ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into and is effective as of the
28th day of August, 1998, by and between R&B, Inc., a Pennsylvania corporation
("Purchaser"); and Allparts, Inc., a Missouri corporation ("Seller").
BACKGROUND
Seller is a wholly-owned subsidiary of JPE, Inc., a Michigan corporation
(the "Company"). This Agreement sets forth the terms and conditions upon which
Purchaser is purchasing, and the Seller is selling, substantially all of the
assets of Seller.
Incorporating the foregoing herein, in consideration of the mutual
agreements, covenants, representations and warranties contained herein, and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, and in reliance thereon, intending to be legally bound, the
parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1 "Accounts Receivable" shall mean as of any date any trade accounts
receivable, notes receivable, bid or performance deposits, employee advances and
other miscellaneous receivables associated with the Business as of such date.
1.2 "Accrued Expenses" shall mean as of any date accrued payroll and
benefits and other accrued expenses as would appear on a balance sheet of the
Business as of such date prepared in accordance with GAAP, including, but not
limited to, those described in Schedule 1.2, but excluding any amounts payable
to Affiliates of Seller and any compensation to Employees or others solely
contingent upon or payable solely as a result of the transactions contemplated
hereby.
1.3 "Affiliate" shall mean any company or other entity which controls, is
controlled by or is under common control with the designated Party. For the
purposes of the foregoing, ownership, directly or indirectly, of twenty percent
or more of the voting stock or other equity interest shall be deemed to
constitute control.
1.4 "Agreement" shall mean this Asset Purchase Agreement.
1.5 "Ancillary Agreements" shall mean, collectively, all agreements
executed in connection herewith, including, but not limited to, the Xxxx of Sale
and Assignment described in Section 5.2.1, the Trademark Assignment described in
Section 5.2.2, the Patent Assignment described in Section 5.2.3, the Covenant
Deed described in Section 5.2.5 and the Assumption Agreement described in
Section 5.3.1.
1.6 "Assumed Liabilities" shall have the meaning given to it in Section
2.4.
1.7 "Balance Sheet" shall mean the balance sheet of the Seller as of June
30, 1998 referred to in Section 6.4.
1.8 "Balance Sheet Date" shall mean June 30, 1998.
1.9 "Books and Records" shall have the meaning given to it in Section 6.15.
1.10 "Business" shall mean the business and operations of Allparts, Inc., a
Missouri corporation as presently conducted by Seller.
1.11 "Closing" shall mean the taking of the actions described in Article V
of this Agreement.
1.12 "Closing Date" shall mean September 30, 1998, or, if all conditions
precedent to the Closing set forth in Article X and Article XI of this Agreement
are not satisfied or waived as of September 30, 1998, the earliest practicable
date after all such conditions precedent are satisfied or waived or such other
date as the Parties shall mutually agree on in writing.
1.13 "Closing Inventory" shall mean all Inventory relating to the Business
on the Closing Date.
1.14 "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended form time to time, and any successor thereto. Any reference herein to a
specific section or sections of the Code shall be deemed to include a reference
to any corresponding provision of future law.
1.15 "Confidential Information" shall have the meaning given to such term
in Section 12.1.
1.16 "Employee" shall mean any individual employed by Seller in the conduct
of the Business as listed on Schedule 1.16 (such Schedule being subject to
change between the date hereof and the Closing Date as a result of employee
changes in the ordinary course of business consistent with past practices).
1.17 "Encumbrance" shall mean any right to, or interest in, property, which
subsists in a third-party and which constitutes a claim, lien or charge attached
to and binding upon the property, including, but not limited to, a mortgage,
judgment lien, tax lien, mechanic's lien, security interest, easement and
right-of-way.
1.18 "Environmental Law" shall mean any federal (including but not limited
to the Clean Water Act, 33 U.S.C. Sections 1251 et seq., the Toxic Substances
Control Act, 15 U.S.C. Sections 2601 et seq., the Clean Air Act, 42 U.S.C.
Sections 7401 et seq., the Safe Drinking Water Act, 42 U.S.C. Sections 300f et
seq., the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. Sections 9601 et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., the River and Harbor Act, 33 U.S.C. Section 407,
and the Occupational Safety and Health Act, 29 U.S.C. Section 651 et. seq.),
state or local statute, ordinance or promulgated rule or regulation, any
judicial or administrative order or judgment (whether or not by consent), and
any provision or condition of any permit, license or other operating
authorization relating to (i) the protection of the environment or the public
welfare from actual or potential exposure (or the effects of exposure) to any
actual or potential release, discharge, disposal or emission (whether past or
present) of any Regulated Substance or (ii) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
Regulated Substance.
1.19 Section intentionally left blank.
1.20 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.21 "ERISA Plans" shall mean defined benefit pension plans and defined
contribution pension plans qualified under Section 401(a) of the Code.
1.22 "Excluded Assets" shall mean those assets that are not included in the
sale contemplated hereby and as are further defined in Section 2.2.
1.23 "Excluded Liabilities" shall have the meaning given to it in Section
2.5.
1.24 Section intentionally left blank.
1.25 "GAAP" shall mean generally accepted accounting principles in the
United States of America, consistently applied.
1.26 "Inventory" shall mean the inventory of the Business, including, but
not limited to, raw materials, supplies, work in process and finished goods.
1.27 "Knowledge" and words of similar import shall mean, with respect to
Purchaser, actual knowledge of a particular fact being known by any officer or
other individual having principal responsibility for a business or
administrative function of such Party and with respect to Seller, "Knowledge"
shall mean the actual knowledge of a particular fact being known by the Vice
President-General Manager, Operations Manager or Vice President of Sales of
Seller.
1.28 "Losses" shall mean all losses, costs, claims, liabilities, fines,
penalties, damages and expenses, including interest which may be imposed in
connection therewith and court costs and reasonable fees and disbursements of
counsel and consultants, but after taking into account any insurance proceeds
received by the party incurring the Losses (net of any premiums paid for such
insurance or premium increases resulting therefrom) and any net tax benefits to
such party resulting therefrom.
1.29 "Material Contracts" shall have the meaning given to it in Section
6.10.
1.30 "Party" shall mean either Seller, or Purchaser, individually, as the
context so requires, and the term "Parties" shall mean Seller, and Purchaser
together.
1.31 "Payables" as of any date shall mean any of the accounts payable
associated with the Business as of such date in accordance with GAAP, other than
to an Affiliate of Seller.
1.32 "Permits" shall have the meaning given to such term in Section 6.11.
1.33 "Permitted Encumbrances" shall mean (i) those Encumbrances as
specifically set forth on Schedule 1.35 hereto or (ii) liens of mechanics,
materialmen, laborers, warehousemen, carriers, real and personal property taxes
and other similar common law or statutory liens arising in the ordinary course
of business which (A) are not yet due and payable or, if due and payable, have
been adequately bonded or which are being contested in good faith or (B) do not
exceed $5,000 individually or in the aggregate.
1.34 "Person" shall mean any individual, corporation, limited liability
company, limited or general partnership, company, trust or estate, joint
venture, association or other entity.
1.35 "Prepaid Expenses" as of any date shall mean payments made by Seller
with respect to the Business which constitute prepaid expenses of the Business
in accordance with GAAP.
1.36 "Product" shall mean any of the products distributed by Seller as of
the Closing Date.
1.37 "Proprietary Rights" shall have the meaning given to such term in
Section 6.9.1.
1.38 "Purchase Price" shall have the meaning given to such term in Section
3.1.1.
1.39 "Purchased Assets" shall have the meaning given to such term in
Section 2.1.
1.40 "Purchaser" shall have the meaning given to such term in the preamble
of this Agreement.
1.41 "Real Property" shall mean the Real Property Leased and the Real
Property Owned, collectively.
1.42 "Real Property Leased" shall mean the real property leased by Seller
in connection with the Business as more fully described in Schedule 1.42 hereto.
1.43 "Real Property Owned" shall mean the real property owned by Seller,
and used in connection with the Business as more fully described in Schedule
1.43 hereto.
1.44 "Regulated Substance" shall mean any substance that is identified (by
listing or characteristic) and regulated (or the clean-up of which can be
required) by any federal, state or local law or regulation intended to protect
the environment or the public health or welfare, including but not limited to
the statutes, ordinances or regulations relating to clean air, clean water,
hazardous and solid waste disposal, safe drinking water, endangered species,
occupational safety and health, oil spill prevention, groundwater protection,
and toxic substances control, among others.
1.45 "Seller" shall have the meaning given to such term in the preamble of
this Agreement.
1.46 "Taxes" shall mean all taxes, duties, charges, fees, levies or other
assessment imposed by any taxing authority, including, without limitation,
income, gross receipts, valueadded, excise, withholding, personal property, real
estate, sale, use, ad valorem, license, lease, service, severance, stamp,
transfer, payroll, employment, customs, duties, alternative, add-on minimum,
estimated and franchise taxes (including any interest, penalties or additions
attributable to or imposed on or with respect to any such assessment).
