EX-10.12
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made on or as of this
31st day of January, 1996 by and between Puro Water Group, Inc., a
corporation duly organized under the laws of the State of Delaware ("Buyer"),
Electrified Companies Inc., a corporation duly organized under the laws of
the State of New Jersey ("Seller"), Xxxxxx Xxxxxxxx, an individual with an
address of 00 Xxxxxxx Xxxxx, Xxxxx Xxxxx, Xxx Xxxxxx 00000 and Xxxx Xxxxxxxx,
an individual with an address of 0 Xxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000
(together, the "Stockholders").
WHEREAS Seller is the owner of certain assets used in connection with
the operation of its business; and
WHEREAS the Stockholders together own all of the issued and
outstanding capital stock of Seller; and
WHEREAS Buyer desires to purchase the hereinafter described assets of
Seller pursuant to the terms and conditions set forth herein; and
WHEREAS Seller desires to sell and transfer such assets to Buyer
pursuant to the terms and conditions set forth herein:
NOW, THEREFORE, for and in consideration of the premises and mutual
promises and covenants hereinafter contained, it is agreed between Buyer,
Seller and the Stockholders as follows:
1. SALE OF ASSETS. Subject to the terms and conditions set forth herein,
Seller shall sell, assign, convey, transfer and set over to Buyer, and Buyer
shall purchase, assume
and accept from Seller, free and clear of any and all liens, claims,
encumbrances, liabilities, obligations, security interests and debts except
as specifically set forth on Schedules 2 and 4.4 annexed hereto, full and
complete title to the following tangible and intangible properties and assets
of Seller, wherever located, set forth in the xxxx of sale described below
(the "Assets"): customer lists and customer databases, including names and
addresses, supplier lists, including names and addresses, software programs,
manuals, documentation and the like, patents, copyrights, trademarks,
tradenames, servicemarks, servicenames, programs (including source codes and
documentation) and other intellectual property of Seller including but not
limited to the names Electrified Companies and "American Eagle" as set forth
in Schedule 4.8 hereof (the "Intellectual Property") and any derivative
thereof, machinery, fixtures, furnishings, equipment, including equipment
rented to or on a no fee loan basis (e.g. coffee brewers) and in the
possession of Seller's customers, including but not limited to water coolers
and containers of all types (specifically excluding therefrom that certain
1990 Jaguar and artwork and other personal items of the Stockholders),
computer hardware, software and peripherals, supplies, inventory, accounts
receivable and rights under contracts and leases to which the Seller is a
party (specifically excluding therefrom a lease for a certain BMW automobile
and the rental deposit of $550 therefore) (the "Contracts"). In that
connection, on the date of the closing of the transactions contemplated
herein (the "Closing"), Seller shall deliver to Buyer: (i) a xxxx of sale in
the form of Exhibit 1(i) covering the Assets; (ii) all title documents
relating to all vehicles set forth on Schedule 1(ii) annexed
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hereto duly endorsed for transfer to Buyer; (iii) assignments of the
Intellectual Property; and (iv) assignments of the Contracts and if so
required, consent to such assignment from any other party thereto.
2. LIABILITIES. Buyer does not hereby and shall not at any time assume
any liabilities or obligations of Seller of any nature whatsoever except as
specifically set forth on Schedule 2 annexed hereto.
3. CONSIDERATION.
3.1 As consideration for the sale of the Assets Buyer shall (a) pay
to Seller on the date of the Closing (the "Closing Date"), Five Million
Dollars ($5,000,000) in the following manner: (i) One Million Dollars
($1,000,000) by bank or certified check or wire transfer; (ii) Five Hundred
Thousand Dollars ($500,000) on the terms and conditions set forth in and in
the form of that certain Promissory Note set forth on Exhibit 3.1(a)(ii)
annexed hereto (the "$500,000 Note"), which shall be secured by a letter of
credit provided by Buyer issued by a financial institution and in form and
substance reasonably satisfactory to Seller; (iii) Two Million Nine Hundred
Thousand Dollars ($2,900,000) on the terms and conditions set forth in and in
the form of that certain Promissory Note set forth on Exhibit 3.1(a)(iii)
annexed hereto (the "$2,900,000 Note"), which shall be secured by a letter of
credit provided by Buyer issued by a financial institution reasonably
satisfactory to Seller and in form and substance reasonably satisfactory to
Seller; and (iv) Six Hundred Thousand Dollars ($600,000) on the terms and
conditions set forth in and in the form of that certain
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Promissory Note set forth on Exhibit 3.1(a)(iv) annexed hereto (the "$600,000
Note"), which shall be secured by a letter of credit provided by Buyer issued
by a financial institution reasonably satisfactory to Seller and in form and
substance reasonably satisfactory to Seller, (b) pay and satisfy that certain
loan made by Summit Bank to Seller, having a current balance of $304,338.08
plus accrued interest through February 1, 1996 of $1,390.88, (c) pay and
satisfy that certain loan made by Broad National Bank to Seller, having a
current outstanding balance of $132,039.30 plus accrued interest through
February 1, 1996 of $32.81, and (d) assume those certain debts and
liabilities set forth on Schedule 2 annexed hereto (collectively the
"Consideration"). The Consideration shall be allocated in accordance with
Schedule 3.1.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AND THE
STOCKHOLDERS. Seller and the Stockholders jointly and severally represent,
warrant, and covenant to Buyer as of the date hereof and at the Closing as
follows:
4.1 EXISTENCE/AUTHORIZATION. Seller is a corporation duly organized
and validly existing under the laws of the State of New Jersey. Seller has
the corporate power to own and operate its properties and the Assets and to
carry on its business as it is now being conducted. See Schedule 4.1 annexed
hereto.
