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EXHIBIT 10.20
ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT, dated as of May 30, 1997, by and among NEW
ENGLAND AUDIO CO., INC., a Massachusetts corporation with a mailing address at
00 Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "Purchaser") and HIFI BUYS
INCORPORATED, a Georgia corporation with a mailing address at 0000-X Xxxxxx Xxx,
Xxxxxx, Xxxxxxx 00000-0000 (the "Seller").
W I T N E S S E T H:
WHEREAS, the Seller is engaged in the retail sale of consumer electronic
and entertainment products in Georgia and
WHEREAS, the Seller desires to convey, sell, transfer and assign to the
Purchaser, and the Purchaser desires to purchase from the Seller, all of the
Assets (as hereinafter defined), and the Purchaser is willing to assume all of
the Assumed Liabilities (as hereinafter defined), on the terms and conditions
hereinafter set forth; and
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Purchase and Sale of Assets.
SECTION 1.1 SALE OF ASSETS. Subject to the terms and conditions set forth
in this Agreement, the Seller does hereby sell, transfer, convey, assign and set
over ("Transfer") to the Purchaser, and the Purchaser does hereby purchase and
acquire from the Seller, all of the Seller's right, title and interest in and to
all of its properties, rights, claims, contracts and assets, tangible or
intangible, real or personal, xxxxxx or inchoate, wherever located
(collectively, "Properties"), but excluding, in all events, the Excluded Assets
(as hereinafter defined) (all such Properties so Transferred are hereinafter
collectively referred to as the "Assets").
SECTION 1.2 ASSETS; EXCLUDED ASSETS.
A. ASSETS. Without limiting the generality or effect of Section 1.1, the
following Properties are included in the Assets Transferred hereunder:
1. RECEIVABLES. Except for receivables relating to the Excluded
Assets, all trade, miscellaneous, accounts and notes receivable arising out of
the sale or
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lease of goods or the rendering of services by the Seller, and all security for
any of the foregoing, including without limitation such of the foregoing as are
listed or described on SCHEDULE 1.2(A)(1) hereto (collectively, the
"Receivables").
2. FIXED ASSETS. Except as set forth in Section 1.2(B)(5) and except
for those assets set forth on SCHEDULE 1.2(B)(7), all machinery, equipment,
leasehold improvements, business machines, tooling, vehicles, parts, furniture,
furnishings, plant and office equipment and other fixed assets or personal
property owned, leased or otherwise held by or on behalf of the Seller,
including without limitation such of the foregoing assets as are owned by the
Seller and are located at any of the Current Locations (as hereinafter defined),
and the rights of the Seller as bailee of any of the foregoing assets, and
including without limitation the assets listed on the fixed asset register (the
"Fixed Asset Register") included as SCHEDULE 1.2(A)(2) hereto (collectively, the
"Fixed Assets").
3. INVENTORY. All inventories, including raw materials, parts, work
in process, goods held for sale, returns, repairs, finished goods and
manufacturing, administrative and other supplies owned by the Seller including,
without limitation, any of the foregoing which have been furnished to any
subcontractor or other bailee (collectively, the "Inventory").
4. COMMITMENTS. All rights of Seller under all contracts,
agreements, other rights of a contractual nature and franchises (collectively,
with all Manufacturer's Warranties, as defined below, "Commitments") to the
extent such Commitments relate to the Seller Business or the Assets (such
Commitments so transferred, the "Purchased Commitments"), including without
limitation such of the foregoing as are listed on SCHEDULE 1.2(A)(4) under the
heading "Purchased Commitments" but excluding those listed on SCHEDULE 1.2(A)(4)
under the heading "Non-Purchased Commitments".
5. PREPAID AND OTHER ITEMS. All credits, prepaid and deferred items
and advanced payments, other than prepaid insurance policy premiums, such as :
(i) rentals (but excluding prepaid rental received from third party subtenants
for their lease of space at the Excluded Real Property), (ii) security deposits
(but excluding security deposits received from third party subtenants in
connection with their lease of space at the Excluded Real Property), and (iii)
Taxes (but excluding prepaid Income Taxes and Taxes relating to any Excluded
Assets); and unbilled charges and deposits, and including without limitation
those prepaid items set forth on SCHEDULE 1.2(A)(5) hereto but excluding prepaid
business license fees which are not transferable with respect to the Current
Locations.
6. DATA AND RECORDS. Except for the Corporate Records (as defined in
Section 1.2(B)(2)), all data and records of the Seller, wherever located and
regardless of how stored or embodied and whether in electronic, written or other
form, including books and records (other than minute books and records of
meetings of the directors and
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stockholders of the Seller), customer lists, dealer and distributor lists,
credit information and correspondence, and employee records and information.
7. INTELLECTUAL PROPERTY. Except for those license agreements set
forth on Schedule 1.2(A)(4) as Non Purchased Commitments, if any, all licenses,
patents, copyrights, designs and drawings, engineering and manufacturing
documents, technical manuals, patterns, processes, formulae, know-how, trade
secrets, trademarks, service marks, trade names, inventions and discoveries
(whether patentable or not), computer software, and other similar rights of the
Seller, and all applications therefor and registrations thereof, including
without limitation (i) those listed in SCHEDULE 1.2(A)(7) hereto and (ii) all
other Proprietary Information (as hereinafter defined) of the Seller
(collectively, the "Intellectual Property") and all rights to xxx for past,
present and future infringement or other violations of the Intellectual
Property. Without limiting the generality or effect of the foregoing, the
Intellectual Property includes the Seller's rights in the name "HiFi Buys" and
the phrase "Audio Video and a Boatload of Know How" and all trademark and
service xxxx rights relating to such names, if any, along with the rights
(common law or otherwise), registrations and logos and goodwill relating
thereto, if any, and to the design element and any variations or combinations
thereof and the goodwill relating thereto, if any. Notwithstanding the
foregoing, Purchaser hereby acknowledges and agrees that Seller has not filed
for a federal, state or other trademark registration of the name "HiFi Buys" or
any derivation thereof.
8. CASH AND DEPOSITS, ETC. All cash and deposits of cash and cash
equivalents, certificates of deposit, payroll accounts, securities (whether
certificated or uncertificated, and whether or not commonly dealt in on
securities exchanges or markets) and any similar cash investments of the Seller,
including without limitation all of the foregoing described on SCHEDULE
1.2(A)(8) hereof.
9. LEASES. The leasehold interests of the Seller under the leases
listed on SCHEDULE 1.2(A)(9) (such leases are referred to herein as the "Seller
Leases," and the real estate subject to such leases as the "Leased Real
Properties").
10. CLAIMS. Except as set forth in Section 1.2(B)(6), all claims,
counterclaims, cross claims and other claims and causes of action against third
parties and any rights to contribution (including without limitation rights to
indemnification) of the Seller.
11. PERMITS AND LICENSES. Except as set forth on Schedule 1.2(B)(7),
all permits, licenses, approvals, consents and authorizations issued by any
Governmental Entity (collectively, "Licenses") currently held by Seller,
including without limitation all of the Licenses listed on SCHEDULE 1.2(A)(11).
12. MANUFACTURERS' AND VENDORS' WARRANTIES. Except as set forth on
Schedule 1.2(B)(7), all of the Seller's rights under manufacturers' and vendors'
warranties, guaranties and similar commitments relating to items included in the
Assets
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(collectively, "Manufacturer's Warranties"), including without limitation all of
the Manufacturer's Warranties listed on SCHEDULE 1.2(A)(12).
13. OTHER ASSETS. Except for the Excluded Assets, all such other
Properties of the Seller that are located at, used in or relate to the conduct
of the Business at any of the Current Locations.
B. EXCLUDED ASSETS. Notwithstanding anything contained in this Agreement
to the contrary, the following Properties (the "Excluded Assets") are not
included in the Assets and Purchaser shall have no rights or claims thereto:
1. TAX REFUNDS. All state or federal Income Tax refunds due to the
Seller for periods prior to the Closing Date and all prepaid Income Taxes and
prepaid Taxes to the extent relating to any Excluded Assets.
2. MINUTE BOOKS, ETC. All of (a) the Seller's minute books, stock
record books and corporate seal and Tax records and (b) any other corporate
records of the Seller to the extent not pertaining to the Assets (collectively,
the "Corporate Records").
3. INSURANCE. Any policies of insurance, whether or not relating to
the Seller Business or the Assets and all prepaid insurance premiums and
refunds.
4. PENSION PLANS, ETC. Except for the assets of the CIGNA Healthcare
Plan provided by Connecticut General Life Insurance Company and the CIGNA
Healthcare Cash Management Program dated December 15, 1995, the assets of the
pension and other funded Benefit Plans (as hereinafter defined) or Benefit
Arrangements (as hereinafter defined), including without limitation, those
listed in SCHEDULE 1.2(B)(4) hereto.
5. CERTAIN REAL ESTATE. The fee interest of the Seller in the real
estate premises used by the Seller in the Seller Business at Xxxx Xxxxxx Xxxx,
Xxxxxx, Xxxxxxx (collectively, the "Excluded Real Property") and the furniture,
fixtures, machinery and equipment located at the Excluded Real Property, used in
the Seller Business as presently conducted at the Excluded Real Property and
which are described on SCHEDULE 1.2(B)(5) (the "Excluded Personalty") (subject,
however, to the Purchaser's rights as tenant under the lease covering the
Excluded Real Property and the Excluded Personalty, referred to in Section
3.2(A)(3), below); and the leasehold interest (and related sublease) of Seller
in the real estate located at Xxx Xxxx Xxxxxxx, Xxxxxxx, Xxxxxxx 00000.
6. RETAINED CLAIMS. All claims, counterclaims, cross-claims and
other claims and causes of action against third parties and any rights to
contribution (including, without limitation, rights to indemnification) of the
Seller to the extent they relate to the Excluded Assets or the Excluded
Liabilities.
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7. OTHER EXCLUDED ASSETS. The "Non-Purchased Commitments" listed on
Schedule 1.2(A)(4) and the automobile and other assets listed on SCHEDULE
1.2(B)(7).
C. ADDITIONAL DEFINED TERMS.
1. "BUSINESS OR SELLER BUSINESS". As used herein, the terms
"Business" or "Seller Business" shall each mean the business as conducted by the
Seller at any time prior to Closing, pursuant to which the Seller engages or has
engaged in the retail sale of consumer electronic and entertainment products,
and any and all business activities incident or ancillary thereto.
2. "DISCLOSURE SCHEDULE". As used herein, the term "Schedule" or
"Disclosure Schedule" shall mean the Schedules attached hereto, which Schedules
are incorporated herein and made a part hereof, fully as if the same were herein
set forth in their entirety.
3. "CURRENT LOCATIONS". As used herein, the term "Current Locations"
shall mean, collectively, the locations and parcels of real estate which
together comprise the Excluded Real Property (absent the [8,000] square feet of
the Excluded Real Property allocated to a third party sub-tenant) and the Leased
Real Properties.
ARTICLE II
Purchase Price
Section 2.1. PAYMENT AT CLOSING. In consideration of the purchase and sale
of the Assets and the covenants herein contained, the Purchaser shall at the
Closing: (i) pay to the Seller, subject to adjustment as set forth in Section
2.2, the aggregate amount of $11,500,000, of which (a) $11,250,000 is being paid
by the Purchaser to the Seller on the Closing Date; and (b) $250,000 is being
delivered into escrow pursuant to the Escrow Agreement (as hereinafter defined);
(ii) pay to Wachovia Bank of Georgia, N.A. ("Wachovia") for the account of
Seller by wire transfer of immediately available funds, the amount of
$5,783,308.71 (the amounts to be paid under (i) and (ii) above are referred to
hereinafter, collectively, as the "Unadjusted Cash Payment"); (iii) execute and
deliver to the Seller (a) the Promissory Note (as hereinafter defined) and (b)
the Warrant (as hereinafter defined); and (iv) assume the Assumed Liabilities as
provided in Article IV hereof.
Section 2.2. POST-CLOSING ADJUSTMENT.
A. GENERAL. The Purchaser and the Seller acknowledge and agree that
the "November Net Asset Value" as shown on SCHEDULE 2.2(A) hereto is $1.3
million.
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The Unadjusted Cash Payment shall be reduced or increased dollar-for-dollar, as
the case may be, to the extent that the Closing Net Asset Value as determined as
provided in this Section 2.2, is less than or greater than $1,000,000 (as so
adjusted, the "Adjusted Cash Payment"). As used herein, the term "Closing Net
Asset Value" shall mean (i) the aggregate book value of the Assets less the
amount of the Assumed Liabilities as such categories of assets and liabilities
would be deemed to exist assuming the Closing had, in fact, occurred effective
at the close of business on May 31, 1997 plus (ii) the amount of the Wachovia
Debt paid under 2.1(ii) above, and shall be calculated in accordance with
Section 2.2(F).
B. PREPARATION OF CLOSING NET ASSET VALUE STATEMENT. Within 60
calendar days after the Closing Date, the Purchaser will cause its accountants,
Deloitte & Touche, or such other nationally known firm of independent public
accountants selected by the Purchaser and reasonably acceptable to Seller (the
"Purchaser's Accountants"), to prepare and deliver to the Seller an audited
balance sheet which fairly presents the Assets and the Assumed Liabilities,
calculated as provided in the last sentence of Section 2.2(A) above and in
accordance with Section 2.2(F), and which sets forth (1) a determination of the
Closing Net Asset Value and a computation of the Adjusted Cash Payment and (2)
the amount of the post-closing adjustment, if any, payable by the Seller or the
Purchaser, as the case may be, as provided in Section 2.2(A) (the "Closing Net
Asset Value Statement"). During such 60 day period, the Seller, the Purchaser
and their respective authorized representatives (including without limitation
the Seller's Accountants (as hereinafter defined) and the Purchaser's
Accountants) shall be entitled to access, during normal business hours, to the
books, records and work papers of the Seller and to provide input to the
Purchaser's Accountants during the preparation of the Closing Net Asset Value
Statement. As part of the preparation of the Closing Net Asset Value Statement,
the Purchaser's Accountants shall, without limitation, review and make such
adjustment, if any, as it shall deem necessary to any Assets reflecting accrued
manufacturer's COOP receivables and like items to ensure that the amount thereof
reflects accruals through the Closing for advertising funds, "key city" funds,
coop advertising funds, volume rebates and the like, based on amounts which
would be received by the Seller assuming its continued operation of the Business
following the closing in the ordinary course and consistent with past GAAP
accounting practices and reasonable projections. Without limiting the generality
of the foregoing, the Purchaser shall retain those employees of Seller set forth
on SCHEDULE 2.2(B) hereto, at their present salary, to assist in the preparation
of the balance sheet and the Closing Net Asset Value Statement during such
60-day period. Seller hereby agrees to reimburse Purchaser for one-half of the
wages paid to such employees during such 60-day period within 30 days after
receipt of an invoice therefor from Purchaser. In addition, the Purchaser and
the Seller shall otherwise cooperate with each other and with each other's
authorized representatives in connection with the preparation, audit and review
of the Closing Net Asset Value Statement, provided that the foregoing does not
unreasonably interfere with the other parties' conduct of their businesses after
the Closing.
