ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated January 3, 1997 as of December 31, 1996, by and
among BATTERIES ACQUISITION CORP., a New York corporation ("Buyer"), BATTERIES
BATTERIES, INC., a Delaware corporation ("BBI"), WSJ ENTERPRISES, INC., an
Illinois corporation 0000 Xxxxxx Xxxxxx, XxXxxxx, Xxxxxxxx 00000 ("Seller")
and XXXXXXX X. XXXX, ("WS Senior") and XXXXXXX XXXX who reside at 0000 Xxxxxx
Xxxxxx Xxxx, Xxx Xxxxx, Xxxxxx 00000, XXXXX XXXXXX ("SG") who resides at 0000
Xxxxxx Xxxx, XxXxxxx, Xxxxxxxx 00000, XXXXXXX XXXXXX XXXX ("WSS") who resides
at 00000 Xxx Xxxxxx Xxx, Xxxxx, Xxxxxxxxxx 00000 and XXXXX XXXX ("JS") who
resides at 0000 Xxxxxx Xxxxxx Xxxx, Xxx Xxxxx, Xxxxxx 00000 (the foregoing
individuals are hereinafter collectively referred to as the "Stockholders").
WHEREAS, the Seller conducts a battery distribution business (the
"WSJ Enterprises Business") and desires to sell, and the Stockholders desire
Seller to sell the WSJ Enterprises Business and the assets comprising that
business to Buyer;
WHEREAS, BBI which owns the outstanding capital stock of the Buyer is
engaged in the ownership and operation of a battery distribution business on a
national basis and is acquiring at the time of the acquisition to be effected
under this Agreement the outstanding capital stock of Battery Network Inc.
("Battery Network") pursuant to a Stock Purchase Agreement among XX0, Xxxxxxx
Network, SG, WSS and JS (the "BN Stock Agreement") and of W.S. Battery and
Sales Company, Inc. ("WSB") pursuant to a Stock Purchase Agreement among BBI,
WSB and W.S. Battery Sales & Co. Inc. Employee Stock Ownership Plan and Trust
(the "ESOP WSB Stockholder"), the sole stockholder of WSB (the "WSB Stock
Agreement"), and desires to have the Buyer acquire and the Buyer desires to
acquire from the Seller the WSJ Enterprises Business and its related assets;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants, representations and warranties hereinafter set forth,
the parties agree as follows:
ARTICLE I
ASSETS
1.1 Assets to be Sold. In reliance upon the representations,
warranties and agreements of the parties hereto contained herein, Seller
hereby agrees to sell, transfer and convey and the Stockholders have caused
the Seller to agree to sell, transfer and convey, to Buyer at the Closing, and
the Buyer hereby agrees to purchase and BBI hereby agrees to cause Buyer to
purchase from the Seller at the Closing, the Transferred Assets of the Seller,
as hereinafter defined, free and clear of all liens, charges and encumbrances,
and the WSJ Enterprises Business. Seller shall retain the Retained Assets, as
hereinafter defined.
1.2 Transferred Assets. The term "Transferred Assets" shall mean all
of the assets, except the Retained Assets, of the Seller at the Closing,
including, but not limited to, the following specified assets to the extent
that such assets are not Retained Assets:
(a) All outstanding contracts, agreements, leases,
arrangements, commitments and understandings, whether written or oral, related
to the WSJ Enterprises Business or the conduct thereof to which Seller is a
party, including those which are listed or referred to on Schedule 1.2(a)
hereto but none related to the Retained Assets except as they give rise to
insurance or indemnification of the Buyer as successor to the WSJ Enterprises
Business or the Transferred Assets.
(b) Lease security deposits set forth in Schedule 1.2(b)
(the "Schedule 1.2(b) Deposits") and the prepaid expenses relating to but not
limited to, utility deposits and similar monies held by third parties,
drawings, hardware, software and all other operating assets used in or
required for the continuance by the Buyer of the WSJ Enterprises Business,
whether tangible or intangible, at the Closing.
(c) All supply contracts, purchase contracts, service
contracts and confidentiality agreements to which Seller is a party that are
related to or connected with the WSJ Enterprises Business, including those set
forth in Schedule 1.2(c).
(d) All copyrights, reprint, rights, trademarks, trademark
licenses, trade names, the sole and exclusive perpetual right to the use of
the name "Alexander Battery" to the extent possessed by Seller, patents, brand
names, slogans, franchises, licenses, authorizations, inventions, processes,
know-how, formulas, trade secrets and other intangible assets relating to or
used in the
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WSJ Enterprises Business owned by Seller (the foregoing, together with all
pending applications for any of the above, if and as appropriate, collectively
"Intangible Assets"), all listed on Schedule 1.2(d) attached hereto.
(e) All accounts receivable, bills and notes receivable of,
commercial paper of, acceptances and any other evidences of indebtedness to,
the Seller outstanding as of the Closing Date arising from the WSJ Enterprises
Business, including, but not limited to, those accounts receivable, bills and
notes receivable outstanding listed on Schedule 1.2(e), except for those
receivables in the amounts and from customers set forth on Schedule 1.2(e)-1
generated from sales outside of the United States (the "Foreign Receivables").
(f) The inventory acquired or assembled for the WSJ
Enterprises Business owned by the Seller.
(g) The furniture and fixtures owned by the Seller (including
those listed on Schedule 1.2(g) attached hereto).
(h) All machinery, vehicles and equipment owned by Seller
(including those listed on Schedule 1.2(h) attached hereto)
(i) All supplies and materials, including, but not limited
to, films and plates as to the catalogues, owned by the Seller and used in
connection with the WSJ Enterprises Business.
(j) All lists of customers and vendors and records of Seller
other than those specified as part of the Retained Assets.
(k) All properties, real or personal, leased by Seller
(including those listed on Schedule 1.2(k) hereto) other than those specified
as part of the Retained Assets.
(l) The cash on hand of Seller at the Closing, including all
cash on hand as of the Closing in the bank accounts maintained by Seller.
(m) All rights and claims of Seller, including claims under
insurance policies, for damages or losses suffered by Seller or for damage to
Transferred Assets of the Seller to the extent that any damaged Transferred
Assets have not been repaired or replaced prior to Closing.
(n) All licenses, permits and authorizations issued by any
governmental authority relating to the Transferred Assets or the WSJ
Enterprises Business which are assignable (collectively the "Permits") and
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(o) The Books and Records, as defined in Section 2.3(b)(iii)
of Seller, relating to its WSJ Enterprises Business, through the Closing.
1.3 Retained Assets. The term "Retained Assets" shall mean the
following specified assets of the Seller:
(a) The Foreign Receivables set forth on Schedule 1.2(e)-1;
and
(b) The stock books, corporate minutes and original tax
returns of the Seller (except that Seller shall provide copies of the
foregoing to the Buyer).
1.4 Assumed Liabilities. Buyer shall assume and undertake to perform
all obligations of Seller under the leases, agreements and contracts included
in the Transferred Assets, but only those obligations which relate to
purchases or sales effected, or properties provided, after the Closing
("Assumed Liabilities").
ARTICLE II
PRICE AND TERMS
2.1 Consideration. (a) Subject to the terms and conditions of this
Agreement, in reliance on the representations, warranties and agreements of
the Seller and Stockholders contained herein, Seller shall sell, convey,
assign, transfer and delivery at the Closing to the Buyer the WSJ Enterprises
Business and Transferred Assets and Buyer shall pay and BBI shall cause Buyer
to pay at the Closing to Seller, in full payment therefor the purchase price
of $678,443.48 less a credit of $529,228.48 for the Foreign Receivables set
forth on Schedule 1.2(e)-1 and the balance of the amount of the Foreign
Receivables not paid to BBI pursuant to Section 5.6 of the BN Stock Agreement
by the BN Stockholders. Payment of the Purchase Price shall be by means of a
wire transfer in federal funds to the bank account at the McHenry State Bank,
XxXxxxx, Illinois designated to Buyer by the Seller in the amount of $149,215.
(b) In the event the amount by which the Closing Combined
Net Worth of Battery Network, WSB and Enterprises as determined pursuant to
Section 2.2 of the BN Stock Agreement is less than $8,000,000 (the
"Deficiency") and such Deficiency exceeds the payment made by the BN
Stockholders pursuant to Section 2.2(b) of the BN Stock Agreement by the BN
Stockholders, Seller and the Stockholders jointly and severally agree to pay
BBI the balance of the Deficiency not paid in the form of a certified check in
such amount to the order of BBI.
