous or toxic substance regulated
under any other statute, law, regulation, order, code, rule, order, or
decree.
"Licenses" means, for purposes of this Section 3.12 only, all
licenses, certificates, permits, approvals, decrees and registrations
required under the Environmental Laws.
3.13 Real Estate. Schedule 3.13(a) (i) contains the legal description
of, any real property or any leasehold or other interest therein (including
without limitation any option or other right or obligation to purchase any real
property or any interest therein) owned by the Acquired Entity as of the date
hereof (the "Company Owned Properties"); and (ii) lists all real property (or
any interest therein) owned by the Acquired Entity within the past five years
that is not owned by the Acquired Entity as of the date of this Agreement. With
respect to each such parcel of Company Owned Properties: (i) the Acquired Entity
or Brassie or their assignee has or will have at Closing good and marketable
title, free and clear of any covenants, conditions, easements and exceptions
other than the permitted exceptions and of any Lien other than liens for real
estate taxes not yet due and payable, (ii) there are no pending or, to the
knowledge of the Acquired Entity or the Sellers, threatened condemnation
proceeding, suits or administrative actions relating to the Company Owned
Properties or other matters affecting adversely the current use, occupancy or
value thereof; (iii) the legal descriptions for the Company Owned Properties
contained in the deeds thereof describe such parcels fully and adequately; (iv)
the buildings and improvements, if any, are located within the boundary lines of
the described parcels of land and are not in violation of applicable setback
requirements, local comprehensive plan provisions, zoning laws and ordinances
(and none of the properties or buildings or improvements thereon are subject to
"permitted nonconforming use" or "permitted non-conforming structure"
classifications), applicable building code requirements, permits, licenses or
other forms of approval, regulation or restrictions by any Governmental
Authority, and do not encroach on any easement which may burden the land; the
land does not serve any adjoining property for any purpose inconsistent with the
use of the land; and the Company Owned Properties are not located within any
flood plain or subject to any similar type restriction for which any permits or
licenses necessary to the use thereof have not been obtained; (v) all
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facilities, if any, have received all approvals of Governmental Authorities
(including licenses and permits) required in connection with the ownership or
operation thereof and have been operated and maintained in accordance with
applicable laws, ordinances, rules and regulations; (vi) there are no Contracts
granting to any party or parties the right of use or occupancy of any portion of
the Company Owned Properties, and there are no parties (other than the Acquired
Entity) in possession of any of the Company Owned Properties; (vii) there are no
outstanding options or rights of first refusal or similar rights to purchase any
of the Company Owned Properties or any portion thereof or interest therein;
(viii) all facilities, if any, located on the Company Owned Properties are
supplied with utilities and other services necessary for their operation, all of
which services are adequate in accordance with all applicable laws, ordinances,
rules and regulations, and are provided via public roads or via permanent,
irrevocable, appurtenant easements benefiting the Company Owned Properties; (ix)
the Owned Properties abut on and have adequate direct vehicular access to a
public road and there is no pending or, to the knowledge of the Acquired Entity
or the Sellers, threatened termination of such access; and (x) all improvements,
buildings and systems on the Owned Properties are suitable for their current
use.
3.14 Business; Good Title to and Condition of Assets; Inventory.
(a) Upon the consummation of the transactions contemplated
hereby, Brassie will have acquired and own all of the Acquired Entity's Assets
and operations of its Business, and any related rights and interests thereto.
The Acquired Entity has good and marketable title to all of its Assets free and
clear of any Liens, except as provided on Schedule 3.14(a).
(b) The Fixed Assets currently in use or necessary for the
business and operations of the Acquired Entity are in good operating condition,
normal wear and tear excepted, and have been maintained in accordance with all
applicable manufacturer's specifications and warranties. For purposes of this
Agreement, the term "Fixed Assets" means all vehicles, machinery, equipment,
tools, supplies, leasehold improvements, furniture and fixtures, owned, used by
or located on the premises of the Acquired Entity.
3.15 Compliance with Laws. The Acquired Entity and the Sellers and
their Affiliates have been in compliance with all laws, regulations and orders
applicable to them, their business and operations (as conducted by them now and
in the past), the Assets, the Company Owned Properties, and any other properties
and assets (in each case owned or used by them now or in the past). The Acquired
Entity has not been cited, fined or otherwise notified of any asserted past or
present failure to comply with any laws, regulations or orders and no proceeding
with respect to any such violation is pending or threatened. The Acquired Entity
is not subject to any Contract, decree or injunction to which it is a party
which restricts the continued operation of any business or the expansion thereof
to other geographical areas, customers and suppliers or lines of business.
Neither the Acquired Entity, nor any of its employees or agents, has made any
payment of funds in connection with its business which is prohibited by law, and
no funds have been set aside to be used in connection with its business for any
payment prohibited by law. The Acquired Entity is and at all times has been in
full compliance with the terms and provisions of the Immigration Reform and
Control Act of 1986, as amended (the "Immigration Act"). With respect to each
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Employee (as defined in 8 C.F.R. 274a.1(f)) of the Acquired Entity for whom
compliance with the Immigration Act is required, the Acquired Entity has on file
a true, accurate and complete copy of (i) each Employee's Form I-9 (Employment
Eligibility Verification Form) and (ii) all other records, documents or other
papers prepared, procured and/or retained pursuant to the Immigration Act. The
Acquired Entity has not been cited, fined, served with a Notice of Intent to
Fine or with a Cease and Desist Order, nor has any action or administrative
proceeding been initiated or threatened against the Acquired Entity, by the
Immigration and Naturalization Service by reason of any actual or alleged
failure to comply with the Immigration Act.
3.16 Labor and Employment Matters. The Acquired Entity does not now
employ, nor has it ever employed, any individuals and there are no key
individuals or executives that are necessary for the Acquired Entity to continue
its Business as now being conducted.
3.17 Employee Benefit Plans
(a) Employee Benefit Plans. Schedule 3.17 contains a list
setting forth each employee benefit plan or arrangement of the Acquired Entity,
including but not limited to employee pension benefit plans, as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), multiemployer plans, as defined in Section 3(37) of ERISA, employee
welfare benefit plans, as defined in Section 3(1) of ERISA, deferred
compensation plans, stock option plans, bonus plans, stock purchase plans,
hospitalization, disability and other insurance plans, severance or termination
pay plans and policies, whether or not described in Section 3(3) of ERISA, in
which employees, their spouses or dependents, of the Acquired Entity participate
("Employee Benefit Plans") (true and accurate copies of which, together with the
most recent annual reports on Form 5500 and summary plan descriptions with
respect thereto, were furnished to Brassie).
(b) Compliance with Law. With respect to each Employee Benefit
Plan (i) each has been administered in compliance with its terms and with all
applicable laws, including, but not limited to, ERISA and the Internal Revenue
Code of 1986, as amended (the "Code"); (ii) no actions, suits, claims or
disputes are pending, or threatened; (iii) no audits, inquiries, reviews,
proceedings, claims, or demands are pending with any governmental or regulatory
agency; (iv) there are no facts which could give rise to any liability in the
event of any such investigation, claim, action, suit, audit, review, or other
proceeding; (v) all reports, returns and similar documents required to be filed
with any governmental agency or distributed to any plan participant have been
duly or timely filed or distributed; and (vi) no "prohibited transaction" has
occurred within the meaning of the applicable provisions of ERISA or the Code.