ARTICLE II
PURCHASE OF ASSETS AND PROPERTIES
AND ASSUMPTION OF LIABILITIES
2.1 Purchased Assets. Subject to the terms and conditions of this
Agreement, Seller shall sell and convey to Purchaser, good, marketable and
indefeasible title to, free and clear of all Encumbrances whatsoever (other than
Permitted Encumbrances, the Assumed Liabilities and except as expressly provided
herein), and Purchaser shall purchase from Seller, the Business as a going
concern and all of Seller's right, title and interest in and to the assets,
properties and rights of every kind and description, real, personal and mixed,
tangible and intangible, wherever situated, constituted or used in the Business
(the "Purchased Assets") as the same shall exist on the Closing Date (other than
the Excluded Assets), including, without limitation, the following:
2.1.1 Real Property Owned. The Real Property Owned, together with the
buildings, structures, improvements and fixtures located thereon, and all
rights, privileges, easements, licenses, hereditaments and other
appurtenances relating thereto;
2.1.2 Real Property Leased. Seller's interest, as lessee, in the Real
Property Leased;
2.1.3 Equipment, Machinery and Other Tangible Personal Property. All
machinery, equipment, leasehold improvements, trucks, automobiles,
supplies, office furniture and office equipment, computing and
telecommunications equipment and other items of personal property that are
owned by Seller and used in connection with the Business, including,
without limitation, those described in Schedule 2.1.3 hereto;
2.1.4 Contracts Relating to the Business. All of the interest of
Seller in all contracts, leases of machinery, equipment and other personal
property, sale orders, purchase orders, guarantees, commitments,
instruments and all other agreements relating to the Purchased Assets
and/or the operation of the Business (collectively, the "Contracts"),
including, without limitation, those listed in Schedule 2.1.4 hereto and
those Contracts not required to be listed on Schedule 2.1.4 because they
relate to amounts in any one case of less than $2,500;
2.1.5 Customer Lists, Sales and Marketing Materials. All customer
lists, sales data, catalogs, brochures, suppliers' names, mailing lists,
art work, photographs and advertising material, whether in electronic form
or otherwise;
2.1.6 Permits, Licenses. All of Seller's interest in Permits (as
hereinafter defined), including, without limitation, those listed in
Schedule 2.1.6 hereto;
2.1.7 Trade Secrets. All trade secrets, secret processes and
procedures, engineering, production, assembly, design, installation, other
technical drawings and specifications, working notes and memoranda, market
studies, consultants' reports, technical and laboratory data, competitive
samples, engineering prototypes, and all similar property of any nature,
tangible or intangible, of Seller and/or utilized in connection with the
Business;
2.1.8 Intellectual Property. All right, title and interest of Seller
in its Proprietary Rights, including, but not limited to, the patents,
trademarks, trademark registrations, trade names, service marks, copyrights
and copyright registrations of Seller and/or utilized in connection with
the Business, including, without limitation, those described in Schedule
2.1.8;
2.1.9 Property, Personnel and Accounting Records. All other records of
Seller, including, without limitation, property records and to the extent
permitted by applicable law, copies of personnel records of Employees who
become employees of Purchaser;
2.1.10 Goodwill. All right, title and interest of Seller in and to the
goodwill incident to the Business;
2.1.11 Inventory. All Closing Inventory;
2.1.12 Accounts Receivable. All Accounts Receivable existing at the
Closing Date;
2.1.13 Prepaid Expenses. All Prepaid Expenses of, or for the benefit
of, the Business at the Closing Date including, without limitation, those
described in Schedule 2.1.13;
2.1.14 Computer Software. All computer applications software, owned or
licensed, whether for general business usage (e.g., accounting, word
processing, graphics, spreadsheet analysis, etc.) or specific,
unique-to-the-business usage (e.g., order processing, manufacturing,
process control, shipping, etc.) and all computer operating, security or
programming software, owned or licensed by Seller and/or utilized in
connection with the Business, including, without limitation, those listed
in Schedule 2.1.14;
2.1.15 Other Intangible Assets. All other assets (including, without
limitation, all causes of action, rights of action, contract rights and
warranty and product liability claims against third parties) relating to
the Purchased Assets or the Business; and
2.1.16 Insurance Plans. All insurance policies which fund all employee
benefit plans or arrangements, such plans and arrangements listed on
Schedule 2.1.16 attached hereto.
2.2 Excluded Assets. Notwithstanding Section 2.1, the following assets
(collectively, the "Excluded Assets") shall be excluded from this Agreement, and
shall not be assigned or transferred to Purchaser:
2.2.1 The consideration paid to Seller pursuant to this Agreement
and/or the Ancillary Agreements;
2.2.2 Assets constituting any pension or other funds for the benefit
of Employees, except as provided in connection with the 401(k) Plan in
Section 4.4;
2.2.3 Corporate minute books and stock books;
2.2.4 Any claims and rights against third parties (including, without
limitation, insurance carriers), to the extent they relate to liabilities
or obligations that are not assumed by Purchaser hereunder (except to the
extent Purchaser shall have incurred costs and expenses with respect to
such claims and rights); and
2.2.5 Claims for refunds of Taxes and other governmental charges to
the extent such refunds relate to periods ending on or prior to the Closing
Date.
2.3 License to Use Certain Assets. To the extent that there are any
tangible or intangible assets used by Seller in connection with the Business
that are not included under Section 2.1 (that are not specifically designated as
Excluded Assets by Section 2.2 (without reference to this Section)), the
Purchased Assets shall include an irrevocable, nonexclusive, perpetual, paid-up,
royalty-free, transferable license to utilize such assets in connection with the
operation of the Business after the Closing Date. To the extent that any such
assets may not be licensed, Seller shall use its best efforts to assure that
Purchaser obtains the benefit of such assets.
2.4 Assumed Liabilities. From and after the Closing Date, and except for
the Excluded Liabilities, and except as may be as a result of fraud or gross
negligence on the part of Seller, Purchaser shall, without any responsibility or
liability of, or recourse to, Seller, or any of its directors, shareholders,
officers, employees, agents, consultants, representatives, affiliates,
successors or assigns, absolutely and irrevocably assume and be liable and
solely responsible for any and all liabilities and obligations of any kind or
nature, whether foreseen or unforeseen, known or unknown, existing or which may
arise in the future, fixed or contingent, material or immaterial, of the Seller
arising out of or relating to (i) the ownership, use or possession of the
Purchased Assets or the operation or condition of the Business or (ii) the
condition of the Purchased Assets (the "Assumed Liabilities"). Gross negligence
shall mean for purposes of this Agreement the intentional failure to perform a
manifest duty in reckless disregard of the consequences as affecting the assets
or property of any Person.
2.5 Excluded Liabilities. From and after the Closing Date, Seller shall,
without any responsibility or liability of, or recourse to, Purchaser, or any of
its directors, shareholder, officers, employees, agents, consultants,
representatives, affiliates, successors or assigns, absolutely and irrevocably
retain and be solely responsible for any and all of the liabilities and
obligations of any kind or nature, whether foreseen or unforeseen, known or
unknown, existing or which may arise in the future, fixed or contingent, matured
or unmatured of Seller arising out of or relating to (a) the payment of Taxes
with respect to any period ending on or prior to the Closing Date; (b) the
Excluded Assets; and (c) intercompany liabilities of Seller to any Affiliate of
Seller, including without limitation, the Company Loan described in Schedule 2.5
attached hereto.
ARTICLE III
CONSIDERATION AND TERMS
3.1 Consideration for Purchased Assets.
3.1.1 Subject to any adjustments pursuant to Section 3.4 and/or
Section 15.2, the aggregate monetary consideration to be paid by Purchaser
to Seller for the Purchased Assets shall consist of a cash payment in the
amount of Nine Million Six Hundred Fifty Thousand Dollars ($9,650,000) (the
"Purchase Price").
3.1.2 As additional consideration, Purchaser also shall assume the
Assumed Liabilities and pay to Seller at the Closing the Estimated Tax
Payment (as hereinafter defined) and the Additional Consideration (as
specified on Schedule 3.1.2). The Additional Consideration shall be paid
according to the terms of Schedule 3.1.2
3.2 Payment of Consideration. Subject to the terms and conditions of this
Agreement, at the Closing, Purchaser shall deliver to Seller the Purchase Price
plus the Estimated Tax Payment by wire transfer of immediately available funds
to a bank account designated in writing by Seller. The "Estimated Tax Payment"
shall mean the Seller's estimated Tax liability relating to federal and state
corporate income taxes and reflected on Seller's closing balance sheet for the
period prior to and including the Closing Date as indicated on a statement
delivered to Purchaser not less than one business day prior to the Closing Date.
3.3 Allocation of Purchase Price. The Parties agree that the Purchase Price
shall be allocated in accordance with Schedule 3.3, attached hereto. Each Party
agrees not to assert, in connection with any tax return, tax audit or similar
proceeding, any allocation of the Purchase Price that differs from that agreed
upon pursuant to this Section.
3.4 Certain Price Adjustments. The Purchase Price shall be adjusted by the
amount, if any, by which the Net Worth (as hereafter defined) of Seller, as of
the Closing Date, as finally determined, is greater or less than the Net Worth
of Seller as of June 30, 1998 (the "Reference Net Worth"). Further, the Seller's
Estimated Tax Payment shall be adjusted by the amount, if any, by which the
Seller's actual Tax liability relating to federal and state corporate income
taxes and reflected on Seller's closing balance sheet for the period prior to
and including the Closing Date (the "Actual Tax Amount") exceeds or is less than
the Estimated Tax Payment.
3.4.1 On or within one day after the Closing Date, personnel assigned
by each of Seller and Purchaser shall jointly inspect all Inventory of the
Business and prepare a physical count of the Closing Inventory.
3.4.2 As soon as practicable following the Closing Date, but not later
than 60 days thereafter, the Parties shall jointly determine the Net Worth
of Seller as of the Closing Date and shall execute a certificate (the "Net
Worth Certificate") setting forth such Net Worth and a calculation of the
Actual Tax Amount. For purposes of this Agreement, "Net Worth" as of any
date shall be the aggregate value determined in accordance with GAAP of (x)
the Purchased Assets net of (y) the Assumed Liabilities. The Net Worth
Certificate shall be prepared in accordance with GAAP, consistent with the
accounting principles and practices utilized in preparing the Reference Net
Worth Statement, provided all such accounting principles and practices are
in accordance with GAAP. If the parties are unable to reach written
agreement as to the Net Worth Certificate and/or the calculation of the
Actual Tax Amount within 60 days after the Closing Date, then the Parties
shall (i) retain KPMG Peat Marwick LLP (the "Firm") to review such matters
as to which written agreement has not been reached. The Firm shall render
its decision within 45 days after being retained by the Parties and the
same shall be final, conclusive and binding upon the parties. The
determination of the Firm for any item in dispute cannot, however, be in
excess of, nor less than, the greatest or lowest value, respectively,
claimed by either Party for that particular item. The fees and expenses of
the Firm shall be shared equally by Seller and Purchaser.
3.4.3 Not later than five business days after written agreement by the
Parties or the written determination of the Firm pursuant to Section 3.4.2,
an adjustment payment, if any, shall be made as follows:
(i) If the Net Worth as of the Closing Date is less than the
Reference Net Worth, Seller shall pay to Purchaser the amount of the
difference; if the Net Worth as of the Closing Date is more than the
Reference Net Worth, Purchaser shall pay Seller the difference;
(ii) If the Estimated Tax Payment exceeds the Actual Tax Amount,
Seller shall pay to Purchaser the amount of the difference; if the
Estimated Tax Payment is less than the Actual Tax Amount, Purchaser
shall pay to Seller the amount of the difference.
Any amounts paid pursuant to this Section 3.4.3 shall be paid with interest
thereon at 9% per annum from but excluding the Closing Date through and
including the date of payment. Notwithstanding the foregoing, in no event
shall any payment by Seller pursuant to this Section 3.4 result in the sum
of the Purchase Price plus the Estimated Tax Payment, each as adjusted
pursuant to this Section 3.4, being less than $10,500,000 and Purchaser
acknowledges that its adjustment pursuant to this Section 3.4 for the
matters specified herein shall be its sole remedy with respect to such
matters whether or not any adjustment to be paid by Seller pursuant to this
Section 3.4 is so limited as specified above.
ARTICLE IV
EMPLOYEE MATTERS
4.1 Offer of Employment. Purchaser shall offer employment on and as of the
Closing Date, on an at-will basis, to all Employees in substantially similar
jobs, at substantially the same base salaries or wages and benefits as were paid
or provided by Seller immediately prior to the Closing Date, except for those
employees set forth on Schedule 4.1. Purchaser shall be responsible for COBRA
coverage for any employee set forth on Schedule 4.1, and for any claims of
discrimination under Federal or state laws, if such claim for discrimination is
based on Purchaser's failure to extend an offer of employment to the employee.
4.2 Vacation Liability. Purchaser shall assume liability for the vacation
entitlement that each Employee who becomes an employee of Purchaser has accrued
as of the Closing Date, provided such accrual is reflected on the balance sheet
of Seller at the Closing Date and included within the determination of Net Worth
pursuant to Section 3.4.2 hereof. Purchaser shall pay each such Employee's wages
or salary during his or her vacation entitlement, when taken.