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2.2 Liabilities Not Assumed. Except as and to the extent otherwise
expressly provided in this Agreement and the Undertakings, Buyer has not
agreed to pay, shall not be required to assume, and shall have no liability or
obligation with respect to, any of the obligations with respect to the
acquisition, lease rental or maintenance of any of the Retained Assets. Seller
shall pay and discharge any current liability or obligation of Seller not
expressly assumed by Buyer hereunder no later than the Closing Date.
2.3 Documents of Sale and Conveyance.
(a) The sale, conveyance, assignment, transfer and delivery
of the Transferred Assets shall be effected by delivery at the Closing by
Seller to Buyer of:
(i) duly executed bills of sale substantially in
the form of Exhibit A hereto (collectively, the "Bills of
Sale");
(ii) instruments of assignment with respect to any
interest Seller has in all copyrights, patents, trade or
service names and marks, and assumed names and all
applications therefor relating to the WSJ Enterprises
Business or any of Transferred Assets, all in recordable
form (collectively, the "Instruments of Assignment"); and
(iii) such other good and sufficient instruments of
conveyance and transfer as shall be necessary to vest in
Buyer good and valid title to the Transferred Assets
(collectively, the "Other Instruments"), free and clear of
all liabilities, obligations, claims, liens and encumbrances
(whether absolute, accrued, contingent or otherwise) except
to the extent herein otherwise provided.
(b) Additional Deliveries by Seller and Stockholders. In
addition to the items set forth in Section 2.3(a), and as conditions to the
agreements hereunder by the Buyer and BBI, the Seller shall deliver at the
Closing to the Buyer:
(i) executed counterparts of the consents referred
to in Schedule 3.10 hereof;
(ii) the certificates of insurance from the
insurance companies as to the transfer to Buyer of insurance
policies owned by Seller, as referred to in Section 3.18;
and
(iii) the opinion of counsel in the form of Exhibit
B hereto.
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Seller shall deliver at the Closing to the Buyer at the
current premises of Seller all books and records (including all computerized
records and other computerized storage media and the software used in
connection therewith) of the Seller other than those relating to the Retained
Assets (collectively, "Books and Records"), including, without limitation, all
Books and Records relating to the catalogues, mail orders, purchase of
materials, supplies and services for, and dealings with vendors, customers and
distributors of, the Seller, and the general ledgers and all other existing
records of the Seller other than the corporate minute books, capital stock
book or original tax returns of the Seller (provided, however, true and
complete copies of Seller's tax returns shall be furnished to Buyer).
(c) Deliveries by Buyer. Buyer shall deliver at the
Closing to the Seller as a condition to the agreements hereunder of the Seller
and Stockholders, the following:
(i) the wire transfer of federal funds referred to
in Section 2.1(a) and Section 6.1 hereof to the Seller;
(ii) undertakings to pay and perform the Assumed
Liabilities; and
(iii) the opinion of counsel in the form of Exhibit
B-1 hereto.
2.4 No Assumption of Obligation Unless Expressed. Except for
obligations expressly assumed by the Buyer hereunder, there shall be no
liability or obligation of the Buyer or BBI to Seller, the creditors of
Seller, the Stockholders, or to others, growing out of or arising from the
sale by the Seller of the WSJ Enterprises Business and Transferred Assets to
the Buyer under the provisions of this Agreement.
2.5 Mail and Funds Received After Closing. Seller and the
Stockholders agree to promptly remit to Buyer all orders, funds and checks
received after the Closing Date by Seller or a Stockholder with respect to the
WSJ Enterprises Business or any of the Transferred Assets, and deliver or
cause to be delivered to Buyer all correspondence addressed to Seller or a
Stockholder relating to the WSJ Enterprises Business or the Transferred
Assets; and (ii) Buyer may open all mail addressed to Seller or a Stockholder
and, to the extent that such mail and the contents thereof relate to WSJ
Enterprises Business or any of the Transferred Assets, deal with the contents
thereof. Buyer shall promptly deliver to the Seller or the Stockholders all
other mail addressed to the Seller or Stockholder and received by Buyer and
shall promptly remit to Seller all funds and checks received after the Closing
Date in payment of the Foreign Receivables and
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checks received in payment of the Uncollected Accounts after payment therefor
by the Seller or the BN Stockholders.
2.6 Closing. The consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place at the time and at the offices
of Brock, Fensterstock, Xxxxxxxxxxx, XxXxxxxxx & Xxxx, LLC, One Citicorp
Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m. on January 3,
1997 (the "Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDERS
To induce Buyer to enter into this Agreement and consummate the
transactions contemplated hereby, Seller and the Stockholders jointly and
severally represent and warrant to Buyer as follows:
3.1 Organization and Qualification of Seller. Seller is a corporation
duly organized and validly existing under the laws of the State of Illinois,
and has the corporate power to own its assets and to conduct its business as
it is presently being conducted, the only jurisdiction where the failure to
qualify in the aggregate has not and will not have a material adverse effect
on its business or the prospects of the WSJ Enterprises Business or Seller's
ability to enforce its contracts. Seller has previously delivered to the Buyer
correct and complete copies of its Certificate of Incorporation, as amended to
date, and By-Laws, as amended to date.
3.2 Authorization of Agreements; No Violations.
(a) This Agreement has been, and the instruments and
agreements contemplated herein, including, but not limited to, Bills of Sale
and Instruments of Assignment (collectively, the "Related Instruments") and
other agreements and documents executed in connection with the transactions
contemplated hereby (the "Closing Documents") have been duly executed and
delivered and constitute the valid and binding obligations of Seller and the
Stockholders thereto, and each of the foregoing is enforceable against the
Seller and the Stockholders thereto, in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and except to the extent that the remedy of
specific enforcement, injunctive relief or other equitable remedy is subject
to the discretion of the court before which any proceedings therefor may be
brought.
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(b) The execution and delivery and the performance of this
Agreement, the Related Instruments and the Closing Documents, to the knowledge
of Seller and Stockholders, do not, with or without the giving of notice
and/or the passage of time:
(i) violate in any material respect any provision
of law applicable to Seller and Stockholders or the
corporate charter or By-Laws of Seller;
(ii) violate, conflict with, result in the breach
or termination of, any provision of, constitute a default
under any indenture, mortgage, deed of trust, lease or other
agreement or instrument to which Seller or a Stockholder is
a party or by which Seller or a Stockholder or any material
asset or property of Seller is or may be bound (the "Binding
Agreements") or give any party other than a Stockholder or
Seller the right to accelerate any material obligation
thereunder, except where such violation, conflict, breach,
default or termination would not have a materially adverse
effect upon the WSJ Enterprises Business or the combined
financial condition or combined results of operations of
Seller, Battery Network and WSB (collectively the "Combined
Financial Condition" and "Combined Results of Operations")
or prospects of Seller or the transferability or value of
the properties or assets of Seller; or
(iii) result in the creation of any lien, charge or
encumbrance upon any of the properties or assets of Seller
pursuant to any of the Binding Agreements. Neither such
execution, delivery and performance nor compliance by Seller
or a Stockholder with the terms and provisions hereof
violate any law or, with or without the giving of notice
and/or the passage of time, conflict with or result in a
breach of any judgment, order, injunction, decree,
regulation or ruling of any court or other governmental
authority to which Seller or a Stockholder is subject or by
which any of the assets of Seller may be bound.
3.3 Financial Statements. The Stockholders have caused Seller to
deliver to Buyer the Combined Balance Sheets of Seller, Battery Network, and
WSB as of September 30, 1996 (the "September 30, 1996 Combined Balance
Sheet"), December 31, 1995 and December 31, 1994 and the related Combined
Statements of Income and Cash Flow of Seller, Battery Network and WSB for the
nine months ended September 30, 1996 and for each of the years ended December
31, 1995, and December 31, 1994 (collectively the "Audited Financial
Statements") prepared from the books
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and records of the Seller, and certified by Deloitte & Touche, independent
public accountants. The Audited Financial Statements fairly present the
Combined Financial Condition as of September 30, 1996, December 31, 1995 and
December 31, 1994, and the Combined Results of Operation for the periods then
ended. The Audited Financial Statements have been prepared in accordance with
generally accepted accounting principles ("GAAP"), consistently applied. The
Closing Combined Net Worth as defined in Section 2.2 of the BN Stock Agreement
is at least $8,000,000.
