EXHIBIT 10.31
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made on September
27, 2002, between Pak-Sak Industries, Inc., a Michigan Corporation ("Seller"),
Maxco, Inc., a Michigan Corporation ("Seller Shareholder" or "Shareholder")
("Seller Shareholder or "Shareholder, together with "Seller", "Seller Parties"),
P-S Business Acquisition Inc., a Michigan corporation to be formed
("BusinessCo") and P&D Real Estate, LLC, a Michigan limited liability company to
be formed ("Real EstateCo") (BusinessCo and Real EstateCo are herein together as
"Buyer", and Packaging Personified, Inc., an Illinois Corporation ("Guarantor,"
together with Buyer, "Buyer Parties").
BACKGROUND
A. Seller is engaged in the business of the manufacture and sale of
polyethylene bags and protective packaging products (the "Business") at
000 Xxxxx Xxxxx Xxxxxx, Xxxxxx, XX 00000 (the "Premises"). Buyer
desires to purchase, and Seller desires to sell to Buyer, the Purchased
Assets (as defined in Section 1) on the terms and subject to the
conditions of this Agreement.
B. Seller Shareholder owns all of Seller's issued and outstanding capital
stock. Seller Shareholder will receive a substantial economic benefit
from Buyer's purchase of the Purchased Assets from Seller and is
joining in this Agreement to make the representations, warranties,
covenants, and indemnifications set forth in this Agreement as a
condition to Buyer's willingness to purchase the Purchased Assets from
Seller.
C. Guarantor owns all of each Buyer's issued and outstanding capital stock
or membership interest. Guarantor will receive a substantial economic
benefit from Buyer's purchase of the Purchased Assets from Seller and
is joining in this Agreement to make the representations, warranties,
covenants, and indemnifications set forth in this Agreement and to
guaranty Buyer's performance of its obligations under this Agreement as
a condition to Seller Parties willingness to sell the Purchased Assets
to Seller.
AGREEMENTS
NOW, THEREFORE, in consideration of the Background and the terms and
conditions set forth in this Agreement, the Seller Parties and Buyer Parties
agree as follows:
1. Assets Purchased. At the Closing, Seller shall sell, assign, convey,
transfer, set over, and deliver to BusinessCo (except as otherwise
noted) all of the assets, rights, and interests of every conceivable
kind or character whatsoever, whether tangible or intangible, that on
the Closing Date are owned by Seller or in which Seller has an interest
of any kind except for Excluded Assets listed under Section 2. These
include, without limitation, the following (collectively, the"
Purchased Assets"):
a. All furniture, fixtures and equipment, fixed assets and all
other items of tangible personal property, in each case
wherever located and whether or not capitalized on Seller's
books, including but not limited to, the property set forth on
Schedule 1A attached hereto (the "Personal Property").
b. All good and saleable inventory of any kind, character, nature
or description, wherever located including all finished goods,
work-in-process, supplies, raw materials, parts, scraps,
containers and packaging materials and including any consigned
inventory (the "Inventory").
c. All accounts, chattel paper, documents, and instruments,
including all accrued interest receivable and also any
security Seller holds for the payment thereof generated by the
Business (the "Receivables") and all of Seller's general
intangibles in connection with the Business and, to the extent
not otherwise constituting general intangibles, any interest
of Seller in any and all claims by Seller against any other
person in connection with the Business, whether now accrued or
later to accrue, contingent or otherwise, known or unknown,
including, but not limited to, all rights under express or
implied warranties from suppliers in connection with the
Business (except as they may pertain to Seller's liabilities
other than Assumed Liabilities), claims for collection or
indemnity, claims in bankruptcy, and chooses in action.
d. All Seller's right, title, benefit, and interest in and to
inventions, discoveries, improvements, designs, prototypes,
trade secrets, manufacturing and engineering drawings, process
sheets, specifications, bills of material, formulae and secret
and confidential processes, know-how, technology, and other
industrial property (whether patentable or unpatentable) used
in the Business (the "Intellectual Property") as listed on
Schedule 11.AA.
e. The real estate located at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxx, legally described on Schedule 1E attached hereto (to
be purchased by Real EstateCo) (the "Real Estate");
f. The full benefit of:
i. Any and all purchase orders placed with and accepted
by Seller on or before the Closing Date in connection
with the Business that have not been completely
performed or filled before the Closing Date, covering
the purchase from Seller of products to be supplied
by Seller in the Business, or covering the rendition
by Seller of service on products supplied by Seller
in the Business and including all deposits, progress
payments, and credits of the Business, as set forth
on Schedule 1.F.1;
ii. The purchase orders listed on Schedule 1.F.2 placed
by Seller prior to the Closing Date in connection
with the Business that have not been
completely performed before the Closing Date,
covering Seller's purchase of inventory, supplies, or
materials in the ordinary course of business; and
iii. The leases of personal property and other agreements
listed in Schedule 1.F.3.
