Exhibit 10(a)(i)
ASSET PURCHASE AGREEMENT
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This ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered
into as of the 5th day of September 2003, by and among RAL PURCHASING CORP., a
New York corporation (the "Buyer"), and THE RAL SUPPLY GROUP, INC., a New York
corporation (the "COMPANY"). Xxxxx Xxxxxx, who is a shareholder of the Company
(the "Shareholder") is countersigning this Agreement only in respect of Section
7.3A and Section 7.4. Xxxxxx X. Xxxxxx is countersigning this Agreement only as
escrow agent under Section 1.2. UNIVERSAL SUPPLY GROUP, INC., a New York
corporation that is an affiliate of Buyer ("Guarantor"), is countersigning this
Agreement only to agree to guaranty the Promissory Note (as hereinafter defined)
under Section 1.2(i).
RECITALS
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A. The Company operates a heating, air conditioning and plumbing supply
business (the "BUSINESS") in six locations, one of which also serves as the
Company's corporate office and distribution center.
B. Buyer desires to purchase the business and selected assets of the
Company, and to assume selected liabilities of the Company.
C. The Company desires to sell such assets and to cause Buyer to assume
such liabilities.
AGREEMENT
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NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties agree as follows:
- SALE AND PURCHASE OF ASSETS
SALE AND PURCHASE OF ASSETS.
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(a) On the terms and subject to the conditions of this
Agreement, at the Closing referred to in SECTION 2.1 hereof, the Company shall
sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase,
acquire and accept delivery of all (except for the Excluded Assets as defined
below) of the Company's assets and properties (the "Assets"), including, without
limitation, the following:
merchandise inventory as of the Valuation Date (which is the
close of business on the second business day prior to the Closing); The
merchandise inventory will be physically counted by the Buyer and the Company
jointly with each leaving with a printed priced list of the inventory. The
merchandise to be counted will be (1) new, unused and in original packaging to
be valued at the Company's current replacement ("computer system") cost as of
the Valuation Date, (2) display merchandise to be valued on the Valuation Date
at the Company's "computer system" cost (which is lower than regular cost or is
carried at no cost), and (3) defective merchandise awaiting return to
manufacturers for credit or replacement, to be valued on the Valuation Date at
the agreed expected credit or replacement value.
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Trade accounts receivable as of the Valuation Date (the "Trade
Receivables") except for any receivables ("Past-Due Receivables") from any
customer who at the Closing is more than 90 days past due on any receivable;
"Trade Receivables Value" means the face value of the Trade Receivables as of
the Valuation Date. The Trade Receivables will be printed in detail and are
subject to collection as is provided in Section 1.11(a).
Certain prepaid and other assets of the Company such as rebates,
advertising co-op funds from vendors and buying groups and prepaid real estate
taxes ("prepaid and other assets") listed in Schedule 1.1(a)(iii). The Buyer
will share excess rebate distributions with the Company in proportion to when
the purchases took place. The "Prepaid and other Assets Value" means the value
of the Prepaid and other Assets as set forth in such Schedule, and is subject to
adjustment after the Closing to account for such events as expenses a party may
pay on account of the other party for bills that crossed their respective
periods of operation (e.g., telephone and other utility bills). The parties
expect that in connection with Company's transitional administrative computer
services referred to hereinafter, the amount of these adjustments will be
determined within 30 days after the Closing.
The fixed assets (the "Fixed Assets") of the Company (machinery and
equipment, office furniture and office equipment, and leasehold improvements at
the depreciated value of the Fixed Assets (the "Fixed Assets Value"), as set
forth on the books and records of the Company, as of the Valuation Date, as well
as certain assets (but not those listed under Section 1.1(b) as "Excluded Fixed
Assets") that are no longer on the Company's capital ledger, all as set forth in
Schedule 1.1(a)(iv).
The Company's rights from and after the Closing under the real estate
leases listed in Schedule 1.1(a)(v) (the "Real Estate Leases"), it being
understood that such leases shall be amended effective as of the Closing as
provided in Section 7.3A and also to provide that (i) a default by lessee under
any one such lease constitutes a default under all such leases; and (ii) the
failure of the Buyer to pay trade payables that are included in the Assumed
Obligations within 60 days of their due date, if such failure is not cured by
Buyer within 30 days after the Company has given notice to Buyer of the Buyer's
failure to pay such payables within such time, shall be deemed additional rent
due and owing by the Buyer under all such leases and shall constitute a default
by Buyer under the terms of all such leases. In such event, Buyer shall consent
to entry by the Court having competent jurisdiction thereof to Judgment(s) of
Possession and issuance of a Warrant of Eviction to be consented to by Buyer
pursuant to Stipulation between the Company and the Buyer to be submitted by the
Company to any Court having competent jurisdiction over summary possession
proceedings pursuant to the pertinent provisions of Article 7 of the Real
Practices and Proceedings Act of the State of New York. Concurrently with the
payment by Buyer of any trade payables included in the Assumed Obligations,
Buyer shall forward to the Company copies of pages from Buyer's disbursement
journals that reflect such payments. The aforesaid provisions of this Section
1.1(a)(vi) shall survive the Closing and delivery of the Conveyance Documents
and not merge therein
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the Company's rights from and after the Closing under the Penske truck
lease (the "Penske Lease") referred to in Schedule 1.1(a)(vi).
credit applications and customer guarantees in the form annexed hereto.
The Xxxxxx mortgage.
all proprietary knowledge, Trade Secrets, Confidential Information,
computer software (but excluding the Shim computer system software and excluding
the showroom electronic catalog currently being tested) and licenses, formulae,
designs and drawings, quality control data, processes (whether secret or not),
methods, inventions and other similar know-how or rights Used in the conduct of
the Company's business, including, but not limited to, the areas of marketing,
advertising and personnel training and recruitment, together with all other
Intangible Rights Used in connection with the Company's business, including all
files, manuals, documentation and source and object codes related thereto;
all utility, security and other deposits of the Company, to
be paid by Buyer at Closing;
purchase orders, customer orders and contracts with vendors
entered into in the ordinary course and outstanding as of the Closing ("Current
Customer and Vendor Commitments");
the Company's business as a going concern and its franchises, Permits and
other authorizations of Governmental Authorities (to the extent such Permits and
other authorizations of Governmental Authorities are transferable) and third
parties, licenses, telephone numbers for all locations, customer lists, vendor
lists, referral lists and contracts, advertising materials and data, restrictive
covenants, choses in action and similar obligations owing to the Company from
its present and former shareholders, officers, employees, agents and others,
together with all books, databases, operating data and records (including
financial, accounting and credit records), files, papers, records and other data
of the Company relative to the operation of the Company's business, i.e.,
inventory, customer records, vendor records, etc., but exclusive of financial
and accounting records which shall remain the property of the Company and at the
Company's option shall be stored at Buyer's facilities free of charge;
Notwithstanding the foregoing, the Company and Buyer shall for a period of not
less than three years make their records for transactions through the Closing
available to the other on request for review and copying (whether for the
purpose of facilitating the preparation of SEC reports for Buyer's affiliates or
otherwise), and they shall not destroy their respective records without first
offering to deliver the same to the other party.
all rights of the Company in and to the name The RAL Supply Group, Inc. and
any other name that incorporates the word RAL or Ral and all variants thereof,
and all other trade names, trademarks and slogans Used in its business, all
variants thereof and all goodwill associated therewith;
indemnification rights against third parties, whether in
respect of asbestos or other hazardous substances or otherwise
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certificates of insurance for manufacturers
all other property and rights of every kind or nature Used by
the Company in the operation of its business.
Notwithstanding the foregoing, the following assets and properties, as well
as the records referred to elsewhere in this Agreement that are to remain the
property of the Company, ("Excluded Assets"), are not included in the Assets:
Cash;
the fixed assets referred to in the Disclosure Schedule as "Excluded Fixed
Assets" constituting certain agreed fixed assets and fixed assets that as of the
Valuation Date were not included in the Company's capital ledger;
Past-Due Receivables;
prepaid insurance, it being understood that Buyer
will obtain its own policies, and prepaid taxes due from employees or
due from other affiliates of the Company
Shims computer system and all associated equipment, it being
understood, however, that the data thereon, together with all other records of
the Company are included in the Assets and are not Excluded Assets
Billboards on Route 17
Yankee seasons tickets
Contents of Xxxxx Xxxxxx'x office and administrative
office. The aforesaid office space is not part of the real estate lease
relating to the Company's Middletown Store and is a separate suite of
offices with a private entrance. The office provides administrative,
financial and bookkeeping services on a fee basis to not only the
Company but to the Company's shareholder, Xxxxx X. Xxxxxx, and its
affiliated companies.
Local Area Network ("LAN") in the Company's
Middletown Store (it being understood, however that the Company's DSL
line and high speed communications network are included in the Assets
and are not Excluded Assets;
Electronic Showroom Catalog; and
All contents of the computer room other than the
telephone system.
It is specifically understood and agreed by the parties
hereto that the Buyer is acquiring, and the Company and Shareholders are
selling, all of the tangible and intangible assets attributable to or Used by
the Company in its Business, except the Excluded Assets. Any cash proceeds
(inclusive of checks, money orders and credit card transactions) of the Excluded
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Assets received by the Buyer subsequent to the date of Closing shall be remitted
by Buyer to Seller within five (5) days from receipt. Conversely, any cash
proceeds (inclusive of checks, money orders and credit card transactions) of the
Assets received by the Company subsequent to the date of Closing shall be
remitted by the Company to Buyer within five (5) days from receipt.
The aforesaid assets and properties to be transferred to the Buyer
hereunder, but not including the Excluded Assets, are hereinafter collectively
referred to as the "ASSETS."
METHOD OF CONVEYANCE. The sale, transfer, conveyance,
assignment and delivery by the Company of the Assets to the Buyer in accordance
with SECTION 1.1(A) hereof shall be effected on the Closing Date by the
Company's execution and delivery to the Buyer of one or more Bills of Sale,
Assignments and other conveyance instruments with respect to the Company's
transfer of Intangible Rights, real property interests and other Assets in form
and scope reasonably satisfactory to Buyer (collectively the "CONVEYANCE
DOCUMENTS"). At the Closing, good, valid and marketable title to all of the
Assets shall be transferred, conveyed, assigned and delivered by the Company to
the Buyer pursuant to the Conveyance Documents, free and clear of any and all
liens, encumbrances, mortgages, security interests, pledges, claims, equities,
charges and other restrictions or limitations of any kind or nature whatsoever
("LIENS"), excepting Assumed Obligations as hereinafter provided in subparagraph
(f) of this Section 1.1.
ASSUMED OBLIGATIONS. At the Closing, the Buyer shall assume,
and agree to satisfy and discharge the following (collectively the "ASSUMED
OBLIGATIONS"):
The Buyer will assume responsibility for payment of trade accounts payable
and certain expense accounts payable including customer deposits as of the
Valuation Date as more particularly set forth herein on Schedule 1.1(f)(ii) of
the Company as of September 23, 2003 (including payments for unreconciled stock
receipts - merchandise received but for which no invoice has been received as of
the Valuation Date). Reference is made to Section 1.1(a)(v) for certain remedies
of the Company should Buyer fail to pay trade accounts payable within the time
period set forth therein, which failure shall also constitute an event of
default under this Agreement;
the Company's liabilities and other obligations arising subsequent to the
Closing under the Real Estate Leases and Penske Truck Lease listed on SCHEDULE
3.13 and under the Current Customer and Vendor Commitments;
the expense accounts payable, customer deposits payable, and payment
obligations for unreconciled stock receipts (namely, merchandise received but
for which no invoice has been received as of the Valuation Date that are listed
on SCHEDULE 1.1(C) hereto.
EXCLUDED LIABILITIES. Except as expressly set forth in SECTION 1.1(C), the
Buyer shall not assume or be responsible at any time for any liability,
obligation, debt or commitment of the Company, whether absolute or contingent,
accrued or unaccrued, asserted or unasserted, or otherwise (the "Excluded
Liabilities"). Without limiting the generality of the foregoing, the Company
expressly acknowledges and agrees that the Company shall retain, and that Buyer
shall not assume or otherwise be obligated to pay, perform, defend or discharge,
any liability or obligation
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incident to, arising out of or incurred with respect
to, this Agreement and the transactions contemplated hereby (including
any and legal or other fees and expenses, all sales, income or other
taxes arising out of the transactions contemplated hereby; without
limiting the generality of the foregoing, Seller shall promptly file a
New York bulk sale tax notice and remit any and all sale taxes due in
respect of the sale of assets contemplated in this transaction to be
paid by Buyer at Closing);
for taxes whether measured by income or otherwise,
in connection with any Plan or Benefit Program or Agreement (as defined in
SECTION 3.7), including, without limitation, any liability of the Company under
ERISA,
under any foreign, federal, state or local law, rule, regulation,
ordinance, program, Permit, or other Legal Requirement relating to health,
safety, Hazardous Materials and environmental matters applicable to the
Company's business and/or the facilities Used by the Company (whether or not
owned by the Company),
pertaining to products sold or manufactured or services performed or other
actions taken or omitted by the Company prior to the Closing Date,
relating to any default taking place before the Closing Date under any of
the Assumed Obligations to the extent such default created or increased the
liability or obligation, or
for Funded Indebtedness or accrued interest, fees or penalties with respect
thereto.
The Company agrees to satisfy and discharge the Excluded Liabilities as the
same shall become due.
PAYMENT FOR ASSETS.
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On the execution of this Agreement, the Buyer shall pay to the Company a
down payment in the sum of $350,000.00 (the "Down Payment") to Xxxxxx X. Xxxxxx,
Esq., as Escrow Agent (the "Escrow Agent") payable by wire transferred funds or
other good and sufficient funds. Also on the execution of this Agreement, the
Company shall deposit the sum of $350,000.00 (the "Xxxxxxx Payment") with Xxxxxx
X. Xxxxxx, Esq., as Escrow Agent (the "Escrow Agent") payable by wire
transferred funds or other good and sufficient funds. The Down Payment and the
Xxxxxxx Payment shall be held by the Escrow Agent pursuant to the terms and
conditions of this Agreement.
If all conditions to the Company's obligations hereunder have been
satisfied, and the Company is ready, willing and able to transfer to the Buyer
the assets being acquired by the Buyer hereunder in accordance with the terms of
this Agreement, and the Buyer through the Final Closing Date (as hereinafter
defined) was unwilling or unable to make payment and take title as provided for
herein; then, in such event, any and all down payment(s) paid by the Buyer
pursuant to this Section 1.2(b) herein constitutes a fair and reasonable amount
of damages under the circumstances and is not a penalty, and the Escrow Agent
shall pay the Down Payment together with any accrued interest thereon to the
Company as and for liquidated damages, with neither party having any further
liability against the other, and the Escrow Agent shall also pay the Xxxxxxx
Payment and all accrued interest thereon to the Company. The term "Final Closing
Date" means October 10, 2003, but if there is a force majeure impediment to
closing on that day, the term means the first business day thereafter on which
there is no such impediment to Closing.
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If all conditions to the Buyer's obligations hereunder have been satisfied,
and the Buyer is ready, willing and able to purchase the assets to be acquired
by the Buyer hereunder in accordance with the terms of this Agreement, and the
Company through the Final Closing Date was unwilling or unable to close this
transaction as provided for herein; then, in such event, the Xxxxxxx Payment
paid by the Company pursuant to this Section 1.2(c) herein constitutes a fair
and reasonable amount of damages under the circumstances and is not a penalty,
and the Escrow Agent shall pay the Xxxxxxx Payment together with any accrued
interest thereon to the Buyer as and for liquidated damages, with neither party
having any further liability against the other, and the Escrow Agent shall also
pay the Down Payment and all accrued interest thereon to the Buyer.
If this Agreement fails to close for reasons other than a default by Buyer
or the Company, the Escrow Agent shall return the Down Payment together with any
accrued interest thereon to Buyer, and the Xxxxxxx Payment together with any
accrued interest thereon to the Company.
At the Closing of this Agreement, the Escrow Agent shall pay to the Company
the Down Payment together with any interest accrued thereon towards the purchase
price payable by Buyer, and shall return the Xxxxxxx Payment together with any
accrued interest thereon to the Company.
The Escrow Agent will give to each of the Company and Buyer not less than
10 days' prior written notice before any funds are released from escrow. If a
dispute should arising with respect to the disposition of the Down Payment or
the Xxxxxxx Payment, the Escrow Agent shall hold the same subject to
determination of said dispute by (i) a final Order of any Court of competent
jurisdiction thereof; or (ii) a written agreement of the parties hereto in which
the Escrow Agent should be entitled to rely. The parties hereto hereby agree
that the Escrow Agent is released and exculpated from all liability hereunder
except for willful misconduct or gross negligence and the sole responsibility of
the Escrow Agent hereunder shall be to hold and disburse said amounts in
accordance with the provisions of this Agreement. Nothing herein shall preclude
Escrow Agent in the event of a dispute from depositing said amounts into any
Court jurisdiction and thereby be released of any obligations and liability
therefore and hereunder.
As payment in full for the Assets being acquired by the Buyer hereunder and
the non-compete covenants set forth in SECTION 7.4 hereof, Buyer shall pay to
the Company, in the manner set forth in this SECTION 1.2, (i) the Merchandise
Inventory Value, plus the Trade Receivables Value, plus the Prepaid Asset Value,
plus the Fixed Asset Value, plus $10,000 in respect of the non-compete covenant
set forth herein, plus $90,000 in respect of goodwill, less (ii) the face value
of all trade accounts payable and accrued expenses and other liabilities and
obligations that are assumed at the Closing by the Buyer under Section 1.1(f)(i)
and 1.1(f)(iii), less the amount paid by Buyer to Seller's accountants under
Section 1.13(c), less accrued vacation and sick pay (but not accrued severance
pay) through the Closing of the Business Employees (as defined in Section 5.9),
but subject to further adjustment as provided in SECTION 1.10 (such amount, as
so adjusted from time to time, is referred to herein as the "PURCHASE PRICE").
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In preparation for the Closing, the parties will prepare an estimate (the
"Estimated Purchase Price") of the Actual Purchase Price by conducting the joint
physical inventory and other procedures that are set forth in Section 1.1 with
the appropriate detailed listings and schedule. In order to plan for and
facilitate the Closing, the Company will also provide Buyer with an estimated
summary of the foregoing on the Valuation Date. A summary purchase price
calculation using June 30, 2003 figures from the Company's unaudited internal
Balance Sheet is attached hereto and made a part hereof as Schedule 1.2(h).
The Closing of this transaction will take place at the office of Xxxxxx X.
Xxxxxx, Esq., 000 Xxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx at 10:00 a.m. on
September 24, 2003 or, at the request of either party on a later date but not
later than October 10, 2003 on a TIME OF THE ESSENCE basis, but if there is a
force majeure impediment to closing on that day, the term means the first
business day thereafter on which there is no such impediment to Closing, at
which time the Buyer will pay the Estimated Purchase Price to the Company. The
Buyer will pay the Estimated Purchase Price to the Company by (i) directing the
Escrow Agent to release the Down Payment to the Company, (ii) paying to the
Company by wiring a funds equal to the sum (but not in excess of the Estimated
Purchase Price) of $725,000, plus such funds (net of expenses) as have
theretofore been borrowed by the Buyer from its lending bank against the
Merchandise Inventory and the Trade Receivables, and by issuing to the Company a
9% unsecured promissory note (the "Promissory Note") of Buyer for the balance
(if any) of the Estimated Purchase Price, payable interest monthly and $25,000
on the first day of each calendar quarter beginning January 1, 2004, with the
entire balance of the principal and any accrued interest being payable on
December 31, 2006, together with the unconditional guaranty of Universal
therefor. Universal hereby agrees to guaranty the Promissory Note with the same
force and effect as if it were jointly and severally liable therefor with Buyer.
The Promissory Note shall be prepayable by the Buyer at its option at any time
without penalty or premium. In addition to the foregoing, the Promissory Note
will provide that (i) a default by the Buyer as lessee(s) under the Real Estate
Leases as provided in Section 1.1(a)(v) of this Agreement shall, likewise (if
not cured within 30 days after notice by the Company), constitute a default by
the Buyer of the Buyer's obligations under the Promissory Note; and (ii) a
default by the Buyer under the Promissory Note shall, likewise (if not cured
within 30 days after notice by the Company), constitute a default under the Real
Estate Leases; and (iii) the Promissory Note will not be subject to offset. In
the event of any adjournment of any Closing, the Estimated Purchase Price shall
be adjusted pursuant to an updated valuation of the Merchandise Inventory, Trade
Receivables and Assumed Obligations.
TIME OF THE ESSENCE for the parties' obligation to close this transaction
not later than October 10, 2003, but if there is a force majeure impediment to
closing on that day, on the first business day thereafter on which there is no
such impediment to Closing.
The Purchase Price shall be allocated, apportioned and adjusted in the
manner specified in IRS Form 8594 attached as SCHEDULE 1.2 and the parties agree
to abide by such allocations (as they may be revised pursuant to SECTION 1.4)
for all tax reporting purposes.
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[1.3 to 1.09 omitted]
Adjustment of Purchase Price.
As set forth in Section 1.2(a) above, the Company and the
Buyer agree to meet on or about November 30, 2003 to resolve any questions,
errors or omissions that might have occurred in the Closing calculation and to
reallocate responsibility for certain expenses, (i.e., gas and electric,
telephone, etc.) which cover the period prior to and after the date of Closing.
Attached hereto and made a part hereof as Schedule 1.2(a) is the unaudited
internal Balance Sheet of the Company and an example of the purchase price
calculation in connection therewith attached hereto and made a part hereof.
Adjustments to the purchase price shall be made first by adjusting the principal
amount of the Promissory Note, and, to the extent of any excess, by cash
payments.
Certain Other Agreements:
Should any Trade Receivable purchased by the Buyer not be paid
by a customer in the ordinary course (without resort to litigation) within 120
days after the Closing, Buyer will reassign to the Company all then outstanding
receivables from such customer, and the Company shall forthwith pay to Buyer in
cash the face value of all such receivables.
Should Buyer fail to receive full credit for any defective
inventory within 75 days after the Closing, Buyer will reassign such defective
inventory to the Company, and the Company shall forthwith pay to Buyer in cash
the portion of the Purchase Price that Buyer paid to the Company for such
inventory.
Buyer has engaged Xxxxx, Xxxxxxxxx & Company, who are the
Company's independent accountants, to audit the
Company's financial statements for the years ended December 31, 2000, 2001 and
2002 (the "Audited Statements"). Buyer will pay up to $24,000 of the fees
therefor.
During the period commencing at the Closing and ending on the earlier of
the 7th anniversary of the Closing and the termination of the lease for the
Middletown lease, Buyer shall at no charge permit the Company to continue to use
the space currently used by the Company for the storage of its records for no
charge.
The Company will at the Closing make all 401(k) payments and other employee
benefit payments accrued through the Closing for the Business Employees (as
defined in Section 5.9.
The Company will provide computer and administrative services at its own
cost and expense for a period not to exceed 90 days from date of Closing.
Services to be provided include sales order entry, invoicing and custom accounts
receivable statements, cash receipts of cash application, purchase order entry,
purchase receipts entry, accounts payable reconciliation, processing and check
generation, inventory transfers, entry and receipt. Daily (where applicable) and
month end reports for each of these functions will be provided to Buyer. For
this purpose the Company shall also furnish to Buyer, at no charge to Buyer, the
use of the Company's computer system (which is an Excluded Asset) and the
Company's administrative staff (who are not being hired pursuant to this
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Agreement). As part of such services, such computer system and such staff will
seek to facilitate the conversion of the Company's computer records with respect
to the Assets to the computer system used by Buyer at its affiliates The Company
shall have no liability for these service so long as it performs its duties
using its best efforts consistent with previous business practice. The aforesaid
provisions of this Section 1.11(f) shall survive the Closing and delivery of the
Conveyance Documents and not merge therein.
- DELIVERIES AT CLOSING
[omitted].
DELIVERIES BY THE COMPANY . At or prior to the Closing, the Company shall
deliver or cause to be delivered to Buyer:
the Conveyance Documents;
a certificate executed by the Company to the effect that the conditions set
forth in SECTIONS 6.2(A) and 6.2(C) have been satisfied;
a good standing certificate from the Company's state or country of
organization;
possession of all originals and copies of agreements, instruments,
documents, deeds, books, records, files and other data and information included
within the Assets, subject to the access rights referred to in Section
1.1(a)(xii).
[omitted]
an employment agreement signed by Xxxxxxx X. Xxxxxx in the form attached as
an exhibit to this Agreement (the "Xxxxxx Employment Agreement")
evidence of the payment of the Xxxxxxx Amount to the Escrow Agent;
all such other documentations, certificates, and instruments as the Buyer
may reasonably request.
DELIVERIES BY BUYER. At or prior to the Closing, Buyer shall deliver to the
Company:
the amount and form of the Estimated Purchase Price required to be paid at
Closing pursuant to SECTION 1.2 hereof;
[omitted]
a certificate executed by an authorized officer of the Buyer, on behalf of
the Buyer, to the effect that the conditions set forth in SECTION 6.1(B) have
been satisfied;
a good standing certificate from Buyer's state of organization;
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evidence of the payment of the Escrow Amount to the Escrow Agent;
all such other documents, certificates and instruments as the Company may
reasonably request.
- REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer that:
CORPORATE EXISTENCE, ETC . The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York.
The Company does not have any subsidiaries.
AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has been duly
executed and delivered by the Company and, as to Section 7.3A, the Shareholder,
and the Company has all requisite power and legal capacity to execute and
deliver this Agreement and all Collateral Agreements executed and delivered or
to be executed and delivered in connection with the transactions provided for
hereby, to consummate the transactions contemplated hereby and by the Collateral
Agreements, and to perform its obligations hereunder and under the Collateral
Agreements. This Agreement constitutes, or upon execution and delivery will
constitute, the legal, valid and binding obligation of each party thereto party,
enforceable in accordance with its terms, except as such enforcement may be
limited by general equitable principles or by applicable bankruptcy, insolvency,
moratorium, or similar laws and judicial decisions from time to time in effect
which affect creditors' rights generally.
CAPITALIZATION AND CORPORATE RECORDS.
All issued and outstanding shares of the Company's capital stock are owned
beneficially and of record by the Shareholder.
The copies of the Articles of Incorporation and Bylaws of the Company
provided to Buyer are true, accurate, and complete and reflect all amendments
made through the date of this Agreement.
NO DEFAULTS OR CONSENTS. [omitted]
NO COMPANY DEFAULTS OR CONSENTS. Except as otherwise set forth in SCHEDULE
3.5 attached hereto, neither the execution and delivery of this Agreement nor
the carrying out of any of the transactions contemplated hereby will:
violate or conflict with any of the terms, conditions or provisions of the
[Articles] of Incorporation or bylaws of the Company;
violate any Legal Requirements applicable to the Company;
violate, conflict with, result in a breach of, constitute a default under
(whether with or without notice or the lapse of time or both), or accelerate or
permit the acceleration of the performance required by, or give any other party
the right to terminate, any Contract or Permit binding upon or applicable to the
Company;
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result in the creation of any lien, charge or other encumbrance on any
Properties of the Company; or
require the Shareholders or the Company to obtain or make any waiver,
consent, action, approval or authorization of, or registration, declaration,
notice or filing with, any private non-governmental third party or any
Governmental Authority.
NO PROCEEDINGS. No suit, action or other proceeding is pending or, to the
knowledge of the Company, threatened before any Governmental Authority seeking
to restrain the Company or the Shareholders or prohibit their entry into this
Agreement or prohibit the Closing, or seeking damages against the Company or the
Properties as a result of the consummation of this Agreement.
EMPLOYEE BENEFIT MATTERS.
-------------------------
SCHEDULE 3.7(A) provides a description of each of the following, if any,
which is sponsored, maintained or contributed to by the Company for the benefit
of the employees or agents of the Company which has been so sponsored,
maintained or contributed to at any time during the Company's existence or with
respect to which the Company has or may have any actual or contingent liability:
each "employee benefit plan," as such term is defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974 ("ERISA") (including, but
not limited to, employee benefit plans, such as foreign plans, which are not
subject to the provisions of ERISA) ("PLANS"); and,
each personnel policy, employee manual or other written statements of rules
or policies concerning employment, stock option plan, collective bargaining
agreement, bonus plan or arrangement, incentive award plan or arrangement,
vacation and sick leave policy, severance pay policy or agreement, deferred
compensation agreement or arrangement, consulting agreement, employment contract
and each other employee benefit plan, agreement, arrangement, program, practice
or understanding which is not described in SECTION 3.7(A)(I) ("BENEFIT PROGRAM
OR AGREEMENT").
True, correct and complete copies of each of the Plans (if any), and
related trusts, if applicable, including all amendments thereto, have been
furnished to Buyer. There has also been furnished to Buyer, with respect to each
Plan required to file such report and description, the three most recent reports
on Form 5500 and the summary plan description. True, correct and complete copies
or descriptions of all Benefit Programs or Agreements have also been furnished
to Buyer.
Except as otherwise set forth in SCHEDULE 3.7(C),
---------------
-16-
The Company does not contribute to or have an obligation to contribute to,
and the Company has not at any time contributed to or had an obligation to
contribute to, and the Company does not have any actual or contingent liability
under, a multiemployer plan within the meaning of Section 3(37) of ERISA
("MULTIEMPLOYER PLAN") or a multiple employer plan within the meaning of Section
413(b) and (c) of the Code.
The Company has substantially performed all obligations, whether arising by
operation of law or by contract, required to be performed by it in connection
with the Plans and the Benefit Programs and Agreements, and to the knowledge of
the Company, there have been no defaults or violations by any other party to the
Plans or Benefit Programs or Agreements;
All reports and disclosures relating to the Plans required to be filed with
or furnished to governmental agencies, Plan participants or Plan beneficiaries
have been filed or furnished in accordance with applicable law in a timely
manner, and each Plan and each Benefit Program or Agreement has been
administered in substantial compliance with its governing documents;
Each of the Plans intended to be qualified under Section 401 of the Code
satisfies the requirements of such Section and has received a favorable
determination letter from the Internal Revenue Service regarding such qualified
status and has not, since receipt of the most recent favorable determination
letter, been amended or operated in a way which could adversely affect such
qualified status;
There are no actions, suits or claims pending (other than routine claims
for benefits) or, to the knowledge of the Company, threatened against, or with
respect to, any of the Plans or Benefit Programs or Agreements or their assets;
All contributions required to be made to the Plans pursuant to their terms
and provisions and applicable law have been made timely;
As to any Plan subject to Title IV of ERISA, there has been no event or
condition which presents the material risk of Plan termination, no accumulated
funding deficiency, whether or not waived, within the meaning of Section 302 of
ERISA or Section 412 of the Code has been incurred, no reportable event within
the meaning of Section 4043 of ERISA (for which the disclosure requirements of
Regulation Section 2615.3 promulgated by the Pension Benefit Guaranty
Corporation ("PBGC") have not been waived) has occurred, no notice of intent to
terminate the Plan has been given under Section 4041 of ERISA, no proceeding has
been instituted under Section 4042 of ERISA to terminate the Plan, there has
been no termination or partial termination of the Plan within the meaning of
Section 411(d)(3) of the Code, no liability to the PBGC has been incurred, and
the assets of the Plan equal or exceed the aggregate present value of the
benefit liabilities (within the meaning of Section 4001(a)(16) of ERISA) under
the Plan, computed on a "plan termination basis" based upon reasonable actuarial
assumptions and the asset valuation principles established by the PBGC;
None of the Plans nor any trust created thereunder or with respect thereto
has engaged in any "prohibited transaction" or "party-in-interest transaction"
as such terms are defined in Section 4975 of the Code and Section 406 of ERISA
which could subject any Plan, the Company or any officer, director or employee
to a tax or penalty on prohibited transactions or party-in-interest transactions
pursuant to Section 4975 of the Code or Section 502(i) of ERISA;
-17-
To the knowledge of the Company, there is no matter pending (other than
routine qualification determination filings) with respect to any of the Plans or
Benefit Programs or Agreements before the Internal Revenue Service, the
Department of Labor or the PBGC;
Each trust funding a Plan, which trust is intended to be exempt from
federal income taxation pursuant to Section 501(c)(9) of the Code, satisfies the
requirements of such section and has received a favorable determination letter
from the Internal Revenue Service regarding such exempt status and has not,
since receipt of the most recent favorable determination letter, been amended or
operated in a way which would adversely affect such exempt status.
The Company has no obligation to provide health benefits or death benefits
to former employees, except as specifically required by law;
Neither the execution and delivery of this Agreement nor the consummation
of any or all of the transactions contemplated hereby will: (A) entitle any
current or former employee of the Company to severance pay, unemployment
compensation or any similar payment, (B) accelerate the time of payment or
vesting or increase the amount of any compensation due to any such employee or
former employee, or (C) directly or indirectly result in any payment made to or
on behalf of any person to constitute a "parachute payment" within the meaning
of Section 280G of the Code;
The Company has not incurred any liability or taken any action, and no
action or event has occurred that could cause the Company to incur any liability
(A) under Section 412 of the Code or Title IV of ERISA with respect to any
"single-employer plan" within the meaning of Section 4001(a)(15) of ERISA that
is not a Plan, or (B) to any Multiemployer Plan, including without limitation an
account of a partial or complete withdrawal within the meaning of Sections 4203
and 4205 of ERISA.
Since January 1, 1997, there have not been any (i) work stoppages, labor
disputes or other significant controversies between the Company and any
employee, (ii) labor union grievances or organizational efforts, or (iii) unfair
labor practice or labor arbitration proceedings pending or threatened.
Except as set forth in SCHEDULE 3.7(A), the Company is not a party to any
agreement, and each has not established any policy or practice, requiring the
Company to make a payment or provide any other form or compensation or benefit
to any person performing services for the Company upon termination of such
services which would not be payable or provided in the absence of the
consummation of the transactions contemplated by this Agreement.
SCHEDULE 3.7(E)(I) sets forth by number and employment classification the
approximate numbers of employees employed by the Company as of the date of this
Agreement, and, except as set forth on SCHEDULE 3.7(E)(II), none of said
employees are subject to union or collective bargaining agreements with the
Company.
-18-
Neither the Buyer nor any of its Affiliates shall have any liability or
obligations under or with respect to the Workers Adjustment Retraining
Notification Act in connection with any of the transactions contemplated in
connection herewith.
FINANCIAL STATEMENTS; LIABILITIES; ACCOUNTS RECEIVABLE; INVENTORIES.
-------------------------------------------------------------------
The Company has delivered to Buyer true and complete copies of (i)
unaudited Financial Statements with respect to the Company and its business as
of and for the years ended December 31, 2000, 2001 and 2002 and unaudited
Financial Statements as of and for the six months ended June 30, 2003 and (ii)
will cause the Audited Financial Statements to be delivered to Buyer before the
Closing. All of such unaudited Financial Statements were prepared from the books
and records of the Company in the ordinary course.
[omitted]
[omitted]
[omitted]
Except as provided under the provisions of the agreements described in
SCHEDULE 3.8(E), the Company has and will have as of the Closing Date legal and
beneficial ownership of its Properties, free and clear of any and all Liens.
ABSENCE OF CERTAIN CHANGES.
Except as otherwise set forth in SCHEDULE 3.9(A) attached hereto, since the
Balance Sheet Date (i.e., June 30, 2003), there has not been:
any event, circumstance or change that had or might have a material adverse
effect on the business, operations, prospects, Properties, financial condition
or working capital of the Company;
any damage, destruction or loss (whether or not covered by insurance) that
had or might have a material adverse effect on the business, operations,
prospects, Properties or financial condition of the Company; or
any material adverse change in the Company's vendor or supplier relations
or in the Company's sales patterns, pricing policies, accounts receivable or
accounts payable.
Except as otherwise set forth in SCHEDULE 3.9(B) attached hereto, since the
Balance Sheet Date, the Company has not done any of the following:
merged into or with or consolidated with, any other corporation or acquired
the business or assets of any Person;
purchased any securities of any Person;
-19-
created, incurred, assumed, guaranteed or otherwise become liable or
obligated with respect to any indebtedness, or made any loan or advance to, or
any investment in, any person, except in each case in the ordinary course of
business and as set forth on SCHEDULE 3.9(B)(iii);
made any change in any existing election, or made any new election, with
respect to any tax law in any jurisdiction which election could have an effect
on the tax treatment of the Company or the Company's business operations;
entered into, amended or terminated, or waived any of the Company's rights
under, any agreement specified in SCHEDULE 3.13;
sold, transferred, leased, mortgaged, encumbered or otherwise disposed of,
or agreed to sell, transfer, lease, mortgage, encumber or otherwise dispose of,
any Properties except (i) in the ordinary course of business and as set forth on
SCHEDULE 3.9(B)(VI), or (ii) pursuant to any agreement specified in SCHEDULE
3.13;
settled any claim or litigation, or filed any motions, orders, briefs or
settlement agreements in any proceeding before any Governmental Authority or any
arbitrator;
incurred, approved or entered into any agreement or commitment to make, any
expenditures in excess of $25,000 (other than those required pursuant to any
agreement specified in SCHEDULE 3.13);
maintained its books of account other than in the usual, regular and
ordinary manner in accordance with generally accepted accounting principles and
on a basis consistent with prior periods or made any change in any of its
accounting methods or practices that would be required to be disclosed under
GAAP;
adopted any Plan or Benefit Program or Agreement, or granted any increase
in the compensation payable or to become payable to directors, officers or
employees (including, without limitation, any such increase pursuant to any
bonus, profit-sharing or other plan or commitment), other than merit increases
to non-officer employees in the ordinary course of business and consistent with
past practice;
suffered any extraordinary losses or waived any rights of material value;
[omitted];
(A) liquidated Inventory or accepted product returns other than in the
ordinary course, (B) accelerated receivables, (C) delayed payables, or (D)
changed in any material respect the Company's practices in connection with the
payment of payables or the collection of receivables;
engaged in any one or more activities or transactions with an Affiliate or
outside the ordinary course of business;
-20-
declared, set aside or paid any dividends, or made any distributions or
other payments in respect of its equity securities, or repurchased, redeemed or
otherwise acquired any such securities;
amended its Articles of incorporation or bylaws; or
committed to do any of the foregoing.
COMPLIANCE WITH LAWS.
---------------------
Except as otherwise set forth in SCHEDULE 3.10(A), the Company is and has
been in compliance in all respects with any and all Legal Requirements
applicable to the Company, other than failures to so comply that would not have
an adverse effect on the business, operations, prospects, Properties or
financial condition of the Company. Except as otherwise set forth in SCHEDULE
3.10(A), the Company (i) has not received or entered into any citations,
complaints, consent orders, compliance schedules, or other similar enforcement
orders or received any written notice from any Governmental Authority or any
other written notice that would indicate that there is not currently compliance
with all such Legal Requirements, except for failures to so comply that would
not have an adverse effect on the business, operations, prospects, Properties or
financial condition of the Company, and (ii) is not in default under, and no
condition exists (whether covered by insurance or not) that with or without
notice or lapse of time or both would constitute a default under, or breach or
violation of, any Legal Requirement or Permit applicable to the Company.
Without limiting the generality of SECTION 3.10(A), the Company has not
received notice of and there is no basis for, any claim, action, suit,
investigation or proceeding that might result in a finding that the Company is
not or has not been in compliance with Legal Requirements relating to (a) the
development, testing, manufacture, packaging, distribution and marketing of
products, (b) employment, safety and health, (c) environmental protection,
building, zoning and land use and/or (d) the Foreign Corrupt Practices Act and
the rules and regulations promulgated thereunder.
LITIGATION. Except as otherwise set forth in SCHEDULE 3.11, there are no
claims, actions, suits, investigations or proceedings against the Company
pending or, to the knowledge of the Company, threatened in any court or before
or by any Governmental Authority, or before any arbitrator, that might have an
adverse effect (whether covered by insurance or not) on the business,
operations, prospects, Properties or financial condition of the Company or on
their ability to consummate the transactions contemplated hereby, and there is
no basis for any such claim, action, suit, investigation or proceeding. SCHEDULE
3.11 also includes a true and correct listing of all material actions, suits,
investigations, claims or proceedings that were pending, settled or adjudicated
since January 1, 2000.
REAL PROPERTY.
--------------
SCHEDULE 3.12(A) set forth a list of all real property or any interest
therein (including without limitation any option or other right or obligation to
purchase any real property or any interest therein) currently owned, or ever
owned, by the Company, in each case setting forth the street address and legal
description of each property covered thereby (the "OWNED PREMISES")
-21-
SCHEDULE 3.12(B) sets forth a list of all leases, licenses or similar
agreements relating to the Company's use or occupancy of real estate owned by a
third party ("LEASES"), true and correct copies of which have previously been
furnished to Buyer, in each case setting forth (i) the lessor and lessee thereof
and the commencement date, term and renewal rights under each of the Leases, and
(ii) the street address and legal description of each property covered thereby
(the "LEASED PREMISES"). The Leases and all guaranties with respect thereto, are
in full force and effect and have not been amended in writing or otherwise, and
no party thereto is in default or breach under any such Lease. No event has
occurred which, with the passage of time or the giving of notice or both, would
cause a material breach of or default under any of such Leases. Neither the
Company nor its agents or employees have received written notice of any claimed
abatements, offsets, defenses or other bases for relief or adjustment.
With respect to each Owned Premises and Leased Premises, as applicable: (i)
the Company has good, marketable and insurable fee simple interest in the Owned
Premises and a valid leasehold interest in the Leased Premises, free and clear
of any Liens, encumbrances, covenants and easements or title defects that have
had or could have an adverse effect on the Company's use and occupancy of the
Owned Premises and the Leased Premises; (ii) the portions of the buildings
located on the Owned Premises and the Leased Premises that are used in the
business of the Company are each in good repair and condition, normal wear and
tear excepted, and are in the aggregate sufficient to satisfy the Company's
current and reasonably anticipated normal business activities as conducted
thereon and, to the knowledge of the Company, there is no latent material defect
in the improvements on any Owned Premises, structural elements thereof, the
mechanical systems (including, without limitation, all heating, ventilating, air
conditioning, plumbing, electrical, utility and sprinkler systems) therein, the
utility system servicing each Owned Premises and the roofs which have not been
disclosed to Buyer in writing prior to the date of this Agreement; and(iii) the
Company has not received notice of (A) any condemnation, eminent domain or
similar proceeding affecting any portion of the Owned Premises or the Leased
Premises or any access thereto, and, to the knowledge of the Company, no such
proceedings are contemplated, (B) any special assessment or pending improvement
liens to be made by any governmental authority which may affect any of the Owned
Premises or the Leased Premises, or (C) any violations of building codes and/or
zoning ordinances or other governmental regulations with respect to the Owned
Premises or the Leased Premises.
COMMITMENTS.
Except as otherwise set forth in SCHEDULE 3.13, the Company is not a party
to or bound by any Customer and Vendor Commitment or any of the following,
whether written or oral:
any Contract that cannot by its terms be terminated by the Company with 30
days' or less notice without penalty or whose term continues beyond one year
after the date of this Agreement;
contract or commitment for capital expenditures by the Company in excess of
$25,000 per calendar quarter in the aggregate;
-22-
lease or license with respect to any Properties, real or personal, whether
as landlord, tenant, licensor or licensee;
agreement, contract, indenture or other instrument relating to the
borrowing of money or the guarantee of any obligation or the deferred payment of
the purchase price of any Properties;
partnership agreement, joint venture agreement or limited liability company
operating agreement;
[omitted];
agreement for the sale of any assets (except inventory in the ordinary
course) that in the aggregate have a net book value on the Company's books of
greater than $5,000;
agreement that purports to limit the Company's freedom to compete freely in
any line of business or in any geographic area;
preferential purchase right, right of first refusal, or similar
agreement; or
other Contract that is material to the business of the Company.
All of the Customer and Vendor Commitments and Contracts listed or required
to be listed in SCHEDULE 3.13 are valid, binding and in full force and effect,
and the Company has not been notified or advised by any party thereto of such
party's intention or desire to terminate or modify any such Customer or Vendor
Commitment or Contract in any respect, except as disclosed in SCHEDULE 3.13.
Neither the Company nor, to the knowledge of the Company, any other party is in
breach of any of the terms or covenants of any of the foregoing listed or
required to be listed in SCHEDULE 3.13. Following the Closing, Buyer will
continue to be entitled to all of the benefits currently held by the Company
under each of the foregoing listed or required to be listed in SCHEDULE 3.13.
Except as otherwise set forth in SCHEDULE 3.13(C), the Company is not a
party to or bound by any Contract or Contracts the terms of which were arrived
at by or otherwise reflect less-than-arm's-length negotiations or bargaining.
INSURANCE. To the best of the Company's knowledge, SCHEDULE 3.14 hereto is
a complete and correct list of all insurance policies (including, without
limitation, fire, liability, product liability, workers' compensation and
vehicular) presently in effect that relate to the Company, or the Properties,
including the amounts of such insurance and annual premiums with respect
thereto, all of which have been in full force and effect from and after the
date(s) set forth on SCHEDULE 3.14.
INTANGIBLE RIGHTS. Set forth on SCHEDULE 3.15 is a list and description of
all material foreign and domestic patents, patent rights, trademarks, service
marks, trade names, brands and copyrights (whether or not registered and, if
applicable, including pending applications for registration) owned, Used,
licensed or controlled by the Company and all goodwill associated therewith. The
Company owns or has the right to use and shall as of the Closing Date own or
have the right to use any and all information, know-how, trade secrets, patents,
copyrights, trademarks, tradenames, software, formulae, methods, processes and
other intangible properties that are necessary or customarily Used by the
-23-
Company for the ownership, management or operation of its Properties
("INTANGIBLE RIGHTS") including, but not limited to, the Intangible Rights
listed on SCHEDULE 3.15. Except as set forth on SCHEDULE 3.15, (i) the Company
is the sole and exclusive owner of all right, title and interest in and to all
of the Intangible Rights, and has the exclusive right to use and license the
same, free and clear of any claim or conflict with the Intangible Rights of
others; and (ii) no royalties, honorariums or fees are payable by the Company to
any person by reason of the ownership or use of any of the Intangible Rights.
EQUIPMENT AND OTHER TANGIBLE PROPERTY. [omitted]
PERMITS; ENVIRONMENTAL MATTERS.
[OMITTED]
Except as set forth on SCHEDULE 3.17(B), (i) the Company to the best of its
knowledge has all times been and is currently in compliance with all applicable
Environmental Laws, including obtaining and maintaining in effect all Permits
required by applicable Environmental Laws, and (ii), the best of its knowledge,
there are no claims, liabilities, investigations, litigation, administrative
proceedings, whether pending or, to the knowledge of the Company, threatened, or
judgments or orders relating to any Hazardous Materials (collectively called
"ENVIRONMENTAL CLAIMS") asserted or threatened against the Company or relating
to any real property currently or formerly owned, leased or otherwise Used by
the Company. Neither the Company nor, to the knowledge of the Company, any prior
owner, lessee or operator of said real property, has caused or permitted any
Hazardous Material to be used, generated, reclaimed, transported, released,
treated, stored or disposed of in a manner which could form the basis for an
Environmental Claim against the Company or the Buyer. Except as set forth on
SCHEDULE 3.17(B), the Company has not assumed any liability of any Person for
cleanup, compliance or required capital expenditures in connection with any
Environmental Claim.
Except as set forth on SCHEDULE 3.17(C), to the best of its knowledge, no
Hazardous Materials are or were stored or otherwise located, and no underground
storage tanks or surface impoundments are or were located, on real property
currently or formerly owned, leased or Used by the Company or, to the knowledge
of the Company, on adjacent parcels of real property, and no part of such real
property or, to the knowledge of the Company, any part of such adjacent parcels
of real property, including the groundwater located thereon, is presently
contaminated by Hazardous Materials excepting certain underground fuel storage
tanks that were removed from the Company's Middletown, New York premises in or
about 1990 and from the Company's Poughkeepsie New York premises on or about
1992.
The Assets and the Excluded Assets together constitute all of the
Assets owned by the Company. No affiliate owns any assets (other than Excluded
Assets) that are used by the Company.
-24-
OTHER INFORMATION.
The information furnished by the Company to Buyer pursuant to
this Agreement (including, without limitation, information contained in the
exhibits hereto, the Schedules identified herein, the instruments referred to in
such Schedules and the certificates and other documents to be executed or
delivered pursuant hereto by the Company at or prior to the Closing) is not, nor
at the Closing will be, false or misleading in any material respect, or
contains, or at the Closing will contain, any misstatement of material fact, or
omits, or at the Closing will omit, to state any material fact required to be
stated in order to make the statements therein not misleading.
- REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Company that:
EXISTENCE AND QUALIFICATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York.
AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has been duly
executed and delivered by Buyer and Buyer has all requisite company power and
legal capacity to execute and deliver this Agreement and all Collateral
Agreements executed and delivered or to be executed and delivered by Buyer in
connection with the transactions provided for hereby, to consummate the
transactions contemplated hereby and by the Collateral Agreements, and to
perform its obligations hereunder and under the Collateral Agreements. Upon the
approval of this Agreement by the Board of Managers of Buyer, the execution and
delivery of this Agreement and the Collateral Agreements and the performance of
the transactions contemplated hereby and thereby have been duly and validly
authorized and approved by all company action necessary on behalf of Buyer.
Subject to such Board approval, this Agreement and each Collateral Agreement to
which Buyer is a party constitutes, or upon execution and delivery will
constitute, the legal, valid and binding obligation of Buyer, enforceable in
accordance with its terms, except as such enforcement may be limited by general
equitable principles or by applicable bankruptcy, insolvency, moratorium, or
similar laws and judicial decisions from time to time in effect which affect
creditors' rights generally.
NO DEFAULT OR CONSENTS. Neither the execution and delivery of this
Agreement nor the carrying out of the transactions contemplated hereby will:
violate or conflict with any of the terms, conditions or provisions of
Buyer's Certificate of Incorporation or by-laws;
violate any Legal Requirements applicable to Buyer;
violate, conflict with, result in a breach of, constitute a default under
(whether with or without notice or the lapse of time or both), or accelerate or
permit the acceleration of the performance required by, or give any other party
the right to terminate, any contract or Permit applicable to Buyer;
result in the creation of any lien, charge or other encumbrance on any
property of Buyer; or
-25-
require Buyer to obtain or make any waiver, consent, action, approval or
authorization of, or registration, declaration, notice or filing with, any
private non-governmental third party or any Governmental Authority.
NO PROCEEDINGS. No suit, action or other proceeding is pending or, to
Buyer's knowledge, threatened before any Governmental Authority seeking to
restrain Buyer or prohibit its entry into this Agreement or prohibit the
Closing, or seeking Damages against Buyer or its properties as a result of the
consummation of this Agreement.
- OBLIGATIONS PRIOR TO CLOSING
From the date of this Agreement through the Closing:
BUYER'S ACCESS TO INFORMATION AND PROPERTIES. The Company shall permit
Buyer and its authorized employees, agents, accountants, legal counsel,
financing sources and other representatives to have access to the books,
records, employees, counsel, accountants, engineers and other representatives of
the Company at all times reasonably requested by Buyer for the purpose of
conducting an investigation of the Company's financial condition, corporate
status, operations, prospects, business and Properties. The Company shall make
available to Buyer for examination and reproduction all documents and data of
every kind and character relating to the Company in possession or control of, or
subject to reasonable access by, the Company and/or the Shareholders, including,
without limitation, all files, records, data and information relating to the
Properties (whether stored in paper, magnetic or other storage media) and all
agreements, instruments, contracts, assignments, certificates, orders, and
amendments thereto. Also, the Company shall allow Buyer access to, and the right
to inspect, the Properties, except to the extent that such Properties are
operated by a third-party operator, in which case the Company shall use its best
efforts to cause the operator of such Properties to allow Buyer access to, and
the right to inspect, such Properties.
COMPANY'S CONDUCT OF BUSINESS AND OPERATIONS. The Company and the
Shareholders shall keep Buyer advised as to all material operations and proposed
material operations relating to the Company. The Company shall (a) conduct its
business in the ordinary course except that the Company will increase inventory
by approximately 15% in preparation for the winter heating season and the
Company will attempt to negotiate extended payment terms therefor (but not less
than 60 days) with its vendors, (b) keep available the services of present
employees, (c) maintain and operate its Properties in a good and workmanlike
manner, (d) pay or cause to be paid all costs and expenses (including but not
limited to insurance premiums) incurred in connection therewith in a timely
manner, (e) use reasonable efforts to keep all Contracts listed or required to
be listed on SCHEDULE 3.13 in full force and effect, (f) comply with all of the
covenants contained in all such material Contracts, (g) maintain in force until
the Closing Date insurance policies (subject to the provisions of SECTION 5.7)
equivalent to those in effect on the date hereof, and (h) comply in all material
respects with all applicable Legal Requirements, and (i) use their best efforts
to preserve the present relationships of the Company with all persons having
significant business relations with the Company.
-26-
GENERAL RESTRICTIONS. Except as otherwise expressly permitted in this
Agreement, without the prior written consent of Buyer, which consent shall not
be unreasonably withheld, the Company shall not:
merge into or with or consolidate with, any other corporation or acquire
the business or assets of any person;
amend its articles of incorporation or bylaws;
create, incur, assume, guarantee or otherwise become liable or obligated
with respect to any indebtedness, or make any loan or advance to, or any
investment in, any person, except in each case in the ordinary course of
business;
enter into, amend or terminate any material agreement;
sell, transfer, lease, mortgage, encumber or otherwise dispose of, or agree
to sell, transfer, lease, mortgage, encumber or otherwise dispose of, any
Properties except (i) in the ordinary course of business, or (ii) pursuant to
any agreement specified in SCHEDULE 3.13;
settle any material claim or litigation, or file any material motions,
orders, briefs or settlement agreements in any proceeding before any
Governmental Authority or any arbitrator;
incur or approve, or enter into any agreement or commitment to make, any
capital expenditures in excess of $10,000 (other than those required pursuant to
any agreement specified in SCHEDULE 3.13));
maintain its books of account other than in the usual, regular and ordinary
manner in accordance with generally accepted accounting principles and on a
basis consistent with prior periods or make any change in any of its accounting
methods or practices;
make any change, whether written or oral, to any agreement or understanding
with any suppliers or customers;
accelerate or delay collection of any notes or accounts receivable in
advance of or beyond their regular due dates or the dates when they would have
been collected in the ordinary course of business consistent with past
practices;
delay or accelerate payment of any accrued expense, trade payable or other
liability beyond or in advance of its due date or the date when such liability
would have been paid in the ordinary course of business consistent with past
practices;
allow its levels of inventory to vary in any material respect from the
levels customarily maintained except as provided in Section 5.2;
adopt any Plan or Benefit Program or Agreement or increase the compensation
payable to any employee (including, without limitation, any increase pursuant to
any bonus, profit-sharing or other incentive plan or commitment);
-27-
become a party to or bound by any of the arrangements described in this
Agreement or any Schedule, whether written or oral;
engage in any one or more activities or transactions outside the ordinary
course of business;
enter into any transaction or make any commitment which could result in any
of the representations, warranties or covenants of the Company and/or the
Shareholders contained in this Agreement not being true and correct after the
occurrence of such transaction or event; or
commit to do any of the foregoing.
NOTICE REGARDING CHANGES. The Company and the Shareholders shall promptly
inform the Buyer in writing of any change in facts and circumstances that could
render any of the representations and warranties made herein by the Company
and/or the Shareholder inaccurate or misleading if such representations and
warranties had been made upon the occurrence of the fact or circumstance in
question. The Buyer shall promptly inform the Company in writing of any change
in facts and circumstances that could render any of the representations and
warranties made herein by it inaccurate or misleading if such representations
and warranties had been made upon the occurrence of the fact or circumstance in
question.
PREFERENTIAL PURCHASE RIGHTS. To the extent there are any parties entitled
or who may become entitled to exercise preferential purchase or consent rights
with respect to the transactions contemplated hereby, the Company and the
Shareholders shall promptly use their best efforts to obtain the agreement in
writing of such parties to waive or not exercise such rights, which request
shall be in form reasonably satisfactory to and approved by Buyer.
ENSURE CONDITIONS MET. Subject to the terms and conditions of this
Agreement, each party hereto shall use all reasonable commercial efforts to take
or cause to be taken all actions and do or cause to be done all things required
under applicable Legal Requirements in order to consummate the transactions
contemplated hereby, including, without limitation, (i) obtaining all Permits,
authorizations, consents and approvals of any Governmental Authority or other
person which are required for or in connection with Buyer's conduct of the
Business (as currently conducted by the Company) subsequent to (x) Closing or
(y) the consummation of the transactions contemplated hereby and by the
Collateral Agreements or (z) both, (ii) taking any and all reasonable actions
necessary to satisfy all of the conditions to each party's obligations hereunder
as set forth in ARTICLE VI, and (iii) executing and delivering all agreements
and documents required by the terms hereof to be executed and delivered by such
party on or prior to the Closing.
[OMITTED] .
CASUALTY LOSS. If, between the date of this Agreement and the Closing, any
of the Properties of the Company shall be destroyed or damaged in whole or in
part by fire, earthquake, flood, other casualty or any other cause, then the
Company shall, at Buyer's election, (i) cause such Properties to be repaired or
replaced prior to the Closing with Properties of substantially the same
condition and function, (ii) assign the Company's rights under applicable
insurance policies provided that the same are sufficient to cause such
-28-
Properties to be repaired or replaced prior to the Closing with Properties of
substantially the same condition and function, or (iii) enter into contractual
arrangements satisfactory to Buyer so that the Company will have at the Closing
the same economic value as if such casualty had not occurred, provided that if
there is substantial loss to the Company' Middletown site or to any two other
sites, Buyer may upon notice to the Company terminate this Agreement without
liability to any party.
EMPLOYEE MATTERS.
-----------------
Effective as of the Closing, the employment by the Company of the employees
listed on SCHEDULE 5.9 shall terminate and the Buyer shall be deemed to have
offered employment to each individual whose employment was so terminated (the
"BUSINESS EMPLOYEES"), effective at 12:01 a.m., local time, on the day after the
Closing Date or, in the case of a Business Employee not actively at work on the
Closing Date on account of a disability, on the day such employee reports for
work after termination of such disability upon substantially the same terms and
conditions with substantially the same duties and responsibilities and at
substantially the same rate of pay as in effect on the Closing Date while such
individuals were employed by the Company. Buyer shall to the extent fully
reserved for in the Closing Date Balance Sheet, the Buyer shall assume
responsibility for the payment of any employee benefits or entitlement,
including severance pay, accrued vacation, sick or holiday pay, to any Business
Employee pursuant to any Plan, Benefit Program or Agreement or law or regulation
as a result of the consummation of the transactions contemplated hereby.
The parties acknowledge that the transactions provided for in this
Agreement may result in obligations on the part of the Company and one or more
of the Plans that is a welfare benefit plan (within the meaning of Section 3(1)
of ERISA) to comply with the health care continuation requirements of Part 6 of
Title 1 of ERISA and Code Section 4980B, as applicable. The parties expressly
agree that Buyer and Buyer's benefit plans shall have no responsibility for
compliance with such health care continuation requirements (i) for qualified
beneficiaries who previously elected to receive continued coverage under the
Company's ERISA benefit plans or who between the date of this Agreement and the
Closing Date elect to receive continued coverage, or (ii) with respect to those
employees or former employees of the Company who may become eligible to receive
such continued coverage as a result of the transactions provided for in this
Agreement.
Except as specifically set forth in this Agreement: (i) the Buyer shall not
be obligated to assume, continue or maintain any of the Plans or Benefit
Programs or Agreements; (ii) no assets or liabilities of the Plans shall be
transferred to, or assumed by, the Buyer or the Buyer's benefit plans; and (iii)
except as fully reserved for in the Closing Date Balance Sheet, the Company
shall be solely responsible for funding and/or paying any benefits under any of
the Plans or Benefit Programs or Agreements, including any termination benefits
and other employee entitlements accrued under such plans by or attributable to
employees of the Company prior to the Closing Date.
Nothing in this Agreement, express or implied, shall confer upon any
employee of the Company, or any representative of any such employee, any rights
or remedies, including any right to employment or continued employment for any
period, of any nature whatsoever.
-29-
The Company shall permit Buyer to contact and make arrangements with the
Company's employees for the purpose of assuring their continued employment by
the Buyer after the Closing and for the purpose of ensuring the continuity of
the Company's business, and the Company agrees not to discourage any such
employees from consulting with Buyer.
The Company shall use its best efforts to keep available the services of
the Company's present employees through the Closing Date.
NAME CHANGE. The Company hereby represents, warrants and covenants to the
Buyer that the corporate name of the Company is as set forth on the signature
page hereof and further agrees and acknowledges that such name is included with
the Assets and that the exclusive right to use such name will be transferred to
the Buyer on the Closing Date. The Company and the Shareholders shall, at the
Closing, cause the filing of an appropriate amendment to the Company's Articles
of Incorporation changing its name to a name which is in no way similar to the
corporate name set forth on the signature page hereof and shall furnish such
written consents and assignments as the Buyer shall hereafter reasonably request
in connection with such name change.
- CONDITIONS TO COMPANY'S AND BUYER'S OBLIGATIONS
CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the Company to
carry out the transactions contemplated by this Agreement are subject, at the
option of the Company to the commercially reasonable satisfaction, or waiver by
the Company, of the following conditions:
Buyer shall have furnished the Company with a certified copy of all
necessary company action on its behalf to approve its execution, delivery and
performance of this Agreement.
All representations and warranties of Buyer contained in this Agreement
shall be true and correct in all material respects at and as of the Closing, and
Buyer shall have performed and satisfied in all material respects all covenants
and agreements required by this Agreement to be performed and satisfied by Buyer
at or prior to the Closing.
-30-
As of the Closing Date, no suit, action or other proceeding (excluding any
such matter initiated by or on behalf of the Company or any Shareholder) shall
be pending or threatened before any Governmental Authority seeking to restrain
the Company or prohibit the Closing or seeking Damages against the Company as a
result of the consummation of this Agreement.
Buyer shall have executed and delivered the Leases referred to in Section
7.3A to the landlords thereunder.
CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to carry out
the transactions contemplated by this Agreement are subject, at the option of
Buyer, to the commercially reasonable satisfaction, or waiver by Buyer, of the
following conditions:
All representations and warranties of the Company and the Shareholders
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing, and the Company and the Shareholders shall have
performed and satisfied in all material respects all agreements and covenants
required by this Agreement to be performed and satisfied by them at or prior to
the Closing.
As of the Closing Date, no suit, action or other proceeding (excluding any
such matter initiated by or on behalf of Buyer) shall be pending or threatened
before any court or governmental agency seeking to restrain Buyer or prohibit
the Closing or seeking Damages against Buyer, the Company or their Properties as
a result of the consummation of this Agreement.
Except for matters disclosed in SCHEDULE 3.9(A) OR 3.9(B) attached hereto,
since June 30, 2003 (which is the date (the "Balance Sheet Date") of the
Company's internal balance sheet referred to elsewhere in this Agreement) and up
to and including the Closing, there shall not have been any event, circumstance,
change or effect that, individually or in the aggregate, had or might have a
material adverse effect on the Company's business, operations, prospects,
Properties or financial condition.
The Buyer shall have received the opinion of Xxxxxx X. Xxxxxx, Esq.,
counsel to the Company ("COMPANY COUNSEL"), dated as of the Closing Date,
addressed to the Buyer and in form and substance reasonably satisfactory to the
Buyer, to the effect set forth on EXHIBIT C hereto.
The Company shall have furnished Buyer with a certified copy of all
necessary corporate action on its behalf approving the Company's execution,
delivery and performance of this Agreement.
[omitted]
-31-
Buyer shall have received written evidence, in form and substance
satisfactory to Buyer, of the consent to the transactions contemplated by this
Agreement of all governmental, quasi-governmental and private third parties
(including, without limitation, persons or other entities leasing real or
personal property to the Company) where the absence of any such consent would
result in a violation of law or a breach or default under any agreement to which
the Company is subject.
No proceeding in which any of the Shareholders or the Company shall be a
debtor, defendant or party seeking an order for its own relief or reorganization
shall have been brought or be pending by or against such person under any United
States, state or foreign bankruptcy or insolvency law.
[omitted]
[omitted]
[omitted].
The landlords under the Real Estate Leases shall have executed
and delivered the Lease Modifications (as hereinafter defined) to Buyer.
Xxxxxxx X. Xxxxxx shall have executed and delivered the
Xxxxxx Employment Agreement.
- POST-CLOSING OBLIGATIONS
FURTHER ASSURANCES. Following the Closing, the Company, the Shareholders
and the Buyer shall execute and deliver such documents, and take such other
action, as shall be reasonably requested by any other party hereto to carry out
the transactions contemplated by this Agreement.
PUBLICITY. None of the parties hereto shall issue or make, or cause to have
issued or made, any public release or announcement concerning this Agreement or
the transactions contemplated hereby, without the advance approval in writing of
the form and substance thereof by each of the other parties, except as required
by law (in which case, so far as possible, there shall be consultation among the
parties prior to such announcement), and the parties shall endeavor jointly to
agree on the text of any announcement or circular so approved or required.
Post-Closing Indemnity .
The Company shall indemnify and hold harmless Buyer from and
against any and all damages arising out of, resulting from or in any way related
to (i) a breach of or the failure to perform or satisfy any of the
representations, warranties, covenants and agreements made by the Company in
this Agreement or in any document or certificate delivered by the Company at the
Closing pursuant hereto, (ii) the occurrence of any event on or prior to the
date of Closing that is (or would be, but for any deductible thereunder) covered
by individual policies of insurance, blanket insurance policies or self
insurance programs maintained by the Company, (iii) the Excluded Assets, (iv)
the existence of any liabilities or obligations of the Company (whether accrued,
absolute, contingent, known or unknown, or otherwise, and whether or not of a
nature appropriate for inclusion in a balance sheet in accordance with GAAP)
other than the Assumed Obligations, or (v) any of the above. Any payment made to
Buyer by the Company pursuant to the indemnification obligations under this
Section 7.3 shall constitute a reduction in the Purchase Price hereunder.
A. Obligations of Shareholder. Shareholder shall be jointly and severally liable
with the Company to the Buyer in respect of (i) the Company's obligations under
Section 1.11 (a) and (b) (relating to trade receivables and defective
inventory), (ii) unpaid payroll taxes, unpaid sales taxes, unpaid employee
benefits, (iii) [omitted], (iv) the non-compete provisions of Section 7.4; (v)
the no-shop provision in Section 9.2(e); and (v) the Company's indemnification
obligations in respect of the foregoing. Shareholder shall also be subject to
the liabilities expressly assumed by him in Section 7.4. In addition,
Shareholder is an affiliate of the landlord under the Real Estate Leases. At the
closing, Shareholder will cause the respective landlords under such leases to
execute and deliver modifications to such leases as follows, and Buyer will
enter into such leases as so modified:
1. Landlord will represent that the intended use is consistent with the a
valid CO or a preexisting legal non-conforming use and does not
violate or prohibit zoning or other ordinances and governmental
requirements, and that that all plumbing electrical and HVAC is in
good condition and working order, and to the best of landlord's
knowledge there are no outstanding violations of record.
-32-
2. section 6.4 will be amended to provide for abatement of rent for
substantial and material destruction of property.
3. section 9.1 shall be amended to clarify that landlord is responsible
for all structural repairs and replacements.
4. in section 16.1, for all matters other than payment of rent or
additional rent (as to which the current default provisions shall
continue to apply), tenant will be in default only if the designated
failure is not cured for 30 days after notice; provided that the time
periods in this Section 4 shall not extend any cure period in the lese
beyond 30 days.
5. in section 22.1 the amount of improvements that can be made during the
term of the lease without the landlord's approval shall be $50,000.
6. the notice provision will be changed appropriately.
7. Schedule B paragraph 1.2 of the Peekskill and Poughkeepsie leases
shall provide that every year, starting with the second, the Annual
Fixed Rent shall be adjusted upward, but never decreased, pursuant to
the provisions hereof. Additionally, the annual fixed rent under the
Peekskill and Poughkeepsie leases shall be deemed to have increased by
$12,000 on January 1, 2001.
8. Article 3.1(a) will be amended to provide that tenant's responsibility
for payment of all taxes in this article is limited to its
proportionate share of taxes calculated as a square footage of space
it occupies divided by the total square footage of the tax property
9. Article X will be amended to provide that tenant's responsibility for
payment of utility charges is limited to its proportionate share of
utility charges calculated by the square footage it occupies divided
by the square footage of the area to which the utility charges apply.
10. All relevant provisions of the lease shall be amended to provide that
tenant's sole environmental responsibility is to do what tenant in its
capacity as tenant is required to do under federal and New York
statutes, and to provide further that the landlord will indemnify the
tenant and holds it harmless from any and all claims, actions or
proceedings asserted against tenant with respect to any environmental
contamination of the leased premises prior to the date of the Closing
(including without limitation any issues arising from an underground
fuel tank referred to in Section 3.17(c), including reasonable
attorney's fees).
11. On the 18th month after the Closing, tenant shall deposit with
landlord one-month's rent as security deposit. On the 24th month after
the Closing, tenant shall deposit with landlord one half month's rent
as an additional security deposit.
12. In addition to any default remedies afforded to the landlord under the
lease, (i) in the event that the tenant defaults under its obligation
to pay the Promissory Note due and owing to the Company as provided in
this Agreement and such default is not cured within 30 days after
notice and/or (ii) in the event that the Buyer defaults under its
obligations hereunder to pay trade payables that are included in the
Assumed Obligations assumed by it under this Agreement and such
failure is not cured by the Buyer within 30 days after Company has
given notice to the Buyer of the Buyer's failure to pay such payables
within such time, and (iii) a default by the tenant under any of such
leases, which is not cured within 30 days after notice, shall
constitute a default under all such leases, any of the aforesaid
defaults of the Buyer shall be deemed additional rent due and owing by
the tenant under each lease. In such event tenant shall consent to the
entry by the court having jurisdiction thereof to Judgments of
Possession and issuance of a Warrant of Eviction to be consented to by
the landlord, the Company and the tenant ("Buyer") to be submitted by
the Landlord or the Company to any Court having competent jurisdiction
over summary possession proceedings pursuant to the pertinent
provisions of Article 7 of the Real Estate Practices and Proceedings
Act of the State of New York. The aforesaid provisions of this
subsection 12 shall survive the Closing and the delivery of the
Conveyance Documents and shall not merge therein.
-33-
13. Notwithstanding anything to the contrary contained in the lease,
tenant will be permitted to assign the lease with landlord's approval
which will not be unreasonably withheld or delayed. Provisions related
to recapture will be deleted.
NON-COMPETITION, NON-SOLICITATION AND NON-DISCLOSURE.
----------------------------------------------------
GENERAL. In consideration of the payment of the Purchase Price, and in
order to induce the Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, each of the Company and Shareholder hereby
acknowledges that it or he is a beneficiary of the Purchase Price payments to
the Company, and each covenants and agrees as follows:
Without the prior written consent of the Buyer, the Company or such
Shareholder shall not for a period of five (5) years from and after the Closing
Date (A) directly or indirectly acquire or own in any manner any interest
(whether through a debt or equity instrument) in any person , firm, partnership,
corporation, association or other entity (including the Company) which engages
or plans to engage in any facet of the Business or which competes or plans to
compete in any way with the Buyer or any of its subsidiaries or Affiliates,
anywhere within a 100-mile radius of any of the Leased Premises (the
"TERRITORY"), (B) be employed by or serve as an employee, agent, officer,
director of, or as a consultant to, any person, firm, partnership, corporation,
association or other entity which engages or plans to engage in any facet of the
Business or which competes or plans to compete in any way with the Buyer or any
of its subsidiaries or Affiliates within the Territory, or (C) utilize his
special knowledge of the business of the Company and his or its relationships
with customers, suppliers and others to compete with Buyer and/or its Affiliates
in any business which engages or plans to engage in any facet of the Business;
provided, however, that nothing herein shall be deemed to prevent such
Shareholder from (x) acquiring through market purchases and owning, solely as a
passive investment, less than three percent in the aggregate of the equity
securities of any class of any issuer whose shares are registered under ss.12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and are listed or
admitted for trading on any United States national securities exchange or are
quoted on the National Association of Securities Dealers Automated Quotation
System, or any similar system of automated dissemination of quotations of
securities prices in common use, so long as such Shareholder is not a member of
any "control group" (within the meaning of the rules and regulations of the
United States Securities and Exchange Commission) of any such issuer. The
Company and each such Shareholder acknowledges and agrees that the covenants
provided for in this SECTION 7.4(A) are reasonable and necessary in terms of
time, area and line of business to protect the Company's Trade Secrets. The
Company and Shareholder further acknowledges and agrees that such covenants are
reasonable and necessary in terms of time, area and line of business to protect
the Buyer's legitimate business interests, which include its interests in
protecting the Buyer's (i) valuable confidential business information, (ii)
-34-
substantial relationships with customers, and (iii) customer goodwill associated
with the ongoing Business. The Company and Shareholder expressly authorizes the
enforcement of the covenants provided for in this SECTION 7.4(A) by (A) the
Buyer and its subsidiaries, (B) the Buyer's permitted assigns, and (C) any
successors to the Buyer's business. To the extent that the covenants provided
for in this SECTION 7.4(A) may later be deemed by a court to be too broad to be
enforced with respect to its duration or with respect to any particular activity
or geographic area, the court making such determination shall have the power to
reduce the duration or scope of the provision, and to add or delete specific
words or phrases to or from the provision. The provision as modified shall then
be enforced. Notwithstanding the foregoing or anything contained herein to the
contrary, the aforesaid provision shall specifically except (i) e-commerce
business and any showrooms associated in connection therewith and/or e-marketing
business; and (ii) any other business that is engaged in by an entity that
purchases the e-commerce business and/or the e-marketing business of Faucet
Outlet, Inc. ("Faucet Outlet") and/or Net Net, Inc. ("Net Net") and any
presently existing or future affiliates, successors and assigns of Faucet Outlet
and/or Net Net and/or the Shareholder.
Without the prior consent of Buyer, the Company and Shareholder shall not
for a period of five (5) years from the Closing Date, directly or indirectly,
for itself or himself or for any other person, firm, corporation, partnership,
association or other entity (including the Company), (A) solicit any Company
employees employed in the Business, or (B) call on or solicit any of the actual
customers or clients of the Business, nor shall the Company or Shareholder make
known the names and addresses of such customers or any information relating in
any manner to the Company's trade or business relationships with such customers
(excepting the last sentence of subparagraph (i) above).
The Company and Shareholder shall not at any time divulge, communicate, use
to the detriment of the Buyer or for the benefit of any other person or persons,
or misuse in any way, any Confidential Information pertaining to the Business.
Any confidential information or data now known or hereafter acquired by the
Company or Shareholder with respect to the Business shall be deemed a valuable,
special and unique asset of the Buyer that is received by the Company or
Shareholder in confidence and as a fiduciary, and the Company or Shareholder
shall remain a fiduciary to the Buyer with respect to all of such information.
INJUNCTION. It is recognized and hereby acknowledged by the parties hereto
that a breach or violation by the Company or Shareholder of any or all of the
covenants and agreements contained in this SECTION 7.4 may cause irreparable
harm and damage to Buyer in a monetary amount which may be virtually impossible
to ascertain. As a result, the Company and Shareholder recognizes and hereby
acknowledges that Buyer shall be entitled (without the requirement of posting a
bond) to an injunction from any court of competent jurisdiction enjoining and
restraining any breach or violation of any or all of the covenants and
agreements contained in this SECTION 7.4 by the Company or Shareholder, and/or
his or its associates, Affiliates, partners or agents, either directly or
indirectly, and that such right to injunction shall be cumulative and in
addition to whatever other rights or remedies the Buyer may possess hereunder,
at law or in equity. Nothing contained in this SECTION 7.4 shall be construed to
prevent Buyer from seeking and recovering from the Company or Shareholder
damages sustained by it as a result of any breach or violation by the Company or
such Shareholder of any of the covenants or agreements contained herein.
-35-
DELIVERY OF PROPERTY RECEIVED BY THE COMPANY AFTER CLOSING. From and after
the Closing, Buyer shall have the right and authority to collect, for the
account of Buyer, all receivables and other items which shall be transferred or
are intended to be transferred to Buyer as part of the Assets as provided in
this Agreement, and to endorse with the name of the Company any checks or drafts
received on account of any such receivables or other Assets. The Company agrees
that it will transfer or deliver to Buyer, promptly after the receipt thereof,
any cash or other property which the Company receives after the Closing Date in
respect of any claims, contracts, licenses, leases, commitments, sales orders,
purchase orders, receivables of any character or any other items transferred or
intended to be transferred to Buyer as part of the Assets under this Agreement.
BUYER APPOINTED ATTORNEY FOR THE COMPANY. [omitted]
ASSIGNMENT OF CONTRACTS. At the option of Buyer, and notwithstanding
anything in this Agreement to the contrary, this Agreement shall not constitute
an assignment of any claim, contract, license, franchise, lease, commitment,
sales order, sales contract, supply contract, service agreement, purchase order
or purchase commitment if an attempted assignment thereof without the consent of
a third party thereto would constitute a breach thereof or in any way adversely
affect the rights of Buyer thereunder. If such consent is not obtained, or if
any attempt at an assignment thereof would be ineffective or would affect the
rights of the Company thereunder so that Buyer would not in fact receive all
such rights, the Company shall cooperate at its own expense with Buyer to the
extent necessary to provide for Buyer the benefits under such claim, contract,
license, franchise, lease, commitment, sales order, sales contract, supply
contract, service agreement, purchase order or purchase commitment, including
enforcement for the benefit of Buyer of any and all rights of the Company
against a third party thereto arising out of the breach or cancellation by such
third party or otherwise.
CORPORATE EXISTENCE. The Company shall maintain its corporate existence
unchanged and in full force and effect for at least three months following the
Closing Date or until December 31, 2003 whichever is earlier.
- [omitted]
- MISCELLANEOUS
LIMITATION ON LIABILITY.
The representations, warranties, agreements, and indemnities of the Company
and (as to Section 7.3A and 7.4) the Shareholder set forth in this Agreement or
in connection with the transactions contemplated hereby shall survive the
Closing.
For purposes of this SECTION 9.1, a party making a claim for indemnity
under SECTION 7.3 is hereinafter referred to as an "INDEMNIFIED PARTY" and the
party against whom such claim is asserted is hereinafter referred to as the
"INDEMNIFYING PARTY." All claims by any Indemnified Party under SECTION 7.3 or
-36-
7.3A hereof shall be asserted and resolved in accordance with the following
provisions. If any claim or demand for which an Indemnifying Party would be
liable to an Indemnified Party is asserted against or sought to be collected
from such Indemnified Party by a third party, said Indemnified Party shall with
reasonable promptness notify in writing the Indemnifying Party of such claim or
demand stating with reasonable specificity the circumstances of the Indemnified
Party's claim for indemnification; provided, however, that any failure to give
such notice will not waive any rights of the Indemnified Party except to the
extent the rights of the Indemnifying Party are actually prejudiced. After
receipt by the Indemnifying Party of such notice, then upon reasonable notice
from the Indemnifying Party to the Indemnified Party, or upon the request of the
Indemnified Party, the Indemnifying Party shall defend, manage and conduct any
proceedings, negotiations or communications involving any claimant whose claim
is the subject of the Indemnified Party's notice to the Indemnifying Party as
set forth above, and shall take all actions necessary, including, but not
limited to, the posting of such bond or other security as may be required by any
Governmental Authority, so as to enable the claim to be defended against or
resolved without expense or other action by the Indemnified Party. Upon request
of the Indemnifying Party, the Indemnified Party shall, to the extent it may
legally do so and to the extent that it is compensated in advance by the
Indemnifying Party for any costs and expenses thereby incurred,
take such action as the Indemnifying Party may reasonably request in
connection with such action,
allow the Indemnifying Party to dispute such action in the name of the
Indemnified Party and to conduct a defense to such action on behalf of the
Indemnified Party, and
render to the Indemnifying Party all such assistance as the Indemnifying
Party may reasonably request in connection with such dispute and defense.
CONFIDENTIALITY.
The existing Non-Disclosure Agreement by Buyer or its affiliates in
favor of the Company shall continue in full force and effect.
At all times after the Closing, the Company shall, and shall cause the
Affiliates of the Company and its and their employees, agents, accountants,
legal counsel and other representatives and advisers to, hold in strict
confidence all, and not divulge or disclose any, information of any kind
concerning the Company and its business; provided, however, that the foregoing
obligation of confidence shall not apply to (i) information that is or becomes
generally available to the public other than as a result of a disclosure by the
Buyer or its Affiliates or any of its or their employees, agents, accountants,
legal counsel or other representatives or advisers, and (ii) information that is
required to be disclosed by the Company or its Affiliates or any of its or their
employees, agents, accountants, legal counsel or other representatives or
advisers as a result of any applicable law, rule or regulation of any
Governmental Authority; and provided further that the Company promptly shall
notify Buyer of any disclosure pursuant to clause (iii) of this SECTION 9.2(A).
-37-
The Company shall, and shall cause their respective Affiliates, employees,
agents, accountants, legal counsel and other representatives and advisers to,
hold in strict confidence all, and not divulge or disclose any, information of
any kind concerning the transactions contemplated by this Agreement, the
Company, Buyer or their respective businesses; provided, however, that the
foregoing obligation of confidence shall not apply to (i) information that is or
becomes generally available to the public other than as a result of a disclosure
by the Company, or any of its Affiliates, employees, agents, accountants, legal
counsel or other representatives or advisers, (ii) information that is or
becomes available to the Company or any of its Affiliates, employees, agents,
accountants, legal counsel or other representatives or advisers after the
Closing on a nonconfidential basis prior to its disclosure by the Company, or
any of its Affiliates, employees, agents, accountants, legal counsel or other
representatives or advisers and (iii) information that is required to be
disclosed by the Company or any of its Affiliates, employees, agents,
accountants, legal counsel or other representatives or advisers as a result of
any applicable law, rule or regulation of any Governmental Authority; and
provided further that the Company shall promptly shall notify Buyer of any
disclosure pursuant to clause (iii) of this SECTION 9.2(c).
Notwithstanding anything herein to the contrary, any party to this
agreement (and each employee, representative, or other agent of such party) may
disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of any transaction contemplated by this Agreement
and all materials of any kind (including opinions and other tax analyses) that
are provided to the party relating to such tax treatment and tax structure
The Company shall not prior to the Closing engage in any discussions, offer
any information or otherwise take part in any activity whatsoever that is
conducive or relates to the possible sale of the Company or any substantial
portion of its assets to any person or entity other than the Buyer
BROKERS. Regardless of whether the Closing shall occur, (i) the Company
shall indemnify and hold harmless Buyer from and against any and all liability
for any brokers or finders' fees arising with respect to brokers or finders
retained or engaged by the Company or any of the Shareholders in respect of the
transactions contemplated by this Agreement, and (ii) Buyer shall indemnify and
hold harmless the Company from and against any and all liability for any
brokers' or finders' fees arising with respect to brokers or finders retained or
engaged by Buyer in respect of the transactions contemplated by this Agreement.
COSTS AND EXPENSES. Each of the parties to this Agreement shall bear his or
its own expenses incurred in connection with the negotiation, preparation,
execution and closing of this Agreement and the transactions contemplated
hereby, except that Buyer shall pay all sales and excise and similar taxes in
connection with this transaction.
NOTICES. Any notice, request, instruction, correspondence or other document
to be given hereunder by any party hereto to another (herein collectively called
"NOTICE") shall be in writing and delivered personally or mailed by registered
or certified mail, postage prepaid and return receipt requested, as follows:
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IF TO BUYER: RAL Purchasing Corp.
c/o Universal Supply Group, Inc.
000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
WITH A COPY TO:
--------------
Xxxxx X. Xxxxxx, Esq.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Fax No. (000) 000-0000
Tel No. (000) 000-0000
IF TO THE COMPANY AND/OR THE Xxxxx X. Xxxxxx, President
Shareholder: The RAL Supply Group, Inc.
Xxxx Xxxxxx Xxx 000
Xxxxxxxxxx, XX 00000
Fax No. (000) 000-0000
Tel. No. (000) 000-0000
WITH A COPY TO:
Xxx Xxxxxx, Esq.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Fax No. 000-000-0000
Tel. No. 000-000-0000
Each of the above addresses for notice purposes may be changed by providing
appropriate notice hereunder. Notice given by personal delivery or registered
mail shall be effective upon actual receipt. Notice given by telecopier shall be
effective upon actual receipt if received during the recipient's normal business
hours, or at the beginning of the recipient's next normal business day after
receipt if not received during the recipient's normal business hours. All
Notices by telecopier shall be confirmed by the sender thereof promptly after
transmission in writing by registered mail or personal delivery. Anything to the
contrary contained herein notwithstanding, notices to any party hereto shall not
be deemed effective with respect to such party until such Notice would, but for
this sentence, be effective both as to such party and as to all other persons to
whom copies are provided above to be given.
GOVERNING LAW . The provisions of this agreement and the documents
delivered pursuant hereto shall be governed by and construed in accordance with
the laws of the State of New York (excluding any conflict of law rule or
principle that would refer to the laws of another jurisdiction).
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DISPUTE RESOLUTION.
(a) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AGREES THAT THE ANY
LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
COLLATERAL AGREEMENTS OR ANY AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY MAY BE BROUGHT IN THE STATE AND FEDERAL COURTS SITTING IN ANY COUNTY OR
VENUE WHATSOEVER IN THE STATE OF NEW YORK AND HEREBY EXPRESSLY SUBMITS TO THE
PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND
EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT SUCH COURTS ARE
AN INCONVENIENT FORUM. EACH PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN SECTION 9.5, SUCH SERVICE TO BECOME
EFFECTIVE 10 DAYS AFTER SUCH MAILING.
(b) EACH OF THE COMPANY, SHAREHOLDERS AND BUYER HEREBY WAIVES ITS RIGHT TO
A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, THE COLLATERAL AGREEMENTS OR ANY OF THE OTHER
TRANSACTION DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties
of each of the parties to this Agreement shall be deemed to have been made, and
the certificates delivered pursuant to clause (ii) of SECTION 2.2 and clause
(iv) of SECTION 2.3 by a party are agreed to and shall be deemed to constitute
the making of such representations and warranties, again at and as of the
Closing by and on behalf of the party on behalf of whom such certificates are
delivered.
ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, together with all
exhibits and schedules attached hereto, constitutes the entire agreement between
and among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as set forth specifically herein or contemplated
hereby. No supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (regardless of whether similar), nor shall any such
waiver constitute a continuing waiver unless otherwise expressly provided.
BINDING EFFECT AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns; but neither this Agreement nor any of the rights,
benefits or obligations hereunder shall be assigned, by operation of law or
otherwise, by any party hereto without the prior written consent of the other
party, provided, however, that nothing herein shall prohibit the assignment of
Buyer's rights and obligations to any direct or indirect subsidiary or prohibit
the assignment of Buyer's rights (but not obligations) to any lender. Nothing in
this Agreement, express or implied, is intended to confer upon any person or
entity other than the parties hereto and their respective permitted successors
and assigns, any rights, benefits or obligations hereunder.
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REMEDIES. The rights and remedies provided by this Agreement are
cumulative, and the use of any one right or remedy by any party hereto shall not
preclude or constitute a waiver of its right to use any or all other remedies.
Such rights and remedies are given in addition to any other rights and remedies
a party may have by law, statute or otherwise.
[OMITTED].
MULTIPLE COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
REFERENCES AND CONSTRUCTION.
Whenever required by the context, and is used in this Agreement, the
singular number shall include the plural and pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identification the person may require. References to monetary amounts,
specific named statutes and generally accepted accounting principles are
intended to be and shall be construed as references to United States dollars,
statutes of the United States of the stated name and United States generally
accepted accounting principles, respectively, unless the context otherwise
requires.
The provisions of this Agreement shall be construed according to their fair
meaning and neither for nor against any party hereto irrespective of which party
caused such provisions to be drafted. Each of the parties acknowledge that it
has been represented by an attorney in connection with the preparation and
execution of this Agreement.
SURVIVAL. Any provision of this Agreement which contemplates performance or
the existence of obligations after the Closing Date, and any and all
representations and warranties set forth in this Agreement, shall not be deemed
to be merged into or waived by the execution and delivery of the instruments
executed at the Closing, but shall expressly survive the Closing as to all
matters for which a claim is made within 18 months after the Closing and shall
be binding upon the party or parties obligated thereby in accordance with the
terms of this Agreement, subject to any limitations expressly set forth in this
Agreement. The provisions of this Section shall not be limited by any contrary
implication from specific survival provisions in any one or more provisions of
this Agreement.
ATTORNEYS' FEES. In the event any suit or other legal proceeding is brought
for the enforcement of any of the provisions of this Agreement, the parties
hereto agree that the prevailing party or parties shall be entitled to recover
from the other party or parties upon final judgment on the merits reasonable
attorneys' fees (and sales taxes thereon, if any), including attorneys' fees for
any appeal, and costs incurred in bringing such suit or proceeding.
-41-
RISK OF LOSS. Prior to the Closing, the risk of loss of damage to, or
destruction of, any and all of the Company's, including without limitation the
Properties, shall remain with the Company, and the legal doctrine known as the
"Doctrine of Equitable Conversion" shall not be applicable to this Agreement or
to any of the transactions contemplated hereby.
- DEFINITIONS
Capitalized terms used in this Agreement are used as defined in this
ARTICLE X or elsewhere in this Agreement.
AFFILIATE. The term "Affiliate" shall mean, with respect to any person, any
other person controlling, controlled by or under common control with such
person. The term "Control" as used in the preceding sentence means, with respect
to a corporation, the right to exercise, directly or indirectly, more than 50%
of the voting rights attributable to the shares of the controlled corporation
and, with respect to any person other than a corporation, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such person.
COLLATERAL AGREEMENTS. The term "Collateral Agreements" shall mean any or
all of the exhibits to this Agreement and any and all other agreements,
instruments or documents required or expressly provided under this Agreement to
be executed and delivered in connection with the transactions contemplated by
this Agreement.
CONFIDENTIAL INFORMATION. The term "Confidential Information" shall mean
confidential data and confidential information relating to the business of the
Company which is or has been disclosed to the Buyer under the terms and
conditions of the letter from Xxxxx X. Xxxxxx, President of the Company, to
Xxxxxxx Xxxxxx, President of USG, dated July 22, 2003 (the "Confidentiality and
Non-Disclosure Agreement".
CONTRACTS. The term "Contracts," when described as being those of or
applicable to any Person, shall mean any and all contracts, agreements,
franchises, understandings, arrangements, leases, licenses, registrations,
authorizations, easements, servitudes, rights of way, mortgages, bonds, notes,
guaranties, liens, indebtedness, approvals or other instruments or undertakings
to which such person is a party or to which or by which such person or the
property of such person is subject or bound, excluding any Permits.
DAMAGES. The term "Damages" shall mean any and all damages, liabilities,
obligations, penalties, fines, judgments, claims, deficiencies, losses, costs,
expenses and assessments (including without limitation income and other taxes,
interest, penalties and attorneys' and accountants' fees and disbursements).
FINANCIAL STATEMENTS. The term "Financial Statements" shall mean any or all
of the financial statements, including balance sheets and related statements of
income and cash flows and the accompanying notes thereto, of the Company
prepared in accordance with generally accepted accounting principles
consistently applied, except as may be otherwise provided herein.
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FUNDED INDEBTEDNESS. "Funded Indebtedness" shall mean the aggregate amount
(including the current portions thereof) of all (i) indebtedness for money
borrowed from others, capital lease obligations, dividends or other amounts
payable to the Shareholders, bonus payables to employees, and purchase money
indebtedness of the Company, (ii) indebtedness of the type described in clause
(i) above guaranteed, directly or indirectly, in any manner by the Company, or
in effect guaranteed, directly or indirectly, in any manner by the Company,
through an agreement, contingent or otherwise, to supply funds to, or in any
other manner invest in, the debtor, or to purchase indebtedness, or to purchase
and pay for property if not delivered or to pay for services if not performed,
primarily for the purpose of enabling the debtor to make payment of the
indebtedness or to assure the owners of the indebtedness against loss, but
excluding endorsements of checks and other instruments in the ordinary course,
(iii) indebtedness of the type described in clause (i) above secured by any Lien
upon property owned by the Company, even though the Company has not in any
manner become liable for the payment of such indebtedness and (iv) interest
expense accrued but unpaid, and all prepayment premiums, on or relating to any
of such indebtedness.
GAAP. "GAAP" means U.S. generally accepted accounting
principles, consistently applied with the Company's
past practices.
GOVERNMENTAL AUTHORITIES. The term "Governmental Authorities" shall mean
any nation or country (including but not limited to the United States) and any
commonwealth, territory or possession thereof and any political subdivision of
any of the foregoing, including but not limited to courts, departments,
commissions, boards, bureaus, agencies, ministries or other instrumentalities.
HAZARDOUS MATERIAL. The term "Hazardous Material" shall mean all or any of
the following: (a) substances that are defined or listed in, or otherwise
classified pursuant to, any applicable laws or regulations as "hazardous
substances," "hazardous materials," "Hazardous wastes," "toxic substances" or
any other formulation intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity or "EP toxicity"; (b) oil, petroleum or
petroleum derived substances, natural gas, natural gas liquids or synthetic gas
and drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (c) any flammable substances or explosives or any radioactive
materials; and (d) asbestos in any form or electrical equipment which contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty parts per million.
INVENTORY. The term "Inventory" shall mean all goods, merchandise and other
personal property owned and held for sale, and all raw materials,
works-in-process, materials and supplies of every nature which contribute to the
finished products of the Company in the ordinary course of its business,
specifically excluding, however, damaged, defective or otherwise unsaleable
items.
LEGAL REQUIREMENTS. The term "Legal Requirements," when described as being
applicable to any person, shall mean any and all laws (statutory, judicial or
otherwise), ordinances, regulations, judgments, orders, directives, injunctions,
writs, decrees or awards of, and any Contracts with, any Governmental Authority,
in each case as and to the extent applicable to such person or such person's
business, operations or properties.
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[omitted] .
PERMITS. The term "Permits" shall mean any and all permits, rights,
approvals, licenses, authorizations, legal status, orders or Contracts under any
Legal Requirement or otherwise granted by any Governmental Authority.
PERSON. The term "Person" shall mean any individual, partnership, joint
venture, firm, corporation, association, limited liability company, limited
liability partnership, trust or other enterprise or any governmental or
political subdivision or any agency, department or instrumentality thereof.
PRODUCT. The term "Product" shall mean each product under development,
developed, manufactured, licensed, distributed or sold by the Company and any
other products in which the Company has any proprietary rights or beneficial
interest.
PROPERTIES. The term "Properties" shall mean any and all properties and
assets (real, personal or mixed, tangible or intangible) owned or Used by the
Company, including all Assets to be conveyed to Buyer pursuant to this
Agreement.
REAL PROPERTY. The term "Real Property" shall mean the real property Used
by the Company in the conduct of its business.
REGULATIONS. The term "Regulations" shall mean any and all regulations
promulgated by the Department of the Treasury pursuant to the Internal Revenue
Code.
SUBSIDIARY. The term "Subsidiary" shall mean any Person of which a majority
of the outstanding voting securities or other voting equity interests are owned,
directly or indirectly, by the Company.
TRADE SECRETS. The term "Trade Secrets" shall mean information of the
Company including, but not limited to, technical or nontechnical data, formulas,
patterns, compilations, programs, financial data, financial plans, product or
service plans or lists of actual or potential customers or suppliers which (i)
derives economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use, and (ii) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy.
USED. The term "Used" shall mean, with respect to the Properties, Contracts
or Permits of the Company, those owned, leased, licensed or otherwise held by
the Company which were acquired for use or held for use by the Company in
connection with the Company's business and operations, whether or not reflected
on the Company's books of account.
[Signature Page Follows]
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EXECUTED as of the date first written above.
BUYER:
------
RAL PURCHASING CORP
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title:: President
GUARANTOR:
----------
UNIVERSAL SUPPLY GROUP, INC. (but only as to its
obligation to guaranty the Promissory Note under
Section 1.2(i))
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title:: President
COMPANY:
--------
THE RAL SUPPLY GROUP, INC.
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title:: President
SHAREHOLDER (but only as to
provisions of Section 7.3A and Section 7.4):
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
Escrow Agent under Section 1.2
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
-45-