3.4 Transfer and Title to the Transferred Asset. Upon delivery of the
Transferred Assets to Buyer at Closing, the Buyer will receive good and
marketable title to the Transferred Assets, free and clear of any lien,
pledge, option, contractual right, equitable right, charge or other
encumbrances of any kind whatsoever, except for the liens and encumbrances
created under the Revolving Credit, Term Loan and Security Agreement among IBJ
Xxxxxxxx Bank & Trust Company, BBI and the subsidiaries of BBI.
3.5 Tangible Assets. Seller does not own any real property. Schedule
3.5 hereto is a complete and correct list of all material items (a book value
of at least $25,000) of tangible personal property, other than inventory, and
fixtures of Seller, all of which were included on the September 30, 1996
Balance Sheet, and all of which are currently used or useable in the conduct
of the WSJ Enterprises Business and are in the aggregate in good condition and
repair, reasonable wear and tear excepted.
3.6 Intangible Assets.
(a) Schedule 3.6 identifies all patents, trademarks, trade
names (including the name "Alexander Battery"), service marks, copyrights,
registrations or applications with respect to any of the foregoing, renewals
or assignments, and all rights in, to, or respecting such renewals and
licenses or rights under the same presently owned, being used, or presently
intended to be acquired (identified as such) by Seller (collectively referred
to herein as the "Business Rights"). To the extent indicated in Schedule 3.6,
the same have been duly registered in the offices indicated therein. There are
no claims or demands of any other person, firm, corporation or entity of which
the Seller or the Stockholders are aware pertaining to any of such rights; and
no proceedings have been instituted, are pending, or, to the knowledge of the
Seller or the Stockholders, are threatened, which challenge, oppose or
threaten interference, cancellation, nullification or concurrent use with any
of the Business Rights. To the knowledge of Seller and the Stockholders, none
of the Business Rights infringed on or otherwise violate the rights of others
or are being infringed on by others; and
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none are subject to any outstanding order, decree, judgment or stipulation. No
licenses, sublicenses or agreements pertaining to any of the Business Rights
are in effect, other than as set forth in Schedule 3.6. Neither Seller nor any
of the Stockholders has been formally charged with infringement of any
adversely-held Business Right with respect to Seller or any Business Right
used in connection with the WSJ Enterprises Business.
(b) Seller owns and possesses all Business Rights which, to
the knowledge of Seller and the Stockholders, are necessary for, and being
used in the conduct of, or in connection with, the WSJ Enterprises Business as
was conducted on September 30, 1996 and as is currently being conducted; all
are in full force and effect and have not been amended or modified. Except as
set forth in Schedule 3.6, Seller has not sold, assigned, transferred,
licensed, sublicensed or conveyed all or any interest in any of the Business
Rights to any person, and has the right, title and interest (free and clear of
all security interests, liens and encumbrances of every nature) in and to the
Business Rights set forth on the Schedule.
3.7 Books and Records. The books and records of Seller have been
maintained on a basis consistent with prior years and accurately reflect the
basis for amounts set forth on the Audited Financial Statements delivered
pursuant to Section 3.3.
3.8 Inventory. All of the inventory of the Seller, Battery Networks
and WSB included on the September 30, 1996 Combined Balance Sheet and the
Closing Combined Balance Sheet is of a quality and quantity currently usable
in the ordinary course of the Battery Network Business, WSB Business or WSJ
Enterprises Business. The present quantity of all current and usable
inventory, after giving effect to the inventory reserve established in
accordance with GAAP, is at a level consistent with the past practices of
Battery Network, WSB and Seller.
3.9 Contracts and Commitments.
(a) Except as set forth in Schedule 3.9 or Schedule 3.10
on the date of this Agreement:
(i) Seller is not a party to or bound by any
distribution agreement, sales representative agreement,
dealer agreement, collective bargaining agreement, loan
agreement, agreement guaranteeing the obligations of
liabilities of others, construction or building modification
agreement, or any other agreement, contract or commitment
relating to its operation, condition (financial or
otherwise), liabilities, assets, earnings, working capital
or the prospects of the WSJ Enterprises Business
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and which provides for future payments or receipts for any
consecutive twelve month period in an amount of at least
$25,000 (or, with respect to purchase orders, $25,000);
(ii) The enforceability of the agreements,
contracts, commitments and licenses referred to in Schedule
3.6 or Schedule 3.9 will not be affected in any manner by
the execution and delivery of this Agreement, the Related
Instruments or the consummation of the transactions
contemplated hereby, except for the need to obtain the
consents and those consents set forth in Schedule 3.10, all
of which consents have been obtained except those as to
certain leases of equipment from lessors indicated in such
Schedule;
(iii) No outstanding purchase contract or
commitment of Seller relates to any business other than the
WSJ Enterprises Business, is materially in excess of the
ordinary and usual requirements of such business at the time
entered into or, to the knowledge of Seller and the
Stockholders, was entered into at any price materially in
excess of the price paid or payable by Seller during the
nine months ended September 30, 1996 or the year ended
December 31, 1995, comparing where applicable prices paid or
payable for similar quantities;
(iv) Neither Seller nor any of the Stockholders is
a party to or bound by any outstanding agreements,
arrangements or contracts relating to the WSJ Enterprises
Business or the Transferred Assets with any of the officers,
employees, agents, consultants, advisors or salesmen of
Seller that (A) is not cancelable by it on notice of not
longer than 30 days and without liability, penalty or
premium, except for those agreements set forth, along with
their expiration dates, on Schedule 3.9, or (B) provides for
the payment of any bonus or commission based on sales or
earnings, the "Plans" listed on Schedule 3.17 and as
permitted under Section 3.19;
(v) Seller is not a party to or bound by any
employment agreement, consulting agreement or any other
agreement which contains any severance or termination pay
liabilities;
(vi) To the knowledge of Seller and the
Stockholders, Seller is not in default under or in violation
in a material respect of, nor, is there any basis for any
valid claim of default under or violation of, in a material
respect, any contract,
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agreement or commitment made or obligation of Seller or
relating to the WSJ Enterprises Business, including, but not
limited to, any material distribution agreement, sales
representative agreement or dealer agreement;
(vii) Seller does not have (A) indebtedness for
borrowed money or the deferred purchase price for property,
including guarantees of, or agreements to acquire, any such
indebtedness of others, or (B) contract, commitment or
arrangement for the borrowing of money or for a line of
credit; and
(viii) None of Seller, the Stockholders, any
"Affiliate" of a Stockholder (meaning a member of the
immediate family of, or any person controlling or controlled
by, any Stockholder), an officer or director of Seller is a
party to or bound by any agreement or arrangement for the
sale of shares of Seller or (other than in the ordinary
course of business and consistent with past practice) any of
the assets or rights of Seller or which provides for the
grant of any preferential rights to purchase any of the
assets or rights of Seller.
(b) With respect to each contract and agreement listed on
Schedule 3.9, except as set forth therein, (A) it is valid, binding and in
full force and effect and is enforceable by Seller in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and other laws and
judicial decisions of general applicability relating to or affecting
creditors' rights and to general principles of equity; (B) to the knowledge of
the Stockholders and Seller, neither Seller nor any other party thereto is in
material breach of any obligation thereunder; and (C) there does not exist any
material default under, or, to the knowledge of the Stockholders and Seller,
any event or condition which, with the giving of notice or passage of time or
both, would become a breach or default in any material respect under the terms
of such contract or agreement on the part of Seller or on the part of any
other party thereto.
(c) Since September 30, 1996, the Seller has not written up
the value of any inventory, or written off as uncollectible any notes or
accounts receivable or any portion thereof, except for write-offs and
write-ups in accordance with GAAP consistently applied; waived any rights of
substantial value; or, to the knowledge of Seller and Stockholders, omitted to
do any act, or permitted any act or omission to act, which will cause a
material breach of any contract, commitment or obligation, or any breach of
any representation, warranty, covenant or agreement made herein.
