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PURCHASE AGREEMENT
BY AND AMONG
PIXIE PLAYMATES, INC.
a Florida corporation
CERTIFIED SEWING SERVICES, INC.
a Florida corporation
CERTIFIED APPAREL SERVICES OF HONDURAS, INC. S.A.
a Honduran corporation
AND
XXXXXXXX'X, INC. OF FLORIDA
a Florida corporation
December 15, 1995
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TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF ASSETS AND SHARES........... 1
Section 1.1 Purchase and Sale of Assets and Shares........... 1
Section 1.2 Purchase Price................................... 3
Section 1.3 Assumption of Certain Liabilities................ 6
Section 1.4 Date, Time and Place of Closing.................. 6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER......... 7
Section 2.1 Corporate Status................................. 7
Section 2.2 Corporate Authority; Effective Agreement......... 7
Section 2.3 Liabilities...................................... 7
Section 2.4 Real Estate...................................... 7
Section 2.5 Personal Property................................ 8
Section 2.6 Trade Names, Trademarks and Service Marks........ 8
Section 2.7 Taxes............................................ 9
Section 2.8 Legal Matters.................................... 9
Section 2.9 Contracts, Leases, Agreements and Other
Commitments.................................. 9
Section 2.10 Employees and Employment Contracts............... 10
Section 2.11 Employee Pensions and ERISA...................... 12
Section 2.12 Consents......................................... 12
Section 2.13 Financial Statements............................. 12
Section 2.14 Suppliers; Conflicts of Interest. .............. 13
Section 2.16 No Material Change............................... 13
Section 2.17 Actions Since Balance Sheet Date................. 14
Section 2.18 Permits and Licenses............................. 14
Section 2.19 Compliance with Laws............................. 14
Section 2.20 Hazard Communications Standard Regulations and
Laws......................................... 15
Section 2.21 Environmental Matters............................ 15
Section 2.22 Statements and Other Documents Not Misleading.... 15
Section 2.23 Survival of Representations and Warranties....... 16
ARTICLE III FURTHER REPRESENTATIONS AND WARRANTIES OF
SHAREHOLDERS................................. 16
Section 3.1 Ownership of Capital Stock of CASH............... 16
Section 3.2 Agreement Not in Breach of Other Instruments
Effecting Shareholders....................... 16
Section 3.3 Valid and Binding Agreement...................... 16
Section 3.4 Capitalization................................... 16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER...... 17
Section 4.1 Corporate Status................................. 17
Section 4.2 Corporate Authority.............................. 17
Section 4.3 Survival of Representations and Warranties....... 17
ARTICLE V CONDUCT OF BUSINESS PENDING CLOSING.............. 17
Section 5.1 Conduct of Business Pending Closing.............. 17
ARTICLE VI FURTHER COVENANTS AND AGREEMENTS................. 18
Section 6.1 Access to Information............................ 18
Section 6.2 Confidentiality.................................. 19
Section 6.3 Cooperation...................................... 19
Section 6.4 Bulk Sales Laws.................................. 19
Section 6.5 Employment of Employees.......................... 19
Section 6.6 Employee Benefit Plans........................... 20
ARTICLE VII CONDITIONS TO OBLIGATIONS OF PURCHASER........... 20
Section 7.1 No Material Adverse Change....................... 20
Section 7.2 Representations and Warranties................... 20
Section 7.3 Performance of Agreements........................ 21
Section 7.4 Opinion of Counsel............................... 21
Section 7.5 No Actions, Etc.................................. 21
Section 7.6 Consents; Lease Estoppels........................ 21
Section 7.7 Executed Lease Agreements........................ 21
Section 7.8 Deliveries....................................... 21
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLERS AND
SHAREHOLDERS................................. 21
Section 8.1 No Material Adverse Change....................... 21
Section 8.2 Representations and Warranties................... 22
Section 8.3 Performance of Agreements........................ 22
Section 8.4 No Actions, Etc.................................. 22
Section 8.5 Deliveries....................................... 22
ARTICLE IX CLOSING.......................................... 22
Section 9.1 Sellers' Deliveries.............................. 22
Section 9.2 Shareholders' Deliveries......................... 23
Section 9.3 Deliveries by Purchaser.......................... 23
Section 9.4 Prorations....................................... 24
Section 9.5 Parties to Bear Own Expenses..................... 24
ARTICLE X INDEMNIFICATION.................................. 24
Section 10.1 Indemnifications................................. 25
ARTICLE XI GENERAL.......................................... 28
Section 11.1 Notices.......................................... 28
Section 11.2 Broker's Commission.............................. 28
Section 11.3 Headings......................................... 29
Section 11.4 Entire Agreement; Governing Law.................. 29
Section 11.5 Severability..................................... 29
Section 11.6 Counterpart Execution............................ 29
Section 11.7 Assignability; Binding Effect.................... 29
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is entered into as of the 15th day of
December, 1995, by and among PIXIE PLAYMATES, INC., a Florida corporation
("Pixie"), CERTIFIED SEWING SERVICES, INC., a Florida corporation ("Certified,"
and together with Pixie, the "Sellers"), and each of the persons who are
signatories hereto as shareholders of CERTIFIED APPAREL SERVICES OF HONDURAS,
INC. S.A., a Honduran corporation ("CASH") (each, a "Shareholder" and
collectively, the "Shareholders"), and XXXXXXXX'X, INC. OF FLORIDA, a Florida
corporation (the "Purchaser").
W I T N E S S E T H:
Sellers and CASH are engaged in the manufacture and marketing
of children's apparel. Sellers desire to sell and Purchaser desires to purchase
substantially all of the assets of Sellers used in the operation of their
respective businesses, and Shareholders desire to sell, assign, transfer and
convey to Purchaser, and Purchaser desires to purchase and acquire from
Shareholders all of the shares of capital stock of CASH owned by Shareholders
(the "Shares"), constituting all of the issued and outstanding capital stock of
CASH, all on the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises
and of the mutual agreements and covenants hereinafter set forth, the parties
hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS AND SHARES
Section 1.1 Purchase and Sale of Assets and Shares.
(a) Purchased Assets. Subject to the terms of this Agreement, on the
Closing Date (as defined below), each Seller will sell, assign, convey, transfer
and deliver to Purchaser, and Purchaser will purchase and acquire from each
Seller, all of such Seller's right, title and interest in, to and under the
assets, business, rights, claims and contracts of such Seller relating to and
used in the business of such Seller (other than the assets expressly excluded as
set forth in subsection 1.1(b) (the "Excluded Assets")), including, but not
limited to, the following (collectively, the "Assets"):
(i) all of such Seller's rights to all of the
Corporation Agreements (as defined herein);
(ii) all of such Seller's rights to all equipment,
machinery, equipment, tools, replacement
parts and fixed assets, including, but not
limited to, the fixed assets identified on
Exhibit "A";
(iii) all of such Seller's rights to all service
marks, trade names, trade secrets, processes
and methods, whether or not patentable;
(iv) all books and records maintained by such
Seller through the Closing Date and
pertaining to the business, including,
without limitation, product manuals,
operating manuals, and records relating to
customer and trade accounts and lists and
similar operating data, other than books and
records which such Seller is required by law
to retain;
(v) all furniture, supplies, inventory items and
other personal property, including, but not
limited to, the inventory identified on
Exhibit "A";
(vi) the prepaid expenses identified on Exhibit
"A";
(vii) all Federal, state and local permits,
authorizations, franchises and licenses; and
(viii) all other current assets.
(b) Excluded Assets. Notwithstanding anything contained in
this Agreement to the contrary, Purchaser and Sellers acknowledge and agree that
Purchaser is not buying and Sellers are not selling the assets identified on
Exhibit "B" (collectively, the "Excluded Assets").
(c) Purchased Shares. Subject to the terms of this Agreement,
on the Closing Date, each Shareholder shall sell, assign, transfer and convey to
Purchaser, and Purchaser shall purchase and acquire from each Shareholder, the
number of Shares set forth opposite such Shareholder's name on Exhibit "C"
attached hereto, which shall represent all of the Shares owned by such
Shareholder and in the aggregate shall represent all of the issued and
outstanding capital stock of CASH. The Shares shall be conveyed to Purchaser
free and clear of all liens, pledges, security interests, claims, encumbrances
and rights of others.