(c) Qualified Plans. With respect to each Employee Benefit
Plan intended to qualify under Code Section 401(a) or 403(a), (i) the Internal
Revenue Service has issued a favorable determination letter, true and correct
copies of which have been furnished to Brassie, that such plans are qualified
and exempt from federal income taxes; (ii) no such determination letter has been
revoked nor has revocation been threatened, nor has any amendment or other
action or omission occurred with respect to any such plan since the date of its
most recent determination
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letter or application therefor in any respect which would adversely affect its
qualification or materially increase its costs; (iii) no such plan has been
amended in a manner that would require security to be provided in accordance
with Section 401(a)(29) of the code; (iv) no reportable event (within the
meaning of Section 4043 of ERISA) has occurred, other than one for which the
30-day notice requirement has been waived; (v) as of the Closing Date, the
present value of all liabilities that would be "benefit liabilities" under
Section 4001(a)(16) of ERISA if benefits described in Code Section 411(d)(6)(B)
were included will not exceed the then current fair market value of the assets
of such plan (determined using the actuarial assumptions used for the most
recent actuarial valuation for such plan); (vi) all contributions to, and
payments from and with respect to such plans, which may have been required to be
made in accordance with such plans and, when applicable, Section 302 of ERISA or
Section 412 of the Code, have been timely made; and (vii) all such contributions
to the plans and all payments under the plans (except those to be made from a
trust qualified under Section 401(a) of the Code) and all payments with respect
to the plans (including without limitation PBGC (as defined below) and insurance
premiums) for any period ending before the Closing Date that are not yet, but
will be, required to be made are properly accrued and reflected on the Financial
Reports.
(d) Multiemployer Plans. The Acquired Entity is not, nor has
it been, obligated with respect to any multiemployer plan as described in
Section 4001(a)(3) of ERISA ("MPPA Plan").
(e) Welfare Plans. (i) The Acquired Entity is not obligated
under any employee welfare benefit plan as described in Section 3(1) of ERISA
("Welfare Plan") to provide medical or death benefits with respect to any
employee or former employee of the Acquired Entity or its predecessors after
termination of employment; (ii) the Acquired Entity has complied with the notice
and continuation coverage requirements of Section 4980B of the Code and the
regulations thereunder with respect to each Welfare Plan that is, or was during
any taxable year for which the statute of limitations on the assessment of
federal income taxes remains open, by consent or otherwise, a group health plan
within the meaning of Section 5000(b)(l) of the Code; and (iii) there are no
reserves, assets, surplus or prepaid premiums under any Welfare Plan which is an
Employee Benefit Plan. The consummation of the transactions contemplated by this
Agreement will not entitle any individual to severance pay, and, will not
accelerate the time of payment or vesting, or increase the amount of
compensation due to any individual.
(f) Controlled Group Liability. Neither the Acquired Entity,
nor any entity that would be aggregated with the Acquired Entity under Code
Section 414(b), (c), (m) or (o); (i) has ever terminated or withdrawn from an
employee benefit plan under circumstances resulting (or expected to result) in
liability to the Pension Benefit Guaranty Corporation ("PBGC"), the fund by
which the employee benefit plan is funded, or any employee or beneficiary for
whose benefit the plan is or was maintained (other than routine claims for
benefits); (ii) has any assets subject to (or expected to be subject to) a lien
for unpaid contributions to any employee benefit plan; (iii) has failed to pay
premiums to the PBGC when due (iv) is subject to (or expected to be subject) an
excise tax under Code Section 4971; (v) has engaged in any transaction which
would give rise
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to liability under Section 4069 or Section 4212(c) of ERISA; or (vi) has
violated Code Section 4980B or Section 601 through 608 of ERISA.
(g) Other Liabilities. (i) None of the Employee Benefit Plans
obligates the Acquired Entity to pay separation, severance, termination or
similar benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change of control" (as such term is
defined in Section 280G of the Code); (ii) all required or discretionary (in
accordance with historical practices) payments, premiums, contributions,
reimbursements, or accruals for all periods ending prior to or as of the Closing
Date shall have been made or properly accrued on the Financial Reports or will
be properly accrued on the books and records of the Acquired Entity as of the
Closing Date; and (iii) none of the Employee Benefit Plans has any unfunded
liabilities which are not reflected on the Financial Reports or the books and
records of the Acquired Entity.
3.18 Tax Matters. All Tax Returns required to be filed prior to the
date hereof with respect to the Acquired Entity or any of its income,
properties, franchises or operations have been timely filed, each such Tax
Return has been prepared in compliance with all applicable laws and regulations,
and all such Tax Returns are true and accurate in all respects. All Taxes due
and payable by or with respect to the Acquired Entity have been paid or are
accrued on the applicable Financial Reports or will be accrued on the Acquired
Entity's books and records as of the Closing.
Except as provided in Schedule 3.18, (i) with respect to each taxable period
of the Acquired Entity, either such taxable period has been audited by the
relevant taxing authority or the time for assessing or collecting Taxes with
respect to each such taxable period has closed and each taxable period is not
subject to review by any relevant taxing authority; (ii) no deficiency or
proposed adjustment which has not been settled or otherwise resolved for any
amount of Taxes has been asserted or assessed by any taxing authority against
the Acquired Entity; (iii) the Acquired Entity has not consented to extend the
time in which any Taxes may be assessed or collected by any taxing authority;
(iv) the Acquired Entity has not requested or been granted an extension of the
time for filing any Tax Return to a date later than the Closing; (v) there is no
action, suit, taxing authority proceeding, or audit or clam for refund now in
progress, pending or threatened against or with respect to the Acquired Entity
regarding Taxes; (vi) the Acquired Entity has not made an election or filed a
consent under Section 341(f) of the Code (or any corresponding provision of
state, local or foreign law) on or prior to the Closing Date; (vii) there are no
Liens for Taxes (other than for current Taxes not yet due and payable) upon the
assets of the Acquired Entity; (viii) the Acquired Entity will not be required
(A) as a result of a change in method of accounting for a taxable period ending
on or prior to the Closing Date, to include any adjustment under Section 481(c)
of the Code (or any corresponding provision of state, local or foreign law) in
taxable income for any taxable period (or portion thereof) beginning after the
Closing Date or (B) as a result of any "closing agreement," as described in
Section 7121 of the Code (or any corresponding provision of state, local or
foreign law), to include any item of income or exclude any item of deduction
from any taxable period (or portion thereof) beginning after the Closing Date;
(ix) the Acquired Entity has not been a member of an affiliated group (as
defined in Section 1504 of the Code) or filed or been included in a combined,
consolidated or unitary income Tax Return; (x) the Acquired Entity is not a
party to or bound by any tax allocation or tax sharing agreement and has no
current
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or potential contractual obligation to indemnify any other Person with respect
to Taxes; (xi) no taxing authority will claim or assess any additional Taxes
against the Acquired Entity for any period for which Tax Returns have been
filed; (xii) the Acquired Entity has not made any payments and is not and will
not become obligated (under any contract entered into on or before the Closing)
to make any payments, that will be non-deductible under Section 280G of the Code
(or any corresponding provision of state, local or foreign law); and (xiii) the
Acquired Entity has not been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code (or any corresponding
provision of state, local or foreign law) during the applicable period specified
in Section 897(c)(1)(a)(ii) of the Code (or any corresponding provision of
state, local or foreign law); (xiv) no claim has ever been made by a taxing
authority in a jurisdiction where the Acquired Entity does not file Tax Returns
that the Acquired Entity is or may be subject to Taxes assessed by such
jurisdiction; (xv) the Acquired Entity does not have any permanent establishment
in any foreign country, as defined in the relevant tax treaty between the United
States of America and such foreign country; (xvi) true, correct and complete
copies of all income Tax Returns filed by or with respect to the Acquired Entity
for the past three years have been furnished or made available to Brassie;
(xvii) the Acquired Entity will not be subject to any Taxes, for the period
ending at the Closing for any period for which a Tax Return has not been filed,
imposed pursuant to Section 1374 or Section 1375 of the Code (or any
corresponding provision of state, local or foreign law); and (xviii) no sales or
use tax will be payable by the Acquired Entity or Brassie or transferee as a
result of this transaction, and there will be no non-recurring intangible tax,
documentary stamp tax other than on the Brassie Shares (or the common stock
acquired thereunder), or other excise tax (or comparable tax imposed by any
governmental entity) as a result of this transaction. The Acquired Entity has
timely and properly filed an S corporation election under the Code and under
applicable state and local Tax law for its first taxable year, and no such S
election has been revoked or terminated, and neither the Acquired Entity nor the
Sellers have taken any action that would cause a termination of such S election.
