EXHIBIT 10.8
ASSET PURCHASE AGREEMENT
BY AND AMONG
XXX MACHINERY MOVERS, INC.
D/B/A IDEAL PRODUCTS
OF ACQUISITION, L.P.
D/B/A ORBITFORM, INC.
PHILFORM, INC.
INDUSTRIAL HOLDINGS, INC.
and
SMSG, L.L.C.
SMSP, L.L.C.
Dated as of
October 16, 2001
TABLE OF CONTENTS
Page
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1. Purchased Assets.......................................................2
1.1 Equipment........................................................2
1.2 Inventory........................................................3
1.3 Receivables......................................................3
1.4 Real Property....................................................3
1.5 Goodwill.........................................................3
1.6 Outstanding Customer Purchase Orders.............................3
1.7 Contracts........................................................3
1.8 Licenses and Permits.............................................3
2. Excluded Assets........................................................3
2.1 Cash and Cash Equivalents........................................3
2.2 Tax Deposits and Refunds.........................................4
2.3 Corporate Records................................................4
2.4 Intercompany Notes and Receivables...............................4
2.5 Insurance Policies...............................................4
2.6 Employee Records.................................................4
2.7 Employee Plans...................................................4
2.8 Assets related to Excluded Liabilities...........................4
2.9 Blastco Note Receivable..........................................4
3. Liabilities............................................................4
3.1 Assumed Liabilities..............................................4
(a) Trade Accounts Payable.....................................4
(b) Other Accrued Payables.....................................4
(c) Outstanding Customer and Supplier Purchase Orders..........4
(d) Assumed Contracts..........................................4
(e) Warranty Claims............................................5
(f) Post-Closing Date Property Taxes...........................5
(g) Liabilities Related to CTDEP Activities....................5
(h) CTDEP Financial Assurance..................................5
3.2 Excluded Liabilities.............................................5
(a) Taxes......................................................5
(b) Comerica Notes.............................................5
(c) Xxxxxx Notes...............................................5
(d) General Electric Note......................................5
(e) Citizens Bank Notes........................................5
(f) SJMB Note..................................................6
(g) SOFTECH Leases.............................................6
(h) Accrued Interest...........................................6
(i) Intercompany Payables......................................6
(j) Accrued Acquisition Expenses...............................6
(k) Pre-Closing Date Property Taxes............................6
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TABLE OF CONTENTS
(continued)
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(l) Accrued Waterbury, CT Rent.................................6
(m) Accrued Sales and Use Tax..................................6
(n) Accrued Business Insurance Expenses........................6
4. Purchase Price for Purchased Assets....................................6
4.1 Allocation of Purchase Price.....................................6
5. Pre-Closing Actions....................................................6
5.1 Conduct of Business..............................................7
5.2 Compliance with Applicable Laws..................................7
5.3 Accuracy of Representations and Warranties ......................7
6. Conditions Precedent to Buyers' Obligations............................7
6.1 Accuracy of Representations and Warranties.......................7
6.2 Performance of Covenants.........................................8
6.3 No Casualty......................................................8
6.4 Delivery of Closing Documents and Items..........................8
6.5 Certificates Regarding Conditions Precedent......................8
6.6 No Litigation....................................................8
6.7 Title Commitments................................................8
7. Conditions Precedent to Seller Parties' Obligations....................8
7.1 Accuracy of Representations and Warranties.......................8
7.2 Performance of Covenants.........................................8
7.3 Delivery of Closing Documents and Items..........................9
8. Closing Matters........................................................9
8.1 Closing..........................................................9
8.2 Deliveries At Closing............................................9
(a) Deliveries by the Sellers..................................9
(b) Deliveries by the Buyers...................................9
8.3 Certain Closing Expenses........................................10
8.4 Further Assurances..............................................10
9. Seller Parties' Representations and Warranties........................10
9.1 Organization and Standing.......................................10
9.2 Authorization...................................................10
9.3 Existing Agreements and Governmental Approvals..................11
9.4 No Subsidiaries.................................................11
9.5 No Insolvency...................................................11
9.6 Permits and Licenses............................................12
9.7 Financial Statements............................................12
9.8 No Undisclosed Liabilities......................................12
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TABLE OF CONTENTS
(continued)
Page
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9.9 Conduct of Business.............................................12
9.10 No Adverse Changes..............................................13
9.11 Employees.......................................................13
9.12 Employee Benefit Plans..........................................13
9.13 Contracts.......................................................14
9.14 Title to Purchased Assets.......................................14
9.15 Sufficiency of Purchased Assets.................................15
9.16 Taxes...........................................................15
9.17 Litigation......................................................16
9.18 Product Liability...............................................16
9.19 Environmental Matters...........................................16
9.20 Compliance with Laws............................................17
9.21 No Brokers......................................................17
9.22 Intellectual Property...........................................17
9.23 Disclosure......................................................17
10. Buyers' Representations and Warranties................................17
10.1 Organization and Standing.......................................17
10.2 Authorization...................................................18
10.3 Existing Agreements and Governmental Approvals..................18
10.4 Deposit of Cash Receipts........................................18
10.5 Sales of Scrap Metals...........................................18
10.6 No Delay in Collection of Receivables...........................18
10.7 Vendor Payments.................................................18
10.8 Arbor Automation................................................19
10.9 Transaction Expenses............................................19
10.10 Compensation Increases..........................................19
10.11 Disclosure......................................................19
11. Post-Closing Covenants................................................19
11.1 Post-Closing Receipts...........................................19
11.2 Sellers' Names..................................................19
11.3 Further Assurances..............................................19
11.4 Books and Records...............................................19
11.5 Sellers' Employees..............................................20
11.6 Waiver..........................................................20
11.7 Rollover of Employee 401(k) Balances............................20
11.8 Continuation of CTDEP Activities................................20
11.9 CTDEP Financial Assurance.......................................21
11.10 Continuation of Coverage........................................22
12. Indemnification.......................................................22
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TABLE OF CONTENTS
(continued)
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12.1 Survival of Representations and Warranties......................22
12.2 Indemnification by the Seller Parties...........................22
12.3 Indemnification by the Buyers...................................23
12.4 Procedure for Indemnification; Third Party Claims...............23
12.5 Procedure for Indemnification; Other than Third Party Claims....24
12.6 Limitations on Liability of the Seller Parties..................24
12.7 Compliance with Bulk Sales Law..................................25
12.8 Remedies........................................................25
13. Expenses..............................................................25
14. Risk of Loss..........................................................25
15. Termination...........................................................25
15.1 Manner of Termination...........................................25
15.2 Effect of Termination...........................................25
16. Miscellaneous Provisions..............................................25
16.1 Notices.........................................................25
16.2 Assignment......................................................26
16.3 Parties in Interest.............................................26
16.4 Choice of Law...................................................27
16.5 Counterparts....................................................27
16.6 Entire Agreement................................................27
16.7 Arbitration.....................................................27
16.8 Public Announcements............................................28
16.9 Facsimile Signatures............................................28
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ASSET PURCHASE AGREEMENT
(IDEAL PRODUCTS AND ORBITFORM)
THIS AGREEMENT (the "Agreement") is made on October 16, 2001, between XXX
MACHINERY MOVERS, INC., a Texas corporation ("Xxx Machinery") d/b/a IDEAL
PRODUCTS ("Ideal Products"), OF ACQUISITION, L.P., a Texas limited partnership
d/b/a ORBITFORM, INC. ("Orbitform") and PHILFORM, INC., a Michigan corporation
("Philform"), (Ideal Products, Orbitform, and Philform collectively referred to
as the "Sellers"), and INDUSTRIAL HOLDINGS, INC., a Texas corporation ("IHI")
(the Sellers and IHI sometimes collectively referred to herein as the "Seller
Parties"), and SMSG, L.L.C., a Michigan limited liability company ("SMSG"), and
SMSP, L.L.C., a Michigan limited liability company ("SMSP") (SMSP and SMSG are
collectively referred to herein as the "Buyers").
BACKGROUND
A. IHI is the owner of all the issued and outstanding capital stock of Ideal
Products and Philform. Philform is the owner of a 49% limited partner
interest in Orbitform and IHI is the owner of the remaining 51% limited
partner interest and is the general partner of Orbitform. Philform's only
asset is the real property and manufacturing facility described in E(2)
below, which it leases to Orbitform, which it is selling hereunder to the
Buyers.
B. The Sellers are engaged in the following business operations
(collectively, the "Business"):
(1) Ideal Products manufactures stamped metal components, fourslide &
multi-slide components, wire-formed pins & drapery hardware, rivets
(solid, semi-tubular & tubular), externally & internally-threaded
fasteners and other cold-headed special parts (sometimes called the
"Ideal Products Business").
(2) Orbitform manufactures rivet-setting machinery and automated
assembly systems primarily for the automotive industry (sometimes
called the "Orbitform Business").
C. The Sellers are currently part of IHI's Engineered Products Group
division, along with IHI's wholly-owned subsidiaries American Rivet
Company, Inc. ("American Rivet") and Xxxxxxxx Metal Forming, Inc.
("Xxxxxxxx") (the Sellers, American Rivet and Xxxxxxxx collectively
referred to as the "EPG Division Members"). As part of the strategic
disposition of the assets of that division from IHI's core business,
American Rivet and Xxxxxxxx are selling substantially all of their assets
to purchasers other than the Buyers. However, the acquirors thereof, as
well as Buyers, are interested in maintaining the customer and
manufactured parts base that the EPG Division Members currently have and
enjoy, without the prospect of the solicitation of those customers by each
other. Therefore, as a condition precedent to the Closing (as defined
below) the Buyers and American Rivet and Xxxxxxxx shall enter into a
customer and manufactured part-based Nonsolicitation Agreement, the terms
of which shall provide that the rights, duties and obligations of the
parties thereunder shall be assignable to the buyers of the stock or
assets of American Rivet and Xxxxxxxx (the "Nonsolicitation Agreement").
D. The Business of the Sellers is conducted at the following premises (the
"Premises"):
(1) The Ideal Products Business is conducted at an owned manufacturing
facility in Beacon Falls, Connecticut, consisting of a 174,000
square foot facility on 31 acres of property, commonly known as 000
Xxxxxxxxxxx Xx., Xxxxxx Xxxxx, Xxxxxxxxxxx (the "Ideal Products Real
Property");
(2) The Orbitform Business is conducted at a manufacturing facility
owned by Philform, located in Jackson, Michigan, consisting of a
110,000 square foot facility known as 0000 Xxxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx (the "Philform Real Property") (the Ideal Products Real
Property and the Philform Real Property, collectively, the "Real
Property").