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C. SELLER ACCEPTANCE OF OR DISAGREEMENT WITH CLOSING NET ASSET VALUE
STATEMENT. If, within 30 calendar days after the date of the Seller's receipt of
the Closing Net Asset Value Statement, the Seller determines in good faith that
the computations therein are inaccurate, the Seller will give written notice (a
"Dispute Notice") to the Purchaser within such 30-calendar day period (i)
setting forth the Seller's determination of the Closing Net Asset Value and the
Adjusted Cash Payment to the extent determinable, and (ii) specifying in
reasonable detail the Seller's basis for its disagreement with the Purchaser's
computations. Any amount that is not in dispute after taking into account the
Dispute Notice shall be promptly paid by the party obligated to make such
payment to the party entitled to receive such payment. The failure by the Seller
to give a Dispute Notice within such 30-calendar day period will be deemed to
constitute a final determination of the Closing Net Asset Value and the Adjusted
Cash Payment as set forth on the Closing Net Asset Value Statement which shall
then be binding upon all parties for all purposes hereunder. As used herein, the
term "Seller's Accountants" shall mean Deloitte & Touche, or such other
nationally recognized accounting firm as the Seller shall designate in writing
to the Purchaser and which shall be reasonably acceptable to the Purchaser. The
Seller, Seller's representatives and Seller's Accountants shall be entitled to
reasonable access, during normal business hours, to Purchaser's books, records
and work papers to the extent reasonably necessary for Seller to review the
Closing Net Asset Value Statement. In addition, Purchaser and Seller shall
otherwise cooperate with each other and with each other's authorized
representatives in connection with Seller's review of the Closing Net Asset
Value Statement.
D. DISPUTE RESOLUTION. If the Purchaser and the Seller are unable to
resolve any disagreement between them within 30 calendar days after Purchaser's
receipt of a Dispute Notice from the Seller, the items in dispute shall be
referred for determination to Ernst & Young LLP (the "Dispute Accountants") as
promptly as practicable. The Dispute Accountants will make a determination as to
each item in dispute, which determination will be (a) in writing, (b) furnished
to each of the Purchaser and the Seller as promptly as practicable after the
item in dispute has been referred to the Dispute Accountants, (c) made in
accordance with this Agreement, and (d) conclusive and binding upon each of the
Purchaser and the Seller. Each of the Purchaser and the Seller will use
reasonable efforts to cause the Dispute Accountants to render their decision as
soon as practicable, including without limitation by promptly complying with all
reasonable requests by the Dispute Accountants for information, books, records
and similar items. Neither party will disclose to the Dispute Accountants, and
the Dispute Accountants will not consider for any purpose, any settlement offer
made by either party. As part of the resolution of all outstanding disputes, the
parties will cause the Dispute Accountants to prepare a balance sheet reflecting
the Closing Net Asset Value as finally determined, a computation of the Adjusted
Cash Payment and the amount of the post-closing adjustment payable by the Seller
or the Purchaser, as the case may be, to the other pursuant to this Section 2.2
(the "Final Closing Net Asset Value Statement"). Such Final Closing Net Asset
Value Statement shall supersede all prior versions of the Closing Net Asset
Value Statement or the Dispute Notice for all purposes.
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E. PAYMENT OF ADJUSTED CASH PAYMENT. To the extent that the
Unadjusted Cash Payment is more than the Adjusted Cash Payment as finally
determined under this Section 2.2, the Seller will, within 15 calendar days
after such final determination or deemed final determination of the Closing Net
Asset Value, cause the amount of such difference to be paid to Purchaser first
from the Escrow Account, together with any interest earned thereon while in the
Escrow Account, from the Closing Date to the date of payment, and second, to the
extent not satisfiable from such amounts, directly by the Seller within such 15
calendar days. To the extent that the Unadjusted Cash Payment is less than the
Adjusted Cash Payment as finally determined under this Section 2.2, the
Purchaser, will, within 15 calendar days after such final determination or
deemed final determination of the Closing Net Asset Value, make payment by wire
transfer of New York Clearing House funds of any unpaid amount of such
difference, together with interest thereon, from the Closing Date to the date of
payment at a rate equal to that interest rate earned on the funds in the Escrow
Account, calculated on the basis of the actual number of days elapsed over 365,
to such account as has been designated by the Seller to the Purchaser.
F. ACCOUNTING STANDARDS; EXPENSES. The Closing Net Asset Value
Statement, the Dispute Notice, the Final Closing Net Asset Value Statement and
the Closing Balance Sheet shall each be prepared in accordance with those
accounting standards set forth in SCHEDULE 2.2(F) and, to the extent not
inconsistent therewith, United States generally accepted accounting principles
("GAAP") (such standards, the "Agreed Upon Accounting Standards") applied on a
basis consistent with the preparation of the November Balance Sheet, provided
that, the Closing Net Asset Value Statement, the Dispute Notice and the Final
Closing Net Asset Value Statement shall include the Assets as the only assets
thereon and, subject to subparagraphs (a), (c), (d) and (e) below, the Assumed
Liabilities as the only liabilities thereon (such Assets and Assumed Liabilities
to be calculated in accordance with the last sentence of Section 2.2(A)). The
Closing Net Asset Value Statement, the Dispute Notice and the Final Closing Net
Asset Value Statement shall, in any event, (a) exclude from the Assumed
Liabilities thereon (i) the amount of $1,775,000 attributable to indebtedness
relating to the Excluded Real Property (the "Real Estate Debt") and (ii) any and
all amounts attributable to accrued vacation liability with respect to Seller
Employees or Former Employees ("Employee Vacation Liabilities"), (b) exclude
from the Assets thereon $2,875,000 attributable to the Excluded Real Property
(c) exclude from the Assumed Liabilities thereon claims, if any, incurred or
arising during the period following Closing until 11:59 p.m. eastern daylight
time on May 31, 1997, directly from the Purchaser's operation of the Business
outside the ordinary course as conducted by the Seller, (d) include as
additional Assumed Liabilities thereon (for computational purposes only) the
aggregate amount owed by the Seller to Wachovia (excluding the Real Estate Debt)
(such amount owed to Wachovia less the Real Estate Debt is referred to herein as
the "Wachovia Debt") immediately prior to the payment to Wachovia provided in
Section 2.1(ii) and (e) include other mutually agreed upon accruals. The
Wachovia Debt is to be included as additional liabilities pursuant to the
foregoing clause (d) solely for purposes of calculating Closing Net Asset Value
under this
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Section 2.2 and the Seller and the Purchaser acknowledge and agree that the
Purchaser is not assuming the Wachovia Debt, but rather a portion of the
Unadjusted Cash Payment is simultaneously being sent by wire transfer to
Wachovia for the benefit of the Seller to repay and discharge such Wachovia Debt
in full. Without limiting the foregoing, reserves reflected in any net asset
value statement, balance sheet or other document contemplated by this Section
2.2 will be established, maintained, applied or released consistent in all
respects with the Agreed Upon Accounting Standards consistently applied. The
balance sheet set forth in: (a) the Closing Net Asset Value Statement, if such
balance sheet was accepted or deemed accepted by the Seller pursuant to Section
2.2(C) or as such balance sheet has been adjusted and accepted, with the
Purchaser's express written consent, as requested by Seller in a Dispute Notice
delivered pursuant to Section 2.2(C) hereof, and (b) the Final Closing Net Asset
Value Statement, if the dispute resolution procedures of Section 2.2(D) are
followed; shall constitute the "Closing Balance Sheet" for purposes of this
Agreement. Subject in all respect to Section 9.14 hereof, each of the Purchaser
and the Seller shall be responsible for their respective costs and expenses
incurred in connection with the procedures set forth in this Section 2.2,
including without limitation attorneys' fees and the fees of the Purchaser's
Accountants and the Seller's Accountants for services rendered in connection
with this Section 2.2, provided, however, that the Seller shall promptly upon
the Purchaser's request reimburse the Purchaser for the fees of the Purchaser's
Accountants, incurred in connection with the development of the Closing Net
Asset Value Statement pursuant to Section 2.2(C), provided that such
reimbursement obligation shall not exceed $25,000. The fees to be paid to the
Dispute Accountants pursuant to Section 2.2(D) shall be borne one-half by the
Purchaser and one-half by the Seller.
The Purchaser and the Seller acknowledge and agree that to the extent that
Purchaser and Seller mutually agree to include an accrued item as a liability on
the Closing Balance Sheet that does not constitute an Assumed Liability but
which does affect the calculation of the Closing Net Asset Value, and Purchaser
refuses to pay the amount of such accrued liability on behalf of Seller as shown
on the Closing Balance Sheet to the applicable party, Purchaser will reimburse
Seller for any amount disbursed by Seller to such third party up to the amount
shown on the Closing Balance Sheet for such liability; provided that nothing in
this paragraph shall be interpreted to require Purchaser to assume such accrued
liability or to indemnify Seller or any other party with respect to such accrued
liability (except for reimbursements to Seller as set forth in this sentence).
ARTICLE III
Closing
SECTION 3.1 CLOSING DATE. The closing of the transactions contemplated
hereby (the "Closing") shall be held at the offices of Goulston & Storrs on May
30, 1997, and shall be effective as of 5:00 p.m. Eastern Time on May 30, 1997,
or such other date and
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time as the parties shall mutually agree (the "Closing Date"). All matters at
the Closing shall be considered to take place simultaneously, and no delivery of
any document or instrument shall be deemed complete until all transactions and
deliveries of documents and instruments and payments contemplated by this
Agreement are completed.
SECTION 3.2 DOCUMENTS OF CONVEYANCE, ETC.
A. DELIVERIES OF THE SELLER. Simultaneously herewith, the Seller (and, in
the case of the Guaranty and Non-Competition Agreements from Xxxxxxx Xxxx,
Xxxxxxx Xxxx, Xxxxx Xxxxxxxx, Xxxxxx Xxxxxxxxx, and Xxxxx Xxxx, referred to in
Section 3.2(A)(8), below, each such person) is delivering the following
documents to the Purchaser:
1. an executed original of the Escrow Agreement, dated the Closing
Date, in substantially the form set forth in EXHIBIT A (the "Escrow Agreement").
2. an executed original of the lease covering the Excluded Real
Property and Excluded Personalty dated the Closing Date in substantially the
form set forth in EXHIBIT B (the "Lease"), executed by the Seller as landlord
thereunder;
3. executed originals of the secretary's certificates in
substantially the form set forth on EXHIBIT C-1;
4. an opinion of counsel to the Seller in substantially the form set
forth in EXHIBIT D hereto;
5. a receipt for the Unadjusted Cash Payment executed by the Seller
in a form satisfactory to Seller;
6. a certification of non-foreign status signed by the chief
executive officer of the Seller affirming that the Seller is not a foreign
person within the meaning of Section 1445 (b)(2) of the Internal Revenue Code of
1986, as amended (the "Code"), which certification shall be in substantially the
form set forth in EXHIBIT E hereto;
7. any clearance certificates or similar documents that may be
required by any state taxing authority in order to relieve the Purchaser of any
obligation to withhold any portion of the Unadjusted Cash Payment;
8. executed originals of the Guaranty and Non-Competition Agreements
from Xxxxxxx Xxxx, Xxxxxxx Xxxx, Xxxxx Xxxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxx
Xxxx, in each case substantially in the forms set forth in EXHIBIT F hereto;
9. a letter from Wachovia to the Seller evidencing payment in full
of the Wachovia Debt, and executed UCC-3's or other evidence showing that any
and all liens, charges and encumbrances on the Assets securing the Wachovia
Debt, the Real
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Estate Debt or the SBA Debt, or any other Liabilities have been or will be
promptly released and discharged.
B. DELIVERIES OF THE PURCHASER. Simultaneously herewith, the
Purchaser is delivering the following to the Seller:
1. the Unadjusted Cash Payment as set forth in Section 2.1;
2. an executed original of the Escrow Agreement, dated the
Closing Date;
3. an executed original of the Lease, dated the Closing Date;
4. an executed original of the Promissory Note in the principal
amount of $1,200,000.00, dated the Closing Date, in substantially the form set
forth in EXHIBIT G (the "Promissory Note");
5. an executed original of the Warrant, dated the Closing Date,
in substantially the form set forth in EXHIBIT H (the "Warrant");
6. an executed original of the officers' certificate in
substantially the form set forth on EXHIBIT C-2;
7. an opinion of counsel to the Purchaser in substantially the
form set forth in EXHIBIT I hereto; and
8. an Assignment and Assumption Agreement, dated the Closing
Date, in substantially the form set forth in EXHIBIT J hereto (the "Assignment
and Assumption Agreement").
The Seller and the Purchaser are also delivering to each other,
simultaneously herewith, such additional certificates, consents, approvals,
agreements, and documents relating to the transactions contemplated by this
Agreement as have been requested and agreed to by such parties, (collectively
with this Agreement and all of the documents referred to in Section 3.2(A) and
3.2(B) above, the "Closing Documents"). The Seller further agrees that at or
subsequent to the Closing, upon the written request of the Purchaser, it will
promptly execute and deliver or cause to be promptly executed and delivered any
further assignment, instruments of transfer, bills of sale or conveyances
reasonably necessary or desirable to vest fully in the Purchaser all of the
Seller's right, title and interest in and to the Assets.
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ARTICLE IV
Assumption of Liabilities
SECTION 4.1. ASSUMED LIABILITIES. At the Closing, and as consideration for
the purchase of the Assets pursuant to Section 2.1(iii), the Purchaser shall
assume in full and agree to pay, perform and discharge those liabilities and
obligations of Seller expressly described and itemized on SCHEDULE 4.1
(collectively, the "Assumed Liabilities").
SECTION 4.2 EXCLUDED LIABILITIES. Notwithstanding anything contained in
this Agreement or the Schedules hereto to the contrary, the Purchaser does not
assume or agree to pay, satisfy, discharge or perform, and shall not be deemed
by virtue of the execution and delivery of this Agreement or any document
delivered at the Closing pursuant to this Agreement, or as a result of the
consummation of the transactions contemplated by this Agreement or otherwise to
have assumed, or to have agreed to pay, satisfy, discharge or perform any of the
Excluded Liabilities. The term "Excluded Liabilities," as used herein, shall
mean (1) any and all liabilities, claims, obligations, expenses or damages,
whether known or unknown, contingent or absolute, named or unnamed, disputed or
undisputed, legal or equitable, determined or indeterminable, or liquidated or
unliquidated (any and all of the foregoing, "Liabilities") of the Seller which
are not listed or described on SCHEDULE 4.1, (2) the Wachovia Debt, (3) the SBA
Debt, and (4) any or all of the following whether or not reflected on the
Closing Balance Sheet and whether or not they otherwise constitute Excluded
Liabilities under the foregoing clause (1), (2) or (3):
A. LIABILITIES COVERAGE/INSURANCE. All Liabilities of the Seller or
any of its Affiliates to the extent covered under any workers compensation,
general liability, casualty, property damage, products liability, auto
liability, excess general liability or any other insurance policy or program,
including any self-insurance program, maintained by the Seller or any of its
Affiliates or under which Seller or any of its Affiliates are covered, in each
case as of the date of the Closing (collectively, "Insurance").
B. LIABILITIES RELATING TO EXCLUDED ASSETS. All Liabilities to the
extent they relate to any of the Excluded Assets.
C. BORROWED MONEY. Except as set forth on SCHEDULE 4.2(C), all
Liabilities for borrowed money, other than trade payables, including without
limitation (i) any obligation evidenced by bonds, debentures, notes or other
similar debt instruments, (ii) any obligation to pay the deferred purchase price
of goods or equipment constituting Assets and secured by a Lien on such goods or
equipment, except for trade payables and pursuant to the Purchased Commitments,
(iii) any monetary obligation under any leasing or similar arrangements which
are, or should be, in accordance with GAAP, classified as a capitalized lease,
except pursuant to the Purchased Commitments, (iv) any monetary obligation
(contingent or otherwise) under letters of credit, bankers'
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acceptances and similar instruments, and (v) any guarantee or other Liability in
respect of any of the foregoing.