3.19 Insurance. Schedule 3.19 lists all valid, outstanding enforceable
policies of insurance issued to the Acquired Entity by reputable insurers
covering its properties, assets and business insuring against such risks and in
such coverage amounts (the "Insurance Policies"). The Insurance Policies are in
full force and effect, and all premiums due thereon have been paid through the
date of this Agreement and will be paid through the Closing. The Acquired Entity
has complied with the provisions of such Insurance Policies applicable to it,
and has provided Brassie copies of all Insurance Policies and all amendments and
riders thereto. There are no pending claims under any of the Insurance Policies
for an amount in excess of $25,000 individually or $100,000 in the aggregate,
including any claim for loss or damage to the properties, assets or business of
the Acquired Entity. The Acquired Entity has not failed to give, in a timely
manner, any notice required under any of the Insurance Policies to preserve its
rights thereunder.
3.20 Licenses and Permits. The Acquired Entity possesses all licenses,
approvals, permits or authorizations from Governmental Authorities
(collectively, the "Permits") for its business and operations, including with
respect to the operations of each of the Company Owned Properties. Schedule 3.20
sets forth a true, complete and accurate list of all such Permits or
applications for such Permits, itemized for the Acquired Entity. All such
Permits are valid and in full force and
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effect, the Acquired Entity is in compliance with the respective requirements
thereof, and no proceeding is pending or threatened to revoke or amend any of
them. None of such Permits is or will be impaired or in any way affected by the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
3.21 Adequacy of the Assets; Affiliated Transactions. The Assets, Owned
Properties, Leased Premises and other equipment leased by the Acquired Entity
constitute, in the aggregate, all of the assets and properties necessary for the
conduct of the business of the Acquired Entity in the manner in which and to the
extent to which such business is currently being conducted. Except as provided
in Schedule 3.21, no officer, director or shareholder of the Acquired Entity,
nor any person related by blood or marriage to any such person, nor any entity
in which any such person owns any beneficial interest, is a party to any
Contract or transaction with the Acquired Entity or has any interest in any
property used by the Acquired Entity.
3.22 Intellectual Property. The Acquired Entity has full legal right,
title and interest in and to all trademarks, service marks, trade names,
copyrights, know-how, patents, trade secrets, licenses (including licenses for
the use of computer software programs), and other intellectual property used in
the conduct of its business as specifically listed on Schedule 3.22 hereof (the
"Intellectual Property"). The conduct of the business of the Acquired Entity as
presently conducted, and the unrestricted conduct and the unrestricted use and
exploitation of the Intellectual Property, does not infringe or misappropriate
any rights held or asserted by any Person and, to the knowledge of the Acquired
Entity and the Sellers, no Person is infringing on any Intellectual Property. No
payments are required for the continued use of the Intellectual Property. None
of the Intellectual Property has ever been declared invalid or unenforceable, or
is the subject of any pending or threatened action for opposition, cancellation,
declaration, infringement, or invalidity, unenforceability or misappropriation
or like claim, action or proceeding.
3.23 Contracts. Schedule 3.23 sets forth a list of each Material
Contract (as defined below), true, correct and complete copies of which have
been provided to Brassie, Schedule 3.23 identifies certain Material Contracts
that require the Consents of third parties to the transactions contemplated
hereby. The Acquired Entity has not violated any of the material terms or
conditions of any Material Contract or any term or condition which would permit
termination or material modification of any Material Contract, all of the
covenants to be performed by any other party thereto have been fully performed,
and there are no claims for breach or indemnification or notice of default or
termination under any Material Contract. To the knowledge of the Acquired Entity
and the Sellers, no event has occurred which constitutes, or after notice or the
passage of time, or both, would constitute, a default by the Acquired Entity
under any Material Contract, and no such event has occurred which constitutes or
would constitute a default by any other party. As used in this Section 3.23
"Material Contracts" shall mean formal or informal, written or oral, (a) loan
agreements, indentures, mortgages, pledges, hypothecations, deeds of trust,
conditional sale or title retention agreements, security agreements, equipment
financing obligations or guaranties, or other sources of contingent liability in
respect of any indebtedness or obligations to any other Person, or letters of
intent or commitment letters with respect to same (other than those which
individually provide for annual payments of less than $25,000); (b) contracts
obligating the Acquired
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Entity to provide or obtain products or services for a period of one year or
more, (c) leases of real property; (d) leases of personal property (other than
those which individually provide for annual payments of less than $25,000); (e)
distribution, sales agency or franchise or similar agreements, or agreements
providing for an independent contractor's services, or letters of intent with
respect to same (other than those which individually provide for annual payments
of less than $15,000); (f) employment agreements, management service agreements,
consulting agreements, confidentiality agreements, non-competition agreements,
employee handbooks, policy statements and any other agreements relating to any
employee, officer or director of the Acquired Entity; (g) licenses, assignments
or transfers of trademarks, trade names, service marks, patents, copyrights,
trade secrets or know how, or other agreements regarding proprietary rights or
intellectual property; (h) contracts relating to pending capital expenditures by
the Acquired Entity; (i) contracts obligating the Acquired Entity to purchase
parts, accessories, supplies, equipment, advertising, media and media related
services of any kind (other than those which individually provide for annual
payments of less than $15,000); (j) non-competition agreements restricting the
Acquired Entity in any manner, (k) any contracts obligating the Acquired Entity
to make payments in excess of $25,000, in the aggregate, over the remaining term
of such contract; and (1) all other Contracts or understandings which are
material to the Acquired Entity or its Business, assets or properties,
irrespective of subject matter and whether or not in writing, and not otherwise
disclosed on the Schedules.