4.3 Assumption of Medical Plan. As of the Closing Date, Seller shall
transfer to Purchaser and Purchaser shall accept, all of the assets and
liabilities of the medical plan covering Employees and former Employees who are
eligible for COBRA coverage. Purchaser's assumption of the medical plan shall
include continuation of all former Employees who are eligible to elect or have
elected COBRA, as well as the obligation to offer COBRA coverage to any
Employees on the Closing Date who are not employed by Purchaser following the
Closing Date. Employees who are hired by Purchaser shall receive service credit
for employment with the Seller for eligibility to participate under the medical
plan and shall not be subject to any pre-existing condition exclusions.
4.4 Other Employee Benefits. Effective on the Closing Date, Purchaser shall
cover the Employees it hires with coverage under either newly established or
existing employee benefit and insurance plans, and Purchaser shall continue to
provide such coverage for a period of no less than six months following the
Closing Date. Employees who are hired by the Purchaser shall receive service
credit for their employment with the Seller for eligibility to participate and
vesting purposes under Purchaser's employee benefit and insurance plans.
Effective on the Closing Date, Purchaser shall cover Employees under Purchaser's
401(k) plan. Purchaser agrees to accept either a plan to plan transfer or
rollover of vested account balances (either of which may include 401(k) plan
loans), from the JPE, Inc. 401(k) Plan in which Seller's Employees participate,
on behalf of the Employees it hires, provided the JPE, Inc. 401(k) Plan meets
the IRS regulations for such plan to plan transfer or rollover.
ARTICLE V
CLOSING
5.1 Time; Location. Subject to the conditions contained herein, the Closing
shall be held on the Closing Date at 10:00 a.m., local time, at the offices of
R&B, Inc., or such other time or place as the Parties shall mutually agree in
writing.
5.2 Documents. At the Closing, Seller shall execute and deliver the
following instruments of transfer and assignment:
5.2.1 A general xxxx of sale and assignment substantially in the form
of Exhibit 5.2.1 (the "Xxxx of Sale and Assignment") hereto, transferring
to Purchaser good, marketable and indefeasible title to all of the
Purchased Assets (subject only to Permitted Encumbrances and the Assumed
Liabilities) and assigning to Purchaser Seller's right, title and interest
in each of the contracts, licenses and other agreements included in the
Purchased Assets, together with all consents of third parties that are
required to make each such assignment effective as to such third parties;
5.2.2 Assignments of Trademarks (as hereinafter defined) (U.S. and
Foreign) substantially in the form of Exhibit 5.2.2 hereto;
5.2.3 Assignments of Patents (as hereinafter defined) (U.S. and
Foreign), substantially in the form of Exhibit 5.2.3 hereto;
5.2.4 Certificates of title to all vehicles included in the Purchased
Assets with assignments related thereto to Purchaser;
5.2.5 Covenant Deed substantially in the form of Exhibit 5.2.5 hereto;
and
5.2.6 Such additional instruments and items of conveyance and transfer
(including, but not limited to, applicable keys, codes, etc.) as Purchaser
may reasonably require in order to more effectively vest in it, and put it
in possession of, the Purchased Assets.
5.3 Buyer Document and Deliveries. At the Closing, Purchaser shall pay the
Purchase Price and the Estimated Tax Payment and shall execute and deliver the
following:
5.3.1. A general assumption agreement in the form of Exhibit 5.3.1
(the "Assumption Agreement") hereto pursuant to which Purchaser assumes the
Assumed Liabilities.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller represents and warrants to Purchaser as follows:
6.1 Organization, Good Standing and Power. Seller is a corporation duly
organized, validly existing and in good standing under the laws of Missouri, and
has all requisite corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements to which Seller is a party, to consummate
the transactions contemplated hereby and thereby and to perform all the terms
and conditions hereof and thereof to be performed by it. The Seller is qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where it is required to be so qualified, except where the failure
to so qualify would not have a material adverse effect. Seller has delivered to
the Purchaser copies of Seller's Articles of Incorporation and By-laws as in
effect on the date when delivered. The Company owns, beneficially and of record,
all of the issued and outstanding common stock of the Seller. There is no other
capital stock of any class or any other securities of the Seller authorized,
issued or outstanding. There are no outstanding subscriptions, rights, options,
warrants, calls or commitments relating to the Seller's capital stock, or any
securities or indebtedness convertible into the Seller's capital stock. Neither
the Seller nor its Affiliates are a party to or bound by any contract relating
to the issuance, ownership, sale, exchange, disposition or purchase of any
shares of the Seller's capital stock or any other of Seller's securities.
6.2 Authorization of Agreement and Enforceability. Seller and Shareholder
have each taken all necessary corporate action to authorize the execution and
delivery of this Agreement and the Ancillary Agreements to which Seller is a
party, the performance by it of all terms and conditions hereof and thereof to
be performed by it and the consummation of the transactions contemplated hereby
and thereby. This Agreement constitutes, and the Ancillary Agreements to which
Seller is a party, upon Seller's execution and delivery thereof, will
constitute, the legal, valid and binding obligations of Seller, enforceable in
accordance with their terms except to the extent that enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws presently or
hereafter in effect relating to or affecting the enforcement of creditors'
rights generally and by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
6.3 No Violation. Consents. The execution, delivery and performance by
Seller of this Agreement and the Ancillary Agreements to which Seller is a
party, and the consummation of the transactions contemplated hereby and thereby
will not (with or without the giving of notice or the lapse of time, or both)
(i) violate any provision of the charter or bylaws of Seller, (ii) violate, or
require any consent, authorization or approval of, or exemption by, or filing
under any provision of any law, statute, rule or regulation to which Seller, the
Business or the Purchased Assets are subject, (iii) violate any judgment, order,
writ or decree of any court applicable to Seller, the Business or the Purchased
Assets, (iv) conflict with, result in a breach of, constitute a default under,
or accelerate or permit the acceleration of the performance required by, or
require any consent, authorization or approval under any contract, agreement or
instrument to which Seller is a party or the Business and/or any of the
Purchased Assets is bound or (v) result in the creation or imposition of any
Encumbrance upon the Business and/or the Purchased Assets, which violation,
conflict, breach, default, acceleration or Encumbrance, or the failure to make
or obtain such filing, consent, authorization or approval, individually or in
the aggregate, could reasonably be expected to have a material adverse effect on
the Purchased Assets or the results of operations of the Business or prevent or
delay the consummation of the transactions contemplated by this Agreement.
6.4 Financial Statements. Schedule 6.4, attached hereto, consists of true
and complete copies of (i) the unaudited balance sheets of the Business for the
years then ended at December 31, 1997, 1996 and 1995 and the related unaudited
statements of income and cash flows for the years then ended, on which a review
has been performed by PricewaterhouseCoopers, independent certified public
accountants; and (ii) an unaudited balance sheet of Seller as of June 30, 1998
and related statements of income and cash flows for the period then ended. All
of such financial statements shall hereinafter collectively be referred to as
the "Financial Statements". Except as set forth on Schedule 6.4, the Financial
Statements have been prepared in accordance with GAAP. The Financial Statements
are consistent with the books and records of the Seller, and there are no
material transactions required by GAAP to be recorded in the Financial
Statements or the accounting records (which have been delivered to Purchaser)
underlying the Financial Statements that have not been recorded in the Financial
Statements or accounting records (which have been delivered to Purchaser), as
applicable. The Financial Statements, including the related notes, present
fairly in all material respects the financial position and the assets and
liabilities of the Seller as of the dates indicated and the results of
operations and cash flows of the Seller for the periods then ended in accordance
with GAAP.
6.5 Accounts Receivable. All Accounts Receivable as set forth on the
Balance Sheet (i) have or will have arisen only in the ordinary course of
business consistent with past practice for goods sold and delivered or services
performed and (ii) are or will be collectible in full at the recorded amounts
thereof (subject to no defenses, setoffs or counterclaims) in the ordinary
course of business (without resort to litigation or assignment to a collection
agency) no later than 90 days after the Closing Date, net of any allowance for
bad debts reflected on the Balance Sheet.
6.6 Inventory. The Inventory as set forth on the Balance Sheet was or will
be acquired and maintained in accordance with the regular business practices of
the Business, consists or will consist of new and unused items of a quality and
quantity usable or salable in the ordinary course of business consistent with
past practice, and is or will be valued in accordance with GAAP consistently
applied and, with respect to Inventory intended for sale, was or will be salable
in the aggregate at prices at least equal to the value thereof on the books of
Seller.
6.7 Absence of Certain Changes or Events. Except as set forth in Schedule
6.7 hereto, since the Balance Sheet Date, in its conduct of the Business, Seller
has not:
6.7.1 Amended in any respect or terminated any Material Contract other
than in the ordinary course of the business consistent with past practice;
6.7.2 Suffered the occurrence of any events that, individually or in
the aggregate, have had, or could reasonably be expected to have, a
material adverse effect on the Purchased Assets or the results of
operations of the Business;
6.7.3 Incurred any damage or destruction having a material adverse
effect on the Purchased Assets or the results of operations of the Business
by fire, storm, or similar casualty, whether or not covered by insurance;
6.7.4 Sold, transferred, replaced or leased any of the Purchased
Assets or sold any Inventory at a discount, except for transactions in the
ordinary course of the business consistent with past practice;
6.7.5 Waived or released any material rights with respect to the
Purchased Assets or the Business, except where such waiver or release did
not have a material adverse effect on the Purchased Assets or the results
of operations of the Business;
6.7.6 Transferred or granted any rights to any Proprietary Rights,
except where such transfer or grant did not have a material adverse effect
on the Purchased Assets or the results of operations of the Business;
6.7.7 Entered into any transaction or made any commitments (for
capital expenditures or otherwise) individually or in the aggregate
exceeding $5,000, other than in the ordinary course of the Business
consistent with past practice;
6.7.8 Changed its methods of accounting;
6.7.9 Increased the compensation of Employees, except following normal
review procedures and as reasonably deemed necessary in the ordinary course
of the Business consistent with past practice; or
6.7.10 Materially altered its conduct in its relations with suppliers
or customers, except where such alteration did not have a material adverse
effect on the Purchased Assets or the results of operations of the
Business.
6.8 Title to Properties: Absence of Liens and Encumbrances. Seller owns and
will transfer to Purchaser at the Closing good and valid title to all of the
Purchased Assets, including without limitation the material properties and
assets reflected on the Balance Sheet (except as disposed of by Seller after the
Balance Sheet Date in the ordinary course of the Business consistent with past
practice), free and clear of all Encumbrances, other than Permitted
Encumbrances. Each of the leases covering Real Property Leased is in full force
and effect and, to Seller's Knowledge, constitutes the legal, valid and binding
obligation of the lessor thereunder, enforceable in accordance with its terms,
except to the extent that enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws presently or hereinafter in effect relating to
or affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
6.9 Proprietary Rights.
6.9.1 Schedule 2.1.8 hereto sets forth a correct and complete list of
all Patents (as hereinafter defined), logos, and Trademarks (as hereinafter
defined), owned and/or used by the Seller, and Schedule 6.9 sets forth a
correct list of all inventions, intellectual property and trade secrets
owned and/or used by the Seller (all of the items set forth in this Section
6.9.1 (whether described on Schedule 2.1.8 and/or Schedule 6.9) shall
hereinafter collectively be referred to as the "Proprietary Rights").