4.2 CORPORATE POWER. Each of Seller and the Stockholders has full
power and authority to execute and deliver this Agreement and such other
agreements and instruments to be executed and delivered by them pursuant
hereto, and to consummate the
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transactions contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by or on the part of Seller to authorize it
to execute, deliver and perform this Agreement and such other agreements,
instruments and transactions contemplated hereby have been duly and properly
taken.
4.3 BINDING OBLIGATION: GOVERNMENTAL CONSENTS.
(a) This Agreement has been duly executed and delivered by
Seller and the Stockholders and constitutes, and such other agreements and
instruments contemplated hereby when duly executed and delivered by Seller
and the Stockholders will constitute, legal, valid and binding obligations of
Seller and the Stockholders enforceable in accordance with their respective
terms, subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally from time to time in effect, and
subject to any equitable principles limiting the right to obtain specific
performance of certain obligations of Seller and the Stockholders hereunder
and thereunder.
(b) Except as set forth in Schedule 4.3(b), all consents of
governmental and other regulatory authorities and of other parties required
to be received by or on the part of Seller and the Stockholders to enable
them to enter into and carry out this Agreement and the transactions
contemplated hereby have been obtained. Without limiting the foregoing, and
except as set forth in Schedule 4.3(b), Seller and the Stockholders have made
all such filings and submissions which may be required under
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applicable law for Seller and the Stockholders to consummate the transactions
contemplated hereby.
(c) Except as set forth in Schedule 4.3(c), neither the
execution and delivery of this Agreement nor the consummation by Seller and
the Stockholders of the transactions contemplated hereby will (i) violate or
conflict with any of the provisions of the Articles of Incorporation or
By-laws of Seller; or (ii) violate or constitute a default under any note,
bond, mortgage, indenture, contract (including but not limited to the
Contracts), agreement, license or other instrument or any order, judgment or
ruling of any governmental authority to which Seller or the Stockholders is
or are a party or by which any of their respective properties are bound.
(d) No other consent, approval, license, permit, or
authorization of, or registration, declaration or filing with, any state or
federal court, administrative agency or commission or other governmental
authority or instrumentality, or of any other third party, is required to be
obtained or made by Seller or the Stockholders in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby other than those that may be required solely
by reason of Buyer's (as opposed to any third party's) participation in the
transactions contemplated hereby.
4.4 TITLE TO ASSETS.
Seller has good and valid title to all of the Assets, free and
clear of all mortgages, liens, or encumbrances of any nature whatsoever
except such as are disclosed on
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Schedule 4.4 hereto (the "Permitted Liens"). The performance by Seller and
the Stockholders of their obligations hereunder will vest in the Buyer full
and complete title in and to the Assets, free and clear of any and all liens,
claims and encumbrances of any nature whatsoever except the Permitted Liens.
4.5 CONDITION OF ASSETS. All of the Assets described on Schedule 1(i)
are in operating condition and repair, except those Assets currently
undergoing repair, maintenance and/or renovation.
4.6 CUSTOMER INFORMATION. At the Closing, Seller shall deliver to
Buyer hard copy and electronic or magnetic media files, to the extent such
exist, containing customer lists and customer databases used by or for Seller
(the "Customer Information") as of Closing. The Customer Information will set
forth the name and address of all of Seller's customers as of the Closing
Date, to the best of Seller's knowledge and belief. Except as set forth in
Schedule 4.6, none of Seller's materially large (i.e. in excess of $6,000 per
year in gross sales) customers has ceased within the last 120 days, nor
indicated any intention to materially reduce the amount of such business.
Seller is the owner of all right, title and interest in and to the Customer
Information and Seller is not a party to any agreement to lease, sell, or
license said Customer Information, except as set forth in Schedule 4.6
annexed hereto.
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4.7 REAL PROPERTY. Schedule 4.7(a) sets forth a complete list of all
real property and interests in real property leased by Seller. Schedule 4.7(b)
sets forth a complete list of all real property and interests in real
property owned by Seller. Seller has good leasehold interest in all real
property shown on Schedule 4.7(a) which are leased by Seller and good fee
title interest in all real property and interests in real property shown on
Schedule 4.7(b) which are owned by Seller. To the best of Seller's knowledge,
Seller is in compliance with all statutes, laws, rules, regulations and
ordinances of any governmental authority or instrumentality relating to its
leased real property and the use thereof by Seller, including but not limited
to all federal, state and local statutes, laws, rules, regulations and
ordinances relating to environmental matters.
4.8 INTELLECTUAL PROPERTY. Schedule 4.8 sets forth a true and
complete list of all patents, trademarks, trade names, servicemarks,
servicenames, copyrights and applications therefor, programs (including
source codes and other documentation) and other intellectual property owned
by or registered in the name of, or used in the business of, Seller
(collectively, the "Intellectual Property"). Except as set forth in
Schedule 4.8, to the best of Seller's knowledge, Seller possesses adequate
and enforceable rights to use in its business as presently conducted (without
payment) all of its Intellectual Property. To the best of Seller's knowledge,
use of the Intellectual Property by Seller does not violate or infringe upon
any rights of any third parties, and there are no opposition or cancellation
proceedings or infringement suits pending or, to the knowledge of Seller and
the Stockholders,
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threatened with respect to any of the Intellectual Property. Seller shall
cooperate with Buyer subsequent to Closing to perfect Buyer's right and
interest to any such Intellectual Property including the registration
thereof. Seller shall, as soon as practicable after the Closing, cause the
name of Seller to be changed to a name that does not include the words
Electrified Companies, or any combination or derivation therof.