3.24 Accuracy of Information Furnished. No representation, statement or
information contained in this Agreement (including, without limitation, the
various Schedules attached hereto) or any agreement executed in connection
herewith or in any certificate delivered pursuant hereto or thereto or made or
furnished to Brassie or its representatives by the Acquired Entity or the
Sellers, contains or shall contain any untrue statement of a material fact or
omits or shall omit any material fact necessary to make the information
contained therein not misleading. The Acquired Entity has provided Brassie with
true, accurate and complete copies of all documents listed or described in the
various Schedules attached hereto.
3.25 Securities Law Matters. Sellers represent and warrant that the
securities to be acquired by the upon consummation of the transactions described
in Article 1 (i) will be acquired by each of them for their own account, not as
a nominee or agent, and without a view to resale or other distribution within
the meaning of the Securities Act and the rules and regulations thereunder; and
(ii) none of the Sellers will distribute any of the securities in violation of
the Securities Act. The Sellers have had the opportunity to discuss the
transactions contemplated hereby with Brassie and have had the opportunity to
obtain such information pertaining to Brassie as has been requested, including
but not limited to filings made by Brassie with the SEC under the Exchange Act.
The Sellers represent that each of them has such knowledge and experience in
business or financial matters that he is capable of evaluating the merits and
risks of an investment in the Brassie Shares.
3.26 No Commissions. Neither the Acquired Entity nor the Sellers has
incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE CLOSING
4.1 Conduct of Business by the Acquired Entity Pending the Closing. The
Acquired Entity and the Sellers, jointly and severally, covenant and agree that,
except as otherwise expressly required or permitted by the terms of this
Agreement, between the date of this Agreement and the Closing, the business of
the Acquired Entity shall be conducted only in, and the Acquired Entity shall
not take any action except in, the ordinary course of business consistent with
past practice. The Acquired Entity and the Sellers shall use its or their
reasonable best efforts to preserve intact the Acquired Entity's business
organizations, and to preserve their present relationships with Persons with
which they have business relations. By way of amplification and not limitation,
the Acquired Entity shall not, except as expressly required or permitted by the
terms of this Agreement, between the date of this Agreement and the Closing,
directly or indirectly, do or propose or agree to do any of the following
(except to the extent such is contemplated to be done herein) without the prior
written consent of Brassie:
(a) amend or otherwise change its Articles of
Incorporation, Bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of any of its
assets, tangible or intangible, except in the ordinary course of business
consistent with past practice; or any shares of its capital stock of any class,
or any options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest, of
it;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock or other securities;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock or other
securities; or acquire (including, without limitation, for cash or shares of
stock, by merger, consolidation or acquisition of stock or assets) any interest
in any corporation, partnership or other business organization or division
thereof or any assets;
(e) except in the ordinary course of business consistent with
past practice, (i) sell, lease or transfer any of its properties or assets, (ii)
make any investment either by purchase of stock or securities, contributions of
capital or property transfer, or purchase any property or assets of any other
Person; (iii) make or obligate itself to make capital expenditures (except for
the $8,500 expenditures at the 1998 PGA Show in Orlando); (iv) incur any
obligations or liabilities including, without limitation, any indebtedness for
borrowed money, issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations of any
Person, or make any loans or advances; (v) modify, terminate, amend or enter
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into any Contract other than as expressly required or permitted herein; or (vi)
impose any security interest or other Lien on any of its Assets;
(f) other than in the ordinary course of business consistent
with past practice, pay any bonus to its officers or employees, or increase the
compensation payable or to become payable to its officers or employees or,
except as presently bound to do, grant any severance or termination pay to, or
enter into any employment or severance agreement with, any of its directors,
officers or employees, or establish, adopt, enter into or amend or take any
action to accelerate any rights or benefits under any collective bargaining,
bonus, profit sharing trust, compensation, stock option, restricted stock
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees;
(g) take any action with respect to accounting policies or
procedures other than in the ordinary course of business consistent with past
practice;
(h) pay, discharge or satisfy any existing claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of due and payable
liabilities reflected or reserved against in its financial statements, as
appropriate, or liabilities incurred after the date thereof in the ordinary
course of business consistent with past practice, or delay paying any amount
payable beyond forty-five (45) days following the date on which it is due,
except to the extent being contested in good faith;
(i) enter into any transaction with any of the Sellers or
an Affiliate thereof;
(j) make or pledge any charitable contributions in excess
of $5,000 in the aggregate; or
(k) agree, in writing or otherwise, to take or authorize any
of the foregoing actions or any action which would make any representation or
warranty in Article III untrue or incorrect in any respect.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Further Assurances. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
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5.2 Compliance with Covenants. The Sellers shall cause the Acquired
Entity to comply with all of the covenants of the Acquired Entity under this
Agreement.
5.3 Cooperation. Each of the parties agrees to cooperate with the
others in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
law, rule or regulation in connection with the transactions contemplated by this
Agreement, and to use his or its best efforts to agree jointly on a method to
overcome any objections by any Governmental Authority to any such transactions.
5.4 Access to Information. From the date hereof to Closing, each party
shall afford to each other party and its officers, employees, auditors, counsel
and agents reasonable access at all reasonable times to its properties, offices
and other facilities, to its officers and employees and to all books and
records, and shall furnish such persons with all financial, operating and other
data and information as may be requested.
5.5 Notification of Certain Matters. Each of the parties to this
Agreement shall give prompt notice to the other parties of the occurrence or
non-occurrence of any event which would likely cause any representation or
warranty made by such party herein to be untrue or inaccurate or any covenant,
condition or agreement contained herein not to be complied with or satisfied
(provided, however, that, any such disclosure shall not in any way be deemed to
amend, modify or in any way affect the representations, warranties and covenants
made by any party in or pursuant to this Agreement).
5.6 Confidentiality; Publicity. Except as may be required by law or as
otherwise permitted or expressly contemplated herein, no party hereto or their
respective Affiliates, employees, agents and representatives shall disclose to
any third party this Agreement, the subject matter or terms hereof or any
confidential information or other proprietary knowledge concerning the business
or affairs of any other party which it may have acquired from such party in the
course of pursuing the transactions contemplated by this Agreement without the
prior consent of the other parties hereto; provided, that any information that
is otherwise publicly available, without breach of this provision, or has been
obtained from a third party without a breach of such third party's duties, shall
not be deemed confidential information. No press release or other public
announcement related to this Agreement or the transactions contemplated hereby
shall be issued by any party hereto, except that Brassie may make such public
disclosure as it deems appropriate (in which case, Brassie will consult with the
Acquired Entity prior to making such disclosure).
5.7 No Other Discussions. The Acquired Entity, the Sellers, and their
Affiliates, employees, agents and representatives will not (a) initiate,
encourage the initiation by others of discussions or negotiations with third
parties, or respond to solicitations by third persons relating to any merger,
sale or other disposition of any substantial part of the assets, capital stock
(or derivatives thereof), business or properties of the Acquired Entity (whether
by merger, consolidation, sale of stock, sale of assets, or otherwise), or (b)
enter into any agreement or commitment (whether or not binding) with respect to
any of the foregoing transactions. The Acquired Entity and the Sellers will
immediately notify Brassie if any third party attempts to initiate any
solicitation,
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discussion, or negotiation with respect to any of the foregoing transactions,
and shall provide Brassie with the name of such third parties and the terms of
any offers.