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3.10 Leases. Schedule 3.10 attached hereto contains an accurate and
complete list of leases (including all amendments thereof and modifications
thereto, the "Leases") pursuant to which Seller leases real property and
leases providing for rentals of at least $10,000 per annum of personal
property. None of the Leases relate to any property or equipment owned or
leased by any Stockholder or an Affiliate. To the knowledge of Seller and the
Stockholders, Seller is not in default in any material respect with respect to
any of the Leases which would permit the lessor thereunder to terminate such
Lease and no event or condition has occurred which (whether with or without
notice, lapse of time or the happening or occurrence of any other event) would
constitute a default in any material respect thereunder, or would permit the
lessor thereunder to terminate such Lease, increase any of the lessee's
obligations or reduce the lessee's rights thereunder. All Leases are valid,
binding and enforceable in accordance with their respective terms, except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights generally and are
in full force and effect, and, except for the consents of lessors set forth in
Schedule 3.10 which consents have been obtained, the execution and delivery of
this Agreement and consummation of the transactions contemplated hereby, will
not require Seller or Buyer to procure the consent of any lessor in order for
Buyer to succeed as lessee thereunder without any additional cost to or Buyer
to Seller or a diminution of lessee's rights thereunder.
3.11 Liabilities. To the knowledge of Seller and the Stockholders,
Seller is not, except as set forth in Schedule 3.11, subject to any
liabilities other than (i) those included in the September 30, 1996 Combined
Balance Sheet; and (ii) accounts payable and accrued expenses which have
arisen in the ordinary course of the WSJ Enterprises Business subsequent to
September 30, 1996.
3.12 Litigation. Except as set forth on Schedule 3.12 attached
hereto, there are no claims, actions, proceedings pending and, to the
knowledge of Seller and the Stockholders, threatened, and to the knowledge of
Sellers and the Stockholders, there are no investigations or inquiries in
progress, pending, threatened, against any Stockholder or Sellers, that could
adversely affect the Transferred Assets, or the transactions contemplated
hereby; nor, to the knowledge of Seller and the Stockholders, is there any
valid basis for any such claim, action, suit, proceeding, inquiry or
investigation. As a result of either the lack of a valid basis for, or the
availability of an appropriate defense to, any claims, actions, suits,
proceedings, inquiries or investigations set forth in Schedule 3.12, none of
such claims, actions, suits, proceedings, inquiries or investigations will
have a material adverse effect on the WSJ Enterprises Business or the Combined
Financial Condition or the Combined Results of Operations.
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None of the Stockholders nor the Seller is subject to any judgment, order or
decree entered in any lawsuit or proceeding which has had or may have a
significant adverse effect on WSJ Enterprises Business or the Combined
Financial Condition or Combined Results of Operations.
3.13 Permits, Licenses, Etc. To the knowledge of Seller and the
Stockholders, Seller does not require any permits, licenses, orders or
approvals of governmental or administrative authorities (collectively the
"Permits") to permit it to carry on the WSJ Enterprises Business as presently
conducted (including, without limitation, those required under federal, state
or local laws or regulations relating to pollution or protection of the
environment) other than the Permits which it currently holds, all of which are
described in Schedule 3.13. The conduct by Seller of the WSJ Enterprises
Business through the date hereof has not and, to the knowledge of Seller and
the Stockholders, the continuation of such business by Buyer after the Closing
in the same manner as currently conducted will not, violate or infringe, and
has not and, to the knowledge of Seller and the Stockholders, will not cause a
default in any material respect under, any of the Permits or require Seller or
the Buyer to obtain any additional Permits, and neither any Stockholder nor
Seller has received any written notification of any threatened suspension or
cancellation of any of the Permits which might be reasonably expected to have
a material adverse effect on the WSJ Enterprises Business or the Combined
Financial Condition or Combined Results of Operations.
3.14 Assets Necessary to Business. Except as set forth in Schedule
3.14, the assets, properties, licenses and other agreements of Seller included
in the Transferred Assets comprise all those required of Buyer to conduct the
WSJ Enterprises Business, at least to the extent conducted by Seller as of
September 30, 1996.
3.15 Taxes. Seller has: (I) filed all returns required to be filed
with respect to all federal, state, local and foreign income, payroll,
withholding, excise, sales, use, real and personal property, use and
occupancy, business and occupation, mercantile, real estate, capital stock and
franchise or other tax (all the foregoing taxes, including interest and
penalties thereon and including estimated taxes thereof, are hereinafter
collectively referred to as "Taxes"), (ii) paid all Taxes required by law to
be paid, and (iii) paid all other Taxes for which a notice of assessment or
demand for payment has been received, except, with respect to all of the
foregoing, to the extent that any claimed tax, fee, interest, assessment or
penalty is not due or is being contested in good faith. No reserve is or will
be required of Seller with respect to any Taxes relating to the income of
Seller through the Closing. Seller has not received any notice of an
examination having been made of Seller's federal income tax returns by the
14
Internal Revenue Service at least since December 31, 1992. Seller has not
agreed to extend the time of assessment or collection of Taxes and is not a
party to any action or proceeding by any governmental authority for the
determination, assessment or collection of any Taxes. There is no examination
pending or, to the knowledge of Seller or the Stockholders, threatened by
taxing authorities relating to the determination, assessment or collection of
any Taxes from Seller.
3.16 Absence of Certain Changes or Events.
Since September 30, 1996:
(i) Seller has not sold or suffered any material
adverse change or loss or termination of or breach or
default of any of the Business Rights set forth or referred
to on the Schedules to this Agreement and there has been no
material adverse change, or, to the knowledge of Seller and
the Stockholders, is any material adverse change threatened
or anticipated, in the combined net sales, Combined
Financial Condition or Combined Results of Operations from
the amounts reflected on the September 30, 1996 Combined
Balance Sheet and the Combined Statement of Income for the
nine months then ended or, to the knowledge of Seller and
the Stockholders, in the prospects for WSJ Enterprises
Business, and Seller and the Stockholders do not know of any
event which is or might reasonably be expected to have a
material adverse effect on such net sales, condition or
results or prospects;
(ii) Seller has not permitted, allowed or suffered
any of its assets (tangible or intangible) to be subjected
to any mortgage, pledge, lien, encumbrance, restriction or
charge of any kind; not canceled any material indebtedness
(individually or in the aggregate) owing to it or waived any
claims or rights of substantial value; and not sold,
transferred or otherwise disposed of any of its property or
assets (tangible or intangible) except in the ordinary
course of business and consistent with past practice;
(iii) Seller has not paid, loaned or advanced any
amount to, or sold, transferred or leased any properties or
assets (tangible or intangible) to, or entered into any
agreement or arrangement with, any of its officers,
directors or employees, or increased the compensation to its
officers and employees at rates exceeding the rates of
compensation paid during the nine months ended September 30,
1996;
(iv) Seller has not experienced any material labor
dispute or difficulty;
15
(v) Seller has not made capital expenditures or
commitments for additions to property, plant, equipment or
for any other purpose which are more than TwentyFive
Thousand Dollars ($25,000) in the aggregate; or suffered any
casualty loss or losses with respect their its assets
(whether or not insured against) which in the aggregate
exceed Twenty-Five Thousand Dollars ($25,000).
3.17 Employee Benefit Plans; ERISA.
(a) Except for the profit-sharing, medical, health and
severance plans set forth on Schedule 3.17, Seller does not maintain,
administer or otherwise contribute to any Employee Benefit Plan, as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which is subject to any provision of ERISA and covers any
employee, whether active or retired ("Employee Plans"). None of the Employee
Plans set forth on Schedule 3.17 is a "multi-employer plan," as defined in
Section 3(37) of ERISA, and Seller has not been obligated to make a
contribution to any Employee Plan within the past five years on behalf of any
employee. Except for those which will be terminated or canceled on or prior to
the Closing, Seller does not maintain any form of current or deferred
compensation (other than base salary and base wages), bonus, incentive
compensation, profit sharing, stock option, stock appreciation right,
severance or separation pay, retirement, pension, salary continuation, group
or individual health, dental, medical, life insurance, survivor benefit or
similar plan, policy or arrangement for the benefit of any employee, whether
active or retired, of any class or classes of its employees ("Benefit
Arrangements"). The Stockholders have provided or caused to be provided to
Buyer (i) a copy of each Employee Plan and Benefit Arrangement, and a copy of
each of the documents (including trust agreements and other funding
arrangements and summary plan descriptions) under which each such Employee
Plan and Benefit Arrangement is operated; (ii) the most recent annual report,
if any, required to be filed with the government or any agency thereof; (iii)
with respect to any Employee Plans which are intended to be qualified under
Section 401(a) of the Code, a copy of the most recent determination letter
from the Internal Revenue Service on the Plan's qualified status and a copy of
the application for such letter; and (iv) a schedule showing either the annual
cost or the current value of all benefits of each Employee Plan and Benefit
Arrangement. With respect to all Employee Plans and Benefit Arrangements,
Seller is in compliance in all material respects with the terms of each such
plan or arrangement and, to the knowledge of Seller and the Stockholders, with
the requirements prescribed by any and all Laws as defined in Section 3.19
currently in effect, including but not
16
limited to ERISA and the Code, applicable to such plans or arrangements. Since
December 31, 1995, the Employee Plans and Benefit Arrangements have not been
amended nor, except pursuant to their terms as in effect on December 31, 1995,
have any payments or contributions been made under such Plans or Arrangements.
Since December 31, 1995, Seller has not failed to make any contribution to, or
pay any amount due and owing as required by applicable law or by the terms of,
any Employee Plan or Benefit Arrangement. The obligations of Seller with
respect to any Employee Plan and Benefit Arrangement is fully funded. There is
no pending or, to the knowledge of Seller or the Stockholders, threatened
legal action, proceeding or investigation against Seller or any Employee Plan
or Benefit Arrangement with respect to the employees of Seller, other than
routine claims for benefits, which could result in liability to such plans of
Seller. The execution of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment (whether of
separation pay or otherwise) becoming due from Seller to any current or former
consultant or employee of Seller or in the vesting, acceleration of payment or
increase in the amount of any benefit payable to or in respect of any such
current or former consultant or employee of Seller, or in the denial or
reversal of any deductions taken by the Seller with respect to payments or
distributions under such plan.
(b) The Stockholders, some of whom have been employees of
WSB and the participants of the ESOP Plan and Trust have represented and
warranted to BBI in the WSB Stock Agreement that the ESOP Plan and Trust has
complied with all Laws, not limited to ERISA and the Code and regulations
thereunder, in connection with its administration and operation, and the sale
by the ESOP WSB Stockholder to BBI of the outstanding shares of capital stock
of WSB. The Seller and Stockholder hereby represent and warrant that any
failure, of the ESOP WSB Stockholder to so comply has not and will not result
in any loss, liability, expense or claim against BBI or any of its
subsidiaries, including the Buyer.
3.18 Insurance. Since December 31, 1992, Seller has, in full force
and effect, insurance against fire, liability, and other claims set forth in
Schedule 3.18 hereto in amounts and against such losses and risks as therein
set forth. The Schedule lists all the insurance policies maintained by Seller
each of which is valid, outstanding and binding. Such policies are sufficient
for compliance with all requirements of law and of all agreements with respect
to the operation of Seller and WSJ Enterprises Business and the coverage
provided thereby with respect to any act or event occurring on or prior to the
Closing will not in any way be affected by or terminate or lapse by reason of
this
17
Agreement or the transactions contemplated by this Agreement and all will be
transferred at the Closing to Buyer, without any cost to Buyer.
3.19 Compliance with Applicable Law. Except as set forth in Schedule
3.19 attached hereto: (a) Seller has complied in all material respects with
respect to its operations, practices, real property, plants, structures,
machinery, equipment, vehicles and other property, and all other aspects of
its business, with all applicable laws (whether statutory or otherwise),
rules, regulations, orders, ordinances, judgments, decrees, orders, writs and
injunctions of all governmental authorities (federal, state, local, foreign or
otherwise) (collectively, "Laws"), including, but not limited to, all Laws
relating to the safe conduct of business, environmental protection and
conservation, antitrust, taxes, consumer protection, currency exchange, equal
opportunity, health, sanitation, fire, zoning, building, occupational safety,
pension, securities, trademark and copyright to the extent that failures to
comply in the aggregate have not and will not result in a loss, liability or
expense to Seller or Buyer, except where the failure or failures to comply
would not have in the aggregate a materially adverse effect on the WSJ
Enterprises Business or its prospects or the financial condition or results of
operations of Seller; and (b) neither Seller nor any of the Stockholders have
received notification which is currently outstanding or uncured of any
asserted present or past failure to so comply. There has not been any storage,
generation, manufacture, refinement, transportation, production, treatment or
disposal of solid wastes, toxic wastes or hazardous wastes or substances by
Seller or, to the knowledge of Seller and the Stockholders, at the real
properties leased or owned by Seller in violation of any applicable Law or
Permit or which would require significant remedial action under any applicable
Law or Permit. There has never been any spill, discharge, leak, emission,
injection, escape, dumping or any other release by Seller of any kind onto any
real property into the environment surrounding such real properties of any
solid wastes, toxic wastes or hazardous wastes or substances as such terms are
defined under any law.
3.20 No Consents. No consent, authorization, approval, order,
license, certificate or permit of or from, or declaration or filing with, any
federal, state, local or other governmental authority or any court or other
tribunal, and no consent or waiver of any party to any distribution agreement,
sales representative agreement, dealer agreement, or any other contract,
agreement, instrument or lease to which Seller or any Stockholder is a party,
is required for the execution, delivery or performance of this Agreement or
any of the Related Instruments by Seller or any Stockholder, as applicable, or
the consummation by such party or parties of the transactions contemplated
hereby or thereby, except for
18
those written consents set forth on Schedules 3.9 and 3.10, all of which have
been obtained by Seller or the Stockholders other than those relating to
personal property which have been noted on Schedule 3.10 as not having the
consents of the lessors.
3.21 Full Disclosure. No representation or warranty of Seller and
Stockholders made in this Agreement, the Related Instruments or any written
statement furnished to the Buyer pursuant hereto or the Related Instruments or
Closing Documents contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements or facts contained herein or therein not materially misleading.
3.22 Bulk Sale. The consummation of the sale of the Transferred Assets
is not subject to any laws relating to "bulk sales" .
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND BBI
To induce Seller and the Stockholders to enter into this Agreement
and consummate the transactions contemplated hereby, Buyer and BBI jointly and
severally represent and warrant to Seller and the Stockholders as follows:
4.1 Organization and Qualification. Each of Buyer and BBI is a
corporation duly organized, validly existing and in good standing under the
laws respectively of New York and of Delaware.
4.2 Authorization of Agreements. This Agreement has been duly
authorized. This Agreement and the Closing Documents have been duly executed
and delivered by Buyer and BBI, constitute the valid and binding obligations
of Buyer and BBI and are enforceable against Buyer and BBI in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforce ment of creditors' rights generally and, except to the
extent that the remedy of specific enforcement or injunctive relief is subject
to the discretion of the court before which any proceedings therefor may be
brought.
4.3 Authority to Buy. Buyer and BBI have all requisite corporate
power and authority: (I) to execute, deliver and perform this Agreement and
the Closing Documents, and (ii) to carry out the transactions contemplated
hereby and thereby. All necessary corporate proceedings of Buyer and
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BBI have been duly taken to authorize the execution and delivery of this
Agreement by Buyer and BBI and the performance of the transactions
contemplated hereby.
4.4 No Consents. No consent, authorization, approval, order, license,
certificate or permit of or from, or declaration or filing with, any federal,
state, local or other governmental authority or any court or other tribunal,
and no consent or waiver of any party to any agreement to which Buyer or BBI
is a party, is required for the execution, delivery or performance by Buyer or
BBI of this Agreement.
4.5 No Violation. The execution and delivery by the Buyer and BBI do
not and their performance of this Agreement and the Closing Documents will
not, with or without the giving of notice and/or the passage of time, violate
any provisions of law applicable to the Buyer or BBI or conflict with, result
in the breach or termination of, any provision of, constitute a default under,
or give any party other than the Buyer or BBI the right to accelerate any
obligation under the Buyer's or BBI's certificate of incorporation, as amended
or by-laws, as amended, or any indenture, mortgage, deed of trust, lease or
other agreement or instrument to which Buyer or BBI is a party, or, with or
without the giving of notice and/or the passage of time, conflict with or
result in a material breach of any judgment, order, injunction, decree,
regulation or ruling of any court or other governmental authority to which the
Buyer or BBI is subject or by which any of the assets of the Buyer or BBI may
be bound.
4.6 Litigation. There are no claims, actions, proceedings, pending or
in progress, pending, or, to the knowledge of Buyer and BBI, threatened, and
to the knowledge of the Buyer and BBI, there are no investigations or
inquiries in progress, pending, or, threatened, against the Buyer or BBI, that
could affect Buyer or BBI, or the transactions contemplated hereby; nor, to
the knowledge of the Buyer and BBI, is there any valid basis for any such
claim, action, suit, proceeding, inquiry or investigation.
4.7 Securities Law Disclosures. BBI has filed all forms, reports,
statements, or other documents required to be filed by BBI with the Securities
and Exchange Commission ("SEC") and NASDAQ/ NMS, including, without
limitation: (a) its Registration Statement or Form S-1 as declared effective
by the SEC on Xxxxx 0, 0000, (x) its Quarterly Reports on Form 10-Q for the
quarters ended April 30, 1996, June 30, 1996 and September 30, 1996, (c) all
reports on Form 8-K and (d) all amendments and supplements to all such reports
and registration statement (collectively, the "BBI SEC Reports"). As of the
respective filing dates, the BBI SEC Reports complied as to form in all
20
material respects with the requirements of the Securities Exchange Act of 1934
(the "Exchange Act") or the Securities Act of 1933 (the "Securities Act"), as
applicable. The BBI SEC Reports did not at the time they were filed contain
any untrue statement of material fact, or omit to state a material fact
required to be stated therein that was necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.8 Full Disclosure. No representation or warranty of Buyer or BBI
made in this Agreement or any written statement furnished by the Buyer or BBI
to Seller or the Stockholders pursuant hereto or the Closing Documents
contains any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements or facts contained
herein or therein not misleading.
ARTICLE V
CERTAIN ADDITIONAL AGREEMENTS
5.1 Transfer Taxes. Seller shall pay all transfer taxes payable with
respect to the transfer of the Transferred Assets to Buyer.
5.2 Full Access. Until the earlier of five (5) years after the
Closing Date or the expiration of any applicable statute of limitations, the
Buyer will, with respect to financial, employment or tax matters relating to
the Transferred Assets and the WSJ Enterprises Business for the periods prior
to the Closing, (I) retain, and as the Seller or a Stockholder may reasonably
request, permit the Stockholders and their representatives, including counsel
and accountants, to inspect and copy the Books and Records of the Seller
related to in the Transferred Assets for periods ending on or prior to the
Closing Date.
5.3 Receivables. To the extent payment for the Uncollected Accounts
required by Section 5.6 of the BN Stock Agreement has not been made by the BN
Stockholders as provided in that Section, Seller shall promptly pay BBI the
amount of the deficiency.
ARTICLE VI
NON-COMPETITION
6.1 Non-Competition.
In consideration of this payment of $25,000 to Seller in the
form of a wire transfer of federal funds to the bank account at the McHenry
State Bank, XxXxxxx, Illinois designated to BBI
21
by Seller in that amount, each of the Stockholders and the Seller agree that
such Stockholder or the Seller, as the case may be, shall not, directly or
indirectly, at any time during the period commencing with the Closing and
ending on a date two (2) years following the later of the Closing or the date
of the termination of such employment of the Stockholder with BBI or any
subsidiary of BBI, (i) compete, directly or indirectly, with Buyer in the
conduct of the battery distribution business of BBI and its subsidiaries,
including Battery Network and WSB or (ii) except on behalf of the BB1 or its
subsidiary, directly or indirectly solicit for employment by others any
employees of BB1, or any of its subsidiaries to perform duties with respect to
any aspect of such business; provided, however, that Buyer or Battery Network
is not then in breach of any obligation to Seller or such Stockholder under
this Agreement or under an employment agreement with the Stockholder and that
nothing contained in this Section 6.1 shall prevent (A) Seller and
Stockholders and their Affiliates from purchasing in the aggregate as an
investment less than 5% in the aggregate of the outstanding securities of any
corporation whose securities are regularly traded on any national security
exchange or in the over-the-counter market or (B) the wife of WSS and her
brother from continuing to own and operate Battery Connection, Inc. a battery
catalogue business.
6.2 Injunctive Relief. The Seller and each Stockholder hereby
expressly acknowledge that money damages might be difficult to calculate and
may not adequately compensate the Buyer in connection with an actual or
threatened breach by Seller or a Stockholder of the provisions of Sec tion 6.1
hereof. Accordingly, Seller and Stockholders hereby expressly agree that Buyer
and BBI shall be entitled to enforce by injunction or other equitable relief
the due and proper performance and observance of the provisions of Section 6.1
hereof, without being required to post any security or bond, and in addition
shall be entitled to pursue any other available remedies at law or equity,
including the recovery of money damages, in respect of the actual or
threatened breach of the provisions of said Section.
ARTICLE VII
REMEDIES
7.1 Survival of Representations and Warranties. The right of a party
to maintain any proceeding or action against another party hereto based on a
breach of a representation and warranty or default of a covenant in this
Agreement or pursuant hereto made by any party shall survive the Closing for a
period of two years except (i) with respect to representations and warranties
with respect
22
to Taxes and under Section 3.17(b) which shall survive for the applicable
statute of limitations period and (ii) such right shall survive any
investigation made at any time by or on behalf of any other party.
7.2 Indemnification by the Stockholders. Subject to Section 7.6,
Seller and the Stockholders jointly and severally agree to indemnify, defend
and hold harmless Buyer and BBI and its controlling persons and controlled
persons, successors and assigns (hereinafter in this Article VII collectively
referred to as Buyer unless the context otherwise indicates) from and against
any and all claims, demands, losses, costs, obligations, liabilities, interest
thereon, penalties and expenses, including reasonable attorneys' fees and
expenses (all the foregoing being hereinafter sometimes collectively referred
to as "Article VII Damages") occasioned by, arising out of or resulting from
any breach or default of any of the representations and warranties of Seller
or the Stockholders or of the covenants of Seller or the Stockholders in this
Agreement, the Related Instruments or in any Exhibit or Schedule to, or any
certificate, agreement or other instrument furnished pursuant to, this
Agreement or the Related Instruments or any facts or circumstances
constituting such a breach or default.
7.3 Indemnification by Buyer and BBI. Subject to Section 7.6, Buyer
and BBI jointly and severally agree to indemnify, defend and hold harmless the
Seller and Stockholders and their respec tive successors and assigns from and
against any and all Article VII Damages occasioned by, arising out of or
resulting from any breach or default of any of the representations, warranties
or covenants of Buyer or BB1 contained in this Agreement or a Related
Instrument or in any Exhibit or Schedule to, or any certificate, agreement or
other instrument furnished pursuant to, this Agreement or a Related Instrument
or any facts or circumstances constituting such breach or default.
7.4 Claims for Indemnification. A party seeking indemnification for
Article VII Damages (the "Indemnified Party"), as a condition of asserting
claims for indemnification, shall notify the other party (the "Indemnifying
Party") in writing of any event, or of any facts, which, in its opinion,
entitle or may entitle the Indemnified Party to indemnification under this
Article VII. The notice from the Indemnified Party shall specify all facts
then known to it relating to its claim for indemnification and the amount or
estimated amount of the liability arising therefrom. The right of the
Indemnified Party to indemnification and the amount or the estimated amount
thereof, as set forth in the notice, shall be deemed agreed to by the
Indemnifying Party unless, within 30 days after the mailing of such notice,
the Indemnifying Party notifies the Indemnified Party in writing that it
disputes the right of the Indemnified Party to indemnification as set forth or
estimated in the notice or that the Indemnifying Party elects to defend, in
the manner provided in Section 7.5 hereof, the claim giving rise to such
23
indemnification right. If the Indemnified Party shall be duly notified that
the Indemnifying Party disputes such claim as aforesaid, the parties shall
endeavor to settle and compromise such dispute but no such settlement or
compromise shall be effected without the consent of both. If unable to do any
of the foregoing, such dispute as to indemnification shall be determined by
appropriate litigation (which shall mean when the claim has been finally
determined by a court or tribunal from which determination no appeal is or may
be taken or when the defense thereto has been abandoned); and any right of an
Indemnified Party to indemnification established by reason of such settlement,
compromise, or litigation shall be promptly thereafter paid and satisfied by
the Indemnifying Party.
7.5 Right to Defend. If the facts giving rise to indemnification
shall involve any actual or threatened claim or demand by any other third
party against an Indemnified Party, the Indemnified Party may upon written
request require the Indemnifying Party, at the expense of the Indemnifying
Party through counsel of its own choosing, to defend or prosecute such claim
or demand in the name of the Indemnified Party, as the case may be (without
prejudice to the right of the Indemnified Party to participate through counsel
of its own choosing at its own expense). The Indemnified Party shall cooperate
in the defense or prosecution of said claim or demand, including providing the
Indemnifying Party with access to such books and records of the Indemnified
Party in the possession of the Indemnified Party, which shall be reasonably
deemed by the Indemnifying Party to relate to said claim or demand, and shall
be entitled to be reimbursed, as provided in Sections 7.2, 7.3 or 7.7, for all
costs and expenses incurred by it in connection therewith. No settlement shall
be effected by an Indemnified Party to which it may claim indemnification from
an Indemnifying Party without the consent of the Indemnifying Party but such
consent shall not be unreasonably withheld.
7.6 Limitations. Except for damages arising with respect to the
representation in Section 3.17(b) and the covenant contained in Section 5.3
(the "Unlimited Damages"), neither the Seller and Stockholders nor the Buyer
and BBI, as the case may be, will be obligated to indemnify, defend or hold
the other party or parties harmless with respect to any Article VI Damages
asserted by it until such damages exceed the sum of $50,000 in the aggregate
(the "Threshold") and then indemnification shall be to the extent of all
Article VI Damages above the Threshold amount. In determining the Threshold,
there should be included, with respect to the Seller's and the Stockholders'
obligations hereunder, all damages under Article VII of the BN Stock Agreement
(other than Unlimited Damages as defined in that agreement) and all damages
under Article VI of the WSB Stock Agreement (other than Unlimited Damages as
defined in that agreement) suffered by the Buyer and BBI (collectively,
24
along with the Article VII Damages hereunder, other than Unlimited Damages,
hereinafter referred to as the "Buyer's and BBI's Aggregate Damages"). In no
event shall the Buyer's and BBI's Aggregate Damages for purposes of
indemnification of the Buyer and BBI exceed a limit (the "Damages Limit") of
$3,000,000 plus the shares of Common Stock of BBI and options to purchase
shares of Common Stock of BBI issued to the Battery Network Stockholders
pursuant to the BN Stock Agreement (such shares and options collectively
referred to as the "Equity Portion of the Damages Limit"). Buyer and BBI agree
that the Unlimited Damages shall be paid in cash and payment of the Buyer's
and BBI's Aggregate Damages shall be sought first from the BN Stockholders
before Buyer and BBI shall require payment from the Sellers and the
Stockholders of Article VII Damages, with the cash payments of Buyer's and
BBI's Aggregate Damages pursuant to the BN Stock Agreement to be credited to
the Buyer's and BBI's Aggregate Damages. In no event shall Buyer and BBI
require the Seller, WS Senior or Xxxxxxx Xxxx to make payment of the Equity
Portion of the Damages Limit.
7.7 Litigation; Remedies Cumulative. In the event of litigation to
enforce this Agreement or any provision thereof, the prevailing party, in
addition to any other relief such party may be awarded, shall be entitled to
recover its reasonable attorneys' fees, including those incurred with respect
to any appellate proceeding. Except as herein expressly provided, all remedies
provided in this Agreement, including, but not limited to, those pursuant to
Section 6.2 and Articles VII and Section 8.5 shall be cumulative and shall not
preclude assertion by any party hereto of any other rights or the seeking of
any other remedies against any other party hereto.
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses. Each party hereto shall pay its own expenses incidental
to the negotiation, preparation and consummation of this Agreement, the
Related Instruments and Closing Documents and all other agreements executed
and delivered by it hereunder or in connection herewith and the transactions
provided for herein and therein, including all fees and expenses of its or
their respective counsel and accountants, except that the fees and expenses of
Deloitte & Touche LLP for its services in auditing and reviewing the Audited
Financial Statements and shall be borne by Buyer and BBI.
8.2 Further Actions. At any time and from time to time after the
Closing, each party hereto agrees, at its own expense (except as otherwise
provided herein), to take such actions and to execute and deliver such
documents as may be reasonably necessary to effectuate the purposes of this
Agreement.
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8.3 Commissions and Finders' Fees. Except for the fees of Founders
Management Services, Inc. ("Founders"), the fees of which shall be the sole
responsibility of Buyer and BBI, each of the parties represents that it has
not incurred any liability to any broker, finder or agent for any brokerage
fees, finder's fees or commissions with respect to the transactions
contemplated by this Agreement, which may be directly or indirectly asserted
against the other parties. Buyer and BBI agrees to be fully responsible to pay
all fees due to or claims of Founders and to indemnify and hold Seller and
Stockholders harmless from and against all liability, loss, cost, charge or
expense, including reasonable counsel fees, arising from claims of Founders
for any fee or commission with respect to the transactions contemplated by
this Agreement or pursuant to all outstanding agreements between Founders and
Buyer.
8.4 Knowledge of Seller. For purposes of this Agreement "knowledge of
the Seller" shall mean the knowledge of any of its officers or directors and
other persons employed by Seller with managerial responsibilities.
8.5 Injunctive Relief. The Buyer, BBI, the Seller and the
Stockholders acknowledge and agree that in view of the uniqueness of WSJ
Enterprises Business, damages at law would be insufficient for breach of any
of their respective covenants in this Agreement. Accordingly, the parties
hereto agree that in the event of a breach or threatened breach of any
provisions of this Agreement, the Buyer and BBI or the Seller and the
Stockholders, as appropriate, shall be entitled to equitable relief in the
form of an injunction to prevent irreparable injury without being required to
provide any security or post any bond. Nothing herein shall be construed as
prohibiting any party hereto from pursuing any remedies, including damages,
for breach or threatened breach of this Agreement.
8.6 Further Assurances. Each party hereto shall, from time to time
after the Closing, at the request of any other party hereto and without
further consideration, execute and deliver such other instruments of
conveyance, assignments, transfer and assumption, and take such other actions
as such other party may reasonably request to more effectively consummate the
transactions contemplated by this Agreement.
8.7 Reformation and Severability. If any provision of this Agreement
is held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof:
26
(a) in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable; and
(b) the legality, validity and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.
8.8 Entire Agreement; Modification. This Agreement, the Related
Instruments and the Exhibits hereto set forth the entire understanding of the
parties with respect to the subject matter hereof, supersede all existing
agreements and understandings between them (and all prior representations and
warranties) concerning such subject matter and may be modified only by a
written instrument duly executed by each party hereto.
8.9 Notices. Any notice given pursuant to this Agreement to any party
hereto shall be deemed to have been duly given (I) when mailed by registered
or certified mail, return receipt requested, (ii) when telecopied, provided a
copy of the notice is mailed by registered or certified mail, return receipt
requested, within one business day following the date of the telecopied
transmission, or (iii) when hand delivered to the party to whom it is to be
given at the address of such party set forth below, as follows:
If to the Seller at its address or to the Stockholders at
his address set forth in the first paragraph of this Agreement:
with a copy to:
Xxxxxx, Newmark & Xxxxxxx, P.C.
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Fax (000) 000-0000
If to Buyer or BBI:
Batteries Batteries, Inc.
Battery Requisition COPY
c/o Founders Equity, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx
Chairman of the Board
FAX: (000) 000-0000
27
with a copy to:
Xxx Xxxxxxxxxxx, Esq.
Brock, Fensterstock, Xxxxxxxxxxx, XxXxxxxxx & Xxxx, LLC
Citicorp Center, 56th Floor
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
FAX: (000) 000-0000
or at such other address as a party shall from time to time designate by
written notice, in the manner provided herein, to the other parties hereto.
8.10 Waiver. Any waiver must be in writing, and any waiver by any
party of a breach of any provision of this Agreement shall not operate as or
be construed to be a waiver of any other breach of that provision or of any
breach of any other provision of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement on one or more
occasions will not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement.
8.11 Binding Effect; Assignment. The provisions of this Agreement
shall be binding upon and inure to the benefit of Seller, the Stockholders,
the Buyer and BBI and their respective heirs, representatives, successors and
permitted assigns. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any party hereto without the prior
written consent of the other parties, and any purported assignment without
such consent shall be void, except that (A) the Buyer may assign this
Agreement to any corporation in which it owns 100% of the outstanding shares
of voting stock and agrees to be bound by the provisions of the Agreement,
provided that BBI guaranties the obligation of the assignee, and (B) the Buyer
and BBI may collaterally assign their rights under this Agreement to IBJ
Xxxxxxxx Bank & Trust Company ("IBJ") as Agent and Lender under the Revolving
Credit, Term Loan and Security Agreement among Buyer, BBI, subsidiaries of
BBI, Battery Network, WSB and IBJ as Agent and Lender.
28
8.12 No Third-Party Beneficiaries. Except for rights of Indemnified
Parties under Article VII hereof, the rights of the parties under the Related
Instruments or the assignees permitted under Section 8.11, this Agreement does
not create, and shall not be construed as creating, any rights enforceable by
any person not a party to this Agreement.
8.13 Headings. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
8.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.15 Governing Law. This Agreement and all amendments thereof shall
be governed by, and construed in accordance with, the internal laws of the
State of Delaware applicable to contracts made and to be performed entirely
within the state, without giving effect to the principles of conflict of laws
which may be applied thereby. Service of process on Buyer, BBI, Seller and the
Stockholders, as the case may be, in any action arising out of or relating to
this Agreement shall be effective upon Buyer, BBI Seller or the Stockholders,
as the case may be, if mailed to the address listed in Section 8.9 hereof.
29
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first written above.
BATTERIES BATTERIES, INC.
By: /s/ Xxxx Xxxxxx
-----------------------------------
Title
BATTERY ACQUISITION CORP.
By: /s/ Xxxx Xxxxxx
-----------------------------------
WSJ ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------
, President
STOCKHOLDERS:
/s/ Xxxxxxx X. Xxxx
--------------------------------------
Xxxxxxx X. Xxxx
/s/ Xxxxxxx Xxxx
--------------------------------------
Xxxxxxx Xxxx
/s/ Xxxxx Xxxxxx
--------------------------------------
Xxxxx Xxxxxx
Attorney & Agent
/s/ Xxxxxxx Xxxxxx Xxxx
--------------------------------------
Xxxxxxx Xxxxxx Xxxx
Attorney & Agent
/s/ Xxxxx Xxxx
--------------------------------------
Xxxxx Xxxx
30
ASSET PURCHASE AGREEMENT AMONG
BATTERIES BATTERIES, INC., BATTERIES ACQUISITION CORP., WSJ ENTERPRISES, INC.
AND THE WSJ ENTERPRISES, INC. STOCKHOLDERS
SCHEDULE 1.2(A)
Transferred Assets: None
SCHEDULE 1.2(B)
Lease Security Deposits: None
SCHEDULE 1.2(C)
None
SCHEDULE 1.2(D)
Intangible Assets: None
SCHEDULE 1.2(E)
None
SCHEDULE 1.2(E)-1
FOREIGN RECEIVABLES
SCHEDULE 1.2(G)
None
SCHEDULE 1.2(H)
None
SCHEDULE 1.2(L)
None
SCHEDULE 3.5
Tangible Assets: None
SCHEDULES 3.6
Intangible Assets:
Pending trademark "Absolute"
Registered trademark - "Battery Network"
SCHEDULE 3.12
Litigation:
Blenheim Group USA, Inc. vs. Battery Network
SCHEDULE 3.13
Permits--Licenses
California--Sellers Permit, California City of Escondido
New Jersey--Sales and Use Tax Recycling Permit
Illinois--Illinois Department of Revenue
Washington--Certificate of Coverage--Master License
License Agreement--De Pew Engineering Inc.
SCHEDULE 3.17
Employee Benefit Plan:
Alexander Battery Co. East, Inc. Specimen Profit Sharing Plan Adoption
Agreement and
Alexander Battery Co. East, Inc. Specimen Profit Sharing Plan & Trust
Alexander Battery Co. West, Inc. Specimen Profit Sharing Plan & Trust
Alexander Battery Co. South, Inc. Specimen Profit Sharing Plan
Adoption Agreement and
Alexander Battery Co. South, Inc. Specimen Profit Sharing Plan & Trust
W.S. Battery & Sales Co., Inc. Employee Stock Ownership Plan and Trust
and
W.S. Battery & Sales Co., Inc. Specimen Money Purchase Pension
Plan & Trust
Battery Network, Inc. Specimen Profit Sharing Plan Adoption Agreement
and
Battery Network, Inc. Specimen Profit Sharing Plan & Trust
SCHEDULE 3.18
Insurance:
INSURANCE COMPANY POLICY NO. STATE TYPE OF INSURANCE
----------------- ---------- ----- -----------------
Xxxxx Xxxx 00-00-0000-0 Xxxxxxxx Business & Liability
State Farm 98-07-3606-4 Washington Business & Liability
State Farm 93-Mo-1343-1 IL, WA, NJ Workers Comp. & Employers
Liability
Met Life 176866 EBPG IL Health/Life
Xxxx. Drier Co. WN96-538430-05 CA Workers Com. & Employers
Liability
Bankers Std. Co. D2 61 19 479 CA Commercial Property &
General Liability
Blue Xxxxxx XX X00000 CA HMO Health Plan
Private MedCare 8634 CA Group Dental Services
Sentry Ins. 44-66422-02-00-961 Commercial Property
00-00000-00 NJ Liability and Umbrella
Coverage
Met Life k76892 NJ Health/Life
SCHEDULE 3.19
Compliance with Applicable Law: None
SCHEDULE 3.9
Contracts and Commitments
A. Manufacturer/Representative Agreements between Absolute Battery and:
XXXXX MARKETING, INC. for Alaska, Washington, Western Oregon, Western
Montana and Western Idaho, commencement 7/12/95
MARKETING SERVICES OF KANSAS for Iowa, Nebraska Missouri and Kansas,
except Intelligent Electronics and Inacom, commencement 9/1/95
NEW HORIZONS for Illinois and Wisconsin, commencement 2/23/1995
NEW ERA SALES for Northern NJ and New York, commencement 5/17/95
XXXXXXXXX XXXXX SERVICES for Florida except Tech Data, commencement 2/7/95
TCG, THE CONNECTION GROUP INC. for Texas, Oklahoma, Louisiana, Arkansas
except Daisytek and CompuCom, commencement 9/1/95
PIONEER MARKETING for New England, upstate New York, sourthern Connecticut
state line to northern Maine west to New York except MacWarehouse,
commencement 2/1/96
XXX BRAKE & ASSOCIATES for Colorado, Utah, Idaho, Wyoming and Montana,
commencement 12/7/95--Note says there is an Addendum adding Arizona,
New Mexico and Southern Nevada.
INCREMENTAL SALES for Northern California, except Van Star, Momentum and
MicorSystems, and Northern Nevada
B. Agreement Between Burlington Northern Railroad Company, the Xxxxxxxx, Topeka
and Santa Fe Railway and Battery Network made on September 1, 1996 through
November
C. Distributor Agreements Between Battery Network, Inc., Absolute Battery Co.
and the following distributors:
ABSOLUTE BATTERY CANADA, INC./BATTERY NETWORK CANADA/XXXXXXX XXXXXX IND.
for the territory of Canada and Cuba
ABSOLUTE BATTERY UK LTD/BATTERY NETWORK EUROPE LTD./XXXXXX XXXX IND. for
the United Kingdom and the European Economic Community ("EEC")
SCHEDULE 3.9 CONTINUED...
D. Summaries of XxXxxxx Agreements with:
Xxx Xxxxx
Xxxxxx Xxxxxxx
Xxx Xxxxx
Xxxx Xxxxxx
Xxxx Xxxxx
E. Summaries of New Jersey Agreements with:
Xxx Xxxxxxxx
Xxxxxx Xxxxx
Xxx Xxxxxx
Xxxxx Xxxxxx
Pamco
Xxxx Xxxxxxxx
Greenshed Sales/Xxxx Xxxxxx
Xxxxx Xxxxxxx
Armondro Toral, Jr.
Canada: Contract
U.K.: Contract
Xxxxxx Mocskowicz
F. Summaries of San Diego Verbal Sales Agreements with:
Xxx Xxxxxxxxxx
Xxxx Xxxxx
PJH Sales and Marketing Inc. (Xxx Xxxxxxx)
Xxxxxx Xxxxx
Xxx Xxxxxxx
SCHEDULE 3.10
Lease Equipment:
Telephone system in North Branch, New Jersey
Commencement 6/6/94; term 60 months; monthly rental payment $1,022.30
Additional payment of $61.09 per month for 800 GS/LS Module
One Yale Sit Down Electric Forklift
SCHEDULE 3.11
Liabilities--None