E. Buyers desire to purchase, and Sellers desire to sell to Buyers, the
Purchased Assets (as defined in Section 1 below) on the terms and subject
to the conditions of this Agreement.
F. IHI acquired all of the capital stock of Philform in February 1998 from
Xxxxxxx Xxxxxxx ("Xxxxxxx") and certain other selling stockholders and
acquired substantially all of the assets of Ideal Products, then operated
as the Hardware and Components Division of Xxxxxx, Inc., in June 1998 from
Xxxxxx, Inc. Before IHI purchased Philform from Xxxxxxx, Philform
conducted the Orbitform Business. Xxxxxxx, the Manager of the Buyers, has
been the President of the Sellers since June 1, 2000 and the Chief
Operating Officer of the Sellers for the past year; in addition, he has
been the Chief Executive Officer of Philform or Chief Executive Officer of
Philform (d/b/a Orbitform) before IHI acquired Philform in 1997 and
General Manager of OF Acquisition (d/b/a Orbitform) after its creation in
1997. The parties therefore hereby acknowledge that Xxxxxxx is in many
cases as knowledgeable as, and in some cases more knowledgeable than, the
Seller Parties regarding the Business and the Purchased Assets, and that
the Buyers are therefore uniquely positioned, having a Manager who
formerly owned and operated the Orbitform Business and who currently
operates the Orbitform Business and the Ideal Products Business.
AGREEMENTS
NOW, THEREFORE, consistent with the Background and in consideration of the
terms and conditions set forth in this Agreement, each of the Seller Parties and
Buyers agrees as follows:
1. PURCHASED ASSETS. At the Closing, Sellers shall sell, assign, convey,
transfer, set over, and deliver to Buyers all of the assets, rights, and
interests of every conceivable kind or character whatsoever, whether
tangible or intangible, that on the Closing Date are owned by Sellers
except for the Excluded Assets (as that term is defined in Section 2
below) (the assets being so purchased, the "Purchased Assets"). The
Purchased Assets include, without limitation:
1.1 EQUIPMENT. All machinery, equipment, tools, fixtures, workstations,
computers, computer software, office equipment, manufacturing and
engineering drawings, and tangible personal property owned by Sellers, and
to the extent not otherwise constituting equipment as defined above, all
other items of tangible personal property, in each case whether or not
capitalized on Sellers' books, and physically located on the Premises
(including, without limitation, the items listed on SCHEDULE 1.1) (the
"Equipment").
2
1.2 INVENTORY. All raw materials inventory, work-in-process inventory, and
finished goods inventory owned by Sellers on the Closing Date (including,
without limitation, the items listed on SCHEDULE 1.2) (the "Inventory").
1.3 RECEIVABLES. All accounts, chattel paper, documents, and instruments (all
as defined in the Uniform Commercial Code (the "UCC"), and also any
security Sellers hold for the payment thereof (including, without
limitation, the items described on SCHEDULE 1.3) (the "Receivables"), and
all of Sellers' general intangibles (as defined in the UCC) and, to the
extent not otherwise constituting general intangibles as defined above,
any interest of Sellers in any and all claims by Sellers against any other
person, whether now accrued or later to accrue, contingent or otherwise,
known or unknown, including, but not limited to, all rights under express
or implied warranties from suppliers (except as they may pertain to
Sellers' liabilities, other than Assumed Liabilities described in Section
2 below), claims for collection or indemnity, claims in bankruptcy, and
choses in action.
1.4 REAL PROPERTY. Indefeasible title in fee simple to the Real Property, as
further described on SCHEDULE 1.4.
1.5 GOODWILL. All of Sellers' right, title and interest in and to the names
"Ideal Products" "Orbitform", or any substantially similar derivations
thereof, any other assumed name currently used by Sellers, and all
telephone numbers, fax numbers, and websites, and all Sellers' rights and
interest in and to inventions, copyrights, patents, trademarks, designs,
prototypes, trade secrets, know-how, technology, technical literature,
advertising literature, confidential information, intangible property, and
all goodwill, going concern value and customer lists, and all records
pertinent to Sellers' customers, suppliers, advertising, services, and
operations (the "Goodwill").
1.6 OUTSTANDING CUSTOMER PURCHASE ORDERS. The full benefit of any and all
purchase orders placed with and accepted by Sellers on or before the
Closing Date that have not been completely performed by Sellers before the
Closing Date, covering the purchase from Sellers of products to be
supplied by Sellers, or covering the rendition by Sellers of service on
products supplied by Sellers and including all deposits, progress
payments, and credits (the "Outstanding Customer Purchase Orders").
1.7 CONTRACTS. All of the Sellers' right, title and interest in and to and
claims and rights under the assumed contracts listed on SCHEDULE 1.7 (the
Assumed Contracts").
1.8 LICENSES AND PERMITS. All of Sellers' rights in all permits and licenses
necessary for the operation of the Business, but only to the extent the
same are transferable.
2. EXCLUDED ASSETS. The assets of the Sellers that are not being purchased
hereunder are as follows (collectively, the "Excluded Assets"):
2.1 CASH AND CASH EQUIVALENTS. All of the Sellers' cash, temporary cash
investments and instruments representing the same and all other cash
equivalents, including checks, automated clearing house deposits or cash
delivered to Comerica Bank-Texas ("Comerica") on the Closing Date or held
by Comerica on the Closing Date.
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2.2 TAX DEPOSITS AND REFUNDS. Any Tax (as that term is defined in Section
9.16(a)) deposits or prepaid Taxes, Tax refunds or Tax claim related to
the Business or the ownership of the Purchased Assets prior to the Closing
Date.
2.3 CORPORATE RECORDS. Certificates of Incorporation and original minute books
and corporate records of the Sellers (it being agreed that a copy of such
documents shall be supplied to the Buyer on its request).
2.4 INTERCOMPANY NOTES AND RECEIVABLES. All intercompany notes and receivables
of the Sellers (other than those among Ideal Products, Orbitform and
Philform).
2.5 INSURANCE POLICIES. All casualty, liability, life or other insurance
policies owned or obtained on the Sellers' behalf and all claims or rights
under any such insurance policies.
2.6 EMPLOYEE RECORDS. All employee records that Sellers are required by law to
retain in their possession.
2.7 EMPLOYEE PLANS. All of Sellers' rights in connection with and all assets
of Employee Plans (as that term is defined in Section 9.12).
2.8 ASSETS RELATED TO EXCLUDED LIABILITIES. All prepaid assets related to the
excluded accrued business insurance expenses of the Sellers.
2.9 BLASTCO NOTE RECEIVABLE. That promissory note dated June 14, 2000 made
payable to Orbitform by Blastco Services Company, in the original
principal amount of $200,000.
3. LIABILITIES.
3.1 ASSUMED LIABILITIES. Sellers agree that Buyers shall assume no liabilities
of Sellers, whether accrued, absolute, contingent, known, unknown, or
otherwise, except for the following as they exist on the Closing Date
(collectively, the "Assumed Liabilities"):
(a) TRADE ACCOUNTS PAYABLE. The trade accounts payable of Sellers
incurred in the Ordinary Course of Business with respect to the
materials or services used in the conduct of the Business, as
consistently reported by Sellers, as described on SCHEDULE 3.1(a),
as the same shall be updated from the date thereof to the Closing
Date;
(b) OTHER ACCRUED PAYABLES. The other accrued payables that are related
to the Business, as consistently reported by the Sellers, as
described on SCHEDULE 3.1(b), as the same shall be updated from the
date thereof to the Closing Date;
(c) OUTSTANDING CUSTOMER AND SUPPLIER PURCHASE ORDERS. All obligations
of the Sellers under the Outstanding Customer Purchase Orders and
under their outstanding purchase orders with their vendors that are
not yet recorded as trade accounts payable;
(d) ASSUMED CONTRACTS. All obligations of the Sellers under the Assumed
Contracts;
4
(e) WARRANTY CLAIMS. All warranty claims (whether made before or after
the Closing Date) for products manufactured by Philform or
Orbitform, without limitation, and for products manufactured by
Ideal Products since June 1, 2000;
(f) POST-CLOSING DATE PROPERTY TAXES. All ad valorem taxes related to
the Real Property accrued after the Closing Date and apportioned to
the Buyers based on the post-Closing period of use and occupancy;
(g) LIABILITIES RELATED TO CTDEP ACTIVITIES. Liabilities accrued from
and after the Closing Date for continuation of groundwater
monitoring and other obligations required under that certain
"Closure and Post-Closure RCRA Surface Impoundments, Ideal
Manufacturing, 000 Xxxxxxxxxxx Xxxx, Xxxxxx Xxxxx, Xxxxxxxxxxx
00000", prepared by YWC Technologies, Inc. (approved on September
18, 1989 by the Connecticut Department of Environmental Protection
("CTDEP") and U.S. Environmental Protection Agency Region I) (the
"Post-Closure Obligations"), except to the extent of the Excess
Obligations Reimbursement of IHI under Section 11.8; and
(h) CTDEP FINANCIAL ASSURANCE. Liabilities for compliance (as the
owner/operator of the Ideal Products facility) with the requirements
of "financial assurance" contained in 40 CFR parts 264 and 265,
respecting the estimated costs of the Post-Closure Obligations), but
only as to any transferee of or successor-in-interest from Buyers of
the Ideal Products Real Property.
3.2 EXCLUDED LIABILITIES. Buyers do not assume and will have no liability for
any debt, liability or obligation of the Sellers except as expressly
provided in Section 3.1. Without limiting the generality of the foregoing
sentence in any way, listed below are several of the liabilities and
obligations that Buyers do not assume and will not be liable or
responsible for the following (collectively, the "Excluded Liabilities"):
(a) TAXES. Any Tax liability of Sellers;
(b) COMERICA NOTES. All liabilities and obligations of any Seller under
the Amended and Restated Credit Agreement with Comerica, dated June
17, 1999, and under the following ancillary promissory notes made
payable to Comerica: (i) note 0059-6; (ii) note 0099-2; (iiii) note
0053-9; and (iv) note 0111-5;
(c) XXXXXX NOTES. All liabilities and obligations of any Seller under
those certain Promissory Notes dated November 10, 1997 and August
14, 1988, payable to Xxxxxx Financial, Inc. in the original
principal amounts of Eight Million Dollars ($8,000,000) and Seven
Million Five Hundred Thousand Dollars ($7,500,000), respectively;
(d) GENERAL ELECTRIC NOTE. All liabilities and obligations of any Seller
under that certain Promissory Note dated December 6, 1995, made
payable to General Electric Capital Corporation, in the original
principal amount of Two Million Eight Hundred Thousand Dollars
($2,800,000);
(e) CITIZENS BANK NOTES. All liabilities and obligations of any Seller
under that certain Inventory Term Note dated October 2, 1995,
payable to Citizens Bank in the original principal amount of One
Million Two Hundred Thousand Dollars ($1,200,000), and that certain
note dated February 28, 1997, made payable to Citizens Bank, in the
original
5
principal amount of One Million Eight Hundred and Two Thousand Five
Hundred Dollars ($1,802,500).