5.8 Restrictive Covenants. The Acquired Entity and Sellers,
individually (a "Restricted Party") and collectively, agree as follows:
(a) Competitive Business. Each Restricted Party hereby agrees
that for a period of two (2) years following the Closing, each Restricted Party
will not engage in the business of or perform any services whatsoever pertaining
or relating in any way to the design or manufacture of golf related tools or
related services of the Acquired Entity, or become financially interested in any
such business or services, whether directly or indirectly as an owner, partner,
trustee, beneficiary, stockholder, officer, director, employee or agent;
provided, however, that performing services for or owning an interest in Brassie
or an Affiliate of Brassie, shall not be in violation of this covenant.
(b) Hiring. Each Restricted Party hereby agrees that for a
period of two (2) years following the Closing, the Restricted Party will not
hire or attempt to hire any employee of the Acquired Entity, Brassie, or any
Affiliate or otherwise encourage or attempt to encourage any such employee to
leave the Acquired Entity's, Brassie's or such Affiliate's employ.
(c) Solicitation. Each Restricted Party hereby further agrees
that for a period of two (2) years following the Closing, the Restricted Party
will not, in any manner or at any time, solicit or encourage any person, firm,
corporation, or other business entity that does business with Brassie, the
Acquired Entity, or any Affiliates of either Brassie or Acquired Entity, to
cease doing such business.
(d) Covenants Independent. Each restrictive covenant on the
part of a Restricted Party set forth in this Section 5.8 shall be construed as a
covenant independent of any other covenant or provisions of this Agreement or
any other agreement which the Restricted Party may have, fully performed and not
executory, and the existence of any claim or cause of action by any Restricted
Party against the Acquired Entity, Brassie, or any Affiliate, whether predicated
upon another covenant of this Agreement or otherwise, shall not constitute a
defense to the enforcement by Brassie of any other covenant.
(e) Divisibility of Covenant Areas and Periods. If any portion
of the restrictive covenants contained herein is held to be unreasonable,
arbitrary or against public policy, each covenant shall be considered divisible
both as to time and geographical area; and each one (1) month of the specified
period shall be deemed a separate period of time and each county of the
geographical area, so that the maximum lesser time period and geographical area
shall remain effective so long as the same is not unreasonable, arbitrary, or
against public policy.
(f) Injunctive and Equitable Relief. Each Restricted Party
recognizes and hereby expressly agrees that the extent of damages to Brassie or
any Affiliate in the event of a breach by a Restricted Party of any restrictive
covenant set forth herein would be impossible to ascertain,
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that the irreparable harm arising out of any breach shall be irrebuttably
presumed, and that the remedy at law for any breach will be inadequate to
compensate Brassie or any Affiliate. Consequently, each Restricted Party hereby
agrees that in the event of a breach of any such covenant, in addition to any
other relief to which Brassie or any Affiliate may be entitled, the Brassie and
any Affiliate shall be entitled to enforce the covenant by injunctive or other
equitable relief ordered by a court of competent jurisdiction.
5.9 Trading in Brassie Common Stock. Except as otherwise expressly
consented to in writing by Brassie, from the date of this Agreement until the
Closing Date, neither the Acquired Entity, the Sellers, nor any of their
Affiliates will directly or indirectly purchase or sell (including short sales)
any shares of Brassie Common Stock in any transactions effected on Nasdaq or
otherwise. The Sellers agree that for a period of two years after the Closing
Date, the Sellers will not directly or indirectly sell or purchase or enter into
any agreement, contract or arrangement to sell or purchase any put or call
options or other derivative securities (including shorts sales) with respect to
Brassie Common Stock or enter into any other agreements, contracts or
arrangements providing for the alteration of the shareholders' investment risk
with respect to any shares of Brassie Common Stock; provided, however, that the
foregoing shall not prohibit the Sellers from making outright, unhedged sales or
purchases of Brassie Common Stock after the Closing.
5.10 Shareholder and Director Vote. The Sellers, in executing this
Agreement, consent as directors and shareholders (as applicable) of the Acquired
Entity, to the Acquisition and other transactions contemplated hereby, waive
notice of any meeting in connection therewith, and hereby release and waive all
rights with respect to the transactions contemplated hereby under any agreements
relating to the sale or purchase of the Purchased Shares of the Acquired Entity.
5.11 Working Capital. The Acquired Entity and the Sellers covenant and
agree that, on the Closing Date there shall be no material change in the
Financial Reports with respect to accounts receivable and accounts payable as
set forth in Schedule 5.11 attached hereto.
5.12 Due Diligence Review. Brassie shall be entitled to conduct prior
to Closing a due diligence review of the assets, properties, books and records
of the Acquired Entity and an environmental assessment of the Owned Properties
and Leased Premises, if applicable (hereinafter referred to as "Environmental
Assessment"). The Environmental Assessment may include, but not be limited to, a
physical examination of the Owned Properties and Leased Premises and any
structures, facilities, or equipment located thereon, soil samples, ground and
surface water samples, storage tank testing, review of pertinent records
(including but not limited to, off-site disposal records and manifests),
documents, and Licenses of the Acquired Entity. The Sellers and the Acquired
Entity shall provide Brassie or its designated agents or consultants with
reasonable access to such property as Brassie, its agents or consultants require
to conduct the Environmental Assessment. Brassie's failure or decision not to
conduct any such Environmental Assessment shall not affect any representation or
warranty of the Acquired Entity or the Sellers under this Agreement.
5.13 Certain Tax Matters. The Sellers shall duly prepare or cause
to be prepared, and file or cause to be filed, on a timely basis, all Tax
Returns for the Acquired Entity for any period
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ending on or before Closing. The Sellers shall provide such Tax Returns to
Brassie for review at least thirty (30) business days prior to their due date
(including extensions where applicable). The Sellers shall not file any amended
Tax Returns with respect to the Acquired Entity without the prior written
consent of Brassie, which consent shall not be unreasonably withheld. After
Closing, each party shall provide the other parties with such information and
records and access to such of its officers, directors, employees and agents as
may be reasonably requested by the other parties in connection with the
preparation of any tax return or any audit or other proceeding relating to the
Acquired Entity.
5.14 Agreements of Affiliates. The Sellers hereby agree to comply with
the restrictions imposed upon affiliates of the Acquired Entity pursuant to Rule
144 under the Securities Act.
5.15 Securities Laws Matters. Brassie covenants to remain current in
its reporting obligations under the Exchange Act for two (2) years following the
Closing Date.