(All the items listed in this Section 1.F are the" Contracts and
Commitments").
g. All records and lists of the Business that pertain directly or
indirectly, in whole or in part, to any one or more of the
following: the Seller's Business customers, suppliers,
advertising, promotional material, sales, services, delivery,
internal organization, employees, and operations.
h. All security deposits, prepaid expenses, and similar items
reflected in the latest of the Financial Statements of Seller
referred to in Section 11.G, in connection with the Business,
in the amount accrued as of the Closing Date.
i. All transferable local, state, and federal franchises,
licenses, bonds, permits, and similar items pertaining to the
Business and/or the Purchased Assets, as listed on Schedule 11
attached hereto (the "Permits").
j. The Business conducted by Seller as a going concern, including
any and all goodwill, telephone and FAX numbers, yellow-page
advertisements, P.O. Box, if any, and Seller's right to use
the name "Pak-Sak Industries, Inc." and all related names and
derivations.
k. To the extent not otherwise specifically included in this
Section or excluded under Section 2, all assets, rights,
claims, contracts, agreements, causes of action and properties
as of the Closing Date, of every kind, character, nature and
description, whether tangible or intangible, xxxxxx or
inchoate, known or unknown, contingent or fixed and wherever
located.
Seller shall update all Schedules described in this Section 1, where
appropriate, as of the Closing Date.
2. Excluded Assets. Buyer is not purchasing any Excluded Assets from
Seller. "Excluded Assets" means:
a. All of Seller's books of account (although copies of such
books and records relating to the Business shall, on
reasonable request made by representatives of Buyer, be
provided to Buyer);
b. Claims for refunds of federal and state income taxes, tax
credits of any kind;
c. Cash or cash equivalents.
3A. Liabilities Assumed. Seller agrees that Buyer assumes no liabilities of
Seller, and Buyer shall not assume any such liability, whether accrued,
absolute, contingent, known, unknown, or otherwise, except for
a. Those liabilities specifically identified as of the Closing
Date on the Closing Date Balance Sheet (consisting of all
Current Liabilities less current maturities of long term debt
as set forth on the Financial Statements included as Schedule
11.G), as may be adjusted, all as pursuant to Section 4.C,
consistent with the accounting done on the Financial
Statements including as Schedule 11.G, incurred in the normal
course of business; specifically including liabilities payable
to Shareholder for insurances and employee benefits
administered by Shareholder for Seller's benefit, all of which
shall be paid on a timely basis;
b. Those liabilities related to executory obligations of Seller's
continued performance arising in the ordinary course of
business under any of the Contracts and Commitments of Seller
that become performable or payable on or after the Closing
Date.
A. (All of the items listed in this Section 3.A are "Assumed Liabilities.")
B. Notwithstanding the foregoing, the dollar amount of Assumed Liabilities
shall in no event exceed the dollar amount of Receivables purchased by
Buyer (net of all reserves for doubtful accounts).
4A. Excluded Liabilities. Notwithstanding the provisions of Section 3A the
Buyer will not assume or become responsible for, and will not be deemed
to have assumed or have become responsible for, any other obligation or
liability of the Seller, the Seller Shareholder, or any of their
affiliates whatsoever other than as specifically set forth in Section
3A (with all such unassumed liabilities and obligations referred to
herein collectively as "Excluded Liabilities"). Without limiting the
generality of the foregoing, the Buyer will not assume or become
responsible for and will not be deemed to have assumed or to have
become responsible for:
a. any liability or obligation arising prior to, on or after the
Closing Date in connection with any Excluded Asset;
b. any liability or obligation of the Seller, any of its
affiliates or any of their respective predecessors under any
Environmental Laws arising out of or in any way related to any
event, transaction, condition, practice, release or occurrence
on or prior to the Closing Date, including but not limited to
any liability or obligation resulting from any violation of
Environmental Laws in connection with the generation, storage,
presence, use, handling, treatment, transportation, disposal
or release of any Hazardous Materials by the Seller, any of
its Affiliates or any of their respective predecessors;
c. any liability or obligation (whether assessed or unassessed)
of the Seller or any of its affiliates with respect to any
Taxes, including any Taxes arising by reason of the
transaction contemplated by this Agreement or any of the
Related Agreements, as of or for any period prior to, on or
after the Closing Date, except for accrued payroll or
employment taxes, property taxes and single business taxes
specifically included on the Financial Statement included as
Exhibit 11.G;
d. any liability or obligation of the Seller or any of its
Affiliates to any current or former employee with respect to
worker's compensation claims made after the Closing Date by
current or former employees of Seller with respect to
conditions or occurrences commencing on or prior to the
Closing Date; or
e. any liability or obligation of the Seller or any of its
affiliates with respect to any civil or criminal litigation,
proceeding, investigation or claim relating to or involving
allegations of criminal conduct, civil fraud or intentional
misconduct.
f. product warranty liabilities, including product defects, for
products produced by Seller on or prior to the Closing Date
and shipped to customers not later than 90 days following the
Closing Date.