D. TAXES. All Liabilities of the Seller or any predecessor or
Affiliate of the Seller arising from or relating to Taxes.
E. ADVISOR FEES. All Liabilities of the Seller for any legal,
accounting, investment banking, environmental services, appraisal, consulting,
brokerage or other advisory fees or expenses incurred by the Seller in
connection with, resulting from or attributable to the execution and delivery of
this Agreement and the consummation of the transactions contemplated to be
consummated hereby.
F. OTHER SITES AND BUSINESSES. All Liabilities of the Seller to the
extent arising out of or relating to the conduct of (i) the Seller Business or
any other activity, in each case at any location other than the Current
Locations or (ii) any other businesses other than the Seller Business regardless
of the location(s) at which such other businesses have been or are conducted.
G. CERTAIN ENVIRONMENTAL LIABILITIES. All Liabilities of the Seller
or any predecessors or Affiliates of the Seller arising from any violation of or
failure to comply with (or imposed as a matter of strict liability under) any
and all Laws (including without limitation any and all Liabilities of the Seller
or any predecessors or Affiliates of the Seller under any Environmental Laws (as
hereinafter defined)) whether or not disclosed or required to be disclosed
pursuant to this Agreement.
As used above, the term "Environmental Laws" shall mean any and all
applicable federal, state, county or local laws, ordinances or regulations
(whether now existing or hereafter enacted or promulgated as they may be amended
from time to time) relating to the generation, discharge, release, containment,
storage, transportation or cleanup of Hazardous Materials or other contaminants
or similar materials, including without limitation the following: (1) the
Comprehensive Environmental Response, Compensation Liability Act of 1980, 42
U.S.C. ss.9601 ET SEQ.; (2) the Toxic Substances Control Act, 15 U.S.C. ss.2101
ET SEQ.; (3) the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
ss.136; (4) the Hazardous Materials Transportation Act, 49 U.S.C. ss.ss.1801 to
1812; (5) the Federal Water Pollution Control Act, 32 U.S.C. ss.1251 ET SEQ.;
(6) the Federal Solid Waste Disposal Act; (7) the Federal Clean Air Act, 42
U.S.C. ss.1857 ET SEQ.; and (8) any other federal, state, county, or local
statutes or implementing regulations (or any other statutes or implementing
regulations of any other Governmental Entity) relating to, regulating, or having
jurisdiction over, any environmental contamination, Hazardous Material (as
hereinafter defined), Environmental Condition (as hereinafter defined), Release
(as hereinafter defined), or Threat of Release (as hereinafter defined).
H. EMPLOYEE LIABILITIES. Subject to the provisions of Section
9.14(B), any liabilities of Seller for severance, other employee benefits
(including without
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limitation benefits mandated by Law (as hereinafter defined)) or other
compensation or damages by or on behalf of any Seller Employees or Former
Employees (as hereinafter defined) or by or on behalf of any Governmental Entity
(as hereinafter defined) in respect of Seller Employees or Former Employees
involving any alleged or actual employment loss, violation of any Law or
termination of employment actually or constructively (by operation of Law or
pre-existing Commitment, including without limitation any Liability for
severance), and all Liabilities of the Seller or any predecessor or Affiliate of
the Seller under or with respect to Benefit Plans or Benefit Arrangements
(except with respect to the Cigna Healthcare Plan and Cash Management Program),
or in respect of payments for unemployment compensation or unemployment
insurance, and all coverage obligations under Code Section 4980B and described
in Section 5.1(k)(i)(a) and all other Liabilities of Seller in respect of Seller
Employees, Former Employees and independent sales representatives or other
independent contractors or their respective benefit plans or arrangements.
I. CERTAIN OTHER LIABILITIES. (i) All Liabilities arising out of or
relating to any fact, circumstance or event, the existence or nonexistence of
which constitutes a misrepresentation or breach of any representation or
warranty of the Seller under this Agreement; and (ii) to the extent not already
covered by the foregoing clause (i), and without regard to whether the same are
disclosed hereunder, all Liabilities of Seller arising under or pursuant to, or
otherwise relating to, any Law requiring the filing or giving of notices with or
to any Governmental Entity (including without limitation any state tax
authority) or any creditor of the Seller or any other party regarding the
transactions contemplated hereby under Article 6 of the Uniform Commercial Code
("Bulk Sales Liabilities").
ARTICLE V
Representations and Warranties by the Seller.
SECTION 5.1 REPRESENTATIONS AND WARRANTIES. The Seller hereby represents
and warrants to the Purchaser that:
A. CORPORATE EXISTENCE AND QUALIFICATION OF SELLER; DUE EXECUTION, ETC.
The Seller is a corporation duly organized, validly existing and subsisting
under the Laws of the State of Georgia and has the requisite corporate power and
authority to own, lease or otherwise hold the Assets and to carry on the Seller
Business as conducted through the Closing Date. The Seller is duly qualified to
conduct business as a foreign corporation in every jurisdiction in which its
ownership or lease of property or conduct of the Seller Business makes such
qualification necessary, except for such jurisdictions in which the Seller's
failure to be so qualified, individually or together with any other failure so
to qualify, would not have a Material Adverse Effect. As used in this Agreement
the term "Material Adverse Effect" means a material adverse effect on any of the
Assets or the business, condition (financial or otherwise), results of
operations or prospects of the
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Seller Business or the ability of any party to this Agreement or to any of the
other Closing Documents to pay or perform its, his or her respective obligations
thereunder. The Seller has all requisite corporate power and authority to
execute, deliver and perform this Agreement and the Closing Documents to which
it is a party, and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Closing Documents
to be executed by Seller and the consummation by the Seller of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
corporate action and, assuming the due execution of this Agreement and the
Closing Documents by the Purchaser, this Agreement and the Closing Documents to
which the Seller is a party constitute valid and binding obligations of the
Seller enforceable against it in accordance with their respective terms, subject
only to applicable bankruptcy, insolvency, reorganization, moratorium or other
similar Laws relating to creditors' rights generally and to general principles
of equity (regardless of whether such enforcement is considered in a proceeding
at law or in equity).
B. NO VIOLATION. Except as set forth on SCHEDULE 5.1(B), neither the
execution and delivery by the Seller of this Agreement or the Closing Documents
to be executed by the Seller, nor the consummation by the Seller of the
transactions contemplated hereby or thereby: (i) violates or will violate any
Law applicable to the Seller; (ii) violates or will violate any order, ruling,
writ, judgment, injunction or decree of any Governmental Entity (an "Order")
applicable to the Seller; (iii) conflicts or will conflict with, or results or
will result in a breach of or default under, the Articles of Incorporation or
bylaws of Seller, or results or will result in any breach of any Commitment
applicable to the Seller (other than a breach which is not material to the
enforcement by the Purchaser of the rights to be transferred to it under the
respective Purchased Commitment or which does not in any case require any
payment of money with respect thereto); or (iv) results or will result in the
imposition of any Lien on any of the Assets. Except as set forth on SCHEDULE
5.1(B), no consent, authorization, or approval from, or registration or filing
with, any Governmental Entity or other third party (not obtained or made as of
the date hereof) is required to be obtained or made by or with respect to the
Seller or the Seller Business in connection with the execution and delivery of
this Agreement or the Closing Documents or the consummation by the Seller of the
transactions contemplated hereby or thereby; provided, however, that Seller is
relying upon the representations of Purchaser set forth in Section 6.1(E) for
purposes of compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
C. FINANCIAL INFORMATION. (i) Attached hereto as SCHEDULE 5.1(C)(I) are
balance sheets of the Seller as of December 31, 1995 and December 31, 1996 (the
December 31, 1996 balance sheet is referred to herein as the "December Balance
Sheet"), respectively, and the related statements of operations, stockholders'
equity and cash flows (including any footnotes thereto), for each of the fiscal
years then respectively ended all of which (a) have been audited by the Sellers'
accountants, whose reports thereon are included within SCHEDULE 5.1(C)(I), (b)
have been prepared in accordance with GAAP, consistently applied throughout the
periods involved, except as otherwise
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noted therein and (c) present fairly, in all material respects, the financial
position of the Seller at the dates indicated in such financial statements and
the results of the Seller's operations for the periods stated therein.
(ii) Attached hereto as SCHEDULE 5.1(C)(II) is the unaudited balance
sheet of the Seller as of March 31, 1997, and the respective related statements
of operations, stockholders' equity and cash flows (including any footnotes
thereto) for the three (3) months then ended all of which (a) have been prepared
in accordance with GAAP (with the exception of accounting for vacation accrual
which has been reflected consistent with the November Balance Sheet),
consistently applied throughout the periods involved subject to normal year-end
adjustments (none of which will be material, except as otherwise noted therein
and on SCHEDULE 5.1(C)(II)) and (b) present fairly, in all material respects,
the financial position of the Seller at the dates indicated in such financial
statements and the results of the Seller's operations for the periods stated
therein.
(iii) Attached hereto as SCHEDULE 5.1(C)(III) is the unaudited
balance sheet of the Seller as of November 30, 1996 (the "November Balance
Sheet"), which (a) has been prepared in accordance with the Agreed Upon
Accounting Standards, except as otherwise noted therein, and (b) presents
fairly, in all material respects, the financial position of the Seller Business
at such date.
(iv) Except as set forth on SCHEDULE 5.1(C)(IV) and except for
returned Inventory (all of which has been made available to Purchaser for
inspection), the Inventory that is shown or reflected on the November Balance
Sheet consisted only of (as of November 30, 1996), and, except for returned
Inventory, the Inventory shown or reflected on the Closing Balance Sheet will
consist only of, items usable or salable in the ordinary course of the Seller
Business valued in accordance with the Agreed Upon Accounting Standards. Except
as set forth on SCHEDULE 5.1(C)(IV), the Seller has no knowledge of any
condition, event or occurrence which could reasonably be anticipated to
materially adversely affect, after the Closing, the supply of Inventory to the
Seller Business by any third party. Seller's trade demo or display, and used or
returned Inventory did not comprise, as of November 30, 1996, and will not
comprise as of Closing, more than 40% of Seller's total Inventory.
(v) The aggregate book value of all of the Seller's Inventory as of
the Closing Date is not less than $9.5 million valued on a cost basis.
(vi) Each of the Receivables that are shown or reflected in the
November Balance Sheet arose out of, and each of the Receivables shown or
reflected in the Closing Balance Sheet will have arisen out of, transactions in
the ordinary course of business of the Seller Business and, subject to the
reserves therefor shown or reflected in the November Balance Sheet and to be
shown or reflected in the Closing Balance Sheet, all such Receivables, in the
aggregate, will constitute (or, in the case of the November Balance Sheet,
constituted as of November 30, 1996) identifiable indebtedness of the
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applicable account debtor, not subject to any offset, defense, counterclaim or
Lien except as set forth on SCHEDULE 5.1(C)(VI). The related reserves with
respect to Receivables shown or reflected in the November Balance Sheet and the
Closing Balance Sheet were, or will be as the case may be, adequate under GAAP.
(vii) The net income of the Seller (as determined in accordance with
GAAP and consistent with prior determinations of the Seller's net income) for
the period from January 1, 1997 through April 30, 1997 reflected a net loss in
the approximate amount of $257,000 (subject to normal year end adjustments).
D. ABSENCE OF CERTAIN TRANSACTIONS. Except as set forth on SCHEDULE 5.1(D),
since November 30, 1996, (i) the Seller has caused the Seller Business to be
operated only in the ordinary course, consistent with past practice; (ii) the
Seller has taken no action which would have violated the provisions of paragraph
10 of that certain letter agreement between the Seller and the Purchaser dated
February 3, 1997, which paragraph is reproduced on APPENDIX B hereto, had such
paragraph applied to the Seller since November 30, 1996; (iii) the reserves
maintained by the Seller have not materially changed; and (iv) there has not
been any material adverse change in the Assets or business, financial condition,
or results of operations or prospects of the Seller Business. The ratio of the
Seller's working capital assets to all assets as of the date hereof is not
materially different from that reflected in the April 30, 1997 balance sheet.
E. MATERIAL CONTRACTS AND OBLIGATIONS. The Seller has made available to the
Purchaser true and correct copies of all Purchased Commitments which are in
written form and any amendments thereto. Except as set forth on SCHEDULE
5.1(E)(I), each Purchased Commitment which is material to the operation of the
Business (and in any case, each of the Seller Leases described on SCHEDULE
1.2(A)(4)) is and will be in full force and effect immediately following the
Transfer thereof at the Closing and represents the valid and binding obligation
of each of the parties thereto.
(ii) With respect to:
(A) each Purchased Commitment, including without limitation the
Seller Leases, to which the Seller is a party, each of the Seller and, to the
knowledge of the Seller, the other party or parties thereto, has performed in
all material respects all obligations required to be performed by it thereunder
through the date hereof and the Seller is not (with or without the lapse of time
or the giving of notice, or both) in default under any such Purchased
Commitment, and the Seller has not received any notice of any default (whether
monetary or nonmonetary) or termination of any such Purchased Commitment from
any other party thereto; and
(B) each Non-Purchased Commitment to which the Seller is a party,
each of the Seller and, to the knowledge of the Seller, the other party or
parties thereto, has performed in all material respects all obligations required
to be performed by it thereunder through the date hereof.
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(iii) SCHEDULE 5.1(E)(III) sets forth Licenses currently held by the
Seller and such Licenses constitute all of the Licenses required under
applicable law for the conduct of the Seller's Business as conducted prior to
the Closing Date. The Seller has duly obtained and legally and validly holds all
Licenses identified on SCHEDULE 5.1(E)(III) as held by it. The Seller has not
received notice of any claim, action, suit, proceeding or investigation in or
before any Governmental Entity , whether brought, initiated, asserted or
maintained by a Governmental Entity or any other person or entity (a "Legal
Proceeding") nor, to the knowledge of the Seller, has any such claim, action,
suit, proceeding or investigation been threatened, which would, if successful on
the merits, lead to a revocation, suspension, or limitation of the rights of the
Seller under any of its Licenses, and the Seller is in compliance in all
material respects with each of its Licenses.