"Patents" means all patents and patent applications. "Trademarks" means
registered trademarks or trade names, registered service marks, trademark,
trade name and service xxxx applications and unregistered trademarks, trade
names and service marks.
6.9.2 Except as disclosed in Schedule 6.9 hereto: (i) Seller owns
and/or possesses adequate licenses or other valid rights of use (without
the making of any payment to others and without having the obligation to
grant rights to others in exchange) for all the Proprietary Rights; (ii)
the Proprietary Rights included in the Purchased Assets constitute all such
rights necessary to conduct the Business in accordance with past practice;
(iii) the validity of the Proprietary Rights and the rights therein of
Seller have not been questioned in any litigation to which Seller is a
party, nor, to Seller's Knowledge, is any such litigation threatened; (iv)
the conduct of the Business does not materially conflict with patent
rights, licenses, trademark rights, trade name rights, copyrights or other
intellectual property rights of others; and (v) the Seller does not
infringe upon or unlawfully or wrongfully use any Patents, Trademarks
and/or other intellectual property owned or claimed by another Person.
6.9.3 Except as disclosed in Schedule 6.9 hereto, Seller does not have
Knowledge that any material use of any Proprietary Rights owned by Seller
has heretofore been, or is now being, made by any Person other than Seller.
Seller has no Knowledge of any material infringement of any Proprietary
Rights owned or licensed by Seller. No present or former director, officer,
employee, shareholder, owner, consultant or other Person of Seller or any
Affiliate of Seller has any interest in any of the Proprietary Rights.
6.10 Contracts and Commitments. Except as listed and described on Schedule
2.1.4 hereto, Seller is not with respect to the Purchased Assets or the Business
a party to any written or oral:
(i) agreement, contract or commitment for the future purchase of, or
payment for, supplies or products, or for the performance of services by
another party, involving in any one case $5,000 or more;
(ii) agreement, contract or commitment to sell or supply products or
to perform services, involving in any one case $5,000 or more;
(iii) agreement, contract or commitment continuing over a period of
more than six months from the date hereof or exceeding $5,000 in value;
(iv) representative, sales agency, dealer or distributor agreement,
consulting contract or commitment;
(v) lease under which Seller is either lessor or lessee other than
with respect to the Real Property Leased;
(vi) note, debenture, bond, conditional sale agreement, equipment
trust agreement, letter of credit agreement, loan agreement or other
contract or commitment for the borrowing or lending of money (including
without limitation loans to or from employees) or guarantee, pledge or
undertaking of the indebtedness of any other Person, except for the Company
Loan described in Schedule 2.5 attached hereto;
(vii) agreement, contract or commitment for any charitable or
political contribution;
(viii) agreement, contract or commitment limiting or restraining
Seller or any successor or assign from engaging or competing in any lines
of business with any Person;
(ix) license, franchise, distributorship or other agreement, including
those that relate in whole or in part to any patent, trademark, trade name,
service xxxx or copyright or to any ideas, technical assistance or other
know-how of or used by the Business.
The foregoing contracts are referred to herein collectively as the "Material
Contracts" and each individually as a "Material Contract." Except as may be
disclosed on Schedule 2.1.4 hereto, (i) each of the Material Contracts, is valid
and enforceable in accordance with its terms, Seller is not, and to the
Knowledge of Seller, no other party thereto is in default in the performance,
observance or fulfillment of any material obligation, covenant or condition
contained therein, and no event has occurred that with or without the giving of
notice or lapse of time, or both, would constitute a default thereunder; (ii) no
advance payments have been received by Seller by or on behalf of any party to
any of the Material Contracts for services to be rendered or products to be
delivered to such party after the Closing Date; and (iii) no consent or approval
of any party to any Material Contract is required for the execution of this
Agreement or the consummation of the transactions contemplated hereby.
6.11 Permits. Licenses. Seller has all material permits, licenses,
registrations, orders and approvals of federal, state or local government or
regulatory bodies that are related to and/or are required to own and utilize the
Purchased Assets and/or operate the Business as currently operated (including
without limitation those required under any Environmental Law) (collectively,
the "Permits") and, except as described in Schedule 6.11, Seller is in
compliance with the material terms and conditions of the Permits. Schedule 2.1.6
hereto sets forth a correct and complete list of all Permits, each one of which
is in full force and effect. No suspension or cancellation of any of the Permits
is in effect, and to Seller's Knowledge, no suspension or cancellation is
threatened. Any Permits that cannot be transferred are identified on Schedule
2.1.6 hereto.
6.12 Compliance with Laws. Except as described in Schedule 6.12 hereto,
Seller has, except where such non-compliance did not have a material adverse
effect on the Purchased Assets or the results of operations of the Business, and
is presently conducting the Business so as to comply with all laws, ordinances
and regulations applicable to the conduct or operation of the Business or the
ownership or use of the Purchased Assets, except where noncompliance will not
have a material adverse effect.
6.13 Legal Proceedings. Except as described in Schedule 6.13 hereto, there
is no claim, action, suit, proceeding, investigation or inquiry pending before
any federal, state or other court or governmental or administrative agency or,
to Seller's Knowledge, threatened against the Business or any of the Purchased
Assets, or relating to the transactions contemplated by this Agreement that
could reasonably be expected to have a material adverse effect on the Purchased
Assets or the results of operations of the Business, nor does Seller know or
have reasonable grounds to know of any basis for any such claim, action, suit,
proceeding, investigation, or inquiry. Except as set forth on Schedule 6.13
hereto, Seller is not a party to or subject to the provisions of any judgment,
order, writ, injunction, decree or award of any court, arbitrator or
governmental, regulatory or administrative official, body or authority that
relates to the Purchased Assets or the Business or that could reasonably be
expected to affect the transactions contemplated by this Agreement.
6.14 Absence of Undisclosed Liabilities. Except as set forth in Schedule
6.14, Seller has no liabilities or obligations known to Seller relating to the
Business except (i) those liabilities and obligations set forth on the Balance
Sheet and not heretofore paid or discharged; (ii) those liabilities and
obligations arising after the Balance Sheet Date in the ordinary course of
business consistent with past practice under any agreement, contract or
commitment specifically disclosed on Schedule 2.1.4 hereto or not required to be
disclosed because of the amount involved; and (iii) those liabilities and
obligations incurred in the ordinary course of business consistent with past
practice since the Balance Sheet Date.
6.15 Books and Records. All material books of account and other financial
records of Seller directly relating to the Business (the "Books and Records")
are complete and correct in all material respects and have been, and will
continue to be, made available to Purchaser. All of the Books and Records have
been prepared and maintained in accordance with good business practices and,
where applicable, in conformity with GAAP (except as otherwise stated therein)
and in compliance in all material respects with applicable laws, regulations and
other requirements.
6.16 Employees. Schedule 1.16 sets forth a true and correct list of all
individuals (i) employed by Seller in the conduct of the Business and their
present position and rate of compensation and (ii) retained by Seller as
independent contractors, sales representatives or consultants (or similar
positions) and their present rate of compensation. The Seller's employees are
all at-will employees, and the Seller has the right to terminate the employment
of each of its employees at any time with or without cause and to terminate the
engagement of any of its independent contractors, sales representatives and
consultants at any time with or without cause without payment to such employee,
independent contractor, sales representative or consultant other than for
services rendered through termination and without incurring any penalty or
liability. The Seller's relations with its employees are currently on a good and
normal basis. The Seller does not have any belief that the transactions
contemplated by this Agreement will adversely affect relations with its
employees. Except as set forth on Schedule 6.16, all accrued wages, vacation
pay, and miscellaneous employee benefit expenses owed to any employees shall
have been paid in full as of the Closing Date and/or fully recorded as a
liability on the Balance Sheet. Except as set forth on Schedule 6.16, as of the
Closing Date, the Company shall have no liability, whether contingent,
liquidated or unliquidated, to any employee benefit plans, including, without
limitation, any ERISA Plans.
6.17 Labor Disputes. Except as described in Schedule 6.17 hereto, there are
no discrimination complaints nor any other kind of employment or labor related
disputes against Seller in connection with the Business pending before or, to
Seller's Knowledge, threatened before any federal, state or local court or
agency, and, to Seller's Knowledge, no material dispute respecting minimum wage
or overtime claims or other conditions or terms of employment exists. The
Business has not experienced any material labor disputes or any material work
stoppage due to labor disagreements within the past three years. With respect to
the Business and except to the extent set forth in Schedule 6.17: (i) there is
no unfair labor practice charge or complaint against Seller pending or, to
Seller's Knowledge, threatened, before the National Labor Relations Board; (ii)
there is no labor strike, slowdown or stoppage pending or, to Seller's
Knowledge, threatened against or affecting Seller; and (iii) no question
concerning representation has been raised within the past three years or, to
Seller's Knowledge, is threatened respecting the Employees. Neither the Seller
nor the Business is or has been (i) a party to or otherwise bound by any
collective bargaining or other type of union agreement or (ii) negotiating any
collective bargaining or other type of union agreement. The Seller is in
material compliance with all applicable laws, regulations and other requirements
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor practice.
6.18 Payroll Practice/Employee Arrangements.
6.18.1 Schedule 6.18 contains a complete list and description of each
employee benefit plan, including, but not limited to, those subject to
ERISA, and/or holiday, vacation or other bonus practice or any other
employee pay practice, arrangement, agreement or commitment (the "Payroll
Practice/Employee Arrangement"), that is maintained by Seller or with
respect to which Seller has any liability or obligation, whether actual or
contingent, with respect to Employees or their respective beneficiaries.
Except as set forth in Schedule 6.18, the Seller has not established,
maintained or contributed to any employee benefit plans, and the Seller has
not proposed any changes to any employee benefit plans now in effect. If
required by applicable law or regulation, Seller has properly submitted all
of Seller's employee benefit plans in good faith to meet the applicable
requirements of ERISA and/or the Code to the IRS for its approval within
the time prescribed therefor under applicable federal regulations.
Favorable letters of determination of such tax-qualified status from the
IRS are attached to Schedule 6.18.
6.18.2 Except as contemplated by Section 4.3, Seller has not taken any
action that may result in Purchaser being a party to, or bound by, any
ERISA Plan, and Purchaser shall have no liability under, or be subject to
any liability on account of, any ERISA Plan or Payroll Practice/Employee
Arrangement following the consummation of the transactions contemplated
hereby.