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(d) Transfer of Assets Subject to Consent. To the extent that
the sale, assignment, transfer or conveyance of any Corporation Agreement
requires the consent of any party other than Purchaser or Sellers, this
Agreement shall not constitute an agreement to effect such sale, assignment,
transfer or conveyance if such action would constitute a breach of the
Corporation Agreement. Such sale, assignment, transfer or conveyance shall occur
only after all necessary consents have been obtained. Pending receipt of the
required consents, or if such consents cannot be obtained, Sellers agree to
cooperate with Purchaser in any reasonable arrangement designed to provide
Purchaser with the benefits under the Corporation Agreement as if the
Corporation Agreement had been sold, assigned, transferred and conveyed on the
Closing Date.
Section 1.2 Purchase Price.
(a) Purchase Price. The consideration to be paid to Sellers
for the Assets and to the Shareholders for the Shares at the Closing shall be
Four Million Six Hundred Fifty Thousand Dollars ($4,650,000) (the "Purchase
Price"), subject to adjustment in accordance with subparagraphS 1.2(b) and
1.2(c) hereof. The Purchase Price shall be allocated among the Assets and the
Shares in accordance with Exhibit "D" attached hereto. Neither Purchaser nor
either Seller shall take any position with any taxing authority which is
inconsistent with such allocation. The Purchase Price with respect to the Shares
shall be allocated among each Shareholder in the same proportion that the Shares
owned by such Shareholder bear to the total number of Shares.
(b) Adjustment to Purchase Price for Inventory. That portion
of the Purchase Price allocated to the inventory of Sellers (the "Inventory
Purchase Price") as set forth on Exhibit "A" shall be subject to adjustment as
follows:
(i) (A) Within seven (7) business days from the
Closing Date, Purchaser shall complete a
physical inventory, on a test audit basis, of
the inventory comprising a portion of the
Assets, and shall deliver to Sellers a
statement setting forth the results of such
physical inventory, including the value of
the inventory as would be recorded on the
books of Purchaser on the Closing Date in
accordance with generally accepted accounting
principles (the "Adjustment Statement");
provided, however, that for purposes of
determining the value of the inventory on the
Closing Date: (1) the value of raw materials
received by Sellers during the period
December 1, 1995 through and including the
Closing Date shall not be included in the
computation; (2) costs incurred by Sellers
during the period December 1, 1995 through
and including the Closing Date in connection
with converting raw material to work in
process or converting work in process to
finished goods shall not be included in the
computation; and (3) the cost of the
inventory as reflected on the Adjustment
Statement shall be reduced by the cost of
finished goods inventory shipped during the
period December 1, 1995 through and including
the Closing Date. The value of the inventory
as set forth on the Adjustment Statement
shall be conclusive and binding on the
parties unless the Sellers deliver to
Purchaser, within fifteen (15) days from
delivery of the Adjustment Statement, written
notice disputing the Adjustment Statement,
which written notice shall be as detailed as
reasonably necessary to describe such
disputes (the "Dispute Statement").
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(B) In the event Purchaser and Sellers are
unable to resolve the disputes set forth on
the Dispute Statement within thirty (30) days
from delivery of the Dispute Statement, the
parties shall engage a mutually acceptable
"Big Six" accounting firm whose determination
of the value of the inventory shall be
binding and conclusive. The fees and costs of
the accounting firm shall be allocated among
the Sellers and Purchaser ratably. The
Adjustment Statement as finally determined in
accordance with this subparagraph 1.2(b)
shall be called the Final Adjustment
Statement. If the value of the inventory as
set forth on the Final Adjustment Statement
is greater than the value of the inventory at
December 1, 1995 as set forth on Exhibit "A,"
Purchaser shall pay to Sellers the difference
within ten (10) days from the determination
of the Final Adjustment Statement. If the
value of the inventory as set forth on the
Final Adjustment Statement is less than the
value of the inventory at December 1, 1995 as
set forth on Exhibit "A," Sellers shall pay
to Purchaser the difference within ten (10)
days from the determination of the Final
Adjustment Statement.
(ii) Purchaser and Sellers acknowledge and agree
that the Purchase Price set forth in
subsection 1.2(a) hereof has been reduced by
$100,000, which amount has been retained by
Purchaser in connection with inventory of
Sellers' constituting work in process
currently being manufactured by CASH.
Purchaser hereby covenants and agrees that
within ten (10) days of the end of each
calendar month following Closing, commencing
on December 30, 1995, Purchaser shall pay to
Sellers the amount equal to the cost (as
reflected in the Final Adjustment Statement)
of work in process inventory which is
delivered by CASH to Purchaser in Florida as
first quality finished goods inventory during
the immediately preceding calendar month,
until the aggregate amount of $100,000 has
been paid to Sellers hereunder. Upon delivery
of all or any portion of such amounts,
Purchaser shall also deliver to Sellers a
certificate of an officer of Purchaser
certifying as to the amount of finished goods
inventory which has been received by
Purchaser from CASH and the basis for the
calculation of the amount paid pursuant to
this Subsection 1.2(b)(ii).
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(C) Adjustment to Purchase Price for CASH
Equity Capital Obligations. Purchaser, Seller
and Shareholders acknowledge and agree that
from the Purchase Price set forth in
subsection 1.2(a) has been reduced by
$500,000 (the "Holdback Amount"), which
amount has been retained by Purchaser, and
shall be disbursed to Sellers and
Shareholders in accordance with the terms of
this subsection 1.2(c). As soon as
practicable following Closing, Purchaser
shall engage Ernst & Young, LLP to conduct an
audit of CASH at October 31, 1995 and
November 30, 1995 and for the twelve months
and one month ended October 31, 1995 and
November 30, 1994, respectively. A copy of
the audit report shall be delivered to
Purchaser and Sellers. To the extent the
audited balance sheet reflects a negative net
worth of CASH at November 30, 1995, and
Purchase and Sellers are unable to mutually
agree, within ten (10) days from the date of
delivery of the audit report, upon a non-cash
adjustment which will offset the negative net
worth, or to otherwise avoid having to
liquidate CASH in accordance with applicable
law, then the amount of such funds
constituting the capital contribution or
advance Purchaser, any shareholder of CASH or
any affiliate of either from and after the
Closing Date shall be required to make to
offset the negative net worth of CASH at
November 30, 1995 shall be deducted from the
Holdback Amount, and the balance shall be
disbursed to Sellers and Shareholders as they
shall direct, which disbursement shall be
made within thirty-five (35) business days
from the date the audit report is delivered
to Purchaser. The costs and fees associated
with such audit shall be borne by Sellers,
and Purchaser shall have the right to offset
the amount of such costs against the Holdback
Amount. If the parties agree that no
liquidation of CASH is required under
applicable law as a result of the negative
net worth or accumulated deficit of CASH, the
Holdback Amount shall be reduced to $200,000,
and $300,000 shall be disbursed to Sellers
and Shareholders as they shall direct within
five (5) business days of the date of such
determination.
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Section 1.3 Assumption of Certain Liabilities.
(a) Assumed Liabilities. On the Closing Date, Purchaser shall
assume and agree to undertake to pay, perform and discharge as and when due, and
shall indemnify Sellers and CASH for and hold Sellers and CASH harmless from and
against each of the following obligations, responsibilities, liabilities and
debts of Sellers and CASH (collectively, the "Assumed Liabilities"):
(i) all obligations, responsibilities and
liabilities incurred in connection with the
performance by Purchaser of the Corporation
Agreements from and after the Closing Date;
and
(ii) all obligations and liabilities arising from
Purchaser's use, ownership, possession, sale
or operation of the Assets following the
Closing Date.
(b) Purchaser Assumes No Other Debts Or Liabilities of
Sellers or CASH. Except for the Assumed Liabilities assumed by Purchaser under
Section 1.3(a) above, the purchase by Purchaser of the Assets and the Shares
shall be free and clear of all liens, claims and encumbrances of any kind and
nature, and without any assumption by Purchaser of any debts, taxes, obligations
or liabilities whatsoever of Sellers or CASH or any other persons who at any
time may have been in possession of the Assets or Shares, whether such
liabilities are actual or contingent, known or unknown, liquidated or
unliquidated, whether tax liabilities, liabilities to creditors, liabilities
arising under any profit sharing, pension or other similar employee benefit
plans, liabilities to employees arising for severance, vacation and similar
employment policies and practices for the period up to and including the Closing
Date, liabilities to governmental agencies or third parties, liabilities assumed
or incurred by Purchaser by operation of law (including bulk sales laws) or
otherwise (collectively, the "Unassumed Debts and Liabilities"). Sellers and
Shareholders jointly and severally agree promptly to pay and discharge, as and
when due, the Unassumed Debts and Liabilities, and will indemnify Purchaser for
and hold Purchaser harmless from and against any and all Unassumed Debts and
Liabilities, even if Purchaser voluntarily pays the Unassumed Debts and
Liabilities.