(iv) Without limiting the generality of the foregoing, SCHEDULE
1.2(A)(4) accurately lists each Commitment, whether written or oral and
including all amendments thereto, to which the Seller is a party of the type
described below, and identifies each such Commitment as being either (i) a
Commitment which is not a Purchased Commitment (a "Non-Purchased Commitment"),
on the one hand, or (ii) a Commitment which is a Purchased Commitment, on the
other hand:
(a) Any employment, severance or consulting Commitment with any
Former Seller Employee;
(b) Any Commitment or series of related Commitments for capital
expenditures or the acquisition or construction of fixed assets which requires
or require aggregate future payments or expenditures in excess of $12,000 in any
twelve (12) month period;
(c) Any Commitment relating to cleanup, abatement or other
actions in connection with any Environmental Condition (as hereinafter defined);
(d) Any Commitment granting to any person a first-refusal,
first-offer or other right to purchase or acquire any of the Assets;
(e) Any license or royalty Commitment, or other Commitment with
respect to Intellectual Property which pursuant to the terms thereof requires
future payments to or by the Seller;
(f) Any Commitment with any manufacturer's representative or
other sales agent or relating to distribution or commission arrangements which
is not terminable without penalty on 30 days' or less prior notice or which
requires (or could reasonably be expected to require, if dependent on future
events) aggregate future payment or expenditures in excess of $12,000 in any
twelve (12) month period;
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(g) Any Commitment under which the Seller is (1) a lessee of
real property, (2) a lessee of, or holds or uses, any machinery, equipment,
vehicle or other tangible personal property owned by a third person or entity,
(3) a lessor of real property, or (4) a lessor of, or makes available for use by
any third person or entity, any tangible personal property owned by the Seller,
in the case of items (2) and (4) above which requires aggregate annual payments
in excess of $12,000;
(h) Any Commitment with respect to a joint venture or
partnership arrangement, under which the Seller is or has agreed to become a
joint venturer or partner;
(i) Any Commitment granting a power of attorney;
(j) Any Commitment with respect to letters of credit, surety or
other bonds or pursuant to which any assets or properties of the Seller are, or
are to be, subjected to a Lien, other than Liens on Inventory securing ordinary
course trade payables owing to the respective vendors of such Inventory and
which are set forth or referred to on SCHEDULE 5.1(G);
(k) Any confidentiality Commitment or Commitment limiting or
restricting the ability of the Seller to enter into or engage in any market or
line of business;
(1) Any Commitment relating to (i) any borrowing or (ii) any
full or partial guarantee or similar Liability in respect of any Liability of
any person or entity other than the Seller; or
(m) Any other Commitment which (1) involves aggregate future
payments by or to the Seller in excess of $12,000 in any twelve (12) month
period other than a purchase or sales order or other Commitment entered into in
the ordinary course of the conduct of the Seller Business, (2) could reasonably
result in a Material Adverse Effect, (3) has been entered into with an Affiliate
of the Seller, or (4) is otherwise material to the conduct of the Seller
Business or the operation or use of the Assets.
F. TITLE TO REAL PROPERTIES: LIENS: CONDITION OF PROPERTIES. (i) The
Current Locations together with the Seller's Xxxx Parkway location comprise all
of the real estate owned or leased by the Seller.
(ii) (a) With respect to any Seller Lease, neither the Seller, nor to
the knowledge of the Seller, any other party thereto, is in default thereunder;
(b) to the knowledge of the Seller, the Current Locations, and the Seller's use
of the same, comply with all applicable zoning or similar Laws, except where the
failure to so comply, individually or together with all other such failures to
so comply, would not impair the conduct of the Seller Business by the Seller or
by the Purchaser following the Closing; (c)
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Seller has not received notice of and is not otherwise aware of any condemnation
proceedings and, to the knowledge of the Seller, no condemnation proceedings
have been threatened with respect to any of the Current Locations, nor has any
such property been condemned; and (d) Seller has not received notice of and is
not otherwise aware of any Legal Proceedings and, to the knowledge of the
Seller, no Legal Proceedings have been threatened that will, with the passage of
time or otherwise, result in the imposition of a mechanic's, serviceman's,
materialman's or other Lien against the Real Property and Seller has not
received notice of and is not otherwise aware of any mechanic's Liens otherwise
imposed against the Real Property.
(iii) The Seller has access to public roads or valid easements over
private streets or private property for such ingress to and egress from each of
the Current Locations as is necessary for the conduct of the Seller Business as
conducted as of the date hereof, and to the knowledge of the Seller, no change
therein has been proposed by any Governmental Entity. To the knowledge of the
Seller, the consummation of the transactions contemplated by this Agreement will
not adversely affect any such access or easements.
G. TITLE TO ASSETS AND WACHOVIA DEBT. SCHEDULE 1.2(A)(2) sets forth
substantially all of the Fixed Assets owned, leased or held by the Seller and
sets forth, as to each itemized Fixed Asset, the original purchase price, and
accumulated depreciation. Except as set forth on SCHEDULE 5.1(G), the Seller has
good and marketable title to all Fixed Assets described in such Schedule as
being owned by the Seller, and to all of the other Assets of the Seller, free
and clear of all Liens other than (i) Liens for Taxes which are not due and
payable or which may thereafter be paid without penalty and which will be
reflected in the Closing Balance Sheet and (ii) Liens set forth on SCHEDULE
5.1(G). The Seller represents and warrants that the total indebtedness owing by
Seller to Wachovia as of the Closing, excluding the Real Estate Debt, is
$5,783,308.71 (excluding post-closing presentments which will not be in excess
of $1,000,000), and the payment to Wachovia made pursuant to Section 2.1(ii) has
satisfied in full all obligations of the Seller to Wachovia other than
obligations relating expressly, and having recourse only, to the Excluded Real
Property or other Excluded Assets and not, in any case, to the Purchaser or the
Assets. Except as set forth on SCHEDULE 5.1(G), each Material Fixed Asset, and
all Fixed Assets in the aggregate, are in good condition, normal wear and tear
excepted. The amount of the Real Estate Debt as of the Closing is $1,410,141
plus accrued interest and the amount of the SBA Debt as of the Closing does not
exceed $364,818 plus accrued interest.
H. INTELLECTUAL PROPERTY. Set forth on SCHEDULE 1.2(A)(7) is a list of:
(i) all patents, and registrations and applications therefor which are owned by
or licensed to the Seller; and (ii) all service marks and trademarks, and
registrations and applications therefor, which are owned by or licensed to the
Seller. Except as set forth on Schedule 5.1(H), to the knowledge of the Seller,
the use of the Intellectual Property, including without limitation the use of
the name "HiFi Buys" or any derivation thereof, as currently used by the Seller,
does not conflict with or infringe upon any intellectual property rights
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of others and the Seller has received no written notice of a conflict with the
asserted rights of others in connection with the Seller's use of any of the
Intellectual Property that has not been satisfied or withdrawn. Except as set
forth in the preceding sentence, Seller makes no representation or warranty
whatsoever, whether express or implied, as to its ownership of or right to use
the name "HiFi Buys" or any derivation thereof. Except as set forth in SCHEDULE
5.1(H), the Seller has the right to assign to the Purchaser its ownership and
all of its rights to use the Intellectual Property owned or used by it or
licensed to it.
I. LITIGATION. Except as set forth in SCHEDULE 5.1(I), there are no Legal
Proceedings pending or, to the knowledge of the Seller, threatened against the
Seller or any predecessors or Affiliates of Seller including, without
limitation, any legal proceeding that seeks to enjoin or obtain damages in
respect of the consummation of the transactions contemplated by this Agreement
or any other Closing Document. The Seller is not in default with respect to any
Order. The Seller Business is operated and has been operated in all material
respects in compliance with all applicable Laws.
J. COMPLIANCE WITH LAWS.
(i) To the Seller's knowledge: (a) the Seller has no Liability under
any, (and the Seller is presently in compliance with all) Environmental Laws and
other Laws applicable to (1) the Current Locations, and any facilities and
operations thereon, or (2) any other location which the Seller or any Affiliate
have at any time leased or owned, or at which the Seller or any Affiliate have
at any time conducted any activities or operations, including without limitation
the Seller Business (all such other locations, the "Other Locations"); (b) the
Seller has all Licenses necessary under all applicable Environmental Laws and
other Laws for the conduct of the Seller Business, its activities and operations
at the Current Locations and for any past or ongoing alterations or improvements
at the Current Locations, which Licenses are listed on SCHEDULE 5.1(E)(III); (c)
except as set forth on SCHEDULE 5.1(J), to the Seller's knowledge there exists
no Environmental Condition with respect to any of the Current Locations or any
of the Other Locations or any facilities or operations thereon; (d) except as
set forth on SCHEDULE 5.1(J), the Seller has not generated, transported,
treated, stored, handled, disposed, or transferred, any Hazardous Material,
except in connection with the Seller Business and in compliance with all
applicable Environmental Laws; (e) there has been no Release or Threat of
Release (as such terms are hereinafter defined) of any Hazardous Material at,
on, under or in the immediate vicinity of any of the Current Locations or any of
the Other Locations which would necessitate any investigation or remediation
activity as required under the Environmental Laws; (f) except as set forth on
SCHEDULE 5.1(J), the Seller has received no notice under the citizen suit
provisions of any Environmental Law in connection with any of the Current
Locations or any of the Other Locations or any facilities or operations thereon;
(g) except as set forth on SCHEDULE 5.1(J), the Seller has received no request
for information, notice, demand letter, or notice of a Legal Proceeding with
respect to any Environmental Condition relating to any of the Current Locations
or any of the Other Locations or any facilities or operations thereon; (h) the
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Seller is not in violation of any health standards or applicable Laws relating
to asbestos, lead-based paints or solvents, except for such violations as are
not, individually or in the aggregate, material to the Seller's financial
condition or prospects or to the Assets or the operation of the Business through
the Closing Date; (i) no polychlorinated biphenyls are used or stored at any of
the Current Locations; and (j) the Seller does not use any private water or
sewer system at any of the Current Locations, but rather uses public water and
sewer systems at all of the Current Locations.
(ii) Without limiting the generality or effect of the foregoing,
SCHEDULE 5.1(J) lists or describes, among other things, (a) any on-site and
off-site locations where the Seller or any Affiliate of the Seller or, to the
knowledge of the Seller, any predecessor of the Seller or of any such Affiliate,
has stored, disposed or arranged for the storage or disposal of any Hazardous
Waste (as defined by the Resource Conservation and Recovery Act of 1976, 42
U.S.C. 6901 et seq.) subject to regulation under any Environmental Laws, and (b)
to the knowledge of the Seller any underground or above ground storage tanks
which are regulated under Environmental Laws, and the capacity and contents of
such tanks, currently or previously located at or on any of the Current
Locations.
(iii) For purposes of this Agreement, the following terms shall have
the following meanings:
(a) "ENVIRONMENT" shall mean soil, surface waters, groundwaters,
land, stream sediments, surface or subsurface strata, ambient air and any
environmental medium.
(b) "ENVIRONMENTAL CONDITION" shall mean any Release of Hazardous
Materials to the Environment; whether or not yet discovered, which could
reasonably be expected to result, or has resulted, in any material damage, loss,
cost, expense, claim, demand, Order or Liability to or against the Seller by any
third party (including without limitation any Governmental Entity) under any
Environmental Law.
(c) "HAZARDOUS MATERIAL" shall mean any pollutant, toxic
substance, hazardous waste, hazardous material, hazardous substance, asbestos,
lead-based paints, or oil or other petroleum product, as any of the foregoing
may be defined in any Environmental Law.
(d) "RELEASE" shall mean any releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, migrating, disposing or dumping into the Environment.
(e) "THREAT OF RELEASE" shall mean a substantial likelihood of a
Release which requires action to prevent or mitigate damage to the Environment
which may result from such Release.
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(f) "GOVERNMENTAL ENTITY" shall mean any domestic or foreign
court, government, governmental agency, authority, entity or instrumentality.
K. EMPLOYEE BENEFITS. (i) SCHEDULE 5.1(K) accurately lists all of the
senior management and other key employees of Seller as of the date hereof and
all of the other employees of Seller as of April 30, 1997 (the "Seller
Employees") and all Benefit Plans and all Benefit Arrangements which are
material to the Seller's employment relationship with any Seller Employee.
Except as set forth on SCHEDULE 5.1(K), each Benefit Plan complies in all
material respects and has been operated and administered in all material
respects in accordance with the Employment Retirement Income Security Act of
1974, as amended ("ERISA"), to the extent that ERISA is applicable, and all
other applicable Laws; no "reportable event," "prohibited transaction" (as such
terms are defined in ERISA and the Code, as applicable) or termination has
occurred with respect to any Benefit Plan; and each Benefit Plan that is an
"employee pension benefit plan" as defined in Section 3(2) of ERISA has been
determined by the Internal Revenue Service (the "IRS") to be qualified under
Section 401(a) of the Code and remains so qualified. Except as set forth on
SCHEDULE 5.1(K), neither any Seller Employee or Former Employee nor any
beneficiary or dependent of any such Seller Employee or Former Employee is or
may become entitled to postemployment benefits of any kind by reason of their
employment by the Seller or termination of such employment including without
limitation death or medical benefits (whether or not insured) and no Seller
Employee or Former Employee will have rights to any severance payment or any
other benefits by reason of the execution or delivery of this Agreement or the
consummation of the transactions contemplated hereby, other than coverage, if
any, mandated by Section 4980B of the Code, with respect to which the Seller
shall provide in a timely manner appropriate COBRA notices relating to
continuation coverage (and which constitutes an Excluded Liability). The Seller
has furnished the Purchaser copies of all material plan documents and other
material documents relating to the Benefit Plans and Benefit Arrangements. The
Seller has terminated any Benefit Plan which is qualified under Section 401(a)
of the Code.
(ii) For purposes of this Agreement:
(a) the term "Former Employees" means all employees formerly employed
by the Seller, including any person on long-term leave of absence or long-term
disability;
(b) the term "Benefit Plan" shall mean each and all "employee benefit
plans" as defined in Section 3(3) of ERISA and which is required to be
maintained or contributed to by the Seller or in which the Seller participates
or under which the Seller has any obligation to make any contributions or other
payments or provides any benefits with respect to Seller Employees and/or their
spouses or beneficiaries, including (1) any such plan that is an "employee
welfare benefit plan" as defined in Section 3(l) of ERISA, including retiree
medical and life insurance plans and (2) any such plan that is an "employee
pension benefit plan" as defined in Section 3(2) of ERISA;
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(c) the term "Benefit Arrangements" means all employment policies,
practices or other arrangements to provide employee or executive compensation or
benefits with respect to employees and/or their spouses or beneficiaries,
including without limitation any such policies or practices relating to life and
health insurance, hospitalization, savings, bonus, deferred compensation,
incentive compensation, holiday, vacation, severance pay, sick pay, sick leave,
disability, tuition refunds, service awards, company cars, scholarships,
relocation, patent awards, fringe benefits, contracts, collective bargaining
agreements, individual employment, consultancy or severance contracts that the
Seller is providing or is obligated to provide, or under which the Seller has
any obligation to make any contributions or other payments, with respect to
Seller Employees or Former Employees and/or their respective spouses or
beneficiaries, other than Benefit Plans.
L. LABOR RELATIONS. The Seller is not a party to or subject to any
collective bargaining agreements. Except as set forth on SCHEDULE 5.1(L) or
SCHEDULE 5.1(K): (i) the Seller has no written or oral contracts of employment
with any Seller Employee; (ii) there are, and since January 1, 1994 have been,
no strikes or work slowdowns pending or, to the knowledge of the Seller,
threatened, against or affecting the Seller Business, and (iii) the Seller is
not currently a party to, and, to the knowledge of the Seller, has not been
threatened with, any Legal Proceeding by any Seller Employee or Former Employee
arising out of employment by the Seller, including without limitation any such
Legal Proceeding or other proceeding for unlawful employment practices or
discrimination in employment. To the knowledge of the Seller, no union
organizational campaign is or has been, pending or instituted with respect to
the employees of the Seller Business.
M. INSURANCE POLICIES. SCHEDULE 5.1(M) accurately lists all policies of
Insurance currently maintained by the Seller, which have been purchased with
respect to the periods identified on such Schedule, including without limitation
those purchased with respect to any periods which include the Closing Date.