4.9 INTENTIONALLY OMITTED
4.10 LITIGATION. Except as indicated on Schedule 4.10, there is no
action, suit, claim, proceeding at law or in equity by any person or entity,
or any arbitration or administrative or other proceeding by or before any
board, panel, tribunal or other such entity, or to the knowledge, information
and belief of Seller and the Stockholders, any investigation by any
governmental or other instrumentality or agency, pending, or, to the
knowledge, information and belief of Seller and the Stockholders, threatened,
against or affecting the Assets of the transactions contemplated hereby or
which could affect the right or ability of Seller or the Stockholders to
transfer and sell the Assets to the Buyer or otherwise consummate the
transactions contemplated herein. Neither Seller nor the Stockholders knows
of any valid basis for any such action, proceeding or investigation. Seller
is not subject to any judgement, order or decree entered in any lawsuit or
prodeeding, nor is Seller or the Stockholders aware of any circumstances that
could give rise to a claim which may have a material adverse affect on the
Assets or on any of Seller's operations, business practices or prospects or
on its ability to acquire any property or conduct business.
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4.11 FINANCIAL STATEMENTS.
(a) Schedule 4.11(a)(i) sets forth the reviewed balance sheet of
Seller as of December 31, 1994 (the "1994 Balance Sheet") and the related
statement of income and retained earnings and cash flows for the year (12
months) then ended (collectively the "1994 Financial Statements"). Schedule
4.11(a)(ii) sets forth the internally prepared year-end balance sheet of
Seller as of December 31, 1995 (the "1995 Balance Sheet") and the related
statement of income earnings for the year (12 months) then ended
(collectively the "1995 Financial Statements"). To the actual knowledge of
Seller, the information in Seller's books and records upon which the 1994 and
1995 Financial Statements have been based is true, accurate and complete
subject to the disclosures set forth in the Schedules hereto.
(b) Subject ot Schedule 4.11(b), the 1994 and 1995 Financial
Statements have been prepared from the books and records of the Seller and
the 1994 Financial Statements have been reviewed in conformity with generally
accepted accounting principles. Generally accepted accounting principles
require that management record an allowance for doubtful accounts against the
outstanding accounts receivable at the balance sheet date. Management has not
recorded this allowance, but rather uses the direct write-off method.
(c) From January 1, 1996 through the Closing Date, Seller has
conducted its business and affairs in the ordinary course; there has been no
material adverse change in the assets, liabilities, sales, income or business
of Seller since January 1, 1996, nor
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do the turnover, costs (direct or indirect) or margin of profitability of
Seller show any material deterioration compared with such position as of
December 31, 1995; since January 1, 1996, no debtor has been released by
Seller on terms that it pay less than the book value of its debt, and, except
as set forth on Schedule 4.11(c), no debt owing to Seller has been deferred,
subordinated or written-off or has proved to any extent unrecoverable (a
"Write-Off"), and no debt shall be the subject of a Write-Off from the date
hereof through the date of the Closing; none of the outstanding receivables
or claims of Seller are subject to the expiration of any statutes of
limitations before the Closing Date; Seller has not introduced any material
change with respect to the operation of its business, including its method or
practice of accounting; and Seller has not increased the carrying value of
any of its assets (whether tangible or intangible).
4.12 UNDISCLOSED LIABILITIES. Except as set forth in Schedule 4.12,
Seller does not have any liabilities or obligations of any nature (whether
accrued, absolute, contingent, unasserted or otherwise) required by generally
accepted accounting principles and practices to be reflected on a balance
sheet or in notes thereto, except (i) as set forth or reflected on the 1994
and 1995 Balance Sheets or described in notes therein (and Balance Sheet
Allowances not reflected therein), (ii) for items disclosed in this Agreement
or the Schedules or Exhibits hereto, (iii) for purchase contracts and orders
for inventory in the ordinary course of business consistent with past
practice, and (iv) for liabilities and obligations incurred in the ordinary
course of business consistent with past practice since the date of
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the 1995 Balance Sheet and not in violation of this Agreement (all
liabilities and obligations set forth in (i)-(iv) above being herein called
"Disclosed Liabilities").
4.13 COMPLETE INFORMATION. Seller and the Stockholders have heretofore
or herein and in the Schedules attached hereto, furnished to Buyer and its
agents information relating to the business and operations of Seller. Seller
and the Stockholders have not knowingly withheld nor omitted any material
adverse information from Buyer. All such information is complete and accurate
in all material respects.
4.14 TAXES.
(a) For purposes of this Agreement: (i) "Tax" or "Taxes" shall
mean, without limitation, all local, state, federal and foreign or other
taxes (including franchise taxes or fees) and assessments, any Social
Security taxes, any direct tax, withholding tax, payroll tax, any stamp
taxes, sales or use taxes and capital taxes, and customs charges, including
all interest, penalties and additions imposed with respect to such amounts
not disclosed on the 1994 or 1995 Financial Statements, or set forth
on Schedule 4.11(a)(i) or (ii).