5.16 Piggyback Registration Rights. Brassie agrees that with respect to
any registration statement filed by Brassie subsequent to (or effective after)
the filing of Brassie's Annual Report on Form 10-KSB for the year ending
December 31, 1997, and effective prior to the second anniversary of the Closing
Date with respect to an underwritten offering of common stock for the account of
Brassie, Brassie will grant so-called "piggyback rights" to the Sellers to
participate in such underwritten offering; provided, however, that the number of
shares of the common stock of Brassie to be included on behalf of such Sellers
shall, in the aggregate, not be less than 100,000 and, without the consent of
Brassie and its underwriters, not be more than five percent (5%) of the number
of shares to be offered by Brassie for its account. In connection with any such
registration, Brassie shall bear the costs of the registration and offering
except that the participating Sellers shall be responsible for (i) their
pro-rata portion of applicable SEC and NASD or Nasdaq National Market filing
fees; (ii) underwriting discounts and commissions and other chargeable
underwriting costs, if any, and (iii) fees of counsel incurred on behalf of such
participating sellers. In addition, in any such registration, each participating
Seller will agree to execute and deliver usual and customary underwriting
agreements and related agreements and documentation as reasonably requested by
Brassie or its underwriters.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF BRASSIE
The obligations of Brassie to effect the Acquisition and the other
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions, any or all of which may be
waived in whole or in part by Brassie:
6.1 Accuracy of Representations and Warranties and Compliance with
Obligations. The representations and warranties of the Acquired Entity and the
Sellers in this Agreement shall be true and correct in all material respects at
and as of the Closing Date with the same force and
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effect as though made at and as of that time except that those representations
and warranties which address matters only as of particular date shall remain
true and correct as of such date. The Acquired Entity and the Sellers shall have
performed or complied with all of their obligations required by this Agreement
to be performed or complied with at or prior to the Closing Date. The Acquired
Entity and the Sellers shall have delivered to Brassie a certificate, dated as
of the Closing Date, (which in case of the Acquired Entity shall be duly signed
by its President and Secretary) certifying that such representations and
warranties are true and correct and that all such obligations have been
performed and complied with.
6.2 No Material Adverse Change or Destruction of Property. Between the
date hereof and the Closing Date; (a) there shall have been no Material Adverse
Change to the Acquired Entity, (b) there shall have been no adverse federal,
state or local legislative or regulatory change having a Material Adverse Effect
on the services, products or business of the Acquired Entity, and (c) none of
the Assets of the Acquired Entity shall have been damaged by fire, flood,
casualty, act of God or the public enemy or other cause (regardless of insurance
coverage for such damage) which damages may have a Material Adverse Effect on
the Acquired Entity, and the Acquired Entity and the Sellers shall have
delivered to Brassie a certificate, dated as of the Closing Date, to that
effect.
6.3 Corporate Certificate. The Acquired Entity and the Sellers shall
have delivered to Brassie (i) copies of the Articles of Incorporation of the
Acquired Entity certified by the Rhode Island Secretary of State no longer than
fifteen (15) days prior to the Closing Date and copies of the Bylaws of the
Acquired Entity as in effect immediately prior to the Closing Date, (ii) copies
of resolutions adopted by the Board of Directors and the shareholders of the
Acquired Entity authorizing the transactions contemplated by this Agreement, and
(iii) a certificate of good standing of the Acquired Entity issued by the State
of Rhode Island and each other state in which it is qualified to do business as
of a date not more than five (5) days prior to the Closing Date, and all of such
documents as to the Acquired Entity shall be certified as of the Closing Date by
the Secretary of the Acquired Entity as being true, correct and complete.
6.4 Consents. The Acquired Entity, the Sellers, and Brassie shall have
received consents to the Acquisition and other transactions contemplated hereby
and waivers of rights to terminate or modify any material rights or obligations
of the Acquired Entity or the Sellers, from any Person from whom such consent or
waiver is required, including without limitation, under any Material Contract
listed or required to be listed in Schedule 3.23 or any other law or regulation
as of a date not more than five (5) days prior to the Closing, or who as a
result of the transactions contemplated hereby, would have such rights to
terminate or modify such Contracts or instruments, either by the terms thereof
or as a matter of law. Brassie shall have obtained other approvals required
under state laws and all other Governmental Authorities with respect to the
transactions contemplated hereby.
6.5 Securities Laws. Brassie shall have received all necessary consents
and otherwise complied with any state Blue Sky or securities laws applicable to
the issuance of the Brassie Shares in connection with the transactions
contemplated hereby.
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6.6 No Adverse Litigation. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the Acquisition or other transactions hereunder, or which, in the reasonable
judgment of Brassie, makes it inadvisable to proceed with the transactions
contemplated hereby.
6.7 Completion of Due Diligence. Completion of Brassie's due diligence,
with respect to the Business of the Acquired Entity, satisfactory to Brassie
that such information obtained during its review of the Business of the Acquired
Entity does not differ substantially from the representations and warranties
being provided hereunder, which due diligence shall be completed by March 2,
1998. In this connection, the Sellers and the Acquired Entity shall furnish and
provide to Brassie all of the Acquired Entity's books, records and other
materials, including, without limitation, records of accounts receivable,
contracts, policies and procedures, vendor names and addresses, customer lists
with addresses and telephone numbers, equipment and maintenance records, leases,
liability and health insurance policies, payroll records, employment records,
and records of any employee benefit plans. Further, Brassie may conduct an
interview of the Acquired Entity's counsel, accountants and other persons with
respect to the Business of the Acquired Entity and the transactions contemplated
herein.
6.8 Board Approval. The Board of Directors of Brassie shall have
authorized and approved this Agreement and the transactions contemplated hereby.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE ACQUIRED ENTITY AND THE SELLERS
The obligations of the Acquired Entity and the Sellers to effect the
Acquisition and the other transactions contemplated hereby shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions, any
or all of which may be waived in whole or in part by the Acquired Entity and the
Sellers.
7.1 Accuracy of Representations and Warranties and Compliance with
Obligations. The representations and warranties of Brassie contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by this Agreement, and (ii)
that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date. Brassie shall
have performed and complied with all of its obligations required by this
Agreement to be performed or complied with at or prior to the Closing Date.
Brassie shall have delivered to the Sellers a certificate, dated as of the
Closing Date, and signed by an executive officer, certifying that such
representations and warranties are true and correct and that all such
obligations have been performed and complied with.
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7.2 No Material Adverse Change. Between the date hereof and the Closing
Date, there shall have been no Material Adverse Change to Brassie as a result of
bankruptcy, insolvency, SEC violations, or a delisting of Brassie's common
stock.
7.3 Brassie Shares. On the Closing Date, Brassie shall have delivered
to the Sellers all of the Brassie Shares as described in Section 2.4.
7.4 No Order or Injunction. There shall not be issued and in effect by
or before any court or other governmental body an order or injunction
restraining or prohibiting the transactions contemplated hereby.
ARTICLE VIII
INDEMNIFICATION
8.1 Agreement by the Sellers for Indemnification. The Sellers, jointly
and severally, agree to indemnify and hold Brassie and its stockholders,
directors, officers, employees, attorneys, agents and Affiliates harmless from
and against the aggregate of all expenses, losses, costs, deficiencies,
liabilities and damages (including, without limitation, related counsel and
paralegal fees and expenses) incurred or suffered by Brassie arising out of,
relating to, or resulting, from (i) any breach of a representation or warranty
made by the Acquired Entity or the Sellers in or pursuant to this Agreement,
(ii) any breach of the covenants or agreements made by the Acquired Entity or
the Sellers in or pursuant to this Agreement, (iii) any inaccuracy in any
certificate, instrument or other document delivered by the Acquired Entity or
the Sellers as required by this Agreement; or (iv) any Excluded Liabilities
(collectively, "Indemnifiable Damages"). Without limiting the generality of the
foregoing, with respect to the measurement of Indemnifiable Damages, Brassie,
its stockholders, directors, officers, employees, attorneys, agents, and
Affiliates shall have the right to be put in the same pre-tax consolidated
financial position as they would have been in if the breach or inaccuracy
referenced in the foregoing clauses (i), (ii), (iii) and (iv) that caused such
Indemnifiable Damages had not occurred, taking into consideration insurance
proceeds actually received by Brassie or agree to be paid to Brassie.