Except as set forth on SCHEDULE 5.1(M), (i) all such Insurance is in full force
and effect, (ii) all premiums, including any current retrospective premiums or
other like arrangement with respect to such policies of Insurance which are
currently maintained have been paid when due with respect to all periods prior
to the Closing, (iii) no notice of cancellation or termination has been received
by the Seller with respect to any such policy of Insurance, (iv) no claim is
currently reserved or, to the knowledge of the Seller, should be reserved under
any policy of Insurance involving an amount in excess of $15,000, and (v) all
such Insurance is so-called "occurrence-based" Insurance. Except as set forth on
SCHEDULE 5.1(M), the Seller has and in the past has had no Insurance which is or
was maintained as self-insurance.
N. TAXES. (i) All Tax Returns (as hereinafter defined) required to be
filed on or before the Closing Date by the Seller have been filed on a timely
basis under the Laws of each applicable jurisdiction. All such Tax Returns were
complete and accurate as filed in all material respects. All Taxes shown as
owing on each such Tax Return and all other
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Taxes owed by the Seller have been paid when due. Except as set forth on
SCHEDULE 5.1(N), the Seller has not executed or filed with the IRS or any other
taxing authority any agreement extending the period for filing any Tax Return
relating to or otherwise affecting the Seller Business or the Assets.
(ii) No claim for assessment or collection of Taxes relating to or
otherwise affecting the Seller, the Seller Business or the Assets is currently
pending or, to the Seller's knowledge, has been asserted against the Seller. The
Seller is not a party to any pending Legal Proceeding by any Governmental Entity
for the assessment or collection of Taxes relating to or otherwise affecting the
Seller, the Seller Business or the Assets nor does the Seller have any knowledge
of any basis for any such Legal Proceeding.
(iii) Except as set forth on SCHEDULE 5.1(N)(III), no waivers of
statutes of limitation in respect of any Tax Returns relating to or otherwise
affecting the Seller, the Seller Business or the Assets have been given or
requested by the Seller nor has the Seller agreed to any extension of time with
respect to a Tax assessment or deficiency relating to or otherwise affecting the
Seller, the Seller Business or the Assets. The federal income Tax Returns of, or
which include, the Seller for all periods to and including any period ended
prior to January 1, 1994, have either been examined by the IRS or the period of
limitations for the assessment or collection of any deficiency with respect to
such period has expired. Except as noted on SCHEDULE 5.1(N)(III), no claim has
been made within the past five years, or, to the Seller's knowledge, at any
other time, by a Governmental Entity in a jurisdiction where the Seller does not
currently file Tax Returns that it is or may be subject to taxation by that
jurisdiction relating to or otherwise affecting the Seller, the Seller Business
or the Assets nor is the Seller aware that any such assertion of jurisdiction is
threatened. No security interests have been imposed upon or asserted against any
of the Assets or the Excluded Assets as a result of or in connection with any
failure, or alleged failure, to pay any Tax. No ruling with respect to Taxes
(other than a request for determination of the status of a qualified pension
plan) has been requested by or on behalf of the Seller with respect to the
Seller, the Seller Business or any Assets.
(iv) Neither the Seller nor any Affiliate is obligated to make any
payments that may constitute "excess parachute payments," as defined in Section
280G of the Code. Neither the Seller nor any Affiliate is a party to any
agreement that is or may be characterized as a lease under the safe-harbor
leasing provisions of Section 168(f)(8) (now repealed) of the Internal Revenue
Code of 1954 that would result in any Asset being treated as owned by another
person. None of the Assets is tax exempt use property within the meaning of
Section 168(h) of the Code or tax-exempt bond financed property within the
meaning of Section 168(g)(5) of the Code.
(v) There is no claim or dispute concerning any Tax liability of the
Seller either (A) claimed or raised by any Governmental Entity in writing or (B)
as to which the Seller or any Affiliate (or any such employees responsible for
Tax matters) has
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any knowledge based upon personal contact with any agent of any Governmental
Entity. The Seller has made available to the Purchaser true and correct copies
of the federal income Tax Returns filed with respect to the Seller for tax
years, 1992, 1993, 1994, 1995 and 1996. Except for the 1994 Tax Return, no such
Tax Returns have been audited or are currently the subject of audit. As to the
audit of the 1994 Tax Return referred to above, such audit has been fully
settled and all amounts, if any, required to be paid pursuant to the
determination thereof have been paid by Seller except that the federal
adjustments have not been reported to the State of Georgia for state tax
purposes, but any resulting tax will be the responsibility of Seller or its
shareholders and constitute an Excluded Liability. The Seller has made available
to the Purchaser correct and complete copies of all examination reports and
statements of deficiencies accrued against or agreed to by any of the Seller or
such Affiliates since January 1, 1992.
(vi) Neither the Seller nor any such Affiliate has entered into any
agreement, whether or not written, providing for the payment of Taxes or
entitlement to refunds and related matters with any other party.
(vii) The Seller has and all such Affiliates have withheld and paid
all Taxes required to be withheld or paid in connection with any amounts paid or
owing to any employee, creditor, independent contractor, stockholder or other
third party.
(viii) None of the Assets is held in an arrangement for which Tax
Returns as a partnership have been or may be filed.
O. PRODUCTS. Without limiting the generality of Section 5.1(J), with
respect to each of the products currently sold in the Seller Business, there is
no and has not been any failure by the Seller to comply with any applicable and
material Law relating to product specifications or disclosures, including
without limitation any so-called "Consumer Protection" Laws.
P. ASSETS NECESSARY TO CONDUCT BUSINESS. The Assets, together with the
Lease and Excluded Assets, comprise all of the assets necessary to operate the
Seller Business as conducted by the Seller prior to Closing.
Q. SOLVENCY. Both as of the date of this Agreement and taking into
account the transactions contemplated hereby and the intended or otherwise
anticipated disposition of the proceeds thereof, (i) the aggregate fair market
value of the Seller's assets is now and will then be greater than the Seller's
Liabilities; (ii) the Seller is now and will then be able to pay its
then-existing debts as they become due in the ordinary course, and (ii) the fair
salable value of the Seller's assets is now and will then be greater than the
amount that will be required to pay the Seller's probable liability on its
then-existing debts as they become due.
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R. BROKERS' FEES. The Seller has made no agreement or taken any other
action which will cause the Purchaser to become obligated for any broker's or
other fee or commission as a result of any of the transactions contemplated by
this Agreement.
S. DISCLOSURE. No representation or warranty by the Seller contained in
this Agreement, the Disclosure Schedule or any certificate or other instrument
furnished or to be furnished at or after the Closing by or on behalf of the
Seller to the Purchaser pursuant to Section 3.2(A) contains or will contain any
untrue statement of a material fact, or omits or will omit to state any material
fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading or
necessary in order fully and fairly to provide the information required to be
provided therein.
X. XXXX-XXXXX-XXXXXX. The annual net sales and total assets (as defined
in 16CFR ss.801.11) of the "person" (as defined in 16 CFR ss.801.1) which
includes the Seller for purposes of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, as of December 31, 1996 were each less than
$100,000,000.
U. UNITED STATES REAL PROPERTY INTERESTS. Less than fifty percent (50%)
of the fair market value of the Assets are United States Real Property
Interests, as such term is defined in Section 897(c) of the Internal Revenue
Code of 1986, as amended.
ARTICLE VI
Representations and Warranties and Covenants of the Purchaser
SECTION 6.1 REPRESENTATIONS AND WARRANTIES. The Purchaser represents and
warrants to the Seller that:
A. CORPORATE EXISTENCE AND QUALIFICATION OF THE PURCHASER; DUE EXECUTION,
ETC. The Purchaser is a corporation duly organized, validly existing and in good
standing under the Laws of The Commonwealth of Massachusetts and has all
requisite corporate power and authority to execute, deliver and perform this
Agreement and the Closing Documents to be executed by it and to consummate the
transactions contemplated hereby and thereby. The Purchaser is duly qualified to
conduct business as a foreign corporation in every jurisdiction in which its
ownership or lease of property or conduct of its business makes such
qualification necessary, except for such jurisdictions in which the Purchaser's
failure to be so qualified, individually or together with any other failure to
qualify, would not materially impair the Purchaser's ability to perform its
obligations hereunder. The execution and delivery of this Agreement and the
Closing Documents to be executed by the Purchaser and the consummation by the
Purchaser of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action and, assuming the due execution of
this Agreement by the Seller, this Agreement and the Closing Documents to be
executed by the Purchaser constitute valid and binding
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obligations of the Purchaser enforceable against it in accordance with their
respective terms, subject only to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws relating to creditors' rights
generally and to general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or in equity).
B. NO VIOLATION. Neither the execution and delivery by the Purchaser of
this Agreement or the Closing Documents to be executed by the Purchaser nor the
consummation of the transactions contemplated hereby or thereby: (i) violates or
will violate any Law applicable to the Purchaser; (ii) violates or will violate
any Order applicable to the Purchaser; (iii) results or will result in a breach
of or default under the Articles of Organization or bylaws of the Purchaser or
conflicts or will conflict with or results or will result in any breach of any
Commitment applicable to the Purchaser. Except as set forth in SCHEDULE 6.1(B),
no consent, authorization or approval from, or registration or filing with, any
Governmental Entity or other third party (not obtained or made as of the date
hereof) is required to be obtained or made by or with respect to the Purchaser
in connection with the execution and delivery of this Agreement or the Closing
Documents to be executed by the Purchaser or the consummation by the Purchaser
of the transactions contemplated hereby or thereby, provided, however, that
Purchaser is relying upon the representations of the Seller set forth in Section
5.1(T) for purposes of compliance with the Xxxx-Xxxxx Xxxxxx Antitrust
Improvements Act of 1976, as amended.
C. LITIGATION. Except as set forth in SCHEDULE 6.1(C), there are no Legal
Proceedings pending or, to the knowledge of the Purchaser, threatened against
the Purchaser or any predecessors or Affiliates of Purchaser that seek to enjoin
or obtain damages in respect of the consummation of the transactions
contemplated by this Agreement or any other Closing Documents. The Purchaser is
not in default with respect to any Order.
D. BROKERS' FEES. The Purchaser has not made any agreement or taken any
other action which will cause the Seller to become obligated for any broker's or
other fee or commission as a result of any of the transactions contemplated by
this Agreement.
X. XXXX-XXXXX-XXXXXX. The annual net sales and total assets (as defined
in 16CFR ss.801.11) of the "person" (as defined in 16 CFR ss.801.1) which
includes the Purchaser for purposes of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, as of December 31, 1996 were each less
than $100,000,000.
F. SOLVENCY. Both as of the date of this Agreement and taking into
account the transactions contemplated hereby and the intended or otherwise
anticipated disposition of the proceeds thereof, (i) the aggregate fair market
value of the Purchaser's assets is now and will then be greater than the
Purchaser's Liabilities; (ii) the Purchaser is now and will then be able to pay
its then-existing debts as they become due in the ordinary course; and (iii) the
fair salable value of the Purchaser's assets is now and will
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then be greater than the amount that will be required to pay the Purchaser's
probable liability on its then existing debts as they become due.
G. DISCLOSURE. No representation or warranty by the Purchaser contained
in this Agreement, or any certificate or other instrument furnished at the
Closing by or on behalf of the Purchaser to the Seller pursuant to Section
3.2(B) contains any untrue statement of a material fact, or omits to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make the statements herein or therein not misleading or necessary in
order fully and fairly to provide the information required to be provided
therein.
SECTION 6.2 COVENANTS. The Purchaser hereby covenants and agrees with the
Seller as follows:
A. BOOKS AND RECORDS; PERSONNEL. For a period of seven years after the
Closing Date (or such longer period as may be required by any Law or any ongoing
Legal Proceeding), the Purchaser will not dispose of or destroy the business
records of the Purchaser (including without limitation those businesses records
pertaining to the Seller Business delivered to Purchaser by Seller at Closing)
to the extent existing on the date hereof and relating to the Assets or the
Business ("Purchaser Business Records"). If the Purchaser wishes to dispose of
or destroy any of the Purchaser Business Records after that time, it shall first
give 30 days' prior written notice to the Seller, and the Seller shall have the
right, at its option and with the Seller bearing responsibility for all of its
out-of-pocket expenses therefor, upon prior written notice to the Purchaser
within such 30-day period, to take possession of the requested Purchaser
Business Records (leaving copies thereof with the Purchaser if so requested by
the Purchaser, with the Purchaser bearing responsibility for all of its
out-of-pocket expenses for such copies) within 60 days after the date of the
Seller's delivery of its notice to the Purchaser.
B. COOPERATION. From and after the Closing Date, Purchaser will make
available to Seller, upon written request and at no additional charge to Seller,
the assistance of Purchaser's payroll and accounts payable personnel where such
assistance is reasonably required in connection with (i) the termination by
Seller of Seller's Defined Contribution Plan provided by Lincoln National Life
Insurance Co. and the roll-over or payout of restated amounts under such plan
and other general matters or (ii) the disbursement by Seller of any sales or
other taxes; provided the foregoing obligations shall not require the Purchaser
to expend any amount of money to accomplish either of the foregoing (i) or (ii)
and all expenses and other amounts relating thereto shall be the sole
responsibility of and be paid by the Seller. Without limiting Section 4.2(H),
Seller and Purchaser hereby acknowledge that in no event shall Purchaser have
any liability with respect to Seller's Profit Sharing Plan or for severance or
termination payout thereunder, all of which are and shall remain Excluded
Liabilities.
C. OPERATION OF BUSINESS. In light of the Closing Balance Sheet being
computed as of May 31, 1997 and the Closing occurring on May 30, 1997, during
the
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period from Closing until 11:59 p.m. eastern daylight time on May 31, 1997,
Purchaser shall operate the Business in the ordinary course consistent with
Seller's past practices.
ARTICLE VII
Covenants of Seller
The Seller hereby covenants and agrees with the Purchaser as follows:
SECTION 7.1 BOOKS AND RECORDS; PERSONNEL. For a period of seven years after
the Closing Date (or such longer period as may be required by any Law or any
ongoing Legal Proceeding), the Seller will not dispose of or destroy those
business records of the Seller Business or primarily relating to the Seller
Business which are not delivered to the Purchaser at Closing ("Retained
Records"). If the Seller wishes to dispose of or destroy any of the Retained
Records after that time, it shall first give 30 days' prior written notice to
the Purchaser, and the Purchaser shall have the right, at its option and with
the Purchaser bearing responsibility for all of its out-of-pocket expenses
therefor, upon prior written notice to the Seller within such 30-day period, to
take possession of the requested Retained Records (leaving copies thereof with
the Seller if so requested by the Seller, with the Seller bearing responsibility
for all of its out-of-pocket expenses for such copies) within 60 days after the
date of the Purchaser's delivery of its notice to the Seller.
SECTION 7.2. TAXES. From and after the Closing, the Seller will make
available to the Purchaser, upon written request and with the Purchaser bearing
responsibility for all of its out-of-pocket expenses therefor, the Seller
personnel or representatives under Seller's control whose assistance or
participation is reasonably required by the Purchaser in anticipation of, or
preparation for, existing or future Legal Proceedings, Tax Return preparation,
audits or other matters in which the Purchaser or any of its Affiliates is
involved and that is related to the Seller Business. The Seller will reasonably
cooperate with the Purchaser in the conduct of any Tax audit, claim for refund
of Taxes or similar proceedings involving or otherwise relating to any of the
Assets or the Seller Business (or the income therefrom or assets thereof).