(b) Seller has duly filed in a timely manner all Tax, employee and
other reports and returns required to be filed by it. Such reports and
returns were completed in accordance with applicable laws and were true and
correct in all material respects. Seller has duly paid all Taxes and other
charges due and payable or lawfully claimed to be due from it by every Tax
authority for the periods covered by such reports and
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returns which are not prescribed by the statute of limitations. Seller has
withheld all Taxes required to be withheld by an employer in the State of New
Jersey and covenants to make all appropriate remittances in connection
therewith in a timely manner, except for such taxes due for the current
period, payment of which is not yet due, which payment will be made by the
Buyer.
(c) Any sales or other tax payable in connection with the sale of
the Assets to Buyer hereunder shall be paid by Seller.
4.15 INTENTIONALLY OMITTED
4.16 COMPLIANCE WITH APPLICABLE LAWS
(a) Neither Seller nor the Stockholders have received notice of any
violation of any applicable statutes, laws, ordinances, rules and regulations
of any governmental authority or instrumentality, domestic or foreign
(including, without limitation, laws relating to environmental matters) with
respect to the Assets of the Seller.
(b) To the best of Seller's knowledge, Seller has obtained and is in
possession of all permits, approvals and consents (the "Permits") of all
governmental authorities and/or instrumentalities necessary for the operation
of the business related to the Assets. A schedule of each of each of the
Permits along with expiration dates is annexed hereto as Schedule 4.16(b).
All of the Permits are in full force and effect, except as set forth in
Schedule 4.16(b). None of the Permits have been revoked and no issuer of any
of the Permits has threatened or indicated an intention to revoke any Permit.
Buyer acknowledges
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that the Permits are non-transferrable. Seller agrees to provide Buyer
with reasonable assistance and cooperation in obtaining the Permits.
(c) Except as set forth on Schedule 4.16(c), to the best of Seller's
knowledge, during the period of Seller's operations on each of the premises
which it occupies, there are no present or past conditions in any way
relating to any Assets, including without limitation leased real property,
involving or resulting from any past or present spill, discharge, leak,
emission, injection, escape, dumping or release of any kind whatsoever of any
substance or exposure of any type in any workplace or to any medium,
including, but not limited to, air, land, surface waters or ground waters, or
from any generation, transportation, treatment, storage or disposal of waste
materials, raw materials or products of any kind or from storage, use or
handling of any hazardous or toxic materials or other substances that is
likely to lead to imposition of any liability (collectively, "Environmental
Matters"). Except as set forth in Schedule 4.16(c), there are no above-ground
or underground storage tanks or septic systems on any property of Seller.
Without limiting any other indemnificiation set forth herein, Seller and the
Stockholders hereby jointly and severally agree to indemnify and defend Buyer
against and hold it harmless from any loss, liability, claim, damage or
expense (including reasonable legal fees and expenses) suffered or incurred
by Buyer to the extent arising from Environmental Matters, which resulted
from Seller's conduct.
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4.17 INVENTORIES. Except as set forth herein, the inventories reflected
on the 1994 Balance Sheet, the 1995 Balance Sheet or thereafter acquired by
Seller consist of items of a quality and quantity usable in the ordinary
course of Seller's business consistent with past practice at the amounts
reflected on said Balance Sheets (which amounts reflect normal obsolescence)
in the case of inventories reflected therein, or, in the case of such
inventories acquired after the date of the 1995 Balance Sheet, at the amounts
reflected on the books of Seller, subject to market price fluctuations in the
ordinary course of business beyond the control of Seller. Except as set forth
herein, the inventories acquired on or after January 1, 1996 consist of items
of a quality and quantity usable in the ordinary course of Seller's business
consistent with past practice at the amounts reflected on the books of Seller
(which amounts reflect normal obsolescence), subject to market price
fluctuations in the ordinary course of business beyond the control of Seller.
4.18 SALARY INCREASES AND BONUSES. Since January 1, 1996, Seller has
not paid any bonuses or granted any salary increases except (i) bonuses and
salary increases of non-executive employees in the ordinary course of
business in accordance with past practice.
4.19 INTENTIONALLY OMITTED
4.20 LABOR LAW MATTERS. To the best of Seller's knowledge, Seller (i)
is in full compliance with all applicable federal and state laws relating to
employment and employment policies, wages, hours, term and conditions
employment, and (ii) has complied in all respects with social security and
pension payment obligations.
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4.21 RECORDS AND SYSTEMS. Except as set forth in Schedule 4.8, all the
records and systems (including but not limited to computer systems) and all
data and information of Seller are recorded, stored, maintained or operated
or otherwise held by Seller, are included in the Assets, and are not wholly
or partly dependent on any facilities which are not under the exclusive
ownership or control of Seller.
4.22 SOFTWARE LICENSES. Except as set forth on Schedule 4.8, Seller is
licensed to use all software necessary to enable it to continue to conduct
its business and use its computerized records for the foreseeable future in
the same manner in which they have been used prior to the Closing Date. All
such licenses to use are included in the Assets, and Seller does not share
any user rights in respect of such software with any other person or entity,
but consent is required to assign Seller's rights in such licenses to Buyer.
Seller uses an outside payroll service to which it transmits its payroll
electronically.