6.18.3 With respect to Seller's employee benefit plans, Seller will
have made, on or prior to the Closing Date, all payments required to be
made by it on or prior to the Closing Date and will have accrued (in
accordance with GAAP) as of the Closing date all payments due but not yet
payable as of the Closing Date, so there will not have been, nor will there
be, any Accumulated Funding Deficiencies (as defined in ERISA or the Code)
or waivers of such deficiencies. Seller has furnished Buyer with a true and
correct copy of the most current Form 5500 and any other form or filing
required to be submitted to any governmental agency with regard to all of
Seller's employee benefit plans and the most current actuarial report with
regard to all of Seller's employee benefit plans covering Employees. All of
Seller's employee benefit plans are, and have been, operated in material
compliance with their provisions and with all applicable law and
regulations, including, without limitation, ERISA and the Code and the
regulations and rulings thereunder. There have been no Reportable Events
(as defined in ERISA), no events described in Sections 4062, 4063 or 4064
of ERISA, and no termination or partial termination (including any
termination or partial termination attributable to this sale) of any of
Seller's employee benefit plans. There would be no liability of Seller
under Title IV of ERISA if any of Seller's employee benefit plans were
terminated as of the Closing Date. Seller has not incurred, and will not
incur, any withdrawal liability, nor does Seller have any contingent
withdrawal liability, under ERISA to any Multiemployer Plan (as defined in
ERISA or the Code). Seller has not incurred, and will not incur, any
liability to the Pension Benefit Guaranty Corporation (or any successor
thereto).
6.18.4 No ERISA Plan or other employee arrangement has provided for
the payment of retiree benefits by Purchaser.
6.18.5 Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due from Seller under
any of Seller's employee benefit plans, (ii) increase any benefits
otherwise payable under any of Seller's employee benefit plans, or (iii)
result in the acceleration of the time of payment or vesting of any such
benefits to any extent. There are no pending actions, claims or lawsuits
which have been asserted or instituted against any of Seller's employee
benefit plans, the assets of any of the trusts under such plans, the plan
sponsor, the plan administrator or against any fiduciary of any of Seller's
employee benefit plans (other than routine benefit claims). There are no
investigations or audits of any of Seller's employee benefit plans, any
trusts under such plans, the plan sponsor, the plan administrator or any
fiduciary of any of Seller's employee benefit plans which have been
threatened or instituted. Except as disclosed in Schedule 6.18, no event
has occurred or will occur which will result in liability to Seller in
connection with any employee benefit plan established, maintained, or
contributed to (currently or previously) by Seller or by any other entity
which, together with Seller, constitute elements of either (i) a controlled
group of corporations (within the meaning of Section 414(b) of the Code),
(ii) a group of trades or businesses under common control (within the
meaning of Sections 414(c) of the Code or 4001 of ERISA), (iii) an
affiliated service group (within the meaning of Section 414(m) of the
Code), or (iv) another arrangement covered by Section 414(o) of the Code.
6.19 No Finder. Except for Xxxxx & Co. (all of whose fees, expenses,
commissions and the like will be paid by Seller), Seller has not taken any
action that would give to any Person a right to a finder's fee or any type of
brokerage commission in relation to, or in connection with, the transactions
contemplated by this Agreement.
6.20 Interest in Business. Seller has not granted, and there is not
outstanding, any option, right, agreement or other obligation pursuant to which
any Person could claim a right to acquire in any way all or any part of, or
interest in, the Business.
6.21 Condition of Assets. All tangible assets and properties which are part
of the Purchased Assets are in good operating condition and repair and are
usable in the ordinary course of the Business consistent with past practice and
conform in all material respects to all applicable laws and regulations relating
to their construction, use and operation.
6.22 Affiliate Transactions. Schedule 6.22 hereto sets forth a summary of
all purchases of goods or services by Affiliates of Seller for the fiscal year
ended December 31, 1997, and for the period ended June 30, 1998. Except as set
forth in Schedule 6.22 hereto, neither the Shareholder nor any other Affiliates
of the Seller provide services or products to, or purchase services and products
from, the Seller.
6.23 Environmental Matters.
6.23.1 Except as set forth in Schedule 6.23 hereto, Seller has not
received any written notice, nor to Seller's knowledge has the Seller
received oral notice, relating to the Business or the Real Property
alleging any violation of any Environmental Law or any written request for
information from any governmental agency or other Person pursuant to any
Environmental Law, and, the Seller, with respect to the Business and the
Real Property, is in compliance in all material respects with all
applicable Environmental Laws;
6.23.2 Except as set forth in Schedule 6.23 hereto, Seller has not
released any Regulated Substances on or beneath the Real Property except in
compliance with Environmental Laws and in such a manner that does not
require response actions under the Environmental Laws;
6.23.3 Except as set forth in Schedule 6.23 hereto, Seller has not
received any notice or order from any governmental agency or private or
public entity in connection with the Business advising it that Seller is
responsible for or potentially responsible for the cost of investigation or
remediation of any Regulated Substance, nor is Seller currently paying for
any of the foregoing, and Seller has not entered into any agreements
pertaining thereto;
6.23.4 Except as set forth in Schedule 6.23 hereto, to Seller's
knowledge the Real Property does not contain any: (i) underground storage
tanks, (ii) underground injection xxxxx; (iii) septic tanks in which
process wastewater or any Regulated Substances have been disposed; (iv)
asbestos; (v) equipment using PCBs; or (vi) drums buried in the ground; and
6.23.5 Schedule 6.23 hereto identifies all environmental studies in
the possession of Seller or its Affiliates relating to the Real Property,
and true and complete copies of such studies have been delivered to
Purchaser.
6.24 Insurance. Schedule 6.24 sets forth a complete list of all insurance
policies maintained by Seller or its Affiliates and all insurance policies known
by Seller to have been maintained by any other Person which may provide any
coverage for Environmental Losses.
6.25 No Significant Items Excluded. Except for Excluded Assets, there are
no assets or properties of Seller or agreements, contract or commitments to
which Seller is a party that (i) relate to the Business and (ii) are of material
importance to the ongoing operation of the Business.
6.26 Customers. Seller has used its reasonable business efforts to
maintain, and currently maintains, good working relationships with all of its
customers. Schedule 6.26 hereto contains a list of the names of the twenty
customers that, for the year ended December 31, 1997, were the largest dollar
volume customers of products sold and provided by Seller. None of such
customers, or any other customers, has given Seller written notice terminating,
canceling or threatening to terminate or cancel any Contract, arrangement,
understanding or relationship with Seller.
6.27 Taxes. Seller has filed all state, county and local Tax returns
(including, without limitation, all income, excise, payroll, withholding,
property, sales, use, franchise and other tax returns and related information)
that are required to be filed by it and that were due prior to the date hereof
and the Closing Date, and has paid in full all Taxes, interest, penalties,
deficiencies and assessments shown as being due pursuant to such returns or
pursuant to any assessment received. Seller is not required to file any Federal
or foreign Tax returns. All Taxes and other assessments and levies that the
Seller has been required by law to withhold or to collect have been duly
withheld and collected and have been paid over to the proper governmental
authorities or are properly held by the Seller for such payment. Except as set
forth on Schedule 6.27, there are no audits, proceedings or other actions, nor
to the knowledge of Seller, have any audits, proceedings or other actions, for
the assessment or collection of additional Taxes of any kind for any period for
which returns have or should have been filed been threatened.
6.28 Subsidiaries. The Seller does not own, directly or indirectly, any
interest or investment (whether equity or debt) in any corporation, partnership,
limited liability company, business, trust, joint venture or other Person.
6.29 Completeness and Accuracy. All information furnished, to be furnished
or caused to be furnished to the Purchaser by the Seller and/or the Company with
respect to the Seller, the Company, the Business, the Purchased Assets, this
Agreement, the Ancillary Agreements and/or the transactions contemplated
hereunder or thereunder, is, or if furnished after the date of this Agreement,
will be, true and complete in all material respects and does not, and, if
furnished after the date of this Agreement, will not, contain any untrue
statement of material fact or fail to state any material fact necessary to make
such information not misleading.
6.30 Representations and Warranties on Closing Date. The representations
and warranties contained in this Section 6 are true and correct on the date
hereof and shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date.
6.31.Disclaimer of Other Representations and Warranties: Best Knowledge
(a) Seller does not make, and has not made, any representations or
warranties relating to Seller or the Business or otherwise in connection
with the transactions contemplated hereby other than those expressly set
forth herein. It is understood that any cost estimate, projection or other
prediction, any data, any financial information or any memoranda or
offering materials or presentations are not and shall not be deemed to be
or to include representations or warranties of Seller. No person has been
authorized by Seller to make any representation or warranty relating to
Seller, the Purchased Assets, the Business, or otherwise in connection with
the transactions contemplated hereby and, if made, such representation or
warranty must not be relied upon as having been authorized by Seller.
(b) Except as expressly set forth in the Agreement the Purchased
Assets and the Business are, and are understood by Purchaser to have been
sold on an "AS IS, WHERE IS" BASIS AND, EXCEPT AS TO THE EXPRESS WARRANTIES
SET FORTH IN THIS AGREEMENT, WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED, IN
LAW OR IN FACT, WITH RESPECT TO THE PURCHASED ASSETS, INCLUDING WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
(c) Whenever a representation or warranty made by Seller herein refers
to the knowledge or expectation of Seller, such knowledge or expectation
shall be deemed to consist only of the actual knowledge or expectation of
any of those persons listed on Schedule 6.31. Seller has not undertaken,
nor shall Seller have any duty to undertake, any investigation concerning
any matter as to which a representation or warranty is made as to the
Seller's knowledge or expectation.
ARTICLE VII
WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
7.1 Organization Good Standing, Power. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of Pennsylvania
and has all requisite corporate power and authority to own and lease the
Purchased Assets and to carry on the Business and to execute and deliver this
Agreement and the Ancillary Agreements to which Purchaser is a party, to
consummate the transactions contemplated hereby and thereby and to perform all
the terms and conditions hereof and thereof to be performed by it.
7.2 Authorization of Agreement and Enforceability. Purchaser has taken all
necessary corporate action to authorize the execution and delivery of this
Agreement and the Ancillary Agreements to which Purchaser is a party, the
performance by it of all terms and conditions hereof and thereof to be performed
by it and the consummation of the transactions contemplated hereby and thereby.
This Agreement constitutes, and the Ancillary Agreements, upon Purchaser's
execution and delivery thereof, will constitute, the legal, valid and binding
obligations of Purchaser, enforceable in accordance with their terms except to
the extent that enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws presently or hereafter in effect relating to
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
7.3 No Violations, Consents. The execution, delivery and performance by
Purchaser of this Agreement and the Ancillary Agreements to which Purchaser is a
party and the consummation of the transactions contemplated hereby and thereby
will not (with or without the giving of notice or the lapse of time, or both)
(i) violate any provision of the charter or bylaws of Purchaser, (ii) violate,
or require any consent, authorization or approval of, or exemption by, or filing
under any provision of any law, statute, rule or regulation to which Purchaser
is subject, (iii) violate any judgment, order, writ or decree of any court
applicable to Purchaser, (iv) conflict with, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of the performance
required by, or require any consent, authorization or approval under any
contract, agreement or instrument to which Purchaser is a party or any of its
assets is bound or (v) result in the creation or imposition of any Encumbrance
upon its assets, which violation, conflict, breach, default, acceleration or
Encumbrance, or the failure to make or obtain such filing, consent,
authorization or approval, with respect to the matters specified in clauses (ii)
through (v) could, individually or in the aggregate, reasonably be expected to
have a material adverse effect on Purchaser or prevent or delay the consummation
of the transactions contemplated by this Agreement.