SECTION 7.3 CORPORATE NAME. Without in any way limiting the right, title or
interest that the Purchaser is acquiring hereunder in or to the trademarks and
service marks described in Section 1.2(A)(7), the Seller shall after the Closing
change all signage and stationery and otherwise discontinue the use of the name
"HiFi Buys", the phrase "Audio Video and a Boatload of Know How" or any
combination or derivation of the foregoing or any other names, or trademarks or
service marks related to or used in the Seller Business. After the Closing, the
Seller shall not use any of the Intellectual Property.
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SECTION 7.4 NON-COMPETITION.
A. COVENANT NOT TO COMPETE. Absent the prior written consent of the
Purchaser, the Seller shall not at any time after the Closing Date: (1) directly
or indirectly, own, manage, operate, finance, join, or control, or participate
in the ownership, management, operation, financing or control of, or be
associated as a director, partner, lender, investor or representative in
connection with, any profit or not-for-profit business or enterprise that: (a)
distributes or sells consumer electronic or entertainment products; or (b)
otherwise competes with the business of Purchaser as it exists immediately
following the Closing, i.e., including the Seller Business as of the Closing
Date; or (2) directly or indirectly solicit, induce or attempt to induce any
person employed by the Purchaser residing in the Restricted Territory to enter
the employ of Seller or any other person or entity (all of the foregoing
covenants collectively, the "Covenant Not to Compete"). For purposes of this
Agreement, "Restricted Territory" shall mean the United States of America. The
Seller shall not, at any time after the Closing, divulge, or permit to be
divulged to others, or use in any way any Proprietary Information (as defined
below) except (a) in accordance with the Purchaser's prior written
authorization, or (b) as may be required by applicable Laws, but, to the extent
practicable, only after the Seller has given the Purchaser not less than ten
(10) business days' notice that the Seller has been ordered by a Governmental
Entity to make such disclosure and describing the circumstances surrounding such
required disclosure and the Purchaser has had a reasonable opportunity
thereafter to petition such government entity for IN CAMERA treatment, or other
appropriate safeguards against the dissemination beyond or by such Governmental
Entity, of the information so ordered disclosed.
As used herein, the term "Proprietary Information" shall mean:
(a) All inventions, discoveries, ideas, research, engineering methods,
practices, processes, systems, formulae, designs, products, projects,
improvements and developments owned or used by the Seller (on or prior
to the Closing Date) or the Purchaser, or which otherwise are included
in the Assets or relate to the Seller Business, and which are not
lawfully in the public domain; and
(b) All client and customer lists, pricing information and trade
secrets owned or used by the Seller (on or prior to the Closing Date)
or the Purchaser, or which otherwise comprise Assets or relate to the
Seller Business; and any other data, information, documents or forms
pertaining to the financial condition, business affairs or prospects
of the Seller (as of the Closing Date) or the Purchaser, or which
otherwise comprise Assets or relate to the Seller Business, including,
without limitation, any such information relative to customers or
suppliers, samples, sketches, bulletins, memoranda, correspondence,
forms and records (including financial statements), information
concerning sources of supply, costs of manufacture and sale and
specifications of equipment; whether or not any of the foregoing is
published
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or unpublished, protected or susceptible to protection under patent,
trademark, copyright or similar laws and whether or not any party has
elected to secure or attempted to secure such protection.
Notwithstanding the foregoing, the term "Proprietary Information" shall not
include any of the foregoing information or materials (i) to the extent they
relate to the Excluded Assets; (ii) that have become generally known to the
public through no wrongful act of the Seller or any of its Affiliates; (iii)
that have been lawfully received by the Seller from a third party without
restriction on disclosure and without a breach by the third party of any
obligation of confidentiality; or (iv) that are independently developed by the
Seller without use of any Proprietary Information.
B. EQUITABLE RELIEF. The Seller and the Purchaser each acknowledge that
any breach of the covenants contained in Section 7.5(A) would cause an
irreparable injury to the Purchaser and that damages and remedies at law for any
breach of any such covenant would be inadequate. The Seller and the Purchaser
each acknowledge that, in addition to any other remedies available to the
Purchaser, the Purchaser shall be entitled to injunctive relief and other
equitable relief to prevent a breach of any such covenant.
C. JUDICIAL DETERMINATIONS. It is the desire and intent of the parties to
this Agreement that the provisions of this Section 7.4 be enforced to the
fullest extent permissible under the Laws and public policies applied in each
jurisdiction in which enforcement is sought. If any particular provision or
portion of this Section 7.4 shall be adjudicated to be invalid, ineffective or
unenforceable, this Section 7.4 shall be deemed automatically amended to delete
therefrom such provision or portion adjudicated to be invalid, ineffective or
unenforceable, such amendment to apply only with respect to the operation of
such provision in the particular jurisdiction with respect to which adjudication
is made.
SECTION 7.5 DISCHARGE OF EXCLUDED LIABILITIES AND BULK SALES LIABILITIES.
Without limiting the provisions of Sections 4.2 or 9.14 hereof, the Seller
acknowledges that it is retaining all Excluded Liabilities. The Seller hereby
agrees and covenants that it shall, at all times following Closing, perform, pay
or discharge, to the extent not theretofore performed, paid or discharged, any
and all Excluded Liabilities and (to the extent not constituting Excluded
Liabilities) any Bulk Sales Liabilities in each case in accordance with their
respective terms.
SECTION 7.6 CHANGE OF NAME. Seller agrees and covenants that it shall, as
of the Closing, take all necessary steps, including filing any and all necessary
notices or documents, to change its name to "HFB Associates Corp." and permit
and transfer to Purchaser all of its right title and interest in and to the use
of the names listed in Section 1.2A.
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ARTICLE VIII
Certain Tax Matters
SECTION 8.1 OBLIGATION FOR CERTAIN TAXES. All sales, use, transfer, stamp,
conveyance, value added or other similar taxes (but excluding in any case all
income taxes of Seller or its Affiliates which shall remain their own
Liabilities), duties, excises or governmental charges imposed by any taxing
jurisdiction, domestic or foreign, and all recording or filing fees, notarial
fees and other similar costs of Closing with respect to the Transfer of the
Assets will be borne one half by the Seller and one half by the Purchaser.
Notwithstanding that the Purchaser may be the party who actually delivers
payment to the applicable authority, the parties hereto agree that the
responsibility for 1997 personal property, ad valorem taxes, transferable
business license fees and real estate taxes payable under Seller Leases with
respect to the Assets shall be prorated between Seller and Purchaser as of the
Closing Date based on the best information available to the parties. Should such
proration be inaccurate based on the actual ad valorem tax xxxx when received,
either Seller or Purchaser, as the case may be, may demand and shall be entitled
to receive on demand a payment from the other correcting such malapportionment.
SECTION 8.2 ALLOCATION OF PURCHASE PRICE. The Seller and the Purchaser
agree that the Purchase Price shall be allocated among the Assets and the
covenants of the Seller set forth in Section 7.4(A) as they shall mutually
agree; provided the parties agree in any case that the Seller will allocate
$1,000 of value to the Warrant. The Purchaser and the Seller will jointly
prepare Form 8594 pursuant to Section 1060 of the Code, on a basis consistent
with such allocation, and none of the parties hereto will take any position with
any Governmental Entity, including without limitation in its federal, state and
local Tax Returns, inconsistent therewith.
SECTION 8.3 SELLER TAX RETURNS. The Seller will prepare and file or cause
to be prepared and filed all Tax Returns for the Seller that are required to be
filed with respect to the Seller through the Closing Date. The Seller will pay
or cause to be paid all Taxes required to be paid with respect to such Tax
Returns. The Seller will pay all Taxes (or, if applicable, reimburse Purchaser
for the payment of such Taxes) attributable to taxable periods ending on or
before the Closing Date or with respect to the allocable portion of any taxable
period that includes but does not end on the Closing Date.
SECTION 8.4 CERTAIN DEFINITIONS. For purposes of this Agreement, (i) "Tax"
or "Taxes" includes all federal, state, local, foreign and other taxes,
assessments, or governmental charges of any kind whatsoever including, without
limitation, income, franchise, capital stock, excise, property, sales, use,
service, service use, leasing, leasing use, gross receipts, value added, single
business, alternative or add-on minimum, occupation, real and personal property,
stamp, workers' compensation, severance, windfall, profits, customs, duties,
disability, registration, estimated, environmental (including Taxes under Code
Section 59A), transfer, payroll, withholding, employment, unemployment and
social security taxes, or other taxes of the same or similar nature,
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together with any interest, penalties or additions thereon and estimated
payments thereof, whether disputed or not, (ii) "Tax Return" or "Tax Returns"
includes all returns, reports, information returns, forms, declarations, claims
for refund, statements and other documents (including any amendments thereto and
including any schedule or attachment thereto) in connection with Taxes that are
required to be filed with a Governmental Entity or other tax authority, or sent
or provided to another party under applicable Law, (iii) "Income Tax" or "Income
Taxes" means all Taxes imposed on, measured by, or that require reference to,
net or taxable income (including any income, capital gains, franchise,
estimated, alternative, minimum, add-on minimum or other tax imposed on,
measured by, or which requires reference to, net or taxable income), together
with interest and penalties thereon and estimated payments thereof, and (iv) all
citations of the Code or to the Treasury Regulations promulgated thereunder in
this Agreement shall include any amendments or successor provisions thereto.
ARTICLE IX
SECTION 9 MISCELLANEOUS.
SECTION 9.1 ENTIRE AGREEMENT: AMENDMENT. Each of the representations,
warranties, covenants and agreements of any party hereto contained in this
Agreement or the Disclosure Schedule or any certificate delivered by or on
behalf of any party hereto pursuant to and which makes reference to this
Agreement will be deemed incorporated and contained in this Agreement and will
constitute representations and warranties of such party. This Agreement
(including the Disclosure Schedule) supersedes any other agreement, whether
written or oral, that may have been made or entered into by any party or any of
their respective Affiliates (or by any director, officer or representative
thereof) with respect to the subject matter hereof. This Agreement (including
the Disclosure Schedule) constitutes the entire agreement of the parties hereto
with respect to the matters provided for herein and there are no agreements or
commitments by or among such parties or their Affiliates with respect to the
subject matter hereof except as expressly set forth in this Agreement. No
investigation or receipt of information by or on behalf of the Purchaser will
diminish or obviate any of the representations, warranties, covenants or
agreements of the Seller under this Agreement or the conditions to obligations
of the Purchaser under this Agreement. No investigation or receipt of
information by or on behalf of the Seller will diminish or obviate any of the
representations, warranties, covenants or agreements of the Purchaser under this
Agreement or the conditions to obligations of the Seller under this Agreement.
SECTION 9.2 AMENDMENTS. No amendment, modification or alteration of the
terms or provisions of this Agreement shall be binding unless the same shall be
in writing and duly executed by the Purchaser and the Seller.
SECTION 9.3 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, and their respective
successors and permitted
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assigns. This Agreement is freely assignable by the Purchaser after the Closing
Date but may not be assigned by the Seller without the prior written consent of
the Purchaser; provided, however, that any such assignment by the Purchaser
shall not relieve it of its obligations hereunder.
SECTION 9.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original for all purposes
and all of which together shall constitute one and the same instrument.
SECTION 9.5 HEADINGS AND SECTION REFERENCES. The headings of the sections
and paragraphs of this Agreement are included for convenience only and are not
intended to be a part of, or to affect the meaning or interpretation of, this
Agreement. All section references herein, unless otherwise clearly indicated,
are to sections within this Agreement.
SECTION 9.6 WAIVER. No failure or delay by either the Purchaser or the
Seller in exercising any right, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies otherwise provided by law.
SECTION 9.7 EXPENSES. Except as otherwise specifically provided for in this
Agreement, including without limitation in Section 2.2(F) hereof, the Seller and
the Purchaser shall each pay all costs and expenses incurred by it or on its
behalf in connection with this Agreement and the transactions contemplated
hereby, including, without limitation, fees and expenses of its, his or their
own financial consultants, accountants and counsel.
SECTION 9.8 NOTICES. Any notice, request, instruction or other document
to be given under this Agreement by any party hereto to any other party shall be
in writing and delivered personally, dispatched by facsimile transmission, or
sent by a nationally recognized overnight courier service or by registered or
certified mail, postage prepaid:
If to the Seller, to:
HFB Associates Corp.
00 Xxxxx Xxxxxxx Xxxxx, XX
Xxxxxxx, Xxxxxxx 00000
Attn.: Xx. Xxxxxxx Xxxx
Fax No.: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxxxxx LLP
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000 Xxxxxxxxx Xxxxxx, X.X. Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attn.: Xxxxxx X. Xxxxx, Esq.
Fax No.: (000) 000-0000
If to the Purchaser, to:
New England Audio Co., Inc.
00 Xxxxxx Xxxx
Xxxxxx, XX 00000
Attn.: Mr. Xxxxxxx Xxxxx
Fax No.: (000) 000-0000
with a copy to:
Goulston & Storrs, P.C.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn.: Xxxx Xxxxxxxx, Esq.
Xxxxxx X. Xxxxx, Esq.
Fax No.: (000) 000-0000
or at such other address for a party or as shall be specified by like notice.
Any notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the person or entity to which it is directed
upon actual receipt by such party (or its agent for notices hereunder). Any
notice that is dispatched by facsimile transmission shall be deemed to have been
duly given to the person or entity to which it is addressed upon transmission
and confirmation of receipt. Any notice that is addressed as provided herein and
mailed by registered or certified mail shall be conclusively presumed to have
been duly given to the person or entity to which it is addressed at the close of
business, local time of such party, on the fifth calendar day after the day it
is so placed in the mail. Any notice that is addressed as provided herein and
sent by a nationally recognized overnight courier service shall be conclusively
presumed to have been duly given to the person or entity to which it is
addressed at the close of business, local time of such person or entity, on the
next business day following its deposit with such courier service for next day
delivery.
SECTION 9.9 GOVERNING LAW. This Agreement and the legal relations among the
parties hereto shall be governed and construed in accordance with the
substantive Laws of the Commonwealth of Massachusetts, without giving effect to
the principles of conflict of laws thereof.
SECTION 9.10 SEVERABILITY. If any provisions hereof shall be held by any
court of competent jurisdiction to be illegal, void, or unenforceable, such
provisions shall be of no
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force and effect, but the illegality or unenforceability shall have no effect
upon, and shall not impair the enforceability of, any other provision of this
Agreement.
SECTION 9.11 KNOWLEDGE. Whenever "to its knowledge," "known" or a similar
phrase is used to qualify a representation of the Seller, the "knowledge" so
referred to shall be deemed to be (a) the actual knowledge of the officers,
directors, management employees and shareholders of the Seller set forth on
SCHEDULE 9.11 hereto and (b) the knowledge reasonably imputed to such person by
virtue of his or her relationship or employment responsibilities to the Seller
as an officer, director, management employee or shareholder, or by virtue of his
or her access to information relating to the matter which is the subject of such
representation.
SECTION 9.12 RIGHTS OF THIRD PARTIES. Nothing expressed or implied in this
Agreement is intended or will be construed to confer upon or give any person or
entity other than the parties hereto and their respective successors and
permitted assigns any rights or remedies under or by reason of this Agreement or
any transaction contemplated hereby.