4.23 EMPLOYEES, COMPENSATION, BENEFIT PLANS AND COLLECTIVE
BARGAINING AGREEMENTS
(a) Seller is not a party to any written non-union employment
agreements.
(b) Without limiting any other indemnification set forth
herein, Seller and the Stockholders hereby jointly and severally agree to
indemnify Buyer, defend against and hold Buyer harmless from and against any
and all claims and/or lawsuits of past or present employees of Seller arising
in connection with any act or omission of Seller or its
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employees and/or agents occurring on or prior to the Closing Date
attributable to the employment by Seller of said employees.
(c) Except as set forth on Schedule 4.23(c), no sum is due to
any current or past employee of Seller arising from his or her employment or
services contract or other arrangement.
(d) Except for the distribution of a divided to the
Stockholders in the approximate aggregate amount of $22,000 as of December
31, 1995, Seller has not made or agreed to make any payments to employees of
Seller or retired employees of Seller that will not be tax deductible.
(e) To the best of Seller's knowledge, Seller has
continuously complied, in all respects, with all applicable requirements of
the labor law, social security law, health and safety regulations and all
other regulations concerning the employment of Seller's employees.
(f) To the best of Seller's knowledge, Seller is not in
default of any of its labor related obligations and there exists no
employment dispute of any kind related to employment matters nor to Seller's
or the Stockholders' knowledge is any such dispute threatened, except as set
forth in Schedule 4.23(c). Seller has complied in all material respects with
the payment and withholding of all applicable labor and related taxes and
contributions, and has supplied in this regard all required information.
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(g) Except as set forth on Schedule 4.23(g), no employee or
group of employees of Seller is a member of any labor union, nor is Seller a
party to or bound by any collective bargaining agreement or other agreement
covering the rights and obligations of Seller to its employees.
(h) Attached as Schedule 4.23(h) is a list of all pension,
retirement or employee health or welfare benefit plans, maintained by Seller
for the benefit of Seller's past and present employees. Except for amounts
due and payable for the current payroll period, all amounts to be paid under
such plans have been completely and timely paid. There is no unfunded
liability with respect to such plans, except for current obligations. Without
limiting any other indemnification set forth herein, Seller and the
Stockholders hereby jointly and severally agree to indemnify Buyer and defend
against and hold Buyer harmless from and against any and all claims and/or
lawsuits arising from Seller's conduct, relating to any pension, retirement
or employee health, welfare or benefit plan maintained by Seller and any
successor liability or obligation in connection therewith.
4.24 RELEASE OF SECURITY INTERESTS. As of the Closing, Seller and the
Stockholders will have obtained an absolute release or waiver of security
interest from all persons and entities maintaining a security interest (other
than Permitted Liens) in any of the Assets.
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4.25 NON-COMPETITION/NON-SOLICITATION. Seller covenants that it shall
not, directly or indirectly, for a period of Five (5) years after the Closing
Date, without prior express written consent of the Buyer:
(i) be engaged in any work or other activity anywhere within
300 miles of East Orange, New Jersey, its territories or possessions
(the "Territory"), or elsewhere if the business located in such
other jurisdiction includes conduct set forth in the Paragraph 4.25(i)
in the Territory, whether as owner, stockholder, partner, consultant,
employer, employee or otherwise, involving the manufacture, marketing
sales or distribution of a product or service the same or similar to a
product or service produced and/or marketed and/or provided by the
Seller as of the date hereof or any of its subsidiaries or affiliated
companies as of the Closing Date,
(ii) either on behalf of itself or any other person, firm or
company anywhere in the Territory, or elsewhere if the business located
in such jurisdiction includes conduct set forth in this Paragraph
4.25(ii) in the Territory, canvass or solicit orders from or in any
way interfere with any person, firm or company who shall at any time
have been directly or indirectly a customer or customers of the Seller
as of the date hereof, or any of its subsidiaries or affiliated
companies, nor
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(iii) employ, solicit or endeavor to entice away from the Seller as of
the date hereof or any of its subsidiaries or affiliated companies any
person who is or was an employee of such company during the three (3)
years immediately preceding the Closing Date.
4.26 INTENTIONALLY OMITTED
4.27 BROKERS/FINDERS. Each party represents to the other that it has
not employed any broker, finder, investment banker or other person and none
of the foregoing has incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated
hereby. Without limiting any other indemnification set forth herein, each
party hereby jointly and severally indemnifies the other and holds the other
harmless from and against any and all claims, liabilities and/or causes of
action for any brokerage fees, commissions, finders fees or the like arising
out of the transactions contemplated hereby.
4.28 ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE. The accounts receivable
and accounts payable of the Seller are fairly reflected in the 1994 and 1995
Balance Sheets and will be fairly reflected on the books of the Seller at the
date of Closing, except as disclosed in the footnotes thereto and the
schedules hereto.
4.29 BUSINESS INTERESTS. Other than as set forth on Schedule 4.29,
Seller does not directly or indirectly own any capital stock of or other
equity interest in any corporation, partnership, limited liability company or
other entity, and Seller is not a
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member of or participant in any partnership, joint venture or similar entity.
Other than as set forth in Schedule 4.29, from January 1, 1996 through the
date of the Closing, Seller has not make or caused to be made any payment to
any subsidiary or affiliate of Seller outside of the ordinary cause of
Seller's business.