Section 1.4 Date, Time and Place of Closing. The transactions
provided for by this Agreement shall be consummated (the "Closing") at _____
a.m., local time, on or before December [15,] 1995, at Cozen and X'Xxxxxx, 0000
Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx, 00000, or at such other place and
time as Sellers, Shareholders and Purchaser shall mutually agree. The date and
time of Closing is hereinafter sometimes called the "Closing Date."
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers jointly and severally represent and warrant to Purchaser, and
Shareholders jointly and severally represent and warrant to Purchaser as to
CASH, as follows:
Section 2.1 Corporate Status. Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and has full power and authority to own its properties and to carry on
the business as presently conducted by it. Each Seller is duly qualified to do
business and is in good standing as a foreign corporation in all other
jurisdictions where the conduct of its business so requires. CASH is a
corporation duly organized, validly existing and in good standing under the laws
of Honduras and has the power and authority to carry on its business as
presently as conducted by it.
Section 2.2 Corporate Authority; Effective Agreement. The Board of
Directors and stockholders of each Seller have duly authorized and approved the
execution and delivery of this Agreement and the performance of the transactions
provided for herein. No other corporate action is required in connection with
the foregoing. This Agreement is a legal, valid and binding obligation of each
Seller and is enforceable against each Seller in accordance with its terms. The
execution, delivery and performance of this Agreement by each Seller and by the
Shareholders and the consummation of the transactions provided for herein do not
and will not: (a) conflict with, violate or result in the breach of any of the
terms or conditions of, or constitute a default under (i) the constituent
documents of Sellers or CASH, (ii) any contract, agreement, commitment,
indenture, mortgage, pledge, note, bond, license, permit or other instrument or
obligation to which any of Sellers or CASH is a party or by which any of Sellers
or CASH or any of the Assets is bound, or (iii) any law, regulation, ordinance
or decree to which any of Sellers or CASH is subject, or (b) result in the
creation or imposition of any lien, security interest, charge, encumbrance,
restriction or right, including rights of termination or cancellation, in or
with respect to, or otherwise materially adversely effect any of Sellers, CASH,
the Assets or the Shares.
Section 2.3 Liabilities. At October 31, 1995, neither of Sellers nor
CASH had any liabilities (including, but not limited to, accounts payable)
except as and to the extent reflected in: (a) the Sellers Financial Statements
or CASH Financial Statements (as such terms are defined below); (b) the books
and records of Sellers or CASH to the extent incurred or arising after October
31, 1995; or (c) this Agreement or any Exhibit hereto.
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Section 2.4 Real Estate. Neither of Sellers nor CASH has any
interest in any real estate except that Sellers and CASH lease, as tenant, the
premises described on Exhibit "E" attached hereto. True, complete and correct
copies of the lease agreements pertaining to the leased premises are attached to
Exhibit "E" (individually a "Lease" and collectively the "Leases"). Sellers and
Shareholders know of no pending or proposed eminent domain proceeding or
assessment for public improvements with respect to any of Sellers' or CASH's
leased premises which could adversely affect the use, operation or value of the
Assets or the businesses in which Sellers and CASH are engaged. Neither of
Sellers nor any Shareholder has received notice from any insurance carrier or
landlord for any leased premises notifying Sellers or Shareholders of the need
to undertake any repairs, alterations or construction or to take any action with
respect to the leased premises. Except as described on Exhibit "E," all of the
buildings, fixtures and improvements, including structural condition and roof,
leased by either of Sellers or by CASH, and all heating and air conditioning
equipment, plumbing, electrical and other mechanical facilities which are part
of, or located in, such buildings or improvements are in good operating
condition and repair and do not require any repairs other than normal routine
maintenance to maintain them in good operating condition and repair.
Section 2.5 Personal Property; Inventory. Exhibit "F" attached
hereto is a list of all personal property which is being sold, assigned,
conveyed, transferred and delivered to Purchaser pursuant to this Agreement
("Personal Property"). Each Seller has good and marketable title to, and is the
absolute owner of, all of the Personal Property owned by it, free and clear of
all liens and encumbrances, except Sellers lease or license the Personal
Property described as leased or licensed on Exhibit "F." CASH has good and
marketable title to, and is the absolute owner of, all of the personal property
used by CASH in the operation of its business, free and clear of all liens and
encumbrances, except CASH leases or licenses the personal property described as
leased or licensed on Exhibit "F." All of the Personal Property and all of the
personal property of CASH is in good operating condition and repair and does not
require any repairs other than normal routine maintenance to maintain the
Personal Property and personal property of CASH in good operating condition and
repair. All of the inventory comprising a portion of the Assets and all of the
inventory of CASH is saleable in the ordinary course of business and is free
from material defects.
Section 2.6 Trade Names, Trademarks and Service Marks. The corporate
name of Sellers and CASH and the trade names and trademarks listed on Exhibit
"G" are the only names and trademarks which are used by Sellers and CASH in the
operation of their respective businesses. Each of the Sellers and CASH is the
sole and exclusive owner of its trade names and trademarks and has the sole and
exclusive right to use the trade names and trademarks. No claim has been
asserted against either of Sellers or against CASH that its trade names or
trademarks conflict with the trade names, trademarks, corporate names or other
proprietary rights of others, and neither of Sellers nor any Shareholder has any
knowledge of any basis for any such claim or conflict. Neither of Sellers nor
CASH owns any patents or has patent applications pending and, to the Sellers'
and Shareholders' knowledge, neither of Sellers nor CASH is engaged in any
activity which infringes upon any patent, patent application, trademark, trade
name, copyright or proprietary right of any other party.
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Section 2.7 Taxes.
(a) Filing of Returns and Payment of Taxes. Each Seller and
CASH has timely filed or will timely file all federal, foreign, state and local
tax returns required by law to be filed by such Seller or CASH and has timely
paid or will timely pay and make adequate provision for the payment of all taxes
(and related interest and penalties) required to be paid in respect of such
returns for all taxable periods up to and including the Closing Date, including,
but not limited to real estate, sales, use, social security, payroll,
unemployment compensation and personal property taxes. No waivers or extensions
of statutes of limitations relating to filing of tax returns have ever been
granted to either Seller or to CASH, and no consents or elections have been
filed by either Seller with the Internal Revenue Service or with any other
taxing authority. Each Seller will have paid or made adequate provision for the
payment of all federal and state income and any other taxes payable by such
Seller with respect to the transactions covered by this Agreement, including
sales, transfer and similar types of taxes.
(b) Cooperation With Sellers Following Closing. Purchaser
agrees that following Closing it shall provide to Sellers (on a confidential
basis) information relating to the Assets and/or the business of Sellers which
Sellers reasonably require to prepare any tax returns, information returns or
reports required to be filed by Sellers with governmental agencies. Such
information shall be provided in the form in which such information has
customarily been maintained by Sellers.
Section 2.8 Legal Matters. Except as set forth on Exhibit "H", none
of Sellers, CASH or any Shareholder is a party to or threatened with any suit,
action, arbitration or other legal or administrative proceeding or governmental
inquiry or investigation by which any of Sellers, CASH, the Shares, the Assets
or the business of Sellers and CASH would be adversely effected. There are no
judgments, orders, decrees or awards before any court, department, commission,
board, instrumentality or arbitrator which affects the Assets, either Seller,
their respective business, CASH or the Shares.
Section 2.9 Contracts, Leases, Agreements and Other Commitments.
(a) Corporation Agreements. Neither of Sellers nor CASH is a
party to or bound by any written, oral or implied contract, agreement, lease,
power of attorney, guaranty, surety agreement, or other commitment except for
the following (collectively, the "Corporation Agreements"):
(i) the Leases described on Exhibit "E";
(ii) agreements involving a maximum possible
liability or obligation on the part of either
Seller or CASH of less than Five Thousand
Dollars ($5,000) each and less than Fifteen
Thousand Dollars ($15,000) in the aggregate;
and
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(iii) the agreements listed on Exhibit "I."