Notwithstanding the foregoing provisions, no claim for Indemnifiable Damages
(except for claims under clauses (ii) and (iv) of this Section 8.1 and claims
under Section 3.18, which may be asserted without regard to the Indemnification
Threshold) shall be asserted by Brassie or any other Person, until the aggregate
of all Indemnifiable Damages exceeds the sum of Twenty-five Thousand and No/100
Dollars ($25,000.00) (the "Indemnification Threshold"), in which case Brassie
shall be entitled to Indemnifiable Damages in excess of Fifteen Thousand and
No/100 Dollars ($15,000.00); provided, however, that except for claims which may
be asserted under Section 3.18 without limitation, the sellers shall not be
responsible for any Indemnifiable Damages exceeding Seventy-Five Thousand and
No/100 Dollars ($75,000.00) in the aggregate.
8.2 Survival of Representations and Warranties. Each of the
representations and warranties made by the Acquired Entity and the Sellers in
this Agreement or pursuant hereto shall
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survive for two (2) years following the Closing Date, except that the
representations and warranties in Section 3.12, Section 3.17, and Section 3.18
shall survive for the respective statute of limitations. No claim for the
recovery of Indemnifiable Damages may be asserted by Brassie after such
representations and warranties shall thus have expired; provided, however, that
claims for Indemnifiable Damages first asserted within the applicable period
shall not thereafter be barred. Notwithstanding any knowledge of facts
determined or determinable by any party by investigation, each party shall have
the right to fully rely on the representations, warranties, covenants and
agreements of the other parties contained in this Agreement or in any other
documents or papers delivered in connection herewith. Each representation,
warranty, covenant and agreement of the parties contained in this Agreement is
independent of each other representation, warranty, covenant and agreement. Each
of the representations and warranties of Brassie shall expire on the Closing
Date.
8.3 Remedies Cumulative; Waiver. The remedies provided herein shall be
the sole remedies for breach of contract, but shall not preclude Brassie from
asserting any other right, or seeking any other remedies against the Sellers,
including remedies for fraud and injunctive relief. The Sellers hereby waive any
right to contribution or any other similar right they may have against the
Acquired Entity as a result of their Agreement to Indemnify in this Article
VIII.
8.4 Defense of Third Party Claims. With respect to each third party
claim for which Brassie seeks indemnification under this Article VIII (a "Third
Party Claim"), Brassie shall give prompt notice to the Sellers of the Third
Party Claim, provided that failure to give such notice promptly shall not
relieve or limit the obligations of the Sellers unless the Sellers has been
materially prejudiced thereby (and such failure to notify the Sellers will not
relieve them from any other liability they may have to Brassie). If the remedy
sought in the Third Party Claim is solely money damages, or if Brassie otherwise
permits, then the Sellers at their sole cost and expense, may, upon notice to
Brassie within fifteen (15) days after the Sellers receives notice of the Third
Party Claim, assume the defense of the Third Party Claim. If the Sellers assumes
the defense of a Third Party Claim, then the Sellers shall select counsel
reasonably satisfactory to Brassie to conduct the defense. The Sellers shall not
consent to a settlement of, or the entry of any judgment arising from, any Third
Party Claim, unless (i) the settlement or judgment is solely for money damages
and the Sellers admit in writing their liability to hold Brassie harmless from
and against any losses, damages, expenses and liabilities arising out of such
settlement or judgment or (ii) Brassie consents thereto, which consent shall not
be unreasonably withheld. The Sellers shall provide Brassie with fifteen (15)
days prior notice before they consent to a settlement of, or the entry of a
judgment arising from, any Third Party Claim. Brassie shall be entitled to
participate, at its own expense, in the defense of any Third Party Claim, the
defense of which is assumed by the Sellers with their own counsel and at their
own expense. With respect to Third Party Claims in which the remedy sought is
not solely money damages and Brassie does not permit the Sellers to assume the
defense, the Sellers shall, upon notice to Brassie within fifteen (15) days
after the Sellers receive notice of the Third Party Claim, be entitled to
participate in the defense with his own counsel at his own expense. If the
Sellers do not assume or participate in the defense of any Third Party Claim in
accordance with the terms of this Section, then the Sellers shall be
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bound by the results obtained by Brassie with respect to the Third Party Claim.
The parties shall cooperate in the defense of any Third Party Claim.
ARTICLE IX
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition after the Closing Date of the Brassie Shares:
9.1 Disposition of Shares. The Sellers represent and warrant that the
Brassie Shares to be acquired hereunder will not be sold or otherwise disposed
of, except (a) pursuant to an exemption from the registration requirements under
the Securities Act, (b) in accordance with Rule 144 under the Securities Act, or
(c) pursuant to an effective registration statement filed by Brassie with the
SEC under the Securities Act. To the extent the Sellers comply with the
provisions of Rule 144 under the Securities Act in effecting sales of the
Brassie Shares, Brassie agrees to provide its transfer agent with appropriate
instructions and/or opinions of counsel in order for the Sellers to sell,
transfer and/or dispose of the Brassie Shares, in accordance with Rule 144.
9.2 Legend. The certificates representing the Brassie Shares shall bear
the following or similar legend as used by Brassie at the time:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT (A) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE ACT AND IN
COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE WITH
RESPECT THERETO, (B) IN ACCORDANCE WITH RULE 144 UNDER THE
ACT, OR (C) IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE.
Brassie may, unless a registration statement is in effect covering such shares,
place stop transfer orders with its transfer agents with respect to such
certificates in accordance with federal securities laws.
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ARTICLE X
DEFINITIONS
10.1 Defined Terms. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as
in effect on the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any agreement, contract, lease, note,
mortgage, indenture, loan agreement, franchise agreement, covenant,
employment agreement, license, instrument, purchase and sales order,
commitment, undertaking, obligation, whether written or oral, express
or implied.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Environmental Costs" shall mean any and all expenses, costs,
damages, liabilities, or obligations (including, without limitation,
fees and expenses of counsel) incurred by, under or pursuant to any
Environmental Laws or related to the Discharge, Handling, presence or
clean up of Hazardous Substances arising as a result of events
occurring or facts or circumstances arising or existing on or prior to
the Closing Date (whether or not in the ordinary course of business),
including and related to those matters set forth in Schedule 3.12.