4.30 INTENTIONALLY OMITTED
4.31 EMPLOYMENT/CONSULTING AGREEMENTS. Seller and the Stockholders
shall, at the Closing, cause Xxxxx Xxxxxxxx to enter into an Employment
Agreement with Buyer in the form of Exhibit 4.31 (a) annexed hereto. Each of
the Stockholders shall, at the Closing, enter into a Consulting Agreement
with Buyer in the form of Exhibit 4.31(b)(i) or (ii), as applicable, annexed
hereto.
4.32 DIVIDENDS. Other than as set forth on Schedule 4.32, Seller has
not, from January 1, 1996 through the date of the Closing, paid or declared
any dividend with respect to any or all of Seller's capital stock.
4.33 NOTE RECEIVABLE. Seller hereby confirms that the principal balance
due under that certain promissory note in the original principal amount of
$200,000, made by Lectromatic Ice Machine Service, Inc. was $148,267 as of
December 31, 1995, that the maker of said note has made no payments to Seller
thereunder out of the ordinary course and/or not in accordance with the terms
thereof since said date and that, to the best of Seller's knowledge, no
defense exists to the enforcement and collection of said promissory note nor
to the enforcement of any other instrument serving as security therefor.
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4.34 STATEMENTS AS TO KNOWLEDGE. All representations, warranties, and
covenants of Seller and/or the Stockholders set forth herein which are
qualified as to knowledge are deemed to be made after diligent inquiry by
each party making such representations, warranties and covenants and with
respect to the Seller, shall be limited to the actual knowledge of the
Stockholders.
5. REPRESENTATIONS WARRANTIES AND COVENANTS OF BUYER.
Buyer hereby represents, warrants and covenants to Seller and the
Stockholders as of the date hereof and at the Closing as follows:
5.1 EXISTENCE. Buyer is a corporation duly organized and validly
existing under the laws of the State of Delaware. Buyer has the corporate
power to own and operate its properties and to carry on its business as it is
now being conducted.
5.2 CORPORATE POWER. Buyer has full corporate power and authority to
execute and deliver this Agreement and such other agreements and instruments
to be executed and delivered by it pursuant hereto, and to consummate the
transactions contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by or on the part of the Buyer to authorize
it to execute, deliver and perform this Agreement and such other agreements,
instruments and transactions contemplated hereby have been duly and properly
taken.
5.3 BINDING OBLIGATION: GOVERNMENTAL CONSENTS. This Agreement has been
duly executed and delivered by Buyer and constitutes, and such other
agreements and
22
instruments when duly executed and delivered by Buyer will constitute, legal,
valid and binding obligations of Buyer enforceable in accordance with their
respective terms, subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally from time to time in
effect, and subject to any equitable principles limiting the right to obtain
specific performance of certain obligations of Buyer hereunder and
thereunder. All consents of governmental and other regulatory authorities and
of other parties required to be received by or on the part of Buyer to enable
it to enter in to and carry out this Agreement and the transactions
contemplated hereby have been obtained. Without limiting the foregoing, Buyer
has made all such filings and submissions which may be required under
applicable law for Buyer to consummate the transactions contemplated hereby.
Neither the execution and delivery of this Agreement nor the consummation by
Buyer of the transactions contemplated hereby will (i) violate or conflict
with any of the provisions of the Articles of Incorporation or By-laws of
Buyer; or (ii) violate or constitute a default under any note, bond,
mortgage, indenture, contract, agreement, license or other instrument or any
order, judgment or ruling of any governmental authority to which Buyer is a
party or by which any of its properties are bound. No other consent,
approval, license, permit, or authorization of, or registration, declaration
or filing with, any state or federal court, administrative agency or
commission or other governmental authority or instrumentality, or of any
other third party, is required to be obtained or made by Buyer in connection
with
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the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby other than those that may be required solely
by reason of Seller's or the Stockholders' (as opposed to any third party's)
participation in the transactions contemplated hereby.
6. INDEMNIFICATION.
6.1 INDEMNIFICATION BY SELLER AND THE STOCKHOLDERS. Seller and the
Stockholders hereby jointly and severally agree to indemnify and defend Buyer
against and hold it harmless from any loss, liability, claim , damage or
expense suffered or incurred by Buyer to the extent arising from any breach
of any representation, warranty or covenant of the Stockholders and/or
Seller contained in this Agreement. In addition, Seller and the Stockholders
hereby jointly and severally agree to indemnify Buyer against all liability
for reasonable legal, accounting and other fees and expenses directly
attributable to any such indemnification. Notwithstanding anything contained
herein to the contrary, the foregoing indemnification. Notwithstanding
anything contained herein the to contrary, the foregoing indemnification
shall be limited by and subject to the following:
(a) There should be no indemnification by the Seller for any
claim or group of claims which, in the aggregate, are an amount less than
$35,000.00, except with respect to claims arising as a result of Seller's
nonpayment of New York State sales tax, for which claims there shall be no
minimum amount.
(b) The amounts of such indemnification shall not exceed the
sum of $600,000, except in the case of material misrepresentation or omission
with respect to
24
paragraphs 4.4 or 4.12, in which case the maximum amount of said
indemnification under this agreement in the aggregate, shall be the sum of
$1,000,000.
(c) The foregoing indemnification shall, in any event,
expire and be null, void and of no further effect two (2) years from the
Closing Date hereof, provided, however, that such expiration shall in no way
affect any claim for indemnification which had been asserted prior to said
date.