7.4 Legal Proceedings. There is no claim, action, suit, proceeding,
investigation or inquiry pending before any federal, state or other court or
governmental or administrative agency or, to Purchaser's Knowledge, threatened
against Purchaser or any of Purchaser's properties, assets, operations or
businesses that might prevent or delay the consummation of the transactions
contemplated hereby.
7.5 No Finder. Purchaser has not taken any action which would give to any
Person a right to a finder's fee or any type of brokerage commission in relation
to, or in connection with, the transactions contemplated by this Agreement.
7.6 Financial Capability. Purchaser has the financial capability to
purchase the Purchased Assets and assume the Assumed Liabilities on the terms
and conditions contained in this Agreement and will have such capability on the
Closing Date.
7.7 Representations and Warranties on Closing Date. The representations and
warranties contained in this Section 7 are true and correct on the date hereof
and shall be true and correct in all material respects on and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date.
ARTICLE VIII
COVENANTS OF SELLER PRIOR TO CLOSING DATE
8.1 Required Actions. Between the date of this Agreement and the Closing
Date, Seller covenants that it will, in its conduct of the Business, except as
otherwise agreed by Purchaser in writing:
8.1.1 Access to Information. Give to Purchaser and its counsel,
accountants, consultants and other representatives, at their sole expense
and risk, reasonable access, during normal business hours, to such of the
properties, books, accounts, contracts and records of Seller as are
relevant to the Purchased Assets and the Business, and furnish or otherwise
make available to Purchaser all such information concerning the Purchased
Assets and the Business as Purchaser may reasonably request, provided that
the confidentiality of any data or information so acquired shall be
maintained as confidential by Purchaser and its representatives in
accordance with Section 9.1.1;
8.1.2 Conduct of Business. Operate the Business only in the usual,
regular and ordinary manner as such Business was conducted prior to the
date hereof, and use its commercially reasonable efforts until the Closing
Date to (i) preserve and keep intact the Business, (ii) keep available the
services of the Employees and (iii) preserve its relationships with
customers, suppliers and others having business dealings with Seller in
connection with the Business;
8.1.3 Maintenance of Properties. Maintain the Purchased Assets,
whether owned or leased, in good repair, order and condition, in accordance
with manufacturers' instructions and Seller's past practices, ordinary wear
and tear excepted;
8.1.4 Maintenance of Books and Records. Maintain the Books and Records
in the usual, regular and ordinary manner, on a basis consistent with past
practice;
8.1.5 Compliance with Applicable Law. Comply in all material respects
with all laws and regulations applicable to the Purchased Assets and to the
conduct of the Business;
8.1.6 Performance of Obligations. Perform all the obligations of
Seller relating to the Purchased Assets and the Business in accordance with
the past practices of Seller;
8.1.7 Approvals, Consents. Obtain in writing as promptly as possible
all other approvals and consents required to be obtained by Seller in order
to effectuate the transactions contemplated hereby and deliver to Purchaser
copies of such approvals and consents;
8.1.8 Notice of Material Damage. Give to Purchaser prompt written
notice of any material damage by fire or other casualty upon the Purchased
Assets or the Business;
8.1.9 Advise of Changes. Advise Purchaser promptly in writing of any
fact that, if known at the Closing Date, would have been required to be set
forth or disclosed in or pursuant to this Agreement, or which would result
in the breach in any material respect by Seller of any of its
representations, warranties, covenants or agreements hereunder;
8.1.10 Update Schedules. Promptly disclose to Purchaser any
information contained in the representations and warranties of Seller
contained in Article VI or in the Schedules to this Agreement which is no
longer complete or correct (including furnishing updated financial
statements);
8.1.11 Pay Employees to Closing Date. Pay all wages, salaries and
other sums due Employees through the close of business on the day prior to
the Closing Date;
8.1.12 Termination. Terminate the employment of all Employees as of
the Closing Date; and
8.1.13 Compliance with Agreement. Not undertake any course of action
inconsistent with satisfaction of the conditions applicable to it set forth
in this Agreement, and use all reasonable efforts to do all such acts and
take all such measures as may be reasonably necessary to comply with the
representations, agreements, conditions and other provisions of this
Agreement.
8.2 Prohibited Actions. Between the date of this Agreement and the Closing
Date, in its conduct of the Business, Seller shall not, except as otherwise
agreed by Purchaser in writing:
8.2.1 Sale of Purchased Assets. Sell, transfer, assign, lease,
encumber or otherwise dispose of any or all of the Purchased Assets other
than in the ordinary course of the Business consistent with past practices;
8.2.2 Business Changes. Change in any material respect the character
of the Business;
8.2.3 Incurrence of Material Obligations. Incur any material fixed or
contingent obligation or enter into any material agreement, commitment or
other transaction or arrangement that is not in the ordinary course of the
Business consistent with past practices;
8.2.4 Incurrence of Liens. Subject to lien, security interest or any
other Encumbrance, other than Permitted Encumbrances, any of the Purchased
Assets;
8.2.5 Change in Employee Compensation and Benefits. Increase the rate
of compensation paid, or pay any bonus, to anyone connected with the
Business, except for those increases or bonuses planned, in the ordinary
course of business consistent with past practices, or establish or adopt
any new pension or profit-sharing plan, deferred compensation agreement or
any other employee benefit plan or arrangement of any kind whatsoever
covering or affecting Employees;
8.2.6 Publicity, Advertisement. Except as required by law, publicize,
advertise or announce to any third party, except as required pursuant to
this Agreement to obtain the consent of such third party, the entering into
of this Agreement, the terms of this Agreement or the transactions
contemplated hereby;
8.2.7 No Release. Except in the ordinary course of the Business
consistent with past practices, cancel, release or relinquish any debts of
or claims against others held by Seller with respect to the Business or
waive any rights relating to the Business; and
8.2.8 No Termination or Modification. Terminate or modify any lease,
contract, governmental license, permit or other authorization or agreement
affecting the Business or the Purchased Assets or the operation thereof.
8.3 Exclusivity. From the date hereof until the earlier of the Closing or
the termination of this Agreement, neither the Seller nor its Affiliates or
agents shall, directly or indirectly, initiate, solicit or negotiate or enter
into any agreement with any other Person, or provide any information to any
other Person, with respect to or in furtherance of any proposal for a merger or
business combination involving, or acquisition of any interest in, or sale of
assets by, the Seller.
ARTICLE IX
COVENANTS OF PURCHASER PRIOR TO CLOSING DATE
9.1 Required Actions. Between the date of this Agreement and the Closing
Date, Purchaser shall, except as otherwise agreed by Seller in writing:
9.1.1 Confidentiality. Not publish or disclose and not authorize or
permit any of its officers, employees, directors, agents or representatives
to publish or disclose any trade secrets or other confidential information
or any data or business or financial books, records or other information of
or pertaining to Seller, which have been furnished to Purchaser by Seller
or to which Purchaser, or any of its officers, employees, directors,
agents, attorneys or accountants, or any financial institution have had
access during any investigation made in connection with this Agreement and
which is not otherwise available to Purchaser, except as required by law
(this section shall survive the termination of this Agreement);
9.1.2 Advise of Changes. Advise Seller promptly in writing of any fact
that, if known at the Closing Date, would have been required to be set
forth or disclosed in or pursuant to this Agreement, or which would result
in the breach in any material respect by Purchaser of any of its
representations, warranties, covenants or agreements hereunder;
9.1.3 Compliance with Agreement. Not undertake any course of action
inconsistent with satisfaction of the conditions applicable to it set forth
in this Agreement, and Purchaser shall use its best efforts to do all such
acts and take all such measures as may be reasonably necessary to comply
with the representations, agreements, conditions and other provisions of
this Agreement; and
9.1.4 Publicity: Advertisement. Except as required by law, not
publicize, advertise or announce to any third party the entering into of
this Agreement, the terms of this Agreement or the transactions
contemplated hereby. This section shall survive termination of this
Agreement.
9.2 Investigation. Prior to the Closing, Purchaser shall use reasonable
efforts to conduct its investigation of the Business in such a manner as to
prevent disruption of relations with the employees, customers and suppliers of
Seller.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder are subject to the fulfillment at or
prior to the Closing of each of the following conditions:
10.1 Accuracy of Representations and Warranties. The representations and
warranties of Seller contained in this Agreement shall have been true in all
material respects on the date hereof and shall be true in all material respects
on and as of the Closing Date with the same force and effect as though made on
and as of the Closing Date.
10.2 Performance of Agreement. The Seller shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants and conditions contained in this Agreement to be
performed or complied with by it at or prior to the Closing Date.
10.3 Seller's Certificate. Purchaser shall have received a certificate from
Seller, dated as of the Closing Date, reasonably satisfactory in form and
substance to Purchaser and its counsel, certifying as to the matters specified
in Section 10.1 and Section 10.2 hereof.
10.4 Secretary's Certificate. The Seller shall have delivered to the
Purchaser a certificate dated as of the Closing Date and signed on its behalf by
the Secretary of the Seller (a) stating that (i) the certified (by the Secretary
of State) copy of the Seller's Charter Document attached to the certificate is
true, correct and complete, (ii) no amendment to such Charter Document has
occurred since the date of the last amendment annexed (such date to be
specified), (iii) a true and correct copy of the Seller's bylaws as in effect on
the date thereof and at all times since the adoption of the resolutions referred
to below is annexed to such certificate, (iv) the resolutions by the Board of
Directors and the Seller's Board of Directors and sole shareholder authorizing
the execution, delivery and performance of the Agreement and Ancillary
Agreements (and all other documents and instruments executed in connection
herewith), and authorizing the transactions contemplated thereunder, were duly
adopted and continue in full force and effect (a copy of such resolutions to be
annexed to such certificate); (b) setting forth the Seller's incumbent officers
and including specimen signatures on such certificate or certificates as their
genuine signatures; and (c) confirming that the Seller is in good standing in
all jurisdictions where the ownership, lease or operation of property or the
conduct of its business requires it to qualify to do business, except for those
jurisdictions where the failure to be duly qualified, authorized and in good
standing would not have a material adverse effect upon the business, prospects,
operations, results of operations, assets, liabilities or condition (financial
or otherwise) of the Seller. The certification referred to above in (c) shall
attach certificates of good standing or similar certificates certified by the
Secretaries of State or other appropriate officials of such states.
10.5 Injunction. On the Closing Date, there shall be no injunction, writ,
preliminary restraining order or any order of any nature in effect issued by a
court of competent jurisdiction directing that the transactions provided for
herein, or any of them, not be consummated as herein provided and no suit,
action, investigation, inquiry or other legal or administrative proceeding by
any governmental body or other Person shall have been instituted which questions
the validity or legality of the transactions contemplated hereby or which if
successfully asserted is necessarily likely to have a material adverse effect on
the conduct of the Business.