(f) SJMB NOTE. All liabilities and obligations of any Seller under that
certain $3,450,000 Subordinated Convertible Promissory Note dated
August 2000, made payable to SJMB, L.P., in the original principal
amount of Three Million Four Hundred and Fifty Thousand Dollars
($3,450,000);
(g) SOFTECH LEASES. All liabilities and obligations under the two
SOFTECH Financial Master Lease Agreements, each dated November 5,
1998, between IHI as lessee and SOFTECH Financial, a division of EAB
Leasing Corp. (the "SOFTECH Leases");
(h) ACCRUED INTEREST. All accrued interest related to the Comerica
Notes, the Xxxxxx Notes, the GE Note, the SJMB Note and the Citizens
Bank Notes;
(i) INTERCOMPANY PAYABLES. All intercompany payables (other than those
among Ideal Products, Orbitform and Philform);
(j) ACCRUED ACQUISITION EXPENSES. Any and all expenses recorded by IHI
as part its purchase accounting in connection with the acquisition
of the Sellers;
(k) PRE-CLOSING DATE PROPERTY TAXES. All ad valorem taxes related to the
Real Property accrued up to the Closing Date and apportioned to the
Sellers based on the pre-Closing period of use and occupancy;
(l) ACCRUED WATERBURY, CT RENT. All accrued rent on the Waterbury,
Connecticut facility formerly occupied by Ideal Products;
(m) ACCRUED SALES AND USE TAX. All accrued sales and use taxes of Ideal
Products as of the Closing Date; and
(n) ACCRUED BUSINESS INSURANCE EXPENSES. All accrued business insurance
of the Sellers (to the extent accrued on a consistent basis).
4. PURCHASE PRICE FOR PURCHASED ASSETS. In consideration for the Purchased
Assets, Buyers shall pay to Sellers at the Closing Twelve Million Two
Hundred Fifty Thousand Dollars ($12,250,000) (the "Purchase Price"), by
wire transfer in immediately available funds.
4.1 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated among
the Purchased Assets in accordance with attached SCHEDULE 4.1. Buyers and
Sellers agree that none of them will take a position on any income tax
return, before any governmental agency or in any judicial proceeding that
is in any way inconsistent with the allocation set forth on SCHEDULE 4.1,
and to file all Tax returns and other returns and reports in a manner
consistent with the allocations in this Section 4.1.
5. PRE-CLOSING ACTIONS. From the date of this Agreement to the Closing Date:
6
5.1 CONDUCT OF BUSINESS. Seller Parties shall carry on and conduct the
Business only in the Ordinary Course of Business (as defined below),
without any change in the policies, practices, and methods that Sellers
pursued before the date of this Agreement, including without limitation,
IHI's policy regarding cash allocation to Ideal Products and Orbitform.
Seller Parties will use their reasonable commercial efforts to preserve
the Business organization intact; to preserve the relationships with
Sellers' customers, suppliers, and others having business dealings with
them; and to preserve the services of Sellers' employees, agents, and
representatives. Ordinary Course of Business" means, with respect to each
Seller, actions of the Seller that are: (a) consistent with past practices
taken in the course of its usual day-to-day operations; (b) not required
to be authorized by resolution of the Seller's board of directors; and (c)
similar in nature and magnitude to actions customarily taken, without
authorization by the boards of directors in the ordinary course of usual
day-to-day operations of other companies of similar size in the same line
of business. Without limitation of the foregoing, (a) Ideal Products shall
not undertake any action without the prior written consent of Buyers that,
if taken before the date of this Agreement, would have been required to be
disclosed on SCHEDULE 9.9; and (b) Seller Parties will not take action or
refrain from taking action that would result in any change in the
Purchased Assets, the Business or Assumed Liabilities, other than in the
Ordinary Course of Business. The Buyers shall in all cases be considered
to have actual knowledge of and, for purposes of this Section 5.1, to
approve, all actions of and decisions made by Xxxxxxx in operating the
Business and his management thereof from the date of this Agreement to the
Closing Date, and his knowledge regarding the Business and the Purchased
Assets shall in all cases be attributed to the Buyers.
5.2 COMPLIANCE WITH APPLICABLE LAWS. Seller Parties and Buyers acknowledge and
agree that it is their intention to carry out the transactions herein in
compliance with applicable laws.
5.3 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND SATISFACTION OF CONDITIONS.
Seller Parties will promptly advise Buyers in writing if (a) any of Seller
Parties' representations or warranties are untrue or incorrect in any
material respect or (b) Seller Parties become aware of the occurrence of
any event or of any state of facts that results in any of the
representations and warranties of Seller Parties being untrue or incorrect
in any material respect as if Seller Parties were then making them. Seller
Parties will use their reasonable commercial efforts to cause all
conditions within their control that are set forth in Section 5 to be
satisfied as promptly as practicable under the circumstances.
6. CONDITIONS PRECEDENT TO BUYERS' OBLIGATIONS. Buyers' obligation to
consummate the transactions contemplated by this Agreement is subject to
the fulfillment (or waiver by Buyers) before or at the Closing of each of
the following conditions:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
(a) Except as provided in Section 6.1(b), the representations and
warranties of Seller Parties contained in this Agreement and all
related documents shall be true and correct at and as of the Closing
Date as though such representations and warranties were made on that
date.
(b) The Seller Parties shall have delivered any necessary updates,
amendments of and changes to the schedules provided for in Section 9
of this Agreement, as are
7
necessary for Seller Parties' representations and warranties to be
true and correct as of the Closing Date with each such update,
amendment and change having been reviewed and approved by the
Buyers.
6.2 PERFORMANCE OF COVENANTS. The Seller Parties shall have in all respects
performed and complied with all covenants, agreements, and conditions that
this Agreement and all related documents require to be performed or
complied with before or on the Closing Date.
6.3 NO CASUALTY. Sellers shall not have incurred, or be threatened with, a
material liability or casualty not covered by insurance that would
materially impair the value of the Purchased Assets.
6.4 DELIVERY OF CLOSING DOCUMENTS AND ITEMS. Sellers shall have delivered or
caused to have been delivered to Buyers the documents and general
instruments of transfer enumerated in Section 8.2(a) of this Agreement.
6.5 CERTIFICATES REGARDING CONDITIONS PRECEDENT. The Seller Parties shall have
delivered to Buyers certificates of the Seller Parties certifying that as
of the Closing Date all of the conditions set forth in Sections 6.1, 6.2,
6.4, and 6.6 have been satisfied.
6.6 NO LITIGATION. No action, suit, proceeding, or investigation shall have
been instituted before any court or governmental body, or instituted by
any governmental agency, (a) to restrain or prevent the carrying out of
the transactions contemplated by this Agreement, or (b) that might affect
Buyers' right to own, operate, and control the Purchased Assets after the
Closing Date.
6.7 TITLE COMMITMENTS. As evidence of each respective title in and to the Real
Property owned by it, each of Ideal Products and Philform shall have
furnished Buyers, the basic cost of which shall be at each such Seller's
cost, a policy of title insurance issued by a recognized title insurance
company, or commitments therefor (a "Title Commitment"), in an amount not
less than the Purchase Price allocated to the Real Property, insuring
Buyers' fee simple and indefeasible title to the Real Property, subject
only to the Permitted Encumbrances (as that term is defined in Section
9.14(b)). In the event that Buyers make objection to the condition of
title, Sellers shall have 5 days from the date of notice of objection to
remedy the title, and obtain title insurance.
7. CONDITIONS PRECEDENT TO SELLER PARTIES' OBLIGATIONS. Seller Parties'
obligations to consummate the transactions contemplated by this Agreement
are subject to the fulfillment of each of the following conditions before
or at the Closing Date:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Buyers' representations and
warranties contained in this Agreement and all related documents shall be
true and correct at and as of the Closing Date as though such
representations and warranties were made on that date.
7.2 PERFORMANCE OF COVENANTS. Buyers shall have in all respects performed and
complied with its obligations under all the covenants, agreements, and
conditions that this Agreement and all related documents require.
8
7.3 DELIVERY OF CLOSING DOCUMENTS AND ITEMS. Buyers shall have delivered or
caused to have been delivered to Sellers the Purchase Price and the
documents and general instruments of transfer enumerated in Section 8.2(b)
of this Agreement.
8. CLOSING MATTERS.
8.1 CLOSING. The closing of the transactions contemplated in this Agreement
(the "Closing") shall take place at the offices of Citizens Bank, Jackson,
Michigan at 10:00 a.m. on October ___, 2001, or at such other place and/or
on such other date as the parties may agree on (the "Closing Date").
8.2 DELIVERIES AT CLOSING.
(a) DELIVERIES BY THE SELLERS. At the Closing, the Sellers or the other
indicated parties shall execute and deliver or provide to Buyers:
(i) the Xxxx of Sale and Assignment conveying the Purchased
Assets, in substantially the form attached as EXHIBIT A;
(ii) the Assignment and Assumption Agreement in substantially the
form of EXHIBIT B;
(iii) either (y) UCC-3 termination statements as are required to
terminate and release all liens on the Purchased Assets
(including without limitation the Liens disclosed on SCHEDULE
9.14), except for Permitted Encumbrances (as that term is
defined in Section 9.14(b)) and the permitted liens
("Permitted Liens") listed on SCHEDULE 8.2(a)(iii), or (z)
letters of creditors indicating that such Liens shall be
released on the Sellers' payment of identified amounts
payable;
(iv) the Nonsolicitation Agreement, in substantially the form of
EXHIBIT C;
(v) Warranty deeds conveying the Real Property and the Title
Commitments for the Real Property;
(vi) for all Purchased Assets the ownership of which is evidenced
by certificates of title, certificates of title duly endorsed
for transfer to Buyers;
(vii) certificates, dated as of a date no earlier than 15 days
before the Closing Date, duly issued by the appropriate
governmental authority in their states of incorporation,
reflecting that each Seller is in existence and in good
standing in such state(s);
(viii) for the Ideal Products Real Property, a fully completed Form
III, Property Transfer Program, pursuant to Connecticut
General Statutes 22a-134 through 22a-134d, and accompanying
Environmental Condition Assessment Form, signed by Ideal
Products as transferor and to be signed by Buyers as
transferees and certifying parties.