"Excluded Liabilities" shall mean (i) any obligations and
liabilities of the Acquired Entity, absolute or contingent, known or
unknown, other than Designated Liabilities; (ii) any liability or
obligation of the Acquired Entity arising under this Agreement; (iii)
any liability or obligation of the Acquired Entity relating to any
default under any Designated Liability to the extent such default
existed and was not cured prior to the Closing; (iv) any liability or
obligation of the Acquired Entity with respect to, or arising out of,
any employee benefit plan, executive deferred compensation plan, or any
other plans or arrangements for the benefit of any employees or
officers of the Acquired Entity (except for those listed on Schedule
3.17); (v) any liability or obligation of the Acquired Entity to the
Sellers or any Affiliate of the Acquired Entity or the Sellers or to
any party claiming to have a right to acquire any shares of capital
stock or other securities convertible into or exchangeable for any
shares of capital stock of the Acquired Entity, and (vi) any
Environmental Costs or Litigation Costs.
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"GAAP" means generally accepted accounting principles in
effect in the United States of America from time to time.
"Governmental Authority" means any nation or government, any
state, regional, local or other political subdivision thereof, and any
entity or official exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, but not limited to,
any conditional sale or other title retention agreement any lease in
the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or comparable law
or any jurisdiction in connection with such mortgage, pledge, security
interest, encumbrance, lien or charge).
"Litigation Costs" shall mean any and all expenses, costs,
damages, liabilities, or obligations (including, without limitation,
fees and expenses of counsel) incurred in connection with any action,
suit, or other legal or administrative proceeding or governmental
investigation arising as a result of events occurring or facts or
circumstances arising or existing on or prior to the Closing Date
(whether or not in the ordinary course of business), including those
matters set forth on Schedule 3.11.
"Material Adverse Change (or Effect)"means a change (or
effect), in the condition (financial or otherwise), properties, assets,
liabilities, rights, obligations, operations, business or prospects
which change (or effect) individually or in the aggregate, is
materially adverse to such condition, properties, assets, liabilities,
rights, obligations, operations, business or prospects.
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, estate,
trust, unincorporated association, joint venture, Governmental
Authority or other entity, of whatever nature.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Return" means any tax return, filing or information
statement required to be filed in connection with or with respect to
any Tax.
"Taxes" means all taxes, fees or other assessments, including,
but not limited to, income, excise, property, sales, use, franchise,
intangible, payroll, withholding, social security and unemployment
taxes imposed by any federal, state, local or foreign government
agency, and any interest or penalties related thereto.
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10.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with
this Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods, where
applicable.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the neuter
and feminine, where the context so permits.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination. This Agreement may be terminated at any time prior to
Closing:
(a) by mutual written consent of all of the parties hereto
at any time prior to the Closing; or
(b) by Brassie upon delivery of written notice to the Acquired
Entity and the Sellers in accordance with Section 12.1 of this Agreement in the
event of a material breach by the Acquired Entity or the Sellers of any
provisions of this Agreement, including covenants, warranties or
representations; or
(c) by the Acquired Entity and the Sellers upon delivery of
written notice to Brassie in accordance with Section 12.1 of this Agreement in
the event of a material breach by Brassie of any provision of this Agreement,
including covenants, warranties or representations; or
(d) by (i) Brassie or (ii) the Acquired Entity and the Sellers
upon delivery of written notice in accordance with Section 12.1 of this
Agreement, if the Closing shall not have occurred by April 15, 1998 and the
reason for failing to Close is not the result of the party seeking to terminate.
11.2 Effect of Termination. Except for the provisions of Article VIII,
in the event of termination of this Agreement pursuant to Section 11.1, this
Agreement shall forthwith become
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void and of no further force and effect, and the parties shall be released from
any and all obligations hereunder; provided, however, that nothing herein shall
relieve any party from liability for the willful breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE XII
GENERAL PROVISIONS
12.1 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be deemed given if
delivered by certified or registered mail (first class postage prepaid),
guaranteed overnight delivery or facsimile transmission if such transmission is
confirmed by delivery by certified or registered mail (first class postage
prepaid) or guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers which any party
shall designate in writing to the other parties):
(a) if to Brassie to:
Xxx Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx Xxxx, President
Telecopy: (000) 000-0000
with a copy to:
Annis, Mitchell, Xxxxxx, Xxxxxxx & Xxxxx
One Tampa City Center, Suite 2100
P.O. Box 3433
Xxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Esquire
Telecopy: (000) 000-0000
(b) If to the Sellers to:
Xxxxxx X. Xxxxx and Xxxxx Xxxxxxx
c/o Taylor Box Company
000 Xxxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxxx 00000
Telecopy: (000) 000-0000
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with a copy to:
Xxxxx Xxxxx XxXxxxxx, Esq.
Tillinghart Licht & Semonoff Ltd.
Xxx Xxxx Xxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Telecopy: (000) 000-0000
12.2 Entire Agreement. This Agreement (including the Schedules and
Exhibits attached hereto) and other documents delivered at Closing pursuant
hereto, contains the entire understanding of the parties in respect of its
subject matters and supersedes all prior agreements and understandings (oral or
written) between or among the parties with respect to such subject matter. The
Schedules and Exhibits constitute a part hereof as though set forth in full
above.
12.3 Expenses. Except as otherwise provided herein, the Sellers shall
pay their own and the Acquired Entity's fees and expenses, including counsel
fees incurred in connection with this Agreement or any transaction contemplated
hereby. Brassie shall pay its own fees and expenses, including its own counsel
fees.
12.4 Amendment: Waiver. This Agreement may not be modified, amended,
supplemented, canceled, or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts.
12.5 Binding Effect: Assignment. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned or delegated by the Acquired Entity or the Sellers
without the prior written consent of Brassie. Brassie may assign all or any
portion of its rights hereunder to one or more of its wholly owned subsidiaries.
12.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
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12.7 Interpretation. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
schedules. Whenever, the words "include," "includes," or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation." Time shall be of the essence in this Agreement.
12.8 Governing Law: Interpretation. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Florida applicable to contracts executed and to be wholly performed
within such State.
12.9 Jurisdiction.
(a) The parties to this Agreement agree that any suit, action
or proceeding arising out of, or with respect to, this Agreement or any judgment
entered by any court in respect thereof shall be brought in either the state
court of Florida or Rhode Island or in the U.S. District Court for Florida or
Rhode Island, and the parties hereby irrevocably accept the exclusive personal
jurisdiction of those courts for the purpose of any suit, action or proceeding.
(b) In addition, Brassie, the Acquired Entity and the Sellers
each hereby irrevocably waives, to the fullest extent permitted by law, any
objection which it or he may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
judgment entered by any court in respect thereof brought in such jurisdiction
and hereby further irrevocably waives any claim that any suit, action or
proceedings brought in any such court has been brought in an inconvenient forum.
12.10 Arm's Length Negotiations. Each party herein expressly represents
and warrants to all other parties hereto that (a) before executing this
Agreement, said party has fully informed itself of the terms, contents,
conditions, and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party has
had the opportunity to seek and has obtained the advise of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said
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party is not acting under duress, whether economic or physical, in executing
this Agreement; and (f) this Agreement is the result of arm's length
negotiations conducted by and among the parties and their respective counsel.
The parties hereto have caused this Agreement to be duly executed and
delivered as of the day and year first above written.
BRASSIE GOLF CORPORATION,
a Delaware corporation
By:
Name:
Title:
TALISMAN TOOLS INCORPORATED,
a Rhode Island corporation
By:
Name:
Title:
Xxxxxx X. Xxxxx, Individually
Xxxxx Xxxxxxx, Individually
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