SECTION 9.13. CONSENT TO SERVICE OF PROCESS. Each party hereby irrevocably
consents to the service of any complaint, summons, notice or other process
relating to any legal action or proceeding against it or him under, arising out
of, or in any manner relating to this Agreement or any other agreement, document
or instrument arising out of or executed in connection with this Agreement by
delivery thereof to it or him by hand, by mail or by overnight express delivery
service in the manner provided for in Section 9.8 or by serving a copy thereof
on any registered agent for such party in the jurisdiction in which such action
or proceeding is brought. Nothing in this Section 9.13 shall affect or impair in
any manner or to any extent the right of any party to serve process in any
manner permitted by Law. The parties further agree that the consent provided for
in this Section 9.13 are personal and solely for the benefit of the parties to
this Agreement and their respective heirs and successors and are not intended
for the benefit of, and may not be invoked by, any other person or third party.
SECTION 9.14 INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
A. INDEMNIFICATION BY SELLER. The Seller hereby agrees to defend and hold
harmless the Purchaser and its Affiliates and their respective employees,
officers, directors, stockholders, partners and representatives from and against
any losses, assessments, Liabilities, claims, damages, costs and expenses
(including without limitation reasonable attorneys' fees and disbursements)
which arise out of or relate to:
(1) any misrepresentation in, breach of or failure to comply with,
any of the representations, warranties, covenants or agreements of the Seller or
any Affiliate of the Seller contained in this Agreement or any other of the
Closing Documents, including without limitation in the Disclosure Schedule; or
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(2) any Environmental Matters (as defined below); or
(3) subject to the provisions of the last paragraph of Section
2.2(F), any Liabilities of the Seller or any Affiliate of the Seller other than
the Assumed Liabilities; or
(4) claims by the employees listed on Schedule 2.2B arising from
their termination by Purchaser (other than claims arising on account of any
commitment made by Purchaser other than to retain such employees for the 60 day
period as described in Section 2.2B).
(5) without limiting the generality of the preceding clauses (1),
(2), (3) and (4), the operation of the Seller Business or ownership of the
Assets prior to the Closing, regardless of whether such losses, assessments,
Liabilities, claims, damages, costs and expenses, or the facts or circumstances
relating thereto, were disclosed hereunder or in the Disclosure Schedule or
otherwise, but excluding, for purposes of this clause (5), such losses,
assessments, Liabilities, claims, damages, costs and expenses that constitute
Assumed Liabilities or that arise from or relate to matters as to which the
Purchaser has agreed to indemnify the Seller under Section 9.14(B) hereof;
and all such losses, assessments, Liabilities, claims, damages, costs and
expenses so arising out of or relating to any of the foregoing clauses (1)
through (5), inclusive of this Section 9.14(A), or the matters described
therein, are referred to hereinafter as the "Purchaser's Losses;" PROVIDED,
however, that the Seller shall not have any obligation so to indemnify the
Purchaser under this Section 9.14(A):
(i) unless and until the Purchaser's Losses paid, incurred,
suffered or accrued by the Purchaser on account of all breaches of
representations and warranties exceed $50,000 in the aggregate, in which event
the Purchaser will be entitled to such indemnification in respect of all such
Purchaser's Losses, including without limitation such initial $50,000 of
Purchaser's Losses; or
(ii) to the extent of the amount, if any, reflected as a
liability on the Closing Balance Sheet with respect to a matter for which
Purchaser seeks indemnification hereunder.
As used above, the term "Environmental Matters" shall mean each and all of
the following:
(i) any acts, practices, or omissions on, at or relating to the Current
Locations or the Other Locations or any facilities or operations thereon, or
otherwise relating in any way to the Seller Business, by the Seller or its
Affiliates prior to Closing, which acts, practices, or omissions are regulated
by or the subject or within the jurisdiction of, or which give rise to any
losses, assessments, Liabilities, claims, damages, costs or expenses under, any
Environmental Laws;
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(ii) any Environmental Condition caused by Seller or of which Seller has
knowledge existing at Closing on, at or relating to the Current Locations or the
Other Locations or any facilities or operations thereon, or otherwise relating
in any way to the Seller Business;
(iii) the generation, manufacture, refinement, transportation, treatment,
storage, handling, disposal, transfer, production or processing of any Hazardous
Material by Seller or by any other person or entity of which Seller has
knowledge on, at or relating to the Current Locations or the Other Locations or
any facilities or operations thereon prior to the Closing, or otherwise relating
in any way to the Seller Business prior to the Closing;
(iv) any Release prior to Closing of any Hazardous Material on, at or
relating to the Current Locations or the Other Locations or any facilities or
operations thereon, or otherwise relating in any way to the Seller Business
caused by Seller or any person or entity of which Seller has knowledge; and
(v) the use or storage prior to Closing by Seller or any person or entity
of which Seller has knowledge of any polychlorinated biphenyls on, at or
relating to the Current Locations or the Other Locations or any facilities or
operations thereon.
THE SELLER ACKNOWLEDGES AND AGREES THAT THE DEFINITION OF "ENVIRONMENTAL
MATTERS" ABOVE SHALL INCLUDE EACH AND ALL OF THE FOREGOING CLAUSES (i) THROUGH
(v), INCLUSIVE, REGARDLESS OF WHETHER ANY OF THE MATTERS DESCRIBED IN SUCH
CLAUSES (i) THROUGH (v), INCLUSIVE, OR ANY FACTS OR CIRCUMSTANCES RELATING
THERETO, HAVE BEEN DISCLOSED TO THE PURCHASER IN THIS AGREEMENT OR IN THE
DISCLOSURE SCHEDULES HERETO OR OTHERWISE, AND THAT THE INDEMNIFICATION
OBLIGATIONS WITH RESPECT TO ENVIRONMENTAL MATTERS PURSUANT TO THIS SECTION 9.14
SHALL EXIST IN FULL FORCE AND EFFECT NOTWITHSTANDING ANY SUCH DISCLOSURE.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE SELLER ACKNOWLEDGES AND
AGREES THAT TO THE EXTENT THAT ANY OF THE MATTERS DISCLOSED ON SCHEDULE 5.1(J)
CONSTITUTE ENVIRONMENTAL MATTERS, SUCH INDEMNIFICATION OBLIGATIONS SHALL EXIST
IN FULL FORCE AND EFFECT WITH RESPECT TO SUCH MATTERS NOTWITHSTANDING SUCH
DISCLOSURE.
B. INDEMNIFICATION BY THE PURCHASER. The Purchaser shall indemnify,
defend and hold harmless the Seller and its Affiliates and their respective
employees, officers, directors, stockholders, partners and representatives from
and against any losses, assessments, Liabilities, claims, damages, costs and
expenses (including without limitation reasonable attorneys' fees and
disbursements) which arise out of or relate to (1) any misrepresentation in,
breach of or failure to comply with, any of the representations, warranties,
covenants or agreements of the Purchaser or any Affiliate of Purchaser
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contained in this Agreement (including, without limitation, the Schedules
hereto) or any other of the Closing Documents; (2) the Purchaser's failure to
perform, pay or discharge, in accordance with their respective terms, the
Assumed Liabilities; (3) employment discrimination by the Purchaser in the
hiring or failing to hire by the Purchaser on or following the Closing Date,
those individuals who were, immediately prior to the Closing, Seller Employees;
or (4) without limiting the generality of the preceding clauses (1), (2) and
(3), the operation of the Business or ownership of the Assets following Closing,
but excluding for purposes of this clause (4), such losses, assessments,
Liabilities, claims, damages, costs and expenses arising from or relating to
matters as to which the Seller has agreed to indemnify the Purchaser under
Section 9.14(A) hereof. All such losses, assessments, liabilities, claims,
damages, costs and expenses so arising out of or relating to any of the
foregoing clauses (1) through (4), inclusive of this Section 9.14(B), or the
matters described therein, are referred to hereinafter as the "Seller's Losses."
The Seller expressly agrees hereby that the Purchaser is not indemnifying the
Seller or any other party against any claims made by any employee of the Seller
with respect to termination of such employee's employment prior to or at
Closing, regardless of the basis upon which any such claim is brought, and any
such claim shall be a Liability of the Seller and shall constitute an Excluded
Liability.
C. SURVIVAL. The Seller's representations and warranties under this
Agreement, and its indemnification obligations arising solely from such
representations and warranties, shall survive the Closing and shall expire and
terminate on May 30, 2000, unless written notice by the Purchaser of a breach or
alleged breach thereof has been provided to the Seller, on or prior to such
date, in which case such representations and warranties so breached or alleged
to have been breached, and such indemnification obligations relating thereto,
shall not so expire and terminate as to the breach or alleged breach set forth
in such written notice until resolution of such breach or alleged breach.
Notwithstanding the foregoing or anything else to the contrary herein:
(1) the representations and warranties of the Seller set forth in
Sections 5.1(J), Section 5.1(K), and Section 5.1(N) of this Agreement, and any
covenants or agreements of the Seller under this Agreement (except to the extent
a covenant herein requires Seller to pay amounts resulting from a breach of any
representation or warranty which covenant shall be subject to the same
limitations on survival as applicable to the respective representation and
warranty to which it relates) and any and all indemnification obligations
relating thereto or otherwise provided in Section 9.14(A), (2) through (5)
inclusive, shall not so expire or otherwise terminate on May 30, 2000, but shall
survive indefinitely, unless earlier expiring in accordance with their
respective terms;
(2) the representations and warranties of Seller set forth in
Sections 5.1(C), 5.1(D), 5.1(L), 5.1 (M), 5.1(Q), 5.1(R) of this Agreement shall
expire and terminate on May 30, 1998 unless written notice by the Purchaser of a
breach or alleged breach thereof has been provided to the Seller, on or prior to
such date, in which case such representations and warranties so breached or
alleged to have been breached, and
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such indemnification obligations relating thereto, shall not so expire and
terminate as to the breach or alleged breach set forth in such written notice
until resolution of such breach or alleged breach; and
(3) the representations and warranties of Seller set forth in
Section 5.1(E) of this Agreement shall expire and terminate on June 30, 1999
unless written notice by the Purchaser of a breach or alleged breach thereof has
been provided to the Seller, on or prior to such date, in which case such
representations and warranties so breached or alleged to have been breached, and
such indemnification obligations relating thereto, shall not so expire and
terminate as to the breach or alleged breach set forth in such written notice
until resolution of such breach or alleged breach.
The Purchaser's representations and warranties under this Agreement, and
its indemnification obligations arising solely from such representations and
warranties, shall survive the Closing and shall expire and terminate on May 30,
2000, unless written notice by the Seller of a breach or alleged breach thereof
has been provided to the Purchaser on or prior to such date, in which case such
representations and warranties so breached or alleged to have been breached, and
such indemnification obligations relating thereto, shall not so expire and
terminate. Notwithstanding the foregoing or anything else to the contrary
herein, any covenants or agreements of the Purchaser hereunder (to the extent
not constituting breaches of Purchaser's representations and warranties) and any
and all indemnification obligations relating thereto (including, without
limitation, Purchaser's indemnification obligations under Sections
9.14(B)(2)-(4)) shall not so expire or otherwise terminate on May 30, 2000, but
shall survive indefinitely, unless earlier expiring in accordance with their
respective terms.
D. LIMITATION ON INDEMNIFICATION LIABILITY IN CERTAIN CASES. The maximum
aggregate liability of the Seller under Section 9.14(A)(1) for any one or more
breaches of the Seller's representations or warranties pursuant to this
Agreement shall be $8,000,000, which maximum aggregate liability shall be
reduced by $1,000,000 at the end of each fiscal quarter of Purchaser, beginning
with the fiscal quarter ending September 30, 1997, until such maximum aggregate
liability is reduced to zero; provided, however, that such limitation on the
liability of the Seller shall not apply to, and there shall be no limit to the
liability of the Seller to the Purchaser under Section 9.14(A)(1) or otherwise
on account of any breach of the representations or warranties set forth in
Section 5.1(J), Section 5.1(K), or Section 5.1(N) of this Agreement.
Notwithstanding anything herein to the contrary, and without limiting the
preceding proviso clause, in no event shall there be any cap or limit on the
liability of the Seller to the Purchaser under or in connection with this
Agreement except as expressly limited pursuant to the preceding sentence and as
set forth in Section 9.17, and there shall be no such cap or limit on any such
liability on account of any breach by the Seller of any of its covenants or
agreements hereunder (except to the extent such liability arises from a breach
of Seller's representations and warranties, in which case such cap or limit
shall be the cap or limit applicable to such breach). PROCEEDINGS UNDER THIS
SECTION 9.14 SHALL BE THE SELLER'S AND PURCHASER'S SOLE AND EXCLUSIVE REMEDY
AGAINST THE OTHER WITH
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RESPECT TO ANY CLAIM ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT EXCEPT
TO THE EXTENT THAT THE CLAIM OF THE SELLER OR THE PURCHASER, AS THE CASE MAY BE,
ARISES FROM OR RELATES TO THE FRAUD OR THE INTENTIONAL DECEPTION OF THE OTHER
PARTY. The Purchaser may at any time and from time to time set off and
appropriate any and all amounts owing to it pursuant to indemnification
obligations of Seller arising under or in connection with this Agreement,
pursuant to those setoff rights set forth in the Promissory Note and the Warrant
and the exercise of such rights of setoff shall be in addition to each and every
right granted under this ss.9.14 and such setoff rights may be exercised
independently or in conjunction with every other right granted under this
ss.9.14.
E. PROCEDURES. (i) In the event that any Legal Proceeding shall be
threatened or instituted in respect to which indemnification may be sought by
one party hereto from another party under the provisions of this Section 9.14,
the party seeking indemnification ("Indemnitee") shall, reasonably promptly
after acquiring actual knowledge of such threatened or instituted Legal
Proceeding, cause written notice in reasonable detail of such threatened or
instituted Legal Proceeding and which is covered by this indemnification, to be
forwarded to the other party from which indemnification is being sought
("Indemnitor"), provided, however, that the failure to provide such notice as of
any particular date as aforesaid will not affect any rights to indemnification
hereunder, except to the extent, and only to such extent, that such failure to
provide such notice actually and materially prejudices the Indemnitor's ability
to adequately defend such Legal Proceeding.
(ii) In the event of the initiation of any Legal Proceeding against an
Indemnitee by a third party, the Indemnitor shall have the absolute right after
the receipt of the notice described in Section 9.14(E)(i), at its option and at
its own expense, to be represented by counsel of its choice, and (subject to
Section 9.14(E)(iii)) to defend against, negotiate, settle or otherwise deal
with any Legal Proceeding or demand that relates to any Purchaser's Losses or
Seller's Losses, as the case may be, indemnified against hereunder, and, in such
event, the Indemnitee will reasonably cooperate with the Indemnitor and its
representatives in connection with such defense, negotiation, settlement or
dealings (and the Indemnitee's costs and expenses arising therefrom or relating
thereto shall constitute Purchaser's Losses, if the Indemnitee is the Purchaser,
or Seller's Losses, if the Indemnitee is the Seller); provided, however, that
the Indemnitee may directly participate in any such Legal Proceeding so defended
with counsel of its choice at its own expense, except that, if the Indemnitor
fails to take reasonable steps necessary to defend diligently such third party
claim upon receiving written notice from the Indemnitee that the Indemnitee
reasonably believes the Indemnitor has failed to take such steps or if the
Indemnitor has not undertaken fully to indemnify the Indemnitee in respect of
all such Purchaser's or Seller's Losses, as the case may be, relating to the
matter and as required hereunder, the Indemnitee may assume its own defense,
and, in such event (a) the Indemnitor will be liable for all Purchaser's or
Seller's Losses, as the case may be, reasonably paid or incurred in connection
therewith, and (b) the Indemnitor shall,
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in any case, reasonably cooperate, at its own expense, with the Indemnitee and
its representatives in connection with such defense.