True, correct and complete copies of all of the Corporation Agreements
on Exhibit "I," including all amendments thereto, have been delivered to
Purchaser. Except as shown on Exhibit "I," all parties to all of the Corporation
Agreements, including Sellers and CASH, as the case may be, have performed all
of the obligations required to be performed under the Corporation Agreements,
and neither of Sellers nor CASH, nor any other party, is in default or in
arrears under the terms thereof, and no condition exists or event has occurred
which, with the giving of notice or lapse of time or both, would constitute a
default under such Corporation Agreements. The consummation of the transactions
provided for in this Agreement will not result in an impairment or termination
of either Sellers' or CASH's rights under any Corporation Agreement. None of the
terms or provisions of any Corporation Agreement materially adversely affects
the Assets or the business of either of Sellers or CASH. Exhibit "I" also
contains a listing of all outstanding written and oral proposals, bids, offers,
guaranties, advances or credit granted which, if accepted, could impose any
debts, obligations or liabilities upon Purchaser after the Closing Date.
(b) Guaranteed Obligations. Each Seller covenants and agrees
with Purchaser that on or prior to the Closing Date, each Seller shall pay and
discharge in full each and every liability of Seller which is guaranteed by
Xxxxxxxx'x, Inc. of Alabama or any affiliate thereof, all of which are disclosed
on Exhibit G-1 (the "Guaranteed Obligations"), and to the extent not so
discharged, such liability shall constitute a Loss to which Purchaser shall be
entitled to indemnification pursuant to Section 10.1.
Section 2.10 Employees and Employment Contracts.
(a) Set forth on Exhibit "J" is a list of:
(i) all collective bargaining agreements and
other agreements requiring arbitration of
employment disputes, and any written
amendments thereto, as well as all
arbitration awards decided under any such
agreements, and all oral assurances or
modifications, past practices, and/or
arrangements made in relation thereto, to
which either Seller or CASH is a party or by
which any is bound; and
(ii) all employment agreements, and all severance
agreements which have not been fully
performed, to which either Seller or CASH is
a party or by which any may become bound
following the transactions contemplated by
this Agreement.
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(b) Set forth on Exhibit "J" is a list of all employees of
each Seller and of CASH, broken down by location, together with their rate of
compensation, title, union affiliations (if any), original date of hire, length
of service, leave status, if any, vacation benefits and sick leave benefits
accrued to date (if payable in cash upon termination of employment) and a list
of all other individuals who are employed as independent contractors of either
Seller or of CASH.
(c) Attached to Exhibit "J" are true and correct copies of
all documents referred to in Exhibit "J" and all personnel policies, employee
and/or supervisor handbooks, procedures and forms of employment applications
relating to the employees of either Seller or CASH.
(d) Except as set forth on Exhibit "J", there is no union
representing or purporting to represent any of the employees of either Seller or
CASH nor is any of the foregoing subject to or currently negotiating any
collective bargaining agreements with any union representing or purporting to
represent the employees of any of the foregoing.
(e) Except as set forth in Exhibit "J":
(i) there are no strikes, slow-downs or other
work stoppages, grievance proceedings,
arbitrations, labor disputes or
representation questions pending or, to the
knowledge of Sellers or Shareholders after
due inquiry, threatened against or involving
either Seller or CASH.
(ii) Sellers and CASH have complied with all laws
relating to labor, employment and employment
practices, including without limitation, any
provisions thereof relating to wages, hours
and other terms of employment, collective
bargaining, non-discrimination, payment of
social security, unemployment compensation
and similar taxes, and none of either Seller
or CASH is liable for any arrearages of
wages, or for taxes or penalties for failure
to comply with any of the liabilities set
forth in this subparagraph or is delinquent
in the payment of any such severance, salary,
bonus, commission or other direct or indirect
compensation for services performed by any
employee to the date hereof, or any amount
required to be reimbursed.
(iii) there are no charges, suits, actions,
administrative proceedings, investigations
and/or claims pending or threatened against
either Seller or against CASH, whether
domestic or foreign, before any court,
governmental agency, department, board or
instrumentality concerning or in any way
relating to the employees or employment
practices of either Seller or CASH.
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Section 2.11 Employee Pensions and ERISA. Neither of Sellers nor
CASH nor any of their respective affiliates maintains, sponsors, contributes to
or has any liability under any agreement, plan, practice or program, whether
written or oral, providing for bonus payments, child or dependant care benefits,
death benefits, accidental death and dismemberment benefits, deferred
compensation benefits, disability or other wage continuation benefits,
educational assistance or tuition benefits, health benefits, paid holiday
benefits, incentive compensation payments, leave of absence rights, medical
expense payments, reimbursement benefits, profit sharing, pension plan benefits
or other benefits, retiree medical or retiree life insurance benefits, stock
option, stock appreciation rights or stock purchase benefits, severance or
termination pay or benefits or vacation benefits except as set forth in Exhibit
"K". The items set forth in Exhibit "K" are individually referred to as an
"Employee Benefit Plan" and collectively referred to as "Employee Benefit
Plans." Each Employee Benefit Plan is in substantial compliance with the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and the
Internal Revenue of 1986 as amended ("Code"). With respect to each Employee
Benefit Plan subject to ss.412 of the Code or Title IV of ERISA (collectively
"Pension Plans"), there has been no failure to make any contribution or pay any
amount required to be paid under ERISA or the terms of any such Pension Plan,
and no request or receipt of any funding waiver has been requested or received
from the IRS. There has been no reportable event (as defined in ss.4043 of
ERISA) within the last five years.
Section 2.12 Consents. Each Seller and CASH has obtained or will
obtain, on or before the Closing Date, all consents, approvals, licenses,
permits or waivers which are required to execute and deliver this Agreement and
to consummate the transactions provided for herein, including the transfer of
the Assets to Purchaser hereby and to afford to Purchaser the benefits to be
provided upon purchase of the Assets and the Shares.
Section 2.13 Financial Statements. Exhibit "L" contains balance
sheets of each Seller at August 31, 1995 and October 31, 1995 and statements of
income and loss of such Seller for the ten months ended August 31, 1995 and the
fiscal year ended October 31, 1995. Exhibit "M" contains balance sheets of CASH
at October 31, 1995 and statements of income and loss of CASH for the fiscal
year ended October 31, 1995. The balance sheets of Sellers at October 31, 1995
and the statements of income and loss for the fiscal year ended October 31, 1995
are sometimes herein called the "Sellers Financial Statements." The balance
sheet of CASH at October 31, 1995 and the statement of income and loss for the
fiscal year ended October 31, 1995 are sometimes herein called the "CASH
Financial Statements." All of such statements have been prepared in accordance
with generally accepted accounting principles (other than for presentation of
footnotes) consistently applied throughout the periods reported upon and present
fairly and accurately the financial position of each Seller and CASH, as the
case may be, as of the dates of such balance sheets and the results of
operations of each Seller and CASH, as the case may be, for the periods reported
upon. Attached to Exhibit "L" and Exhibit "M," respectively, are copies of
management representation letters and legal letters delivered to Sellers and
CASH's auditors for the periods reviewed by them. Also attached to Exhibit "L"
is a signed report of Spencer, Marston, Xxxxx, Xxxxxx & Co. as to an agreed upon
procedures review conducted by said firm on behalf of Sellers. The financial
position of CASH at November 30, 1995 is such, and at Closing will be such, that
there shall be no legal or other regulatory obligation to cause a liquidation of
CASH absent remedial measures to be undertaken by the shareholders of CASH which
could either require a reclassification of items on the balance sheet of CASH or
Pixie or require an additional equity contribution.
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Section 2.14 Suppliers; Conflicts of Interest.
(a) Suppliers. Exhibit "N" is a list of suppliers which have
provided materials or services to either of Sellers or CASH as of October 31,
1995. Neither of Sellers nor CASH has been notified of, nor to Sellers' or
Shareholders' knowledge, has there been any circumstance that would result in a
termination or cancellation of any agreement between either of Sellers or CASH
and any of their respective suppliers, distributors or customers. Prior to the
Closing Date, each Seller and CASH shall cooperate with Purchaser in making or
causing to be made such reasonable inquiries of and written introductions to
customers and suppliers of the business of each as Purchaser may reasonably deem
necessary or advisable.
(b) Conflicts of Interest. Except as shown on Exhibit "O," no
stockholder, director, officer or employee of either Seller or of CASH or any
relative or any affiliate of any of the foregoing: (i) has any pecuniary
interest in any supplier or customer of either Seller or of CASH or in any other
business with which any of the foregoing conducts business or with which either
of Sellers or CASH is in competition; or (ii) has any interest in any property
or assets used by either Seller or CASH, including the Assets; or (iii) has any
contractual or other claim, express or implied, of any kind whatsoever against
either of Sellers or CASH in connection with its business or the Assets.