10.6 Actions and Proceedings. All corporate actions of the Seller's Board
of Directors and sole shareholder required to carry out the transactions
contemplated by this Agreement or incidental thereto shall be reasonably
satisfactory to counsel for Purchaser.
10.7 Consents. Any third-party and governmental consents, approvals or
authorizations necessary for the conveyance of the Purchased Assets or valid
consummation of the transactions contemplated hereby shall have been obtained,
including, but not limited to, any consents or expiration or termination of
waiting periods pursuant to the HSR Act.
10.8 Searches. The Seller shall deliver to Purchaser at Closing the Uniform
Commercial Code and/or title searches for Encumbrances, judgments and tax liens
(collectively, the "Searches"), conducted by the Seller, showing at Closing that
the Purchased Assets and Business are (or upon payment at Closing by Seller of
the indebtedness thereby secured will be) free and clear of all Encumbrances and
judgments other than Permitted Encumbrances. If any of the Searches reveal
Encumbrances (other than Permitted Encumbrances) on any of the Purchased Assets,
the Seller shall remove the same by paying such indebtedness (and all costs
associated therewith) at or prior to Closing, and shall, at or prior to Closing,
deliver to the Purchaser executed Uniform Commercial Code termination statements
terminating all such Encumbrances, judgments and tax liens relating thereto.
10.9 Section intentionally left blank.
10.10 Due Diligence. Prior to Purchaser's delivery of the Due Diligence
Completion Certificate (as hereinafter defined), the Purchaser's completion and
satisfaction (as determined in Purchaser's sole discretion) with the results of
its due diligence review in connection with the Seller, the Business, the
Company and the transactions contemplated hereunder.
10.11 Opinion of Counsel. Purchaser shall have received the favorable
opinion of Xxxxxx Xxxxxxx, counsel for Seller, satisfactory to Purchaser and its
counsel as to the matters set forth in Sections 6.1, 6.2 and 6.3 hereof.
10.12 Title Insurance. To the extent applicable hereunder, Purchaser shall
have received, obtained at its expense, a title insurance policy issued by a
reputable title insurance company selected by Purchaser at regular rates
insuring Purchaser's title to the Real Property as good and marketable and free
of all Encumbrances except Permitted Encumbrances.
10.13 No Material Adverse Change. From and after the date of this
Agreement, there shall not have occurred or be threatened any development,
event, circumstance or condition that had or is reasonably likely to have,
individually or in the aggregate, a material adverse effect upon the Purchased
Assets or the business, operations, results of operations, assets, liabilities
or condition (financial or otherwise) of the Seller.
10.14 Miscellaneous. The Seller shall have complied with the provisions of
any and all laws relating to bulk transfers in connection with the sale of the
Purchased Assets, and shall have delivered to the Purchaser the following: (a)
to the extent available, the original invoices together with the manufacturer's
or dealer's guarantees and/or warranties and assignments thereof, covering the
Purchased Assets; (b) copies or originals of all files, books and records,
Permits, Contracts, applications, correspondence and other documents relative to
the Purchased Assets, the Business and the Seller, other than those included in
Excluded Assets; (c) receipts acknowledging the Purchaser's payment of the
Purchase Price; (d) Articles of Amendment amending the Seller's Charter
Documents to change its name to one which is not similar to its present
corporate name, which Articles of Amendment shall be in proper form and
accompanied by the proper check for filing with the Secretary of State; (e) all
keys and codes for the Purchased Assets; and (f) all such further documents and
instruments that may be reasonably requested by the Purchaser in order to more
effectively transfer title of the Purchased Assets to the Purchaser.
ARTICLE XI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligations of Seller are subject to the fulfillment at or prior to the
Closing of each of the following conditions:
11.1 Accuracy of Representations and Warranties. The representations and
warranties of Purchaser contained in this Agreement shall have been true in all
material respects on the date hereof and shall be true in all material respects
on and as of the Closing Date with the same force and effect as though made on
and as of the Closing Date.
11.2 Performance of Agreement. Purchaser shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants and conditions contained in this Agreement to be
performed or complied with by it at or prior to the Closing Date.
11.3 Purchaser's Certificate. Seller shall have received a certificate from
Purchaser, dated as of the Closing Date, reasonably satisfactory in form and
substance to Seller and its counsel, certifying as to the fulfillment of all
matters specified in Section 11.1 and Section 11.2 hereof.
11.4 Secretary's Certificate. Seller shall have received a certificate,
dated the Closing Date, of the Secretary or any Assistant Secretary of Purchaser
with respect to the incumbency and specimen signature of each officer or
representative of Purchaser executing this Agreement, the certificate referred
to in Section 11.3 and the Ancillary Agreements to which Purchaser is a party.
11.5 Injunction. On the Closing Date, there shall be no injunction, writ,
preliminary restraining order or any order of any nature in effect issued by a
court of competent jurisdiction directing that the transactions provided for
herein, or any of them, not be consummated as herein provided.
11.6 Actions or Proceedings. All corporate actions of Purchaser's Board of
Directors required to carry out the transactions contemplated by this Agreement
or incidental thereto shall be reasonably satisfactory to counsel for Seller.
11.7 Consents. Any third-party and governmental consents, approvals or
authorizations necessary for the conveyance of the Purchased Assets or the valid
consummation of the transactions contemplated hereby shall have been obtained,
including, but not limited to, any consents or expiration or termination of
waiting periods pursuant to the HSR Act.
11.8 Opinion of Counsel. Seller and Shareholder shall have received the
favorable opinion of Xxxxx X. Xxxxx, Esquire, counsel for Purchaser,
satisfactory to Seller and Shareholder and their counsel as to the matters set
forth in Sections 7.1, 7.2 and 7.3 hereof.
ARTICLE XII
OBLIGATIONS AFTER THE CLOSING DATE
12.1 Confidentiality. Seller hereby covenants and agrees that, except as
may be required by law, rule, regulation or court order, or as may be permitted
by this Agreement, it will not at any time reveal, divulge or make known to any
Person (other than Purchaser or as may be permitted by this Agreement, or its
agents or Affiliates) any information that relates to this Agreement, the
transactions contemplated hereby, the Purchaser (and its Affiliates) or the
Business (whether now possessed by Seller and/or the Company or furnished by
Purchaser after the Closing Date), including, but not limited to, customer lists
or other customer information, trade secrets or formulae, marketing plans or
proposals, financial information or any data, written material, records or
documents used by or relating to the Business (collectively, the "Confidential
Information"). This Section shall survive termination of this Agreement.
12.2 Covenant Not to Interfere. Seller and Purchaser hereby covenant and
agree that, unless this Agreement is terminated pursuant to Section 13.1, for a
period of five years after the Closing Date, they will not, whether for their
own account or for the account of any other Person, endeavor to entice away from
the other Party any person who is an employee of such Party.
12.3 Noncompetition. From the Closing Date and to the end of the fifth year
following the Closing Date, each of the Seller and its Affiliates (except those
Affiliates set forth on Schedule 12.3) will not, directly or indirectly, for
their benefit or any other Person's benefit, unless acting in accordance with
Purchaser's written consent, own, manage, operate, finance or participate in the
ownership, management, operation or financing of or permit its name to be used
by or in connection with any business or enterprise engaged in the manufacture,
processing, distribution or sale of Product in the United States or anywhere in
the world. Seller acknowledges that the provisions of this Section are
reasonable and necessary to protect the interests of Purchaser, that any
violation of this Section may result in an irreparable injury to Purchaser and
that damages at law may not be reasonable or adequate compensation to Purchaser
for violation of this Section and that, in addition to any other available
remedies, Purchaser shall be entitled to have the provisions of this Section
specifically enforced by preliminary and permanent injunctive relief without the
necessity of proving actual damages or posting a bond or other security and to
an equitable accounting of all earnings, profits and other benefits arising out
of any violation of this Section. In the event that the provisions of this
Section shall ever be deemed to exceed the time, geographic, product or other
limitations permitted by applicable law, then the provisions shall be deemed
reformed to the maximum extent permitted by applicable law. In no event shall
the provisions of this Section 12.3 be deemed to be binding upon Seller or any
Affiliate following the sale of substantially all of the assets or a majority of
the stock of any such entity to an unaffiliated third party.
12.4 Transition of Employees. From and after the Closing Date, Purchaser
and Seller shall cooperate to ensure an orderly transition of the Employees who
accept employment with Purchaser.
12.5 Administrative Assistance by Seller. To the extent applicable, except
as otherwise agreed, Seller shall provide such accounting, data processing and
other support services to Purchaser as are reasonably required in connection
with the transfer of the Business and the Purchased Assets to Purchaser without
cost to Purchaser for a period of not more than 90 days following the Closing
Date and thereafter for an additional period of up to 180 days at a reasonable
cost to be negotiated. Seller shall cooperate with Purchaser's auditors in
connection with the preparation of any report or filing required in connection
with the transactions contemplated hereunder, such cooperation to be provided by
Seller at no cost to Purchaser.
12.6 Further Assurances of Seller. From and after the Closing Date, Seller
shall, at the request of Purchaser, execute, acknowledge and deliver to
Purchaser, without further consideration, all such further assignments,
conveyances, endorsements, deeds, special powers of attorney, consents and other
documents, and take such other action, as Purchaser may reasonably request (i)
to transfer to and vest in Purchaser, and protect is rights, title and interest
in, all the Purchased Assets and (ii) otherwise to consummate the transactions
contemplated by this Agreement. In addition, from and after the Closing Date,
Seller shall afford Purchaser and its attorneys, accountants and other
representatives access, during normal business hours, to any books and records
relating to the Business that Seller may retain as may reasonably be required in
connection with the preparation of financial information, tax returns or other
reports of Purchaser.
12.7 Further Assurances of Purchaser. From and after the Closing Date,
Purchaser shall afford to Seller and its attorneys, accountants and other
representatives, access (with prior written notice), during normal business
hours, to such books and records relating to the Business as may reasonably be
required in connection with the preparation of financial information for periods
concluding on or prior to the Closing Date. Purchaser shall cooperate in all
reasonable respects with Seller with respect to its former interest in the
Business and in connection with financial account closing and reporting and
claims and litigation asserted by or against third parties.
12.8 Accounts Receivable or Other Payments. In the event that either Party
hereto at any time receives any funds from any third party that are properly
payable to the other Party hereto, the Party receiving such funds shall promptly
remit such funds to the Party entitled to such funds.
ARTICLE XIII
TERMINATION
13.1 Termination of Agreement. This Agreement may be terminated:
(i) by the mutual written consent of Seller and Purchaser;
(ii) by Seller or Purchaser if the Closing has not taken place on or
before September 30, 1998; provided, however, that no Party then in breach
of any representations and warranties or covenants hereunder shall have the
right to terminate;
(iii) by Purchaser, on the one hand, or Seller, on the other hand if
in the event of a breach of any representation or warranty of Seller or of
Purchaser, respectively, set forth in this Agreement which breach shall or
shall reasonably be expected to result in a material adverse effect on the
assets or business of Purchaser or Seller, as the case may be, or the
ability to consummate the transactions contemplated hereby;
(iv) by Seller or Purchaser if Purchaser has not delivered the Due
Diligence Completion Certificate on or before the expiration of the Review
Period; and
(v) by Purchaser if there has been a material adverse change in the
Business from the Balance Sheet Date.
13.2 Return of Documents. If this Agreement is terminated for any reason
pursuant to this Article XIII, each Party shall return to the other Party all
documents and copies thereof which shall have been furnished to it by such other
Party or, with the written agreement of the other Party, shall destroy all such
documents and copies thereof and certify in writing to the other Party any such
destruction.
13.3 Remedies. If this Agreement is terminated by Seller or Purchaser as
permitted under Section 13.1 and not as a result of a breach of a
representation, warranty or covenant or the failure of any Party to perform its
obligations hereunder, such termination shall be without liability of any Party.
If a Party terminates this Agreement as a result of a breach of a
representation, warranty or covenant by the other Party or the failure of the
other Party to perform its obligations hereunder, the nonbreaching Party shall
be entitled to all of its remedies under law and equity. If any condition
precedent to a Party's obligation is not met and if such Party does not exercise
its right to terminate this Agreement by reason thereof, the other Party shall
have no liability or obligation whatsoever to such Party by reason of the breach
of any representation, warranty, covenant or agreement set forth herein known to
such Party that gave rise to the failure of such condition precedent.
ARTICLE XIV
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
14.1 Survival of Representations, Etc. The representations and warranties
given by the Seller and the Purchaser under this Agreement shall not survive the
Closing, except that all representations and warranties contained in Section
6.27 shall survive the Closing for the period of the applicable statute of
limitations plus any extensions or waivers thereof by Seller.
14.2 Indemnification by the Seller. Seller shall indemnify, defend and hold
harmless Purchaser from and against any and all damages, claims, losses,
obligations, liabilities, deficiencies, interest, costs and expenses arising out
of or related to (i) payment of, or obligations in respect of, Taxes due with
respect to any period ending on or prior to the Closing Date and, with respect
to income taxes based on the operations of Seller prior to the Closing Date
and/or (ii) fraud or gross negligence (as defined in Section 2.4) on the part of
the Seller (collectively, "Fraud Actions"). Purchaser shall promptly give
written notice hereunder to Seller after becoming aware of any claim as to which
recovery may be sought against the Seller because of the indemnity in this
Section, and, if such indemnity shall arise from the claim of a third party,
shall permit the Seller to assume the defense of any such claim and any
litigation or other proceeding resulting from such claim; provided, that
Purchaser may, in any event, at its own expense, monitor and participate in, but
not control, the defense of any such claim or litigation. Notwithstanding the
foregoing, the right to indemnification hereunder shall not be affected by any
failure of Purchaser to give such notice (or by delay by Purchaser in giving
such notice) unless, and then only to the extent that, the rights and remedies
of the Seller shall have been prejudiced as a result of the failure to give, or
delay in giving, such notice. The notice required hereunder shall specify the
basis for the claim for indemnification to the extent ascertainable at the time
of the notice. Failure by Seller to notify Purchaser of its election to defend
any such claim or action by a third party within 10 days after notice thereof
shall have been given to the Seller shall be deemed a waiver by the Seller of
its right to defend such claim or action. Nothing herein shall be deemed to
prevent Purchaser from making a contingent claim for indemnification hereunder,
provided the Purchaser has reasonable grounds to believe that the claim or
demand for indemnification will be made and sets forth the estimated amount of
such claim to the extent then ascertainable. The Seller shall not, in the
defense of such claim or any litigation resulting therefrom, consent to entry of
any judgment (other than a judgment of dismissal on the merits without costs) or
enter into any settlement, except with the written consent, which consent shall
not be unreasonably withheld, of the Purchaser. If the Seller does not assume
the defense of any such claim by a third party, or litigation resulting
therefrom, after receipt of notice from the Purchaser, or if the Seller is
negligent in handling such defense, the Purchaser may, at the Seller's expense,
defend against such claim or litigation in such manner as it deems appropriate.
Seller shall pay promptly to Purchaser the amount of all damages, losses,
deficiencies, liabilities, costs, expenses, claims and other obligations to
which the foregoing indemnity relates.
14.3 Effect of Investigation. Any claim for indemnification shall not be
invalid, and shall be unaffected, as a result of any investigation or any due
diligence review by, or opportunity to investigate or perform due diligence
afforded to, the Purchaser, except where Purchaser had Knowledge of the material
facts giving rise to the claim for indemnification prior to the Closing Date.
ARTICLE XV
DUE DILIGENCE COMPLETION CERTIFICATE
AND OTHER AGREEMENTS
15.1 Due Diligence Completion Certificate. Within twenty-five days after
the date of this Agreement and delivery of the Schedules (the "Review Period"),
Purchaser shall deliver to the Seller a certificate (the "Due Diligence
Completion Certificate") evidencing completion and satisfaction of Purchaser's
due diligence (in its sole discretion) with the results of its due diligence
review ("Due Diligence Review").
15.2 Business Opportunity Fee. Each of the parties hereto acknowledges that
the other party has expended significant time and expense, and has forgone other
business opportunities in connection with the transactions contemplated
hereunder. Therefore, if the Closing does not occur on or before October 15,
1998 and, if the Agreement has not been terminated as permitted by Section 13.1
by October 15, 1998, each party hereunder is obligated under this Agreement to
consummate the transactions set forth herein (each such party's respective
conditions precedent having been satisfied), the party that breaches this
Agreement by not performing its obligations to consummate the transactions
contemplated hereunder shall pay the other party $500,000 in immediately
available funds on or before October 17, 1998.
ARTICLE XVI
GENERAL
16.1 Expenses. Except as otherwise provided in this Agreement, and whether
or not the transactions herein contemplated shall be consummated, Purchaser and
Seller and the Company shall pay their own fees, expenses and disbursements,
including the fees and expenses of their respective counsel, accountants and
other experts, in connection with the subject matter of this Agreement and all
other costs and expenses incurred in performing and complying with all
conditions to be performed under this Agreement. This Section shall survive the
termination of this Agreement.
16.2 Publicity. All notices to third parties and all other publicity
concerning the transactions contemplated by this Agreement shall be jointly
planned and coordinated by and between Purchaser and Seller. Except as may be
required by law, no Party shall act unilaterally in this regard without the
prior written approval of the other Party, such approval not to be unreasonably
withheld. This Section shall survive the termination of this Agreement.
16.3 Waivers. The waiver by either Party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
16.4 Binding Effect; Benefits; Assignment. This Agreement shall inure to
the benefit of, and shall be binding upon, the Parties hereto and their
respective successors and assigns. Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the Parties hereto, or
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement. Neither Seller nor Purchaser
shall assign, or otherwise transfer any interest in this Agreement to any other
Person, except Purchaser may assign this Agreement or an interest therein to a
Person which is an Affiliate of Purchaser or a purchaser of the Purchased Assets
from Purchaser.
16.5 Notices. All notices, requests, demands, elections and other
communications which either Party to this Agreement may desire or be required to
give hereunder shall be in writing and shall be deemed to have been duly given
if delivered personally, by a reputable overnight courier service which requires
a signature upon delivery, by mailing the same by registered or certified first
class mail, postage prepaid, return receipt requested, or by telecopying with
receipt confirmation (followed by a first class mailing of the same) to the
Party to whom the same is so given or made. Such notice, request, demand,
waiver, election or other communication will be deemed to have been given as of
the date so delivered or electronically transmitted or seven days after mailing
thereof.
16.5.1 If to Seller, to:
Xxxxx X. Xxxxx, President
JPE, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
With a copy to:
Xxxxxxx X. Xxxx, Esquire
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx XX 00000-0000
16.5.2 If to Purchaser, to:
Xxxxxxx X. Xxxxxx, President
R&B, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
With a copy to:
Xxxxx X. Xxxxx, Esquire
Vice President and General Counsel
R&B, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
or to such other address as such Party shall have specified by notice to the
other Party hereto.
16.6 Entire Agreement. This Agreement (including the Exhibits and Schedules
hereto) and the documents delivered pursuant hereto constitute the entire
agreement and understanding between the Parties hereto as to the matters set
forth herein and supersede and revoke all prior agreements and understandings,
oral and written, between the Parties hereto or otherwise with respect to the
subject matter hereof. No change, amendment, termination or attempted waiver of
any of the provisions hereof shall be binding upon any Party unless set forth in
an instrument in writing signed by the Party to be bound or their respective
successors in interest.
16.7 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
16.8 Headings. The article, section and other headings contained in this
Agreement are for reference purposes only and shall not be deemed to be a part
of this Agreement or to affect the meaning or interpretation of this Agreement.
16.9 Construction. Within this Agreement, the singular shall include the
plural and the plural shall include the singular, and any gender shall include
all other genders, all as the meaning and the context of this Agreement shall
require.
16.10 Governing Law and Choice of Forum. The validity and interpretation of
this Agreement shall be construed in accordance with, and governed by the
internal laws of the State of Delaware. All claims, disputes or causes of action
(with the exception of those to be arbitrated in accordance with Section 3.4.4)
relating to or arising out of this Agreement shall be brought, heard and
resolved solely and exclusively by and in a federal court situated in
Wilmington, Delaware or state court situated in New Castle County, Delaware.
Each of the parties hereto agrees to submit to the jurisdiction of such courts
and that such jurisdiction shall be proper for all purposes of this Agreement.
16.11 Cooperation. The Parties hereto shall cooperate fully at their own
expense, except as otherwise provided in this Agreement, with each other and
their respective counsel and accountants in connection with all steps to be
taken as part of their obligations under this Agreement.
16.12 Severability. If any term, covenant, condition or provision of this
Agreement or the application thereof to any circumstance shall be invalid or
unenforceable to any extent, the remaining terms, covenants, conditions and
provisions of this Agreement shall not be affected thereby and each remaining
term, covenant, condition and provision of this Agreement shall be valid and
shall be enforceable to the fullest extent permitted by law. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only as broad as is enforceable.
16.13 Attorneys' Fees. If a dispute arises among the Parties as a result of
which an action is commenced to interpret or enforce any of the terms of this
Agreement, the losing Party shall pay to the prevailing Party reasonable
out-of-pocket attorneys' fees, costs and expenses incurred in connection with
the prosecution or defense of such action.
* * * * *
The Parties have caused this Agreement to be signed in their respective
names by an officer thereof duly authorized as of the date first above written.
R&B, INC. ALLPARTS, INC.
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxx X. Xxxxxxx
------------------------- ---------------------------
Xxxxxx Xxxxxx Xxxxx X. Xxxxxxx
Executive VP Vice President and
Chief Financial Officer
The undersigned JPE, Inc., intending to be legally bound, hereby agrees to be
jointly and severally obligated and responsible in connection with Articles 3.4,
12 and 14 of this Asset Purchase Agreement.
JPE, Inc.
By: /s/ Xxxxx X. Xxxxx
-------------------------
Xxxxx Xxxxx, President