4. Purchase Price for Purchased Assets.
a. Initial Purchase Price. The purchase price to be paid by Buyer
to Seller for the Purchased Assets at the Closing (the
"Initial Purchase Price") shall be equal to:
(i) $1,006,303 (which is the agreed upon value for the
Personal Property, plus
(ii) $673,697 (which is the agreed upon value for the Real
Estate, plus
(iii) Seller's Closing Date book value of Receivables (less
any related reserve for doubtful accounts), plus
(iv) Seller's and Buyer's good-faith estimate of the
Closing Date Inventory value, less any reserve for
obsolete or unsaleable inventory), plus
(v) Seller's Closing Date book value of prepaid expenses
(provided that such prepaid expenses relate to the
Purchased Assets, less
(vi) an agreed upon discount of $500,000 (to be allocated
between the Personal Property and the Real Estate, as
set forth on Schedule 4.D, less
(vii) Seller's Closing Date book value of the Assumed
Liabilities, the dollar amount of which shall not
exceed the dollar amount of the purchased
Receivables.
The Initial Purchase Price shall be paid by Buyer in full at
the Closing, and shall be subject to the Escrow Account
provisions set forth in Section 4.b of this Agreement and the
post-closing adjustment provisions set forth in Section 4.c of
this Agreement. Buyer shall deliver to Seller the amount
determined under this Section by cashier's check or wire
transfer ("Readily Available Funds") at Closing.
b. Escrow Account. At Closing, Buyer shall transfer to Fifth
Third Bank (the "Escrow Agent") a portion of the Initial
Purchase Price equal to $220,000, by the wire transfer of
immediately available funds. Such amount shall be deposited in
a separate interest-bearing account, and the funds therein to
be disbursed as provided for in the Escrow Agreement between
the Escrow Agent, Seller and Buyer, in the form attached
hereto as Schedule 4B (the "Escrow Agreement"). Such Escrow
Agreement shall provide that the funds held in such account,
together with interest accruing thereon (the "Escrow Funds")
shall be disbursed as follows: (i) to satisfy claims that
Buyer may bring under Section 11.p of this Agreement regarding
uncollectability of any Receivables; (ii) to satisfy claims
that Buyer may bring under any other provisions of this
Agreement, to the extent such claims exceed $50,000 as
provided in Section 15.d of this Agreement; provided, however,
that such claims in (i) and (ii) are asserted no later than
150 days after Closing and subject to other customary
safeguards for determining the right to withdraw funds to
cover the claims; (iii) to pay amounts to Seller or Buyer
pursuant to the final Purchase Price determination as
contemplated under section 4(c)(vi) hereof; and (iv) to the
extent the Escrow Funds are not disbursed to cover such
claims, or are not then the subject of a dispute as to a
potential claim, to disburse the balance of such Escrow Funds
to Seller 151 days after the Closing Date (or if such date is
not a business day, on the first business day thereafter). At
the Closing, the Escrow Agent, Seller and Buyer shall execute
and deliver the Escrow Agreement. The fees and costs of the
Escrow Agent and the Escrow Account shall be split equally
between Seller and Buyer.
c. Determination of Final Purchase Price
(i) Within 60 days after the Closing Date, Seller will
cause to be prepared and delivered to Buyer a balance
sheet of the Seller as of the Closing Date (the
"Closing Date Balance Sheet") prepared in accordance
with generally accepted accounting principles applied
on a basis consistent with that employed by the
Seller in the preparation of the Financial Statements
and using the same accounting methods, policies,
practices and procedures with consistent
classifications, judgments and valuation and
estimation methodologies as used in the determination
of the Initial Purchase Price and the preparation of
the Financial Statements, and including those post-
Closing adjustments required to give effect to (i)
the elimination of any assets and liabilities of the
Seller not sold to or assumed by the Buyer in
accordance with the terms of this Agreement; and (ii)
the value of the Inventory at the Closing Date.
(ii) In connection with the preparation of the Closing
Date Balance Sheet, Buyer and Seller shall perform a
physical inventory of supplies, raw materials, work
in process and finished goods included in the
Purchased Assets, and such physical inventory shall
be supervised by an accounting firm of Buyer's
choosing. The physical inventory shall be conducted
on the Closing Date or as close to the Closing Date
as reasonably practicable (in which event such
inventory shall be adjusted to the Closing Date).
Seller shall permit Buyer and its employees, agents
and accountants all necessary access to Seller's
facilities and shall secure access to any other
location of Seller's goods not under the control of
Seller.
(iii) Unless Buyer delivers written notice to the Seller
within 30 days after the receipt of the Closing Date
Balance Sheet stating any objections thereto and the
basis therefor, Buyer shall be deemed to have agreed
to the Closing Date Balance Sheet in the form and
amount delivered to Seller. If such notice of
objections is given by Seller within such 30-day
period, Seller will attempt in good faith to reach an
agreement with the Buyer as to any matters in
dispute. If the Buyer and the Seller, notwithstanding
such good faith effort, fail to resolve any matters
in dispute within 15 days after the Seller advises
the Buyer of its objections, then any remaining
disputed matters will be finally and conclusively
determined by the independent auditing firm of Xxxxx
Xxxxxx and Company, LLP ("Xxxxx Xxxxxx") or, if Xxxxx
Xxxxxx refuses to perform this function, by such
other recognized national auditing firm as designated
by the American Institute of Certified Public
Accountants (the "Arbiter"). Promptly, but not later
than 30 days after its appointment, the Arbiter will
determine (based solely on presentations by the
Seller and the Buyer to the Arbiter and not by
independent review) only those issues in dispute and
will render a report as to the disputes and the
resulting calculation of the Closing Date Balance
Sheet, which report will be conclusive and binding
upon the parties. In resolving any disputed item, the
Arbiter may not assign a value to any particular item
greater than the greatest value for such item claimed
by either party or less than the lowest value for
such item claimed by either party, in each case as
presented to the Arbiter. The Seller and the Buyer
shall each pay one-half of the fees and expenses of
the Arbiter for services pursuant to this Agreement
and each agrees to execute, if requested by the
Arbiter, a reasonable engagement letter.
(iv) For purposes of complying with the terms set forth
herein, each party will cooperate with and make
available to the other party and its auditors and
representatives all information, records, data and
auditors' working papers,
and will permit access to its facilities and
personnel, as may be reasonably required in
connection with the preparation and analysis of the
Closing Date Balance Sheet and the resolution of any
disputes thereunder.
(v) As soon as the Closing Date Balance Sheet has been
prepared pursuant to the provisions set forth in this
Section and all disagreements with respect thereto
have been resolved, the final purchase price (the
"Purchase Price") shall be determined. The Purchase
Price shall be equal to:
1. $1,006,303 (which is the agreed upon value
for the Personal Property, plus
2. $673,697 (which is the agreed upon value for
the Real Estate, plus
3. the Closing Date Balance Sheet value of
Receivables (less any related reserve for
doubtful accounts), plus
4. the Closing Date Balance Sheet value of
Inventory, less any reserve for obsolete or
unsaleable inventory), plus
5. the Closing Date Balance Sheet value of
prepaid expenses (provided that such prepaid
expenses relate to the Purchased Assets),
less
6. an agreed upon discount of $500,000 (to be
allocated between the Personal Property and
the Real Estate, as set forth on Schedule
4.D, less
7. the Closing Date Balance Sheet value of the
Assumed Liabilities, the dollar amount of
which shall not exceed the dollar amount of
the purchased Receivables.
(vi) Within 10 business days following receipt by the
parties of the Closing Date Balance Sheet and
resolution of any disputes with respect thereto, any
difference between the Purchase Price and the Initial
Purchase Price shall be paid to Seller or Buyer as
the case may be as follows:
1. If the Purchase Price is increased from the
Initial Purchase Price, Buyer shall pay such
difference between the Purchase Price and
the Initial Purchase Price to the Seller in
Readily Available Funds; and
2. If the Purchase Price is decreased from the
Initial Purchase Price, Buyer and Seller
shall direct to the Escrow Agent in writing
that such difference be disbursed to Buyer
from the Escrow Account. In addition, if the
decrease in the Purchase Price exceeds the
balance of the Escrow Account, such excess
shall be paid by Seller to Buyer in Readily
Available Funds.
d. Allocation of Purchase Price. The Purchase Price shall be
allocated among the Purchased Assets in accordance with
attached Schedule 4.D. Buyer and Seller agree to file all
returns and reports in a manner consistent with the
allocations in this Section.
5. Related Agreements.
a. Real Estate Purchase Agreement. The real estate located at 000
Xxxxx Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxx, shall be purchased by
Real EstateCo pursuant to an agreement in the form attached
hereto as Exhibit A.
b. Real Estate Lease. Real EstateCo shall assume the lease for
the building located at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx
(the "Leased Premises") pursuant to an agreement in the form
attached hereto as Exhibit B.
c. Consulting Agreement. Buyer shall pay Seller a consulting fee
of $300,000 pursuant to an agreement in the form attached
hereto as Exhibit