(b) DELIVERIES BY THE BUYERS. At the Closing, Buyers shall execute and
deliver, as applicable, to the Sellers or other applicable party:
9
(i) the Purchase Price;
(ii) the Assignment and Assumption Agreement;
(iii) the Nonsolicitation Agreement;
(iv) the Transitional Services Agreement as to Buyers' provision of
post-Closing data processing support to American Rivet and
Xxxxxxxx, as the rights, duties and obligations of the parties
shall be assignable to the buyers of the stock or assets of
American Rivet and Xxxxxxxx, in substantially the form of
EXHIBIT D;
8.3 CERTAIN CLOSING EXPENSES. Seller Parties shall be liable for and shall pay
all federal, state, and local sales, use, excise, and documentary stamp
taxes and all other taxes, duties, or other like charges properly payable
on and in connection with the Sellers' conveyance and transfer of the
Purchased Assets to Buyers.
8.4 FURTHER ASSURANCES. Seller Parties shall cooperate with and assist Buyers
with the transfer of the Purchased Assets under this Agreement and take
all other reasonable actions to assure that the Business is smoothly
transferred to Buyers. From time to time after the Closing Date, Seller
Parties shall, at the request of Buyers, execute and deliver such
additional conveyances, transfers, documents, instruments, assignments,
applications, certifications, papers, and other assurances that Buyers
request as necessary, appropriate, convenient, useful or desirable to
effectively carry out the intent of this Agreement and to transfer the
Purchased Assets to Buyers.
9. SELLER PARTIES' REPRESENTATIONS AND WARRANTIES. Each of the Seller
Parties, jointly and severally, represents and warrants to Buyers that, as
of the date hereof (except to the extent any representation or warranty is
made as of another date, which are in such case made as of such other
date):
9.1 ORGANIZATION AND STANDING. Xxx Machinery and Philform are corporations
duly incorporated, validly existing, and in good standing under the laws
of the State of Texas and Michigan, respectively, and Orbitform is a
limited partnership duly organized, validly existing, and in good standing
under the laws of the State of Texas. Sellers have all requisite power and
authority (corporate and otherwise) to own their properties and conduct
their businesses as they are now being conducted. Each Seller is duly
qualified and in good standing in every jurisdiction in which it is
required by the nature of its business or the ownership or lease of its
properties to so qualify, except where the failure to so qualify does not
or is not reasonably expected to have a material adverse effect on any
Seller or its business. Except for "Ideal Products", Xxx Machinery has
not, and except for "Orbitform" (Ideal Products and Orbitform
collectively, the "Names"), OF Acquisition has not, used or assumed any
other name in connection with the conduct of its business during the last
five years. Ideal Products has filed assumed or fictitious name
certificates for the name "Ideal Products" in the states in which it uses
such names.
9.2 AUTHORIZATION. Sellers have all requisite power and authority (corporate
and otherwise), and Seller Parties have all requisite legal capacity (a)
to execute, deliver, and perform this Agreement and all other agreements
and instruments that will be delivered at the Closing
10
under Section 8.2 (all such other agreements and instruments, the "Related
Agreements") to which each is a party and (b) to consummate the
transactions contemplated under this Agreement and the Related Agreements.
Sellers have taken all necessary corporate or partnership action
(including the approval of its board of directors and shareholders), as
the case may be, to approve the execution, delivery, and performance of
this Agreement and the Related Agreements to be executed and delivered by
it and the consummation of the transactions contemplated in this Agreement
and in the Related Agreements. Each of the Seller Parties has duly
executed and delivered this Agreement. This Agreement is, and the Related
Agreements when executed and delivered by the parties to them will be,
legal, valid, and binding obligations of each of the Seller Parties that
are a party to them, enforceable against each of them in accordance with
the Agreement and Related Agreements' respective terms, except as such
enforcement may be limited by bankruptcy, insolvency, moratorium, or
similar laws relating to the enforcement of creditors' rights and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
9.3 EXISTING AGREEMENTS AND GOVERNMENTAL APPROVALS.
(a) Except as set forth on SCHEDULE 9.3, the execution, delivery, and
performance of this Agreement and the Related Agreements and the
consummation of the transactions contemplated by them: (i) do not
and will not violate any provisions of law applicable to any of the
Seller Parties, the Business, or the Purchased Assets; (ii) do not
and will not conflict with, result in the breach or termination of
any provision of, or constitute a default under (in each case
whether with or without the giving of notice or the lapse of time or
both) Sellers' Certificates or Articles of Incorporation or Bylaws,
or any indenture, mortgage, lease, deed of trust, or other
instrument, contract, or agreement or any order, judgment,
arbitration award, or decree to which any of the Seller Parties is a
party or by which any of them or any of their respective assets and
properties are bound (including, without limitation, the Purchased
Assets being operated and used as of the Closing Date); and (iii) do
not and will not result in the creation of any lien or encumbrance
on any of the Seller Parties' properties, assets, or Business
(including, without limitation, the Purchased Assets).
(b) Except as set forth on SCHEDULE 9.3, no approval, authority, or
consent of, or filing by, any Seller Party with, or notification to,
any federal, state, or local court, authority, or governmental or
regulatory body or agency or any other corporation, partnership,
individual, or other entity is necessary (i) to authorize the
execution and delivery of this Agreement or any of the Related
Agreements by any of the Seller Parties, (ii) to authorize the
consummation of the transactions contemplated by this Agreement or
any of the Related Agreements by any of the Seller Parties, or (iii)
to continue Buyers' use and operation of the Purchased Assets after
the Closing Date.
9.4 NO SUBSIDIARIES. Sellers do not have any subsidiaries or directly or
indirectly own any interest or have any investment in any other
corporation, partnership, or other entity.
9.5 NO INSOLVENCY. No insolvency proceeding of any character, including,
without limitation, bankruptcy, receivership, reorganization, composition,
or arrangement with creditors, voluntary or involuntary, affecting Sellers
or any of their assets or properties is pending or,
11
to any Seller Parties' actual knowledge, threatened. Seller Parties have
not taken any action in contemplation of, or that would constitute the
basis for, the institution of any such insolvency proceedings.
9.6 PERMITS AND LICENSES. The Sellers have, to their actual knowledge, all
necessary permits, certificates, licenses, approvals, consents, and other
authorizations required to carry on and conduct the Business as presently
conducted and to own, lease, use, and operate the Purchased Assets at the
places and in the manner in which the Business is presently conducted, all
of which to the extent transferable shall be transferred or assigned to
Buyers at the Closing, without expense to Buyers.
9.7 FINANCIAL STATEMENTS. Sellers have delivered to Buyers the financial
statements attached as SCHEDULE 9.7 (the "Financial Statements"). The
Financial Statements have been and will be prepared in accordance with
GAAP, subject to normal recurring year-end adjustments and the absence of
notes, and fairly present Sellers' financial position as of the dates
indicated and the results of their operations as of the dates indicated
and for the periods covered thereby. All Taxes (as defined in Section
9.16(a)) of Sellers due or paid are and will be timely reflected in the
Financial Statements; and all Taxes not yet due and payable are and will
be fully accrued or otherwise provided for. Except as otherwise disclosed
on SCHEDULE 9.7, Sellers' books and records are and have been maintained
on an accrual basis in accordance with GAAP; and accurately reflect, and
will accurately reflect, the basis for the financial condition and the
results of their operations that are set forth in the Financial
Statements. Notwithstanding any other contrary provision of this Section
9.7, the Seller Parties make no representations whatsoever with respect to
Orbitform's operating income statement included in its Financial
Statements or with respect to the accounts receivable, inventory, accounts
payable and accrued expenses and payables reflected on its balance sheet
included in the Financial Statements.
9.8 NO UNDISCLOSED LIABILITIES. Except as otherwise disclosed on SCHEDULE 9.8
or in the Financial Statements, Ideal Products has no liabilities or
obligations, whether accrued, absolute, contingent, or otherwise, and, to
the Seller Parties' actual knowledge, there exists no fact or circumstance
that could give rise to any such liabilities or obligations in the future,
and which requires disclosure on the Financial Statements in accordance
with GAAP.
9.9 CONDUCT OF BUSINESS. Except as otherwise disclosed on attached SCHEDULE
9.9, since August 31, 2001, Ideal Products has not:
(a) Declared or paid any dividend or made any other payment from capital
or surplus or other distribution of any nature, or directly or
indirectly redeemed, purchased, or otherwise acquired,
recapitalized, or reclassified any of its capital stock.
(b) Merged or consolidated with any other entity.
(c) Altered or amended its Articles of Incorporation or Bylaws.
(d) Entered into, materially amended, or terminated any contract,
license, lease, commitment, or permit, except in the Ordinary Course
of Business.
(e) Experienced any labor disturbance.
12
(f) Incurred or become subject to any obligation or liability (absolute,
accrued, contingent, or otherwise), except (i) in the Ordinary
Course of Business, and (ii) in connection with the performance of
this Agreement.
(g) Paid or satisfied any obligation or liability (absolute, accrued,
contingent, or otherwise) other than (i) liabilities shown or
reflected in Sellers' balance sheet as of August 31, 2001, or (ii)
liabilities incurred since the date of the balance sheet, in each
case only in the Ordinary Course of Business and in accordance with
the express terms of such obligation or liability.
(h) Sold, transferred, or agreed to sell or transfer any asset,
property, or business; cancelled or agreed to cancel any debt or
claim; or waived any right, except in the Ordinary Course of
Business.
(i) Disposed of or permitted to lapse any Intellectual Property.
(j) Instituted or settled any litigation, action, or proceeding before
any court or governmental body relating to the Purchased Assets or
the Business.
(k) Made any change in any method of accounting or any accounting
practice or suffered any deterioration in accounting controls.
(l) Entered into any other transaction other than in the Ordinary Course
of Business.
(m) Agreed or committed to do any of the foregoing.
9.10 NO ADVERSE CHANGES. Except as otherwise disclosed in SCHEDULE 9.10, since
August 31, 2001, no Seller Party has actual knowledge of any occurrence,
condition, or development that has adversely affected, or is likely to
adversely affect, Sellers, their prospects, their condition (financial or
otherwise), their affairs, their operations, the Business, or the
Purchased Assets.