6.2 INDEMNIFICATION OF BUYER. Buyer shall indemnify and defend
Seller and the Stockholders against, and hold them harmless from, any loss,
liability, claim, damage or expense (including reasonable legal fees and
expenses) suffered or incurred by Seller and the Stockholders to the extent
arising from any breach of any representation, warranty or covenant of Buyer
set forth herein or arising from the conduct of the business relating to the
Assets after the Closing. In addition, Buyer agrees to indemnify Seller and
the Stockholders against all liability for reasonable legal, accounting and
other fees and expenses directly attributable to any such indemnification.
Notwithstanding the foregoing, the foregoing indemnification shall be subject
to and inclusive of the following:
(a) In the event that a claim for indemnification results from
a breach by the Buyer to pay any of the liabilities or obligations of Seller
specifically assumed by Buyer, pursuant to paragraph 2 above and that certain
Assumption of Liabilities by and between Buyer and Seller of even date
herewith, and the aggregate amount of such claim
25
or claims exceeds $2,500, then, in addition to any other rights of
indemnification and/or remedies available to Seller, Seller shall have the
following rights and remedies:
(i) if the liability does not relate to taxes owed to a
governmental entity which has the power to lien, encumber or freeze
the personal assets of the Stockholders, then, in the event said
creditor initiates collection proceedings against the Seller or the
Stockholders, then Buyer must either pay the Seller, or the creditor
within thirty (30) days of receipt from the Seller of notice of such
collection action or, in the alternative, must present and
diligently prosecute a bona fide defense to said debt. If Buyer
fails to make such payment or present such defense within the time
set forth above, then Seller may immediately declare the $600,000
Note due and payable and enforce collection thereof against the
Buyer. In the event that the payable, debt or liability is a tax due
to a governmental agency which has the power to lien, encumber or
freeze the assets of the Seller or the Stockholders, then Buyer must
make payment to the creditor or to the Seller within three (3) days
of receipt of notice that said creditor has liened, encumbered or
frozen the assets of Seller or Stockholders. Upon Buyer's failure to
make such payment, then Seller may declare the $600,000 Note
immediately due and payable.
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6.3 PROCEDURES RELATING TO INDEMNIFICATION.
(a) In order for a party (the "Indemnified Party") to be entitled
to any indemnification provided for under Paragraph 6.1 or 6.2 of this
Agreement in respect of, arising out of, or involving a Claim (as hereinafter
defined) or demand made by any person, firm, governmental authority or
corporation against the Indemnified Party (a "Claim" or a "Third Party
Claim"), such Indemnified Party shall notify the indemnifying party as soon
as practicable following receipt of written notice of said Third Party Claim;
PROVIDED, HOWEVER, that the failure to give or delay in giving such
notification shall not affect the indemnification provided hereunder except
to the extent the indemnifying party shall have been actually prejudiced as
a result of such failure or delay. Thereafter, the Indemnified Party shall
deliver to the indemnifying party, as soon as practicable following the
Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the
Third Party Claim. In providing notice to the indemnifying party, the
Indemnified Party acknowledges its responsibility to provide said notice as
promptly as possible in order that the indemnifying party shall be able to
engage counsel and to submit appropriate answers to any Third Party Claim
within the time period required by law.
(b) If a Third Party Claim is made against an Indemnified Party,
the indemnifying party shall assume the defense thereof with counsel selected
by the indemnifying party and reasonably acceptable to the Indemnified Party.
The Indemnified
27
Party may participate in the defense of such Third Party Claim; PROVIDED,
HOWEVER, the indemnifying party will not be liable to the Indemnified Party
for legal expenses incurred by the Indemnified Party in connection with such
defense subsequent to the assumption thereof by the indemnifying party. The
indemnifying party shall be liable for the fees and expenses of counsel
employed by the Indemnified Party for any period during which the
indemnifying party has not assumed the defense thereof. All of the parties
hereto shall cooperate in the defense or prosecution of any Third Party
Claim. Such cooperation shall include the retention and (upon the indemnifying
party's written request) the provision to the indemnifying party of records
and information which are reasonably relevant to such Third Party Claim, and
making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
The Indemnified Party shall not admit any liability with respect to, or
settle, compromise or discharge, such Third Party Claim without the
indemnifying party's prior written consent.
7. DURATION OF REPRESENTATIONS. The representations, warranties,
covenants and indemnities in this Agreement and in any other document
delivered in connection herewith (other than those with respect to Taxes
which shall continue until the later of (i) the expiration of any statute of
limitations attributable to said matters, and (ii) the final resolution of
any action commenced in connection with Taxes) shall survive the Closing and
shall terminate on the later of (i) the close of business on the date Two (2)
28
years following the Closing Date, and (ii) the final resolution of any claim,
with respect to that claim, made within said Two (2) year period.
8. CONFIDENTIAL INFORMATION.
Each party agrees to maintain as confidential all information which is
delivered to it by the other and agrees further not to disclose the same to
any third party whatsoever or use any such information for any purpose except
in connection with the implementation of the undertakings of the parties
described herein, PROVIDED, HOWEVER, that the Buyer may be required to release
information concerning the transactions contemplated hereby in furtherance of
its responsibilities as a publicly traded company. In such event, Buyer shall
use its best efforts to give advance notice of such release to the Stockholders.