(iii) Without the prior written consent of the Indemnitee, which shall
not be unreasonably withheld, the Indemnitor will not enter into any settlement
of any third party claim which would lead to Liability or create any financial
or other obligation on the part of the Indemnitee which is not immediately paid
or reimbursed in full by the Indemnitor on account of its indemnification
obligation hereunder or which would otherwise adversely affect the Assets or the
Seller Business. If a firm offer is made to settle a third party claim without
leading to Liability or the creation of a financial or other obligation on the
part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder and the Indemnitor desires to accept and agree to such
offer, the Indemnitor will give written notice to the Indemnitee to that effect.
If the Indemnitee notifies the Indemnitor that it does not consent to such firm
offer within 10 calendar days after its receipt of such notice from the
Indemnitor, the Indemnitee may continue to contest or defend such third party
claim and, in such event, the maximum Liability of the Indemnitor as to such
third party claim will not exceed the amount of such settlement offer, plus the
Purchaser's Losses or Seller's Losses, as the case may be, reasonably paid or
incurred by the Indemnitee through the end of such 10-calendar day period.
(iv) After any final judgment or award shall have been rendered by a
Governmental Entity of competent jurisdiction and the time in which to appeal
therefrom has expired, or a settlement shall have been consummated, or the
Indemnitee and the Indemnitor shall have arrived at a mutually binding agreement
with respect to each separate matter alleged to be indemnified against by the
Indemnitor hereunder, the Indemnitee shall forward to the Indemnitor notice of
any sums due and owing by it with respect to such matter, and the Indemnitor
shall pay all of the sums so owing to the Indemnitee by wire transfer or
certified or bank cashier's check within 30 days after the date of such notice.
Any and all Purchaser's Losses or Seller's Losses, other than those described in
the preceding sentence (including Purchaser's Losses or Seller's Losses incurred
in the absence of any threatened or pending Legal Proceeding, or Purchaser's
Losses or Seller's Losses incurred after any such Legal Proceeding has been
threatened or instituted but prior to the rendering of any final judgment or
award in connection therewith), shall be paid by the Indemnitor on a current
basis, and, without limiting the generality of the foregoing, the Indemnitee
shall have the right to invoice the Indemnitor for such Purchaser's Losses or
Seller's Losses, as the case may be, as frequently as it reasonably deems
appropriate, and the proper amount of any such Purchaser's Losses or Seller's
Losses, as the case may be, which are described or listed in any such invoice
shall be paid to the Indemnitee, by wire transfer or certified or bank cashier's
check, within 30 days after the date of such invoice.
SECTION 9.15 CERTAIN EMPLOYMENT MATTERS. The Purchaser acknowledges that it
is, simultaneously with the Closing, offering employment to certain of the
Seller Employees. Any such employment shall be on terms established by the
Purchaser and such Seller Employees, and, without limiting the generality of the
foregoing, the Seller
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acknowledges that such terms are not necessarily comparable to the terms
applicable to the prior employment of such Seller Employees by the Seller
(including, without limitation terms relating to Benefit Plans and Benefit
Arrangements provided by the Seller).
SECTION 9.16 CERTAIN DEFINITIONS AND INTERPRETIVE MATTERS.
A. CERTAIN DEFINITIONS. Unless the context otherwise requires, (i) each
accounting term not otherwise defined in this Agreement has the meaning assigned
to it in accordance with GAAP, (ii) "or" is disjunctive but not necessarily
exclusive, and (iii) the term "Affiliate" has the meaning given to that term in
Rule 12b-2 of Regulation 12B under the Securities Exchange Act of 1934, as
amended, and, when the term is used with reference to the Seller, includes, in
any case and without limitation, each of Xxxxxxx Xxxx, Xxxxx Xxxx, Xxxxxxx Xxxx,
Xxxxx Xxxxxxxx and Xxxxxx Xxxxxxxxx. All references to "$" or dollar amounts
mean lawful currency of the United States of America. The term "Laws" shall mean
any foreign or domestic, federal, state, county or local statute, law,
ordinance, rule, regulation, or court or administrative order, judgment or
ruling.
B. INTERPRETIVE MATTERS. No provision of this Agreement will be
interpreted in favor of, or against, any of the parties hereto by reason of the
extent to which any such party or its counsel participated in the drafting
thereof or by reason of the extent to which any such provision is inconsistent
with any prior draft hereof or thereof.
C. SPECIFIC DEFINED TERMS. The following defined terms are defined in the
respective Sections of this Agreement as set forth below:
Defined Term Section Defined In
------------ ------------------
"Adjusted Cash Payment" 2.2(A)
"Affiliate" 9.16(A)
"Agreed Upon Accounting Standards" 2.2(F)
"Assets" 1.1
"Assumed Liabilities" 4.1
"Benefit Arrangements" 5.1(K)(ii)(c)
"Benefit Plans" 5.1(K)(ii)(b)
"Bulk Sales Liabilities" 4.2(I)
"Business" 1.2(C)(1)
"Closing" 3.1
"Closing Balance Sheet" 2.2(F)
"Closing Date" 3.1
"Closing Net Asset Value" 2.2(A)
"Closing Net Asset Value Statement" 2.2(B)
"Closing Documents" 3.2(B)
"Code" 3.2(A)(9)
"Commitments" 1.2(A)(4)
"Corporate Records" 1.2(B)(2)
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"Covenant Not to Compete" 7.4(A)
"Current Locations" 1.2(C)(3)
"December Balance Sheet" 5.1(C)(i)
"Disclosure Schedule" 1.2(C)(2)
"Dispute Accountants" 2.2(D)
"Dispute Notice" 2.2(C)
"Employee Vacation Liabilities" 2.2(F)
"Environment" 5.1(J)(iii)(a)
"Environmental Conditions" 5.1(J)(iii)(b)
"Environmental Laws" 4.2(G)
"ERISA" 5.1(K)(i)
"Escrow Agreement" 3.2(A)(2)
"Excluded Assets" 1.2(B)
"Excluded Liabilities" 4.2
"Excluded Personality" 1.2(B)(5)
"Excluded Real Property" 1.2(B)(5)
"Final Closing Net Asset Value Statement" 2.2(D)
"Fixed Asset Register" 1.2(A)(2)
"Fixed Assets" 1.2(A)(2)
"Former Employees" 5.1(K)(ii)(a)
"GAAP" 2.2(F)
"Governmental Entity" 5.1(J)(iii)(f)
"Hazardous Material" 5.1(J)(iii)(c)
"Income Tax" or "Income Taxes" 8.4(iii)
"Indemnitee" 9.14(E)(i)
"Indemnitor" 9.14(E)(i)
"Insurance" 4.2(A)
"Intellectual Property" 1.2(A)(7)
"Inventory" 1.2(A)(3)
"IRS" 5.1(K)(i)
"Knowledge" 9.11
"Law" 9.16(A)
"Leased Real Properties" 1.2(A)(9)
"Lease" 3.2(A)(3)
"Legal Proceeding" 5.1(E)(iii)
"Liabilities" 4.2
"Licenses" 5.1(E)(iii)
"Manufacturer's Warranties 1.2(A)(12)
"Material Adverse Effect" 5.1(A)
"Non-Purchased Assets" 1.2(B)(7)
"Non-Purchased Commitments" 5.1(E)(iv)
"November Balance Sheet" 5.1(C)(iii)
"November Net Asset Value" 2.2(A)
"Order" 5.1(B)
"Other Locations" 5.1(J)(i)(a)
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"Promissory Note" 3.2(B)(4)
"Properties" 1.1
"Proprietary Information" 7.4(A)
"Purchased Commitments" 1.2(A)(4)
"Purchaser" intro. Paragraph
"Purchaser Business Records" 6.2(A)
"Purchaser's Accountants" 2.2(B)
"Purchaser's Losses" 9.14(A)
"Receivables" 1.2(A)(1)
"Release" 5.1(J)(iii)(d)
"Restricted Territory" 7.4(A)
"Retained Records" 7.1
"Seller's Accountants" 2.2(C)
"Seller's Losses" 9.14(B)
"Seller" intro. Paragraph
"Seller Business" 1.2(C)(1)
"Seller Employees" 5.1(K)(i)
"Seller Leases" 1.2(A)(9)
"Tax" or "Taxes" 8.4(i)
"Tax Return" or "Tax Returns" 8.4(ii)
"Threat of Release" 5.1(J)(iii)(e)
"Transfer" 1.1
"Unadjusted Cash Payment" 2.1
"Wachovia" 2.1
"Wachovia Debt" 2.2(F)
"Warrant" 3.2(B)(5)
SECTION 9.17. SELLER'S INDEMNIFICATION FOR CERTAIN ENVIRONMENTAL PROBLEMS.
Without limiting the provisions of Section 9.14(A) and in addition thereto but
subject to the limitation set forth in this Section 9.17, the Seller hereby
agrees to indemnify and hold harmless the Purchaser for forty-percent (40%) of
any losses, assessments, liabilities, claims, damages, costs, and expenses
actually suffered by Seller arising out of any of the following:
(a) any Environmental Condition existing at Closing on, at or relating to
the Current Locations or the Other Locations or any facilities or operations
thereon and which are not covered by Seller's indemnification obligations set
forth in Section 9.14(A)(2);
(b) the generation, manufacture, refinement, transportation, treatment,
storage, handling, disposal, transfer, production or processing of any Hazardous
Material prior to Closing on, at or relating to the Current Locations or the
Other Locations or any facilities or operations thereon and which are not
covered by Seller's indemnification obligations set forth in Section 9.14(A)(2);
or
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(c) any Release prior to Closing of any Hazardous Material on, at or
relating to the Current Location or Other Locations or any Facilities or
Operations thereon and which are not covered by Seller's indemnification
obligations set forth in Section 9.14(A)(2);
PROVIDED, HOWEVER, that the maximum liability of Seller under this Section 9.17
shall not exceed One Hundred Thousand Dollars ($100,000); and
PROVIDED FURTHER that Purchaser shall not have the right to assign the benefits
of the provisions of this Section 9.17 to any other person or entity. Seller's
indemnification obligations under this Section 9.17 shall survive indefinitely.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first written above.
HIFI BUYS INCORPORATED
By: /s/ Xxxxxxx Xxxx
------------------------------------
Title: President
---------------------------------
NEW ENGLAND AUDIO CO., INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Title: President
---------------------------------
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APPENDIX A
----------
Exhibit A - Escrow Agreement
Exhibit B - Lease
Exhibit C-1 - Seller's Officer's Certificate
Exhibit C-2 - Purchaser's Officer's Certificate
Exhibit D - Opinion of Counsel for Seller
Exhibit E - Certificate of Non-Foreign Status for Seller
Exhibit F - Guaranty and Non-Competition Agreements
Exhibit G - Promissory Note
Exhibit H - Warrant
Exhibit I - Opinion of Counsel for Purchaser
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APPENDIX B
----------
10. CONDUCT OF BUSINESS. During the Exclusivity Period, HiFi Buys will
conduct its business only in the ordinary course on a basis consistent with past
practice, will stay current with respect to all of its Liabilities, and will use
its best efforts to keep available the services of its officers and employees
and to maintain existing relations with distributors, dealers, licensee,
associates, suppliers, customers and others having business relationships with
HiFi Buys. In furtherance of the foregoing, and in any case, HiFi Buys will
maintain advertising, staffing and employee compensation at current levels (and
without limiting the generality of the foregoing, shall not pay any
extraordinary bonuses or other employee payments), and will not pay any
dividends or otherwise make distributions to its shareholders (other than
reasonable compensation and distributions to shareholders for tax liabilities
consistent with projected amounts previously disclosed to the Purchaser), enter
into any new real estate or operating lease or terminate any such existing
lease, enter into any new contract involving expenditures in excess of $25,000
(unless such contract is terminable at will with no liability to HiFi Buys or
the Purchaser consents thereto in writing or is for purchases of inventory
consistent with past practice), terminate any existing material contract, or
take any action which could reasonably be expected to have a material adverse
effect on or materially change HiFi Buys business, financial condition, or
prospects. In addition, HiFi Buys will obtain or maintain, as the case may be,
insurance on the Assets to be purchased covering such risks and hazards and in
such amounts as are prudent and customary under the circumstances.
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LIST OF SCHEDULES AND EXHIBITS FROM THE HIFI BUYS ASSET PURCHASE AGREEMENT,
---------------------------------------------------------------------------
MAY 1997
--------
The Company agrees to furnish supplementally any schedule or exhibit listed
below to the Commission upon request.
HIFI BUYS ASSET PURCHASE AGREEMENT: SCHEDULES
----------------------------------------------
Schedule 1.2(A)(1) Receivables
Schedule 1.2(A)(2) Fixed Asset Register
Schedule 1.2(A)(4) Commitments
Schedule 1.2(A)(5) Prepaid Items
Schedule 1.2(A)(7) Intellectual Property
Schedule 1.2(A)(8) Cash and Deposits
Schedule 1.2(A)(9) Seller Leases
Schedule 1.2(A)(11) Permits and Licenses
Schedule 1.2(A)(12) Manufacturers' and Vendors' Warranties
Schedule 1.2(B)(4) Pension Plans, Etc.
Schedule 1.2(B)(5) Certain Real Estate
Schedule 1.2(B)(7) Other Excluded Assets
Schedule 2.2(A) November Net Asset Value
Schedule 2.2(B) Employees to be retained for Closing Date Net Asset
Value Statement
Schedule 2.2(F) Agreed Upon Accounting Standards
Schedule 4.1 List of Assumed Liabilities
Schedule 4.2(C) Borrowed Money
Schedule 5.1(B) Violations
Schedule 5.1(C)(i) Audited Financials
Schedule 5.1(C)(ii) Unaudited Interim Financials
Schedule 5.1(C)(iii) November Balance Sheet
Schedule 5.1(C)(iv) Inventory not Usable or Salable in the Ordinary
Course
Schedule 5.1(D) Certain Transactions
Schedule 5.1(E)(i) Necessary Consents
Schedule 5.1(E)(iii) Licenses
Schedule 5.1(G) Liens
Schedule 5.1(H) Non-Assignable Intellectual Property Rights
Schedule 5.1(I) Legal Proceedings
Schedule 5.1(J) Compliance with Laws
Schedule 5.1(K) ERISA and Related Matters
Schedule 5.1(L) Labor Matters
Schedule 5.1(M) Insurance
Schedule 5.1(N)(i) Tax Filing Extensions
Schedule 5.1(N)(iii) Certain Tax Claims
Schedule 6.1(B) Necessary Contents
52
Schedule 6.1(C) Litigation
Schedule 9.11 Persons with "Knowledge"
EXHIBITS
--------
Exhibit A Escrow Agreement
Exhibit B West Liddell Lease
Exhibit C-1 Seller Officer's Certificate
Exhibit C-2 Purchaser Officer's Certificate
Exhibit D Seller Counsel Legal Opinion
Exhibit E Seller Certificate of Non-Foreign Status
Exhibit F Guaranty and Non-Competition Agreements/Guaranty
Exhibit G Subordinated Promissory Note
Exhibit H Warrant
Exhibit I Purchaser Counsel Legal Opinion
Exhibit J Assignment and Assumption