Section 2.15 Subsidiaries; Officers; Directors. Neither of Sellers
nor CASH has any subsidiary or owns any capital stock, security, partnership
interest or other interest of any kind in any corporation, partnership, joint
venture, association or other entity. Schedule "P" sets forth a complete list of
all directors and officers of CASH, all bank accounts, all safe deposit boxes
and all persons authorized to sign checks drawn on such accounts and to have
access to such safe deposit boxes.
Section 2.16 No Material Change. Since October 31, 1995, there has
been no material adverse change in the business, assets (including the Assets)
or financial condition of either Seller or of CASH and their respective
businesses except as the same may be caused by transactions in the ordinary
course of business which are not prohibited by this Agreement and which are
described on Exhibit "Q."
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Section 2.17 Actions Since Balance Sheet Date. Except as set forth
on Exhibit "R," since October 31, 1995, neither of Sellers nor CASH:
(a) has taken any action outside of the ordinary course of
business;
(b) has borrowed any money or become contingently liable for
any obligation or liability of others;
(c) has not paid all of its debts and obligations as they
became due;
(d) has incurred any debt, liability or obligation of any
nature to any party except for obligations arising in the ordinary course of
business; and
(e) has not used its best efforts to preserve its business
organization intact, to keep available the services of its employees, and to
preserve its relationships with its customers, suppliers and others with whom it
deals.
Section 2.18 Permits and Licenses. Each of Sellers and CASH holds
all franchises, licenses, permits, consents, approvals, waivers and other
authorizations (collectively, the "Permits") which are necessary for the
operation of their respective businesses, including, without limitation, all
Permits issued by federal, foreign, state or local governments and governmental
agencies. Neither of Sellers nor CASH is in default, nor has any of the
foregoing or the Shareholders received any notice of any claim of default, with
respect to any of the Permits or of any notice of any other claim or proceeding
or threatened proceeding relating to any of the Permits. All of the Permits are
in full force and effect. The transactions provided for in this Agreement will
not result in the cancellation or termination of any of the Permits.
Section 2.19 Compliance with Laws. Each of Sellers and CASH is in
compliance with all requirements of law, federal, foreign, state and local, and
all requirements of all governmental bodies or agencies having jurisdiction over
it, the operations of their respective business and the use of the Assets, and
all leasehold premises occupied by it. Neither of Sellers nor CASH nor any
Shareholder has received any notice, not previously complied with, from any
federal, foreign, state or municipal authority or any insurance or inspection
body, that any of its properties, facilities, equipment or business procedures
or practices fails to comply with any applicable law, ordinance, regulation,
building or zoning law, or requirement of any public authority or body. There
are no regulations or legislation pending before any federal, foreign, state,
local or foreign or governmental body or legislature which, if adopted, would
have a materially adverse effect on the business of either Seller or CASH or on
the Assets.
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Section 2.20 Hazard Communications Standard Regulations and Laws.
Each Seller is in compliance with all of its obligations pursuant to the
Occupational Safety and Health Administration, Hazard Communications Standard
Regulations, 29 CFR 1910.1200 ("HCS Regulations") to the extent it is obligated
to be in compliance therewith.
Section 2.21 Environmental Matters. Attached hereto as Exhibit "S"
is a complete inventory of all raw materials, chemicals, products and waste
materials, including all "Hazardous Wastes" as defined in 42 U.S.C. ss.6903(5),
processed, generated, produced, stored, or maintained at any of the facilities
owned or used by Sellers, including real estate subject to Leases; all on-site
spills, leaks, releases at such facilities; past and present off-site disposal
practices and activities with to respect Hazardous Wastes and Hazardous
Substance; and notice of waste disposal if any filed pursuant to Section 103(C)
of the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601, et seq. ("CERCLA"). Exhibit "S" also describes the location
and contents of all storage and treatment facilities, including ponds, disposal
areas, underground storage tanks and other storage facilities, currently in use
or formerly used by Sellers or any other person at or in connection with the
facilities referenced above. Such facilities are satisfactory for, and in
compliance with, all environmental, health, fire, safety and regulatory
statutes, laws, rules and regulations. Except as set forth on Exhibit "S", all
facilities owned or used by Sellers, including real estate leased by Sellers,
are in compliance in all material respects with all applicable federal, state
and local environmental laws and regulations, including, but not limited to, the
Clean Air Act, 42 U.S.C. Section 7401, et seq.; the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. Section 1251,
et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq.; the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act
("XXXX"), 42 U.S.C. Section 9601, et seq.; the Hazard Communication Standard, 29
CFR Section 1910.1200; and the Toxic Substances Control Act, 15 U.S.C. Section
2601, et seq. There has not been a "Release" (as defined by CERCLA and XXXX) of
any "Hazardous Substance" from the facilities described in paragraph (a) hereof.
For purposes of this Section 2.21 the representations and warranties of Sellers
as they apply to the premises leased by Certified shall be deemed to be made to
the best knowledge of Sellers after due inquiry. To the best knowledge of
Shareholders after due inquiry, CASH is in compliance with all laws, rules and
regulations applicable to CASH and to the premises in which CASH conducts its
business to the extent such laws, rules and regulations govern the conduct of
CASH as to environmental matters. CASH has complied with all the requirements of
the Ley General del Ambiente (Decree No. 104-93 of May 27, 1993) including, but
not limited to, the EIA mentioned in Article 5 of the aforesaid Law, having
obtained the corresponding license which is still in good force and effect.
15
Section 2.22 Statements and Other Documents Not Misleading. Neither
this Agreement, including all Exhibits, nor any other financial statements,
documents or instruments delivered by either of Sellers or Shareholders to
Purchaser in connection with this Agreement and the transactions contemplated by
this Agreement, contains or will contain any untrue statement of any material
fact or omits or will omit to state any material fact required to be stated to
make such statement, document or instrument not misleading.
Section 2.23 Survival of Representations and Warranties. The
representations, warranties and agreements of Sellers and Shareholders set forth
in this Agreement or in any Exhibit attached hereto are made as of the date of
this Agreement and shall be true, correct, complete and accurate on and as of
the Closing Date and at all times between the date of this Agreement and the
Closing Date, and the same shall survive the Closing Date.
ARTICLE III
FURTHER REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder, severally as to such Shareholder, hereby represents
and warrants to Purchaser that:
Section 3.1 Ownership of Capital Stock of CASH. Such Shareholder
owns the number of Shares set forth opposite his name on Exhibit "C". Such
Shareholder has good, marketable and unencumbered title to such Shares, free and
clear of all liens, security interest, pledges, claims options, rights of
others. There are no restrictions on such Shareholder's rights to transfer such
Shares to Purchaser pursuant to this Agreement. No transfer of record, ownership
of, or beneficial interest in, any of such Shares, will be made between the date
hereof and closing.
Section 3.2 Agreement Not in Breach of Other Instruments Effecting
Shareholders. The execution and delivery of this Agreement, the consummation of
the transactions provided for herein, and the fulfillment of the terms hereof by
the Shareholder will not result in a breach of any of the terms and provisions
of, or constitute a default under, or conflict with, any agreement or the
instrument by which the Shareholder is bound, any judgment, decree, order or
award of any court, governmental body arbitrator, or of any applicable law or
regulation.
Section 3.3 Valid and Binding Agreement. This Agreement constitutes the
valid and binding obligation of the Shareholder, and is enforceable against such
Shareholder in accordance with its terms.
Section 3.4 Capitalization. CASH has an authorized capital
consisting of [to be completed]. Except as set forth on Exhibit "C", there are
no options, warrants, rights, stockholder agreements or other instruments or
agreements outstanding giving any person the right to acquire any shares of
capital stock of CASH, nor are there any commitments to issue or execute any
such options, warrants, rights or other instruments or agreements. True, correct
and complete copies of the constituent documents of CASH and all corporate
records of CASH are complete and accurate and all have been delivered to
Purchaser prior to the execution of this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers and Shareholders
that:
Section 4.1 Corporate Status. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and has full power and authority to own its properties and to carry on
the business presently as conducted by it. On the Closing Date, Purchaser will
be duly qualified to do business and in good standing in all jurisdictions in
which qualification is necessary to own the Assets and the Shares.
Section 4.2 Corporate Authority. The Board of Directors of Purchaser
has duly authorized and approved the execution and delivery of this Agreement
and the performance of the transactions provided for herein. No other corporate
action is required in connection herewith. This Agreement constitutes a legal,
valid and binding obligation of Purchaser and is enforceable against Purchaser
in accordance with its terms.
Section 4.3 Survival of Representations and Warranties. The
representations, warranties and agreements of Purchaser as set forth in this
Agreement or in any Exhibit attached hereto are made as of the date of this
Agreement and shall be true, correct and accurate on and as of the Closing Date
and at all times between the date of this Agreement and the Closing Date, and
the same shall survive the Closing Date.
ARTICLE V
CONDUCT OF BUSINESS PENDING CLOSING
Section 5.1 Conduct of Business Pending Closing. Each Seller jointly
and severally agrees as to the Sellers, and each Shareholder jointly and
severally agrees as to CASH, that between the date hereof and the Closing Date,
each Seller and CASH shall:
(a) not take any action or omit to take any action which
would cause any of the representations and warranties of either Seller or
Shareholders contained in this Agreement or in any Exhibit to become untrue;
(b) conduct its business in a good and diligent manner in the
ordinary and usual course of its business;
17
(c) not enter into any contract, agreement, commitment or
other arrangement with any party, other than contracts in the ordinary course of
its business, and not amend, modify or terminate any Corporation Agreement,
without the prior written consent of Purchaser;
(d) use its best efforts to preserve its business
organization intact, to keep available the service of its employees and to
preserve its relationships with customers, suppliers and others with whom it
deals;
(e) not reveal to any party, other than Purchaser or its
authorized representatives ("Agents"), any of the business procedures and
practices followed by it in the conduct of the Business;
(f) maintain in full force and effect all insurance currently
maintained by it;
(g) keep the premises occupied by it and all of its equipment
and tangible personal property in good operating repair and perform all
necessary repairs and maintenance;
(h) comply with all provisions of any Corporation Agreement
applicable to it as well as with all applicable laws, rules and regulations;
(i) not dispose of any Asset except in the ordinary course of
business, or terminate any Lease;
(j) not engage in any transaction which involves the
expenditure or commitment of more than Ten Thousand Dollars ($10,000) without
the prior consent of the Purchaser; and
(k) not issue any securities or other rights to purchase
capital stock of CASH.
ARTICLE VI
FURTHER COVENANTS AND AGREEMENTS
Section 6.1 Access to Information. Each of Sellers and each
Shareholder shall give to Purchaser and its Agents access to all of the
properties and assets (including the Assets) of Sellers and of CASH and to each
of the foregoing's documents, books and records relating to their respective
current and past operations and businesses, and shall permit Purchaser and its
Agents to make copies thereof, and each Seller and each Shareholder shall permit
Purchaser to interview each of Seller's and CASH's employees during reasonable
business hours and upon reasonable prior notice.
18
Section 6.2 Confidentiality.
(a) Purchaser and its Agents will exercise due diligence in
maintaining the confidentiality of all reports, data and other business
information relating to either Seller or CASH which Purchaser or its Agents
obtain in connection with this Agreement. If the transactions contemplated by
this Agreement are not consummated, Purchaser and its Agents will keep and
maintain in strict confidence for a period of one (1) year from the date hereof
all information concerning the business, assets, properties and personnel of
Sellers and CASH obtained by Purchaser or such Agents in connection with this
Agreement, and shall return to the Sellers or CASH, as appropriate, all copies
of the documents, data and other business information which Purchaser and its
Agents shall have acquired from such Seller or CASH.
(b) The confidentiality obligations of Purchaser in this
Section 6.2 shall not apply to information which: (i) is in the public domain;
(ii) is published or otherwise becomes part of the public domain through no
fault of Purchaser, its directors, officers and employees; (iii) Purchaser can
demonstrate was in its possession at the time of disclosure and was not acquired
directly or indirectly from either Seller or from CASH on a confidential basis
or from a source other than either Seller or CASH, which, to the best of
Purchaser's knowledge, did not acquire the information on a confidential basis;
or (iv) is required to be disclosed pursuant to any applicable judgment, order,
decree or subpoena of any court or governmental body or agency having
jurisdiction; provided that Purchaser shall give to the Seller or CASH, as
appropriate, reasonable prior notice of the disclosure of any such information
pursuant to the foregoing exception (iv).
Section 6.3 Cooperation. The parties hereto agree to execute and
deliver all other instruments and take all such other actions as any party may
reasonably request from time to time, before or after Closing and without
payment of further consideration, to effectuate the transactions provided herein
and to confer to Purchaser the benefits intended by such transactions. The
parties shall cooperate fully with each other and with their respective counsel
and accountants in connection with any steps required to be taken as part of
their respective obligations under this Agreement.
Section 6.4 Bulk Sales Laws. Each Seller, at its sole cost and
expense, shall fully and completely comply with the applicable provisions of any
bulk sales law pertaining to the transactions contemplated by this Agreement.
19
Section 6.5 Employment of Employees. Purchaser currently expects to
employ, at its option, certain of the employees of Sellers and CASH. Sellers and
CASH agree to take no action which would interfere with such employment by
Purchaser, and Sellers shall take all action required by law or otherwise to
cause the valid termination of employment at the Closing Date of such employees
by Sellers who are to be employed by Purchaser following the Closing Date.
Sellers and Shareholders further agree that Purchaser shall not assume any
responsibility for, and Sellers and Shareholders shall jointly and severally
indemnify Purchaser from and against, any liability arising from any termination
of employment of those employees of Sellers whom Purchaser does not employ after
the Closing Date, or as to whom Purchaser gives Sellers notice that Purchaser
will not continue their employment, such notice to be given on or prior to the
Closing Date. Sellers and Shareholders further agree that Purchaser shall not be
liable for, and Sellers and Shareholders shall jointly and severally indemnify
Purchaser from and against, any liability in respect of any employees of Sellers
or CASH for any acts or omissions relating to the employment of such employees
or to the business of Sellers or CASH arising on or prior to the Closing Date,
regardless of whether the employees of Sellers or CASH are subsequently employed
by Purchaser. Nothing in this Agreement is intended to confer upon any employee
of Sellers or CASH any rights or remedies, including, without limitation, any
rights of employment of any nature or kind whatsoever.
Section 6.6 Employee Benefit Plans. Each of Sellers and Xxxxxxx
Xxxxxxx shall jointly and severally remain responsible for, and shall indemnify
Purchaser from and against any liability in respect of, any Employee Benefit
Plans established by Sellers or CASH for the benefit of their respective
employees. Notwithstanding any provision contained in this Agreement to the
contrary, Purchaser shall not assume or be responsible in any manner for any
liabilities or obligations arising under or as a result of any Employee Benefit
Plan sponsored by Sellers or CASH or in which Sellers or CASH or their
respective employees participate.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to consummate the transactions contemplated
by this Agreement are subject to the satisfaction, on or prior to the Closing
Date, of each of the following conditions, any or all of which Purchaser may
waive:
Section 7.1 No Material Adverse Change. During the period from the
date hereof to the Closing Date there shall not have been any material adverse
change in the business, Assets, results of operations, financial condition or
prospects of the business of either of Sellers or of CASH.
Section 7.2 Representations and Warranties. Each of the
representations and warranties of Sellers and Shareholders set forth in this
Agreement and any Exhibit hereto shall be true and correct on and as of the
Closing Date as if made on and as of the Closing Date.
20
Section 7.3 Performance of Agreements. Sellers and Shareholders
shall have performed and complied with all of their respective covenants and
agreements contained in this Agreement which are required to be performed or
complied with on or prior to the Closing Date.
Section 7.4 Opinion of Counsel. Purchaser shall have received an
opinion from Sellers' and Shareholders' counsel, dated as of the Closing Date,
in form and content reasonably acceptable to Purchaser.
Section 7.5 No Actions, Etc. No action, suit, proceeding or
investigation by or before any court, administrative agency or other
governmental authority shall have been instituted or threatened, the effect of
which would restrain, prohibit or invalidate the transactions contemplated by
this Agreement or affect the right of Purchaser to own or control, after the
Closing, the Assets or the Shares or to operate the business of either of
Sellers or CASH.
Section 7.6 Consents; Lease Estoppels. All consents of all third
parties required to consummate the transactions provided for in this Agreement
shall have been obtained, and Purchaser shall have received estoppel
certificates executed by the landlords of all real property leased by Sellers
and CASH in a form reasonably acceptable to Purchaser.
Section 7.7 Executed Lease Agreements. Purchaser shall have executed
new lease agreements with respect to the premises leased by Sellers and CASH on
such terms as Purchaser shall, in its sole discretion, deem acceptable.
Section 7.8 Deliveries. All documents required to be delivered by
Sellers and Shareholders at or prior to Closing shall have been delivered to
Purchaser at Closing.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLERS AND SHAREHOLDERS
The obligations of Sellers and Shareholders to consummate the
transactions contemplated by this Agreement are subject to the satisfaction, on
or prior to the Closing Date, of each of the following conditions, any or all of
which Sellers and Shareholders may waive:
Section 8.1 No Material Adverse Change. During the period from the
date hereof to the Closing Date there shall not have been any material adverse
change in the ability of Purchaser to perform under this Agreement.
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Section 8.2 Representations and Warranties. Each of the
representations and warranties of Purchaser set forth in this Agreement and any
Exhibit hereto shall be true and correct on and as of the Closing Date as if
made on and as of the Closing Date.
Section 8.3 Performance of Agreements. Purchaser shall have
performed and complied with all of its covenants and agreements contained in
this Agreement which are required to be performed or complied with on or prior
to the Closing Date.
Section 8.4 No Actions, Etc. No action, suit, proceeding or
investigation by or before any court, administrative agency or other
governmental authority shall have been instituted or threatened, the effect of
which would restrain, prohibit or invalidate the transactions contemplated by
this Agreement or affect the right of Purchaser to own or control, after the
Closing, the Assets or the Shares or operate the business of either of Sellers
or CASH.
Section 8.5 Deliveries. All documents required to be delivered by
Purchaser at or prior to Closing shall have been delivered to Seller at Closing.
ARTICLE IX
CLOSING
Section 9.1 Sellers' Deliveries. At the Closing, Sellers shall
deliver to Purchaser: -------------------
(a) in a form satisfactory to Purchaser's counsel or as set
forth in this Agreement, such bills of sale, checks, endorsements of transfer,
conveyances, assignments and subleases and other agreements as shall vest in
Purchaser title to the Assets in accordance with the terms hereof.
(b) a certificate signed by a duly authorized officer of each
Seller, dated the Closing Date, confirming: (i) the truth and correctness of all
of the representations and warranties of such Seller contained in this Agreement
as of the Closing Date and as of all times between the date hereof and the
Closing Date; (ii) that all agreements and covenants of such Seller required to
have been complied with have been complied with; and (iii) that all necessary
corporate action by the Board of Directors and stockholders of such Seller have
been taken to authorize the consummation of the transactions contemplated by the
Agreement.
(c) the original copy of each written Corporation Agreement.
(d) a "good standing" certificate for each Seller issued by
the Department of State of the State of Florida.
22
(e) keys to all premises and to all automobiles and vehicles
included in the Assets.
(f) the legal opinion referred to in subsection 7.4.
(g) the lease agreements referred to in subsection 7.7
countersigned by the Landlord to the extent either Seller or an affiliate of
either Seller is a party thereto.
(h) an Assumption Agreement executed by Sellers, in form and
content acceptable to Sellers and Purchaser.
Section 9.2 Shareholders' Deliveries. At the Closing, Shareholders
shall deliver to Purchaser the following:
(a) Certificates for the Shares, endorsed by the Shareholders
in blank, or with stock transfer powers executed by Stockholders in blank
attached.
(b) a copy of the certificate of incorporation, or equivalent
constituent document, and by-laws of CASH certified as true, correct and
complete by the President and Secretary of CASH;
(c) a certificate signed by each Shareholder, dated the
Closing Date, confirming: (i) the truth and correctness of all of the
representations and warranties of such Shareholder contained in this Agreement
as of the Closing Date and as of all times between the date hereof and the
Closing Date; (ii) that all agreements and covenants of such Seller required to
have been complied with have been complied with; and (iii) that all necessary
corporate action by the Board of Directors and stockholders of each Seller have
been taken to authorize the consummation of the transactions contemplated by the
Agreement.
Purchaser's Deliveries.
(d) written resignations of all directors and officers of
CASH dated and effective as of the Closing Date.
(e) the stock books and records, corporate minute books and
corporate seal of CASH.
(f) general releases in favor of CASH executed by each
Stockholder and by each officer and director of CASH, in form and substance
satisfactory to Purchaser's counsel releasing CASH from all liability to such
persons.
Section 9.3 Deliveries by Purchaser. At the Closing, Purchaser shall
deliver to Sellers and Shareholders the following:
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(a) the Purchase Price in the form and manner provided for in
Section 1.2 hereof and as adjusted by subsections 1.2(b) and 1.2(c) thereof.
(b) A certificate signed by a duly authorized officer of
Purchaser, dated the Closing Date, confirming: (i) the truth and correctness of
all of the representations and warranties of Purchaser contained in this
Agreement as of the Closing Date and as of all times between the date hereof and
the Closing Date; (ii) that all agreements and covenants of Purchaser required
to have been complied with have been complied with; and (iii) that all necessary
corporate action by the Board of Directors of Purchaser has been taken to
authorize the consummation of the transactions contemplated by the Agreement.
(c) an Assumption Agreement executed by Purchaser, in form
and content acceptable to Sellers and Purchaser.
Section 9.4 Prorations. All taxes, assessments, utilities, and other
similar expenses on or relating to the Assets and to CASH shall be prorated
between the parties hereto as of 12:01 a.m. on the date of the Closing;
provided, however, that all labor costs and overhead expenses allocated to labor
and to the cost of inventory shall be pro rated between the parties hereto as of
12:01 a.m. on December 8, 1995. In the event any such taxes or other expenses
are not then ascertainable, such proration shall be made on the basis of the
most recently ascertainable estimates of such taxes or other expenses. All
rentals, deposits, advances, periodic payments and other amounts paid or to be
paid by Sellers and CASH under the Corporation Agreements shall be prorated
between Sellers and CASH, as appropriate, and Purchaser as of 12:01 a.m. on the
Closing Date. Amounts due each party hereto as a result of the application of
this Section 9.4 shall be offset against each other and the resulting balance
shall be promptly paid by one party to the other. If any statement or invoice
necessary to make the foregoing determination has not yet been received and the
amount due thereunder is not otherwise ascertainable, then proration and payment
therefor shall be deferred until such statement or invoice has been received.
Section 9.5 Parties to Bear Own Expenses. Whether or not the
transactions contemplated by this Agreement are consummated and except as
otherwise provided for herein, Purchaser, Sellers and Shareholders shall each
bear their respective expenses relating to or arising out of this Agreement,
including, but not limited to, fees for attorneys, accountants and other
advisors.
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ARTICLE X
INDEMNIFICATION
Section 10.1 Indemnifications.
(a) Indemnification by the Sellers and Shareholders. Each
Seller jointly and severally agrees, and each Shareholder severally agrees as to
such Shareholder's Shares and jointly and severally agrees as to CASH, to
indemnify, defend and hold harmless Purchaser and its directors, officers,
Agents and employees from and against any and all losses, damages, liabilities
and expenses, including, without limitation, legal fees and court costs, to
which any of them may become subject as the result of:
(i) any and all loss or damage resulting from any
misrepresentation, breach of warranty, or any
non-fulfillment of any warranty,
representation, covenant or agreement on the
part of either of Sellers or any Shareholder
contained in this Agreement;
(ii) any and all loss or damage resulting from any
error contained in any statement, report,
certificate or other document or instrument
delivered to Purchaser pursuant to this
Agreement or contained in any Exhibits;
(iii) any and all loss or damage resulting to
Purchaser by reason of any claim, debt,
liability or obligation not expressly assumed
by Purchaser hereunder, including the
Unassumed Debts and Liabilities, or otherwise
arising from the business of either of
Sellers or CASH or the ownership, use or
operation of the Assets on or prior to the
Closing Date; and
(iv) any and all acts, suits, proceedings,
demands, assessments, judgments, reasonably
attorneys' fees, costs and expenses incident
to any of the foregoing.
(b) Indemnification by Purchaser. Purchaser hereby agrees to
indemnify, defend and hold harmless each Shareholder and each Seller and its
directors, officers, Agents and employees, from and against any and all losses,
damages, liabilities and expenses, including, without limitation, legal fees and
court costs, which any of them may become subject to as the result of:
(i) any and all loss or damage resulting from any
misrepresentation, breach of warranty, or any
non-fulfillment of any warranty,
representation, covenant or agreement on the
part of Purchaser contained in this
Agreement;
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(ii) any and all loss or damage resulting to
either Seller or any Shareholders by reason
of any claim, debt, liability or obligation
expressly assumed by Purchaser hereunder; and
(iii) any and all acts, suits, proceedings,
demands, assessments, judgments, reasonably
attorneys' fees, costs and expenses incident
to any of the foregoing.
(c) Procedures for Establishment of Indemnification.
(i) In the event that any claim shall be asserted
by any party which, if sustained, would
result in a right of a party to
indemnification hereunder (a "Loss"), the
person entitled to indemnification hereunder
(the "Indemnitee"), within a reasonable time
after learning of such claim, shall notify
the person obligated to provide
indemnification hereunder with respect to
such claim (the "Indemnitor"), and shall
extend to the Indemnitor a reasonable
opportunity to defend against such claim, at
the Indemnitor's sole expense and through
legal counsel reasonably acceptable to the
Indemnitee, provided that the Indemnitor
proceeds in good faith, expeditiously and
diligently. No determination shall be made
pursuant to subparagraph (ii) below while
such defense is still being made until the
earlier of (A) the resolution of said claim
by the Indemnitor with the claimant, or (B)
the termination of the defense by the
Indemnitor against such claim or the failure
of the Indemnitor to prosecute such defense
in good faith in an expeditious and diligent
manner. The Indemnitee shall be entitled to
rely upon the opinion of its counsel as to
the occurrence of either of said events. The
Indemnitee shall, at its option and expense,
have the right to participate in any defense
undertaken by the Indemnitor with legal
counsel of its own selection. No settlement
or compromise of any claim which may result
in a Loss may be made by the Indemnitor
without the prior written consent of the
Indemnitee unless (A) prior to such
settlement or compromise the Indemnitor
acknowledges in writing its obligation to pay
in full the amount of the settlement or
compromise and all associated expenses and
(B) the Indemnitee is furnished with security
reasonably satisfactory to the Indemnitee
that the Indemnitor will in fact pay such
amount and expenses.
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(ii) In the event that an Indemnitee asserts the
existence of any Loss, the Indemnitee shall
give written notice to the Indemnitor of the
nature and amount of the Loss asserted. If
the Indemnitor, within a period of fifteen
(15) days after the giving of the
Indemnitee's notice, shall not give written
notice to the Indemnitee announcing its
intention to contest such assertion of the
Indemnitee (such notice by the Indemnitor
being hereinafter called the "contest
notice"), such assertion of the Indemnitee
shall be deemed accepted and the amount of
the Loss shall be deemed established. In the
event, however, that a contest notice is
given to the Indemnitee within said fifteen
(15) day period, then the contested assertion
of a Loss shall be settled by arbitration to
be held in Philadelphia, Pennsylvania in
accordance with the rules of the American
Arbitration Association then obtaining. The
determination of the arbitrator(s) shall be
delivered in writing to the Indemnitor and
the Indemnitee and shall be final, binding
and conclusive upon all of the parties
hereto, and the amount of the Loss, if any,
determined to exist, shall be deemed
established. Notwithstanding anything herein
contained to the contrary, each party shall
pay its own attorney's fees, costs and
expenses incident to any arbitration
proceeding brought under this subparagraph
9(c)(ii).
(iii) The Indemnitee and the Indemnitor may agree
in writing, at any time, as to the existence
and amount of a Loss, and, upon the execution
of such agreement, such Loss shall be deemed
established.
(iv) Payments of any Loss shall be paid to the
person entitled thereto within ten (10)
business days following the establishment of
the Loss. Failure to pay the amount of the
Loss when due shall give rise to interest
thereon calculated at a rate equal to 12% per
annum. Purchaser shall be entitled to offset
any Loss to which it is entitled to
indemnification hereunder, including any
amounts representing interest calculated
thereon, against rent due under the Lease for
the premises located at 0000 Xxxxxxx Xxxx,
Xxxxx, Xxxxxxx.
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ARTICLE XI
GENERAL
Section 11.1 Notices. All notices and other communications hereunder
shall be in writing and shall be sent by certified mail, postage prepaid, return
receipt requested; by an overnight express courier service that provides written
confirmation of delivery; or by facsimile with confirmation, addressed as
follows:
If to Sellers: Xxxxxxx Xxxxxxx
c/o 000 Xxxxx Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
With a copy to: Hamden X. Xxxxxx, III, Esquire
000 Xxxxx Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
If to Shareholders: To the address for such Shareholder
standing on the stock books of Pixie
Honduras
If to Purchaser: Xxxxxxxx'x, Inc. of Florida
000 Xxxx Xxxxxxxxxx Pike
Suite 100
Plymouth Meeting, PA 19462
With a copy to: Xxxxxx X. Xxxx, Esquire
Cozen and X'Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Any party may change its address for receiving notice by giving notice
of a new address in the manner provided herein. Any notice so given, shall be
deemed to be delivered on the second (2nd) business day after the same is
deposited in the United States Mail, on the next business day if sent by
overnight courier, or on the same business day if sent by facsimile before the
close of business, or the next day, if sent by facsimile after the close of
business.
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Section 11.2 Broker's Commission. Each party agrees to indemnify and
hold harmless the other party from and against any and all liability, loss,
damage, cost or expense (including court costs and attorney fees) arising out of
or relating to any claim that such party entered into any brokerage agreement or
similar arrangement, whether oral or written.
Section 11.3 Headings. The descriptive article, section and
paragraph headings set forth herein are inserted for convenience of reference
only, do not constitute a part of this Agreement and shall not control or affect
the meaning or construction of any provision of the within Agreement.
Section 11.4 Entire Agreement; Governing Law. This Agreement,
together with Exhibits attached hereto, constitutes the entire agreement between
the parties pertaining to this subject matter and supersedes all prior or
contemporaneous agreements and understandings of the parties relating to the
same. This Agreement may be amended only in writing signed by both parties. This
Agreement shall be governed and construed in accordance with the laws of the
State of Florida, notwithstanding conflicts of laws provisions to the contrary.
Section 11.5 Severability. If any term or provision of this
Agreement or any application thereof shall be invalid or unenforceable, the
remainder of this Agreement and any other application of such term or provision
shall not be affected thereby.
Section 11.6 Counterpart Execution. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
Section 11.7 Assignability; Binding Effect. This Agreement may not
be assigned by either party without the prior written consent of the other
party. This Agreement shall be binding upon the parties hereto, and their
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed the within
Agreement on the day and year first above written.
PIXIE PLAYMATES INC.,
a Florida corporation, Seller
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Title: President
Attest: /s/ Xxxxxx Xxxxxxx
----------------------------------
(Assistant) Secretary
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
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CERTIFIED SEWING SERVICES, INC.
a Florida corporation, Seller
By: /s/ Xxxxxxx X. Loptain
-------------------------------
Title: Secretary/Treasurer
[Corporate Seal]
XXXXXXXX'X, INC. OF FLORIDA
a Florida corporation, Purchaser
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Title (Vice) President
[Corporate Seal]
SHAREHOLDERS: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
/s/ J. Xxxxxx Xxxxxxx
-------------------------------
/s/ Xxxxxx Xxxxxxx
-------------------------------
/s/ Xxxx Xxxxx
-------------------------------
/s/ Xxxxxx Xxxxx Xxxx
-------------------------------
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LIST OF EXHIBITS
Exhibit "A" Fixed Assets, Inventory, Prepaid Expenses
Exhibit "B" Excluded Assets
Exhibit "C" Shareholders of CASH; Shares
Exhibit "D" Allocation of Purchase Price
Exhibit "E" Real Estate
Exhibit "F" Personal Property
Exhibit "G" Trade Names
Exhibit "H" Legal Matters
Exhibit "I" Corporation Agreements
Exhibit "I-1" Guaranteed Obligations
Exhibit "J" Employees
Exhibit "K" Employee Benefit Plans
Exhibit "L" Sellers Financial Statements
Exhibit "M" CASH Financial Statements
Exhibit "N" Suppliers
Exhibit "O" Conflicts of Interest
Exhibit "P" Subsidiaries
Exhibit "Q" No Material Change
Exhibit "R" Action Since Balance Sheet Date
Exhibit "S" Environmental Matters
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