9. CLOSING. The Closing of the transactions contemplated hereby shall
take place at the offices of Seller's counsel, Sorokin, Sorokin, Gross, Hyde
& Xxxxxxxx, Xxx Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 and shall occur
on or about January 31, 1996 at 1:00 p.m.
10. INTENTIONALLY OMITTED
11. MISCELLANEOUS PROVISIONS.
11.1 FURTHER ASSURANCES. Each party hereto agrees to execute and
deliver such other documents, agreements or instruments and take such further
action as may be reasonably requested by any other party hereto for the
implementation of this Agreement and the consummation of the transactions
contemplated hereby.
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11.2 NOTICES. Any notices required or permitted hereunder shall be
sufficiently given if in writing and personally delivered, by facsimile and
confirmed by telephone, or by nationally recognized overnight courier,
addressed as follows or to such other address as the parties shall have given
notice of pursuant hereto:
(a) If to the Seller or the Stockholders:
Electrified Companies, Inc.
c/o Xxxxxx Xxxxxxxx
00 Xxxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
with a copy to:
Sorokin, Sorokin, Gross, Hyde & Xxxxxxxx
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telephone (000) 000-0000
Facsimile (000) 000-0000
Attention Xxxxxx X. Xxxxx, Esq.
(b) If to Buyer:
Puro Water Group, Inc.
00-00 00xx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Telephone (000) 000-0000
Facsimile (000) 000-0000
Attention Messrs. Xxxx X. Xxxx and Xxxxx Xxxx
with a copy to:
Lev & Berlin, P.C.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Telephone (000) 000-0000
Facsimile (000) 000-0000
Attention Xxxxx X. Xxxxxx, Esq.
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All such notices shall be effective upon the earlier of receipt or, in the
case of registered mail, seven (7) days after depositing in the mail, postage
prepaid, return receipt requested and addressed as shown above.
11.3 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits hereto) represents the entire understanding and agreement between
the parties with respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived, only by
written instrument making specific reference to this Agreement signed by the
parties hereto. This Agreement supersedes all prior agreements and
arrangements between the parties hereto and their affiliates. In the event of
any inconsistency, ambiguity or contradiction between the terms of this Asset
Purchase Agreement and the Notes referenced in paragraph 3 hereof, the terms
of the Notes shall prevail.
11.4 SUCCESSORS AND ASSIGNS; BENEFITS. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and, except
as otherwise provided below, their respective successors and assigns. Nothing
contained in this Agreement or in any of the Schedules or Exhibits hereto is
intended to create any rights in any person or entity that is not a party to
this Agreement and no person or entity shall be deemed to be a third party
beneficiary hereof of thereof.
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11.5 SECTION HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.6 APPLICABLE LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New
Jersey, without regard to the principles thereof relating to conflicts law.
The parties hereto consent to the jurisdiction of the courts of the State of
New Jersey and the United States District Court for the District of New
Jersey.
11.7 EXPENSES. Except as otherwise provided herein, the parties
hereto shall pay their own respective fees and expenses, including without
limitation, attorneys' fees.
11.8 SEVERABILITY. If any provision of this Agreement shall be held
by any court of competent jurisdiction to be illegal, void or unenforceable,
such provision shall be of no force and effect, but the illegality or
unenforceability of such provision shall have no effect upon and shall not
impair the enforceability of any other provision of this Agreement.
11.9 PUBLICITY. None of the parties hereto shall issue any press
release or make any other public statement or announcement relating to,
connected with or arising out of this Agreement or the matters contained
herein, without obtaining the prior written approval of the other parties
hereto to the contents and the manner of presentation and publication
thereof. Notwithstanding the foregoing, after the Closing Buyer or Seller may
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individually issue any such release, statement or announcement as it
reasonably deems appropriate.
11.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument. This Agreement
may be executed by telecopied signatures with the same effect as original
signatures.
11.11 SCHEDULES AND EXHIBITS. All Schedules and Exhibits referenced
herein are incorporated herein by reference and shall be initialed by both
parties in order to be deemed an integral part of this Agreement. The
contents of such Schedules and Exhibits are deemed to be disclosures to Buyer
by Seller and the Stockholders. In the event that any Schedule or Exhibit
provided for herein is incomplete or has not been prepared by Seller or the
Stockholders and attached hereto as of the execution and delivery of this
Agreement, it shall be a condition precedent to Closing that such Schedule or
Exhibit shall be in form and substance reasonably satisfactory to Buyer.
11.12 POST-CLOSING ACCESS. For a period of three (3) months
following the Closing Date, Buyer shall accord to Seller and Seller's agents
reasonable access to the Seller's books and records located on the premises
of the business in East Orange, New Jersey, during normal business hours for
the purpose of removal of same. In addition, Seller and its agents shall be
accorded reasonable access under the Buyer's supervision to the Seller's
computer to generate financial information through the Closing Date. If and
to the extent
33
that any of such records are reasonably necessary to the Buyer's conduct and
operation of the business, then Buyer may copy such material prior to
Seller's removal of same.
PURO WATER GROUP, INC. ELECTRIFIED COMPANIES INC.
By: /s/ Xxxx Xxxx By: /s/ Xxxxxx Xxxxxxxx
------------------------- -----------------------------
Its Co-President Its President
/s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx Xxxxxxxx
Individually
/s/ Xxxx Xxxxxxxx
-------------------------------
Xxxx Xxxxxxxx
Individually
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