9.11 EMPLOYEES. There is not now, nor has there been at any time during the
past five years, any strike, lockout, grievance, other labor dispute, or
trouble of any nature pending or threatened against Sellers or that in any
manner affects Sellers.
9.12 EMPLOYEE BENEFIT PLANS.
(a) No employee benefit plan, program or arrangement of whatever nature,
whether or not subject to any provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), bonus, stock, or
other employee pay practice, consulting, retainer, employment,
retirement, welfare, fringe benefit, insurance, incentive, vacation,
holiday, sickness, leave of absence, or any other plan, policy,
program, agreement or other arrangement that any Seller sponsors,
maintains or contributes to with respect to IHI's current or former
employees (individually and collectively, "Employee Plan"), shall by
its terms or applicable law, become binding upon or an obligation,
liability or responsibility of Buyers in any way, financial or
otherwise. No Seller has engaged in any action or omission which may
result in either Buyer being a party to, or bound by, any Employee
Plan. The Sellers warrant that no Employee Plan provides for payment
of termination, change of control or
13
retiree benefits in any manner such that either Buyer would become
liable to provide such benefits.
(b) Each employee pension benefit plan, as that term is defined in
ERISA, and its related trust ("Pension Plan and Trust"), meet, and
since their inception have met, the requirement for qualification
under Section 401(a) and 401(k) of the Internal Revenue Code of
Section 1986, as amended (the "Code"), and are not and since their
inception have been, exempt from taxation under Section 501(a) of
the Code, and the Internal Revenue Service has issued a favorable
determination letter with respect to the qualified status of the
Pension Plan and Trust and has not taken any action to revoke such
letter.
(c) With respect to any Employee Plan that is subject to the
continuation requirements of Sections 601-608 of ERISA and Section
4980B of the Code ("COBRA coverage") or the continuation
requirements of any applicable state or local law, each respective
Seller sponsoring, maintaining or contributing to such Employee
Plans has complied with all such applicable laws and regulatory
requirements with respect to the Sellers' current or former
employees.
(d) No Employee Plan is either (i) a "multiemployer plan" (as defined in
Section 3(37) of ERISA) or (ii) a defined benefit pension plan
subject to Title IV of ERISA.
(e) During the five years preceding the Closing Date, (i) no
under-funded pension plan subject to Section 412 of the Code has
been transferred out of any Seller and (ii) no Seller has
participated in or contributed to, nor had an obligation to
contribute to, any multiemployer plan (as defined in ERISA Section
3(37)) and no Seller has any withdrawal liability with respect to
any multiemployer plan.
9.13 CONTRACTS. Except for the contracts and commitments listed on SCHEDULE
9.13 ("Contracts and Commitments"), or as otherwise listed on SCHEDULE
9.13, no Seller is a party to nor bound by any agreement or commitment
that materially affects the Business, the Purchased Assets, or the Assumed
Liabilities. All Contracts and Commitments are valid and binding
obligations of the Sellers in accordance with their respective terms. No
material default or alleged material default exists on the part of either
Seller or, to the Seller Parties' actual knowledge, on the part of any
other party, under any of the Contracts and Commitments. True and complete
copies of all Contracts and Commitments have been delivered to Buyers.
Notwithstanding any other provision of this Agreement to the contrary,
Buyers acknowledge and agree that the Levelor Xxxxxx Drapery Hardware
Supply Agreement, dated August 15, 2001 (the "Levelor Xxxxxx Contract"),
requires the prior written consent of Levelor Xxxxxx, a division of Xxxxxx
Window Furnishings, Inc., to its assignment to Buyers, which is not being
obtained prior to Closing.
9.14 TITLE TO PURCHASED ASSETS.
(a) Except as described on SCHEDULE 9.14, Seller Parties are the sole
and absolute owners of the Purchased Assets and have good title to
all of the Purchased Assets other than the Real Property, free and
clear of any and all free and clear of all liens, claims, demands,
charges, options, equity interests, leases, pledges, security
interests ("Liens").
14
(b) Philform has indefeasible title in fee simple in and to the Philform
Real Property and Ideal Products has indefeasible title in and to
the Ideal Products Real Property, free and clear of any and all
Encumbrances, except for (i) those encumbrances listed on Schedule B
of the Title Commitments and (ii) liens for real property taxes,
assessments and charges not yet due and payable ("Permitted
Encumbrances").
(c) SCHEDULE 9.14 lists or describes all property used in the conduct of
the Business and/or situated on the Premises that is owned by or an
interest in which is claimed by any other person (whether a
customer, supplier, or other person) and for which Sellers are
responsible, together with copies of all related agreements.
9.15 SUFFICIENCY OF PURCHASED ASSETS. The Purchased Assets constitute all the
property and assets, real, personal, and mixed, tangible and intangible
(including, without limitation, contract rights), that are used or are
useful in, or are necessary for the conduct of, the Business in accordance
with the Sellers' present practices.
9.16 TAXES.
(a) "Tax" or "Taxes" shall mean all of Sellers' federal, state, county,
local, and other taxes relating to all periods before the Closing
Date (including, without limitation, income taxes; premium taxes;
single-business taxes; excise taxes; sales taxes; use taxes;
value-added taxes; gross receipts taxes; franchise taxes; ad valorem
taxes; real estate taxes; severance taxes; capital levy taxes;
transfer taxes; stamp taxes; employment, unemployment, and
payroll-related taxes; withholding taxes; and governmental charges
and assessments).
(b) Except as otherwise disclosed on SCHEDULE 9.16, Sellers have filed
on a timely basis all Tax returns they are required to file under
federal, state, or local law, and has paid or established an
adequate reserve with respect to all Taxes for the periods covered
by such returns. No agreements have been made by or on behalf of
Ideal Products for any waiver or for the extension of any statute of
limitations governing the time of assessment or collection of any
Taxes. Ideal Products and its officers have received no notice of
any pending or threatened audit by the IRS or any state or local
agency related to its Tax returns or Tax liability for any period,
and no claim for assessment or collection of Taxes has been asserted
against Ideal Products. There are no federal, state, or local tax
liens outstanding against any of Ideal Products' assets (including,
without limitation, the Purchased Assets) or its Business.
(c) The sale by Sellers of the Purchased Assets and the Buyers'
acquisition of such assets will not result in the imposition of or
liability on the Buyers for any sales or use taxes except in
connection with the transfer of any motor vehicles that are part of
the Purchased Assets.
(d) After the Closing Date: (i) Sellers shall file final Tax returns
with respect to Ideal Products and Philform and shall pay any Taxes
that are due with respect to each Seller; and (ii) Buyers shall
prepare all Tax returns of Orbitform.
15
9.17 LITIGATION. To the Seller Parties' actual knowledge, there are no claims,
disputes, actions, suits, proceedings, or investigations pending or
threatened against or affecting any Seller, the Business, or the Purchased
Assets.
9.18 PRODUCT LIABILITY. To the Seller Parties' actual knowledge, no defect or
deficiency exists in any of the products manufactured or sold by Sellers,
or in any finished Inventory of Sellers, that could give rise to any
liabilities or claims for breach of warranty, product liability, or
similar liabilities or claims.
9.19 ENVIRONMENTAL MATTERS.
(a) The following terms used in this Section 9.19 have the meanings set
forth below:
(i) CTDEP means the Connecticut Department of Environmental
Protection.
(ii) Environmental Laws means all federal, state, county, municipal
and local, foreign, and other statutes, laws, regulations, and
ordinances that relate to or deal with protection of human
health or the environment, all as may be amended from time to
time.
(iii) Hazardous Substance(s) means (A) any flammable or combustible
substance, explosive, radioactive material, hazardous waste,
toxic substance, pollutant, contaminant, or any related
materials or substances identified in or regulated by any of
the Environmental Laws; and (B) asbestos, polychlorinated
biphenyls, urea formaldehyde, chemicals and chemical wastes,
explosives, known carcinogens, petroleum products and
by-products (including fractions thereof), and radon.
(iv) Property means any parcel of real estate now or previously
owned, leased, or operated by Sellers or in which Sellers have
or had any interest, including the Premises.
(b) Except as described in SCHEDULE 9.19, to the Seller Parties' actual
knowledge: (i) Ideal Products is now and has at all times been in
full compliance with all Environmental Laws; (ii) there are no
substances or conditions in or on the Ideal Products Real Property
that might reasonably be expected to support a claim or cause of
action against Ideal Products under any Environmental Laws; (iii)
there are not, and never have been, any underground storage tanks
located in or under the Ideal Products Real Property, except for the
two (2) underground tanks identified in the Phase I report with
respect to the Ideal Products Real Property, as to which, based on
the results of the ongoing groundwater monitoring at the site, there
is no hydrocarbon contamination at the site in excess of the
applicable CTDEP Remediation Standards Regulations for Surface Water
Protection Criteria for hydrocarbons in groundwater; (iv) neither
Ideal Products nor its directors, officers, employees, or agents,
have generated or transported any Hazardous Substances at any time
that have been transported to or disposed of in any landfill or
other facility where the transportation or disposal could create
liability to any unit of government or any third party.
(c) Except as described in SCHEDULE 9.19, during the time Ideal Products
has owned the Real Property, no activity has been undertaken on the
Ideal Products Real Property
16
by Ideal Products that would cause the Ideal Products Real Property
to become a treatment, storage or disposal facility within the
meaning of any Environmental Laws. Ideal Products has not, to its
actual knowledge, undertaken any activity that has caused (i) a
release or threatened release of any Hazardous Substances; or (ii)
the discharge of pollutants or effluents into any water source or
system or into the air, or the dredging or filling of any waters,
where such action would require a permit under any Environmental
Laws. Ideal Products has obtained all permits required by all
applicable Environmental Laws, and all such permits are in full
force and effect.
(d) Ideal Products has disclosed and delivered to Buyers all
environmental reports and investigations that it has ever obtained
or ordered with respect to the Ideal Products Real Property.
9.20 COMPLIANCE WITH LAWS. Ideal Products has, and, to the Seller Parties'
actual knowledge, Orbitform has, complied with all laws, orders,
regulations, rules, decrees, and ordinances affecting to any material
extent or manner any aspects of the Business or the Purchased Assets.
9.21 NO BROKERS. Sellers have not engaged, and are not responsible for any
payment to, any finder, broker, or consultant in connection with the
transactions contemplated by this Agreement, except as set forth on
SCHEDULE 9.21.
9.22 INTELLECTUAL PROPERTY. SCHEDULE 9.22 lists all patents, processes,
trademarks, trade names, copyrights, service marks, logos, trade secrets
and all applications and registrations therefor that are used in the
Business, and licenses thereof under which the Sellers have any right to
the use or benefit of, or other rights with respect to, any of the
foregoing ("Intellectual Property"). Except as set forth in SCHEDULE 9.22,
the identified Seller is, to the Seller Parties' actual knowledge, the
sole and exclusive owner of the Intellectual Property, free and clear of
all Encumbrances. To the Seller Parties' actual knowledge, none of the
Sellers' Intellectual Property infringes on any other person's
intellectual property, and, to the Seller Parties' actual knowledge, no
activity of any other person infringes on any of the Intellectual
Property. To the Seller Parties' actual knowledge, the Sellers have been
and are now conducting the Business in a manner that has not been and is
not now in violation of any other person's intellectual property, and
Sellers do not require a license or other proprietary right to so operate
the Business.
9.23 DISCLOSURE. No representation or warranty of the Seller Parties in this
Agreement and no statement in any of the Schedules of Sellers hereto
contains any untrue statement of, or omits to state, a material fact
necessary to make statements herein or therein, in light of the
circumstances in which they were made, not misleading.
10. BUYERS' REPRESENTATIONS AND WARRANTIES. Buyers jointly and severally
represent and warrant to each Seller Party that, as of the date hereof
(except to the extent any representation or warranty is made as of another
date, which are in such case made as of such other date):
10.1 ORGANIZATION AND STANDING. Buyers are limited liability companies duly
organized and validly existing under the laws of the State of Michigan,
and Buyers have all the requisite
17
power and authority (corporate and otherwise) to own their properties and
to conduct their business as it is now being conducted.
10.2 AUTHORIZATION. Buyers have taken all necessary action (a) to duly approve
the execution, delivery, and performance of this Agreement and (b) to
consummate any related transactions. Buyers have duly executed and
delivered this Agreement. This Agreement is the legal, valid, and binding
obligation of Buyers, enforceable against Buyers in accordance with its
terms, except as such enforcement may be limited by bankruptcy,
insolvency, moratorium, or similar laws relating to the enforcement of
creditor's rights and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in
equity).
10.3 EXISTING AGREEMENTS AND GOVERNMENTAL APPROVALS.
(a) Except as set forth on SCHEDULE 10.3, the execution, delivery, and
performance of this Agreement and the consummation of the
transactions contemplated by them: (i) do not and will not violate
any provisions of the law applicable to Buyers; (ii) do not and will
not conflict with, result in the breach or termination of any
provision of, or constitute a default under (in each case whether
with or without the giving of notice or the lapse of time, or both)
Buyers' Articles of Organization or Operating Agreement, or any
indenture, mortgage, lease, deed of trust, or other instrument,
contract, or agreement or any order, judgment, arbitration award, or
decree to which Buyers are a party or by which it or any of its
assets and properties are bound; and (iii) do not and will not
result in the creation of any line or encumbrance on any of the
Buyers' properties, assets, or business.
(b) Except as set forth on SCHEDULE 10.3, no approval, authority, or
consent of, or filing by Buyers with, or notification to, any
federal, state, or local court, authority, or governmental or
regulatory body or agency or any other corporation, partnership,
individual, or other entity is necessary (i) to authorize Buyers'
execution and delivery of this Agreement or (ii) to authorize
Buyers' consummation of the transactions contemplated by this
Agreement.
10.4 DEPOSIT OF CASH RECEIPTS. Except as set forth on SCHEDULE 10.4, since June
1, 2000, all cash receipts of Ideal Products and Orbitform have been
promptly deposited into their bank accounts (i.e., such deposits have in
all cases been made within 24 hours of receipt).
10.5 SALES OF SCRAP METALS. Except as set forth on SCHEDULE 10.5, since June
30, 2001, all sales of scrap metals of Ideal Products and Orbitform have
been made on a basis consistent with historical practices, and no scrap
metals have been retained in the plant for sale after Closing.
10.6 NO DELAY IN COLLECTION OF RECEIVABLES. Except as set forth on SCHEDULE
10.6, since June 1, 2000, neither Ideal Products nor Orbitform has made
any special arrangements with customers, whether formal or informal,
causing or that would cause collection of receivables to extend beyond
customary terms for payment.
10.7 VENDOR PAYMENTS. Except as set forth on SCHEDULE 10.7, since June 30,
2001, all vendor payments of Orbitform have been made in a manner
consistent with past practices, as cash has been made available and all
vendor payments of Ideal Products have been made in
18
accordance with instructions from corporate cash management. No advances
have been made to any vendors of Orbitform or Ideal Products.
10.8 ARBOR AUTOMATION. Since June 1, 2000, nothing has occurred within Arbor
Automation which is outside of the scope of that transaction that Xxxxxxx
discussed with IHI management, as more fully described on EXHIBIT 10.8.
10.9 TRANSACTION EXPENSES. Except as set forth on SCHEDULE 10.9, no funds have
been expended or expenses incurred by Orbitform or Philform in connection
with this transaction (including those of consultants, accountants and
attorneys) and no funds have been expended or expenses incurred by
Orbitform or Philform for the benefit of Arbor Automation.
10.10 COMPENSATION INCREASES. Since June 30, 2001, there have been no
compensation increases or bonus payments made to Xxxxxxx except as
authorized by IHI.
10.11 DISCLOSURE. No representation or warranty of the Buyers in this Agreement
and no statement in any of the Schedules of Buyers hereto contains any
untrue statement of, or omits to state, a material fact necessary to make
statements herein or therein, in light of the circumstances in which they
were made, not misleading.
11. POST-CLOSING COVENANTS.
11.1 POST-CLOSING RECEIPTS. From and after the Closing Date, Sellers will
promptly notify and transfer to Buyers any payments or other receipts they
receive with respect to any of the Purchased Assets. Pending any such
transfer, Sellers will segregate any such payments from its other assets
and will clearly xxxx or designate them as the property of Buyers.
11.2 SELLERS' NAMES. From and after the Closing Date, Sellers agree to take or
cause to be taken any and all steps or actions that shall be or become
permissible, proper, or convenient to enable or permit Buyers to use the
Names. Sellers shall not use either directly or indirectly the Names,
either alone or in combination with one or more other words, in or in
connection with any business, activities, or operations that Sellers
directly or indirectly carry on or conduct after the Closing. Within 7
business days after the Closing Date, the Sellers shall file and record
such documents as will terminate the rights of the Sellers in and to the
Names in the jurisdictions in which they are so recorded and filed.
11.3 FURTHER ASSURANCES. From time to time after the Closing Date, each party
hereto will, at any other party's request, execute, acknowledge and
deliver to such requesting party such other instruments and take such
other actions and deliver such other documents as may be reasonably
required to carry out the intent of this Agreement and the Related
Agreements. After the Closing Date, the Sellers will use their reasonable
commercial efforts to work with the Buyers to obtain the written consent
of Levelor Xxxxxx to the assignment of the Levelor Xxxxxx Contract to the
Buyers.
11.4 BOOKS AND RECORDS. Insofar as any Seller determines that any books and
records may be needed or useful in connection with federal, state or local
regulatory or tax matters, resolution of third party disputes or contract
compliance issues, or other bona fide business purposes, for a period of
seven years after the Closing Date, Buyers will use their best efforts to
preserve and make available to the Sellers, at the location of such books
and records in the respective Buyer's organization, access to and the
right to copy such of the books and
19
records as such Buyer may then have in its possession or to which it may
have access upon written request of any Seller during normal business
hours. The Buyers agree to make such of their employees and of the books
and records as any Seller Party may request, available at the Buyers' cost
to assist in the preparation of financial reports and tax returns for the
Sellers' fiscal years ending in 2001.
11.5 SELLERS' EMPLOYEES. As of after the Closing Date, the Buyers shall make
offers of employment to all existing employees of the Sellers with
salaries and employee benefits comparable to those provided by the Sellers
before the Closing Date. The parties intend that all employees of the
Sellers that Buyers hire will be new employees of the Buyers as of the
Closing Date or the date of hire, whichever is later.
11.6 WAIVER. The Buyers and all persons and entities that directly, or
indirectly through one or more intermediaries, control, or are controlled
by, or are under common control with, the Buyers, hereby waive, release,
relinquish and acquit each of IHI, T-3 Energy Services, Inc., First
Reserve Fund VIII, L.P., and Comerica, as agent and individually, Hibernia
National Bank and National Bank of Canada, and their directors, officers,
stockholders, agents and successors, from and against all claims,
counterclaims, demands, suits, rights, actions and causes of action of any
nature whatsoever, as a result of or in connection with the sale by IHI or
the EPG Division Members (other than Sellers) of the assets or capital
stock of such EPG Division Members to persons other than the Buyers.
11.7 ROLLOVER OF EMPLOYEE 401(k) BALANCES. After the Closing, based on the
instructions and elections of any person who was before the Closing an
employee of either Seller, each Seller shall follow such directions or
instructions and cooperate in "rolling over" their Pension Plan and Trust
accounts to an account of Buyers' comparable plan, as such comparable plan
or plans shall allow.
11.8 CONTINUATION OF CTDEP ACTIVITIES. Buyers acknowledge that Ideal Products
has engaged CCA, LLC ("CCA"), as environmental consultants, to perform the
work at the Ideal Products Real Property as outlined in CCA's proposal
letter dated December 20, 2000 (the "CCA Proposal Letter") (a copy of
which proposal letter was previously furnished to Buyers), which work
includes the installation of two new bedrock aquifer monitoring xxxxx (the
"Bedrock Aquifer Xxxxx") at the Ideal Products Real Property. From and
after the Closing Date, Buyers shall assume and continue, at their expense
(except as hereinbelow provided), any further remediation activity at the
Ideal Products Real Property beyond that covered by the CCA Proposal
Letter, including any additional testing and/or monitoring required by
CTDEP, to demonstrate to the satisfaction of CTDEP that the pre-existing
environmental impact of discharges from the Ideal Products Premises on the
bedrock aquifer below the Ideal Products Real Property is in compliance
with the applicable CTDEP Remediation Standards Regulations for Surface
Water Protection Criteria for such discharged substance(s) in groundwater,
such that either an approval of the remediation is received by the
Commissioner of CTDEP pursuant to Section 22a-134a(i) of the Connecticut
General Statutes, or that a Licensed Environmental Professional
independently verifies the Ideal Products Real Property as having complied
with the CTDEP Remediation Standard Regulations pursuant to Section
22a-134a(h) of the Connecticut General Statutes (either, "CT Statutory
Compliance"). To the extent that the annual out-of-pocket costs to Buyers
of (i) compliance with the Post-Closure Obligations, plus (ii) further
testing, monitoring, and/or remediation to obtain CT
20
Statutory Compliance beyond that covered by the CCA Proposal Letter, plus
(iii) if required by CTDEP, monitoring of the Bedrock Aquifer Xxxxx,
exceed in the aggregate $10,000 in any single calendar year, IHI shall
reimburse Buyers, promptly upon demand, for such costs in such calendar
year exceeding $10,000 (the "Excess Obligations Reimbursement"). The
Seller Parties and Buyers agree that the benefit of the Excess Obligations
Reimbursement shall be personal to Buyers and to any entity controlled by
Buyers to whom the Ideal Products Real Property is transferred (such
controlled entity, a "Buyer-Controlled Entity"), shall not be transferable
or assignable by Buyers, except to a Buyer-Controlled Entity, and shall
terminate upon the sale, transfer or other disposition of the Ideal
Products Real Property by Buyers or any Buyer-Controlled Entity (such
event, a "Non-Affiliate Sale"); provided, however, that (y) only an entity
in which the members of the Buyers, who are Xxxxxxx, Xxxxxx Xxxxxx and
Xxxxxx Xxxxxxx, own either individually or collectively at least 51% of
the capital stock or membership or partnership interests, as the case may
be, shall be considered a Buyer-Controlled Entity to which the Buyers may
transfer the Excess Obligations Reimbursement; and (z) the Collateral
Assignment of Asset Purchase Agreement executed in connection with this
Agreement shall not be considered a Non-Affiliate Sale. Notwithstanding
the foregoing, Buyers will not be entitled to recover the amount of Excess
Obligations Reimbursement payable to Buyers hereunder unless and until the
amount of such Excess Obligations Reimbursement exceeds, in the aggregate,
$10,000.
11.9 CTDEP FINANCIAL ASSURANCE.
(a) The Seller Parties have provided a trust fund (the "Trust Fund") to
CTDEP to satisfy the "financial assurance" requirements contained in
40 CFR parts 264 and 265, respecting the estimated costs of the
"Closure and Post-Closure RCRA Surface Impoundments, Ideal
Manufacturing, 000 Xxxxxxxxxxx Xxxx, Xxxxxx Xxxxx, Xxxxxxxxxxx
00000", prepared by YWC Technologies, Inc. (approved on September
18, 1989 by the CTDEP and U.S. Environmental Protection Agency
Region I) ("the Post-Closure Obligations", and such financial
assurance, the "Financial Assurance Requirements"). As soon as
possible after the Closing Date, the Buyers shall use commercially
reasonable efforts to obtain any legally allowable financial
assurance mechanism that will be sufficient to permit the release to
IHI of the then-remaining balance of the Trust Fund. The parties
acknowledge that any balance of the Trust Fund remaining on its
release by CTDEP shall be remitted and returned solely to IHI.
(b) If for some reason Buyers do not obtain such legally allowable
financial assurance mechanism or CTDEP does not allow the release of
the then-remaining balance of the Trust Fund to the Seller Parties,
then in any event:
(i) Any transferee from or successor-in-interest of Buyers of the
Ideal Products Real Property shall, as a condition precedent
to the transfer of the Ideal Products Real Property, satisfy
the Financial Assurance Requirements, which financial
assurance shall take the form of a trust account, letter of
credit or surety bond in compliance with the provisions of the
Financial Assurance Requirements. In such instance, compliance
with Financial Assurance requirements shall be sufficient to
permit the CTDEP's release to the Seller Parties of the
then-remaining balance of the Trust Fund;
21
(ii) for as long as the Buyers continue to own the Ideal Products
Real Property and the Trust Fund remains in place: (y) the
Buyers shall provide copies to the Seller Parties of all
correspondence with the CTDEP and all environmental tests and
reports with respect to the Ideal Products Real Property; and
(z) the Buyers shall obtain the prior written approval of the
Seller Parties to any plan of action or proposal made to CTDEP
in order to obtain CT Statutory Compliance.
11.10 CONTINUATION OF COVERAGE. After the Closing, Seller Parties shall offer
COBRA coverage to the employees of Ideal Products, who are covered as of
the Closing Date, as such coverage is currently offered to such employees,
as the same is required by law. Seller Parties shall accept payment from
Buyers rather than from such employees for cost of such health insurance
coverage, plus a reasonable administrative fee.
12. INDEMNIFICATION.
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties' representations,
warranties covenants, agreements and indemnities shall survive the
Closing, the consummation of the transactions this Agreement provides for
and any investigation with respect thereto a period of two years beginning
on the Closing Date (except those pursuant to the Assignment and
Assumption Agreement, which shall survive until all Assumed Liabilities
have been satisfied), except that (i) the indemnity period for
representation and warranties of the Seller Parties with respect to Taxes
under Section 9.14 and under Section 9.19(b) regarding the Underground
Tanks on the Ideal Products Real Property shall survive until expiration
of the relevant statues of limitation or any extension thereof; and (ii)
the indemnity period for representations and warranties under Sections 9.2
and 10.2 shall have no expiration date. The two-year anniversary date of
the Closing Date is referred to hereafter as the "Expiration Date", and
any later expiration date provided for in this Section 12.1 is referred to
as the "Extended Expiration Date". Notwithstanding anything to the
contrary, the covenants of IHI as set forth in Section 11.8 with respect
to the Excess Obligations Reimbursement shall not expire, except upon a
Non-Affiliate Sale.
12.2 INDEMNIFICATION BY THE SELLER PARTIES.
(a) Subject to Section 12.2(b) below, the Seller Parties, jointly and
severally, shall defend, indemnify, and hold harmless Buyers and
their directors, officers, shareholders, members, partners,
successors, and assigns from and against any and all costs, losses,
claims, suits, actions, assessments, diminution in value,
liabilities, fines, penalties, damages (excluding in all cases
consequential and punitive damages), and expenses (including
reasonable legal fees) (collectively, "Damages") in connection with
or resulting from:
(i) All debts, liabilities, and obligations of Sellers, whether
accrued, absolute, contingent, known, unknown, or otherwise,
but excluding any Assumed Liabilities.
(ii) Any inaccuracy in any representation or breach of any warranty
of Seller Parties contained in this Agreement or any Related
Agreement.
22
(iii) Any failure by Seller Parties to perform or observe in full,
or to have performed or observed in full, any covenant,
agreement, or condition to be performed or observed by the
Seller Parties under this Agreement or any Related Agreement.
(b) Seller Parties shall not be obligated to indemnify the Buyers (i)
with respect to any matter to the extent Xxxxxxx had actual
knowledge of such matter prior to the Closing and did not disclose
such matter to the Seller Parties; or (ii) for claims for Damages
related to or in connection with the failure to obtain, prior to the
Closing, the consent of Levelor Xxxxxx to the assignment of the
Levelor Xxxxxx Contract to Buyers.
12.3 INDEMNIFICATION BY THE BUYERS. The Buyers, jointly and severally, share,
indemnify and hold harmless the Seller Parties and their directors,
officers, shareholders, agents, successors and assigns (the "Seller
Indemnitees") from and against any Damages as they are incurred or
suffered by any of them and caused by or arising out of:
(a) The Buyers' breach of or default in the performance of any covenant
or agreement in this Agreement or in any Related Agreement,
including without limitation its obligations under the Assignment
and Assumption Agreement; and
(b) The Buyers' breach of any representation or warranty in this
Agreement.
12.4 PROCEDURE FOR INDEMNIFICATION; THIRD-PARTY CLAIMS.
(a) Any party claiming indemnification under this Section 12 is referred
to in this Agreement as an "Indemnified Person" and any party
against whom such claims are asserted under this Section 12 is
referred to in this Agreement as an "Indemnifying Person."
(b) Within 15 days after receipt of notice of commencement of any action
by any third party evidenced by service of process or other legal
pleading, or with reasonable promptness after the assertion in
writing of any claim by a third party, the Indemnified Person shall
give the Indemnifying Person written notice thereof, together with a
copy of such claim, process or other legal pleading. The failure to
so notify the Indemnifying Person within the above time frame will
not relieve the Indemnifying Person of any liability it may have to
the Indemnified Person, except to the extent the Indemnifying Person
demonstrates that the defense of such action is unduly prejudiced by
the Indemnified Person's failure to give such notice, or except if
such notice is not delivered before the time specified in Section
12.1. The Indemnifying Person shall have the right to undertake and
control the defense, settlement, compromise or other disposition
thereof at its own expense and through a legal representative of its
own choosing. The Indemnified Person and its counsel shall have the
right to be present at the negotiation, defense and settlement of
such action or claim, and any settlement or compromise of any such
action or claim shall be subject to the approval of the Indemnified
Person, which approval shall not be unreasonably withheld.
(c) If the Indemnifying Person, by the 30th day after receipt of notice
of any such claim (or, if earlier, by the 10th day immediately
preceding the day on which an answer or
23
other pleading must be served in order to prevent judgment by
default in favor of the person asserting such claim), has not
notified the Indemnified Person of its election to defend against
such claim, the Indemnified Person shall have the right to undertake
the defense, compromise or settlement of such claim through counsel
of its choice on behalf of and for the account and risk of the
Indemnifying Person, at the cost and expense of the Indemnifying
Person. In such event, the Indemnifying Party and its counsel shall
have the right to be present at the negotiation, defense and
settlement of such action or claim, and any settlement or compromise
of any such action or claim shall be subject to the approval of the
Indemnifying Party, which approval shall not be unreasonably
withheld.
12.5 PROCEDURE FOR INDEMNIFICATION; OTHER THAN THIRD-PARTY CLAIMS. Any claim
for indemnification for a matter not involving a third-party claim shall
be asserted by written notice, which specifies in reasonable detail the
factual basis of such claim, and delivered to the party or parties from
which indemnification is sought.
12.6 LIMITATIONS ON LIABILITY.
(a) Other than as specifically provided for claims as to the matters
specified in Section 12.1, no claim for indemnification shall be
made hereunder unless asserted by a written notice given to the
Indemnifying Party on or before the Expiration Date or the Extended
Expiration Date, as the case may be.
(b) No claim for indemnification shall be made hereunder with respect to
any matter (i) unless and until the total amount of Damages exceeds
$50,000 in the aggregate ("Minimum Damages"), and then only for the
amount by which such Damages exceeds Minimum Damages; and (ii) to
the extent that the total amount of Damages exceeds $10,000,000
("Maximum Damages"); provided, however, that any claim for Damages
resulting from IHI's failure to perform or observe its covenants as
to the Excess Obligations Reimbursement of Section 11.8 may be made
without being subject to Minimum Damages and shall also not be
included in the calculation of, and shall be in addition to, Maximum
Damages.
(c) The Indemnified Person shall act in good faith and in a commercially
reasonable manner to mitigate any Damages for which it may seek
indemnification under this Section 12.
(d) An indemnity payment for Damages otherwise due and payable under
this Section 12 shall be decreased to the extent of any (i) net
reduction of tax liability the Indemnified Party or any affiliated
party thereof actually realizes as a result of such indemnifiable
loss, and (ii) insurance proceeds the Indemnified Party or any
affiliated party thereof actually collects in connection with the
indemnifiable loss.
(e) The Seller Parties shall not have any liability under Section 12.2,
and the Buyers shall have no liability under Section 12.3, unless
the notices required under Sections 12.4 and 12.5 are delivered on
or before the Expiration Date or the Extended Expiration Date, as
the case may be.
24
12.7 COMPLIANCE WITH BULK SALES LAW. Buyers and the Seller Parties hereby waive
compliance with the bulk sales law in any applicable jurisdiction for the
transactions this Agreement provides for.
12.8 REMEDIES. The remedies of the Buyers and the Buyer Indemnitees set forth
in this Section 12 shall be the exclusive post-Closing remedies available
to them with respect to the actual or alleged breach by any of the Seller
Parties of any provision of this Agreement or the Related Agreements.
13. EXPENSES. Each of the parties shall pay all of the costs that it incurs
incident to the preparation, execution, and delivery of this Agreement and
the performance of any related obligations, whether or not the
transactions contemplated by this Agreement shall be consummated, except
that all such costs and all liabilities of Sellers other than the Assumed
Liabilities, including, without limitation, Tax liabilities, shall be paid
out of the proceeds of the Purchase Price and shall not be charged to the
Business as an expense.
14. RISK OF LOSS. The risk of loss of or damage to the Purchased Assets from
fire or other casualty or cause shall be on Sellers at all times up to the
Closing, and it shall be the responsibility of Sellers to repair, or cause
to be repaired, and to restore the property to the condition it was before
the loss or damage.
15. TERMINATION.
15.1 MANNER OF TERMINATION. This Agreement may be terminated at any time before
the Closing Date as follows:
(a) By Buyers and Seller Parties in a written instrument signed by each
of them.
(b) By Buyers or Seller Parties if the Closing does not occur on or
before October 31, 2001.
(c) By Buyers or Seller Parties if there has been a material breach of
any of the representations or warranties set forth in this Agreement
on the part of the other, and this breach by its nature cannot be
cured before the Closing.
(d) By Buyers or Seller Parties if there has been a material breach of
any of the covenants or agreements set forth in this Agreement on
the part of the other, and this breach is not cured within 10
business days after the breaching party or parties receive written
notice of the breach from the other party.
15.2 EFFECT OF TERMINATION. If terminated as provided in Section 15.1, this
Agreement shall forthwith become void and have no effect, except for
Section 13, Section 16.7 and Section 16.8, and except that no party shall
be relieved or released from any liabilities or damages arising out of the
party's breach of any provision of this Agreement.
16. MISCELLANEOUS PROVISIONS.
16.1 NOTICES. All notices, demands, and requests required or permitted to be
given under the provisions of this Agreement shall be in writing and shall
be deemed given (a) when personally delivered or sent by facsimile
transmission to the party to be given the notice or
25
other communication or (b) on the business day following the day such
notice or other communication is sent by overnight courier to the
following:
IF TO SELLER PARTIES:
Xxxxxx X. Xxxx
Industrial Holdings, Inc.
0000 Xxxxxxx
Xxxxxxx, Xxxxx 00000
Telephone Number 000-000-0000
FAX 000-000-0000
With a copy to:
Xxxxxxx Xxxxxx L.L.P.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. XxXxxx
Telephone Number 000-000-0000
FAX 000-000-0000
IF TO BUYERS:
Xxxxxxx Xxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone Number 000-000-0000
FAX 000-000-0000
With a copy to:
Xxxxxxxx & Xxxxxxx, P.C.
Attn: Xxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone Number 000-000-0000
FAX 000-000-0000
or to such other address or facsimile number that the parties may
designate in writing.
16.2 ASSIGNMENT. Except as set forth herein, neither Seller Parties nor Buyers
shall assign this Agreement, or any interest in it, without the prior
written consent of the other, except that either Buyer may, without Seller
Parties' consent, assign its rights and obligations under this Agreement
to one or more subsidiaries or wholly owned limited liability companies
formed by the Buyers; provided, however, that each such assignee must
accede to all of the obligations of the Buyers hereunder.
16.3 PARTIES IN INTEREST. This Agreement shall inure to the benefit of, and be
binding on, the named parties and their respective successors and
permitted assigns, but not any other person.
26
16.4 CHOICE OF LAW. This Agreement shall be governed, construed, and enforced
in accordance with the laws of the State of Michigan.
16.5 COUNTERPARTS. This Agreement may be signed in any number of counterparts
with the same effect as if the signature on each counterpart were on the
same instrument.
16.6 ENTIRE AGREEMENT. This Agreement and all related documents, schedules,
exhibits, or certificates represent the entire understanding and agreement
between the parties with respect to the subject matter and supersede all
prior agreements or negotiations between the parties. This Agreement may
be amended, supplemented, or changed only by an agreement in writing that
makes specific reference to this Agreement or the agreement delivered
pursuant to it and that is signed by the party against whom enforcement of
any such amendment, supplement, or modification is sought.
16.7 ARBITRATION.
(a) Any dispute, controversy, or claim arising out of or relating to
this Agreement or relating to the breach, termination, or invalidity
of this Agreement, whether arising in contract, tort, or otherwise,
shall at the request of any party be resolved in binding
arbitration. Any arbitration shall proceed in accordance with Title
9 of the United States Code, as it may be amended or recodified from
time to time ("Title 9"), and the current Commercial Arbitration
Rules (the "Arbitration Rules") of the American Arbitration
Association ("AAA") to the extent that Title 9 and the Arbitration
Rules do not conflict with any provision of this Section 16.7.
(b) No provision of or the exercise of any rights under this Section
16.7 shall limit the right of any party to seek and obtain
provisional or ancillary remedies (such as injunctive relief,
attachment, or the appointment of a receiver) from any court having
jurisdiction before, during, or after the pendency of an arbitration
proceeding under this Section. The institution and maintenance of
any such action or proceeding shall not constitute a waiver of the
right of any party (including the party taking the action or
instituting the proceeding) to submit a dispute, controversy, or
claim to arbitration under this Section.
(c) Any award, order, or judgment made pursuant to arbitration shall be
deemed final and may be entered in any court having jurisdiction
over the enforcement of the award, order, or judgment. Each party
agrees to submit to the jurisdiction of any court for purposes of
the enforcement of the award, order, or judgment.
(d) The arbitration shall be held before one arbitrator knowledgeable in
the general subject matter of the dispute, controversy, or claim and
selected by AAA in accordance with the Arbitration Rules, except
that any arbitration in which the disputed, controverted, or claimed
amount (as reflected on the demand for arbitration, as the same may
be amended) exceeds $500,000.00 shall be held before three
arbitrators, one arbitrator being selected by Buyer, one by the
Seller Parties, and the third by the other two from a panel of
persons identified by AAA who are knowledgeable in the general
subject matter of the dispute, controversy, or claim.
27
(e) The arbitration shall be held at the office of AAA located in
Detroit, Michigan (as the same may be from time to time relocated),
or at another place the parties agree on.
(f) In any arbitration proceeding under this Section 16.7, subject to
the award of the arbitrator(s), each party shall pay all its own
expenses, an equal share of the fees and expenses of the arbitrator,
and, if applicable, the fees and expenses of its own appointed
arbitrator. The arbitrator(s) shall have the power to award recovery
of costs and fees (including reasonable attorney fees,
administrative and AAA fees, and arbitrators' fees) among the
parties as the arbitrators determine to be equitable under the
circumstances.
(g) The interpretation and construction of this Section 16.7, including,
but not limited to, its validity and enforceability, shall be
governed by Title 9 of the U.S. Code, notwithstanding the choice of
law set forth in Section 16.4 of this Agreement.
16.8 PUBLIC ANNOUNCEMENTS. The parties agree to advise and confer with each
other prior to the issuance of any public reports, statements or press
releases pertaining to this Agreement and the transactions contemplated
hereby. Each party will use its best efforts to maintain in strict
confidence the existence and terms of this Agreement and the transactions
contemplated hereby. Unless otherwise required by law or as set forth
above, no party shall make any public announcement or disclosure
concerning this Agreement, except as mutually agreed. The financial terms
of the Agreement are to be kept confidential, except to the extent that
the disclosure is required under law. Nothing in the foregoing is intended
to prevent IHI from making any filings required with the Securities and
Exchange Commission.
16.9 FACSIMILE SIGNATURES. The parties acknowledge that signatures on this
Agreement may be delivered by facsimile in lieu of an original signature
and the parties agree to treat such signatures as original signatures and
shall be bound thereby.
The parties have executed this Agreement on the date set forth on the
first page of this Agreement.
SELLER PARTIES:
XXX MACHINERY MOVERS, INC. D/B/A IDEAL PRODUCTS
By:
---------------------------------------
[NAME OF AUTHORIZED SIGNER]
Its:
--------------------------------------
28
PHILFORM , INC.
By:
---------------------------------------
[NAME OF AUTHORIZED SIGNER]
Its:
--------------------------------------
OF ACQUISITION, L.P., D/B/A ORBITFORM
By:
---------------------------------------
[NAME OF AUTHORIZED SIGNER]
Its:
--------------------------------------
INDUSTRIAL HOLDINGS, INC.
By:
---------------------------------------
[NAME OF AUTHORIZED SIGNER]
Its:
--------------------------------------
BUYERS:
SMSG, L.L.C.
By:
---------------------------------------
[NAME OF AUTHORIZED SIGNER]
Its:
--------------------------------------
SMSP, L.L.C.
By:
---------------------------------------
[NAME OF AUTHORIZED SIGNER]
Its:
--------------------------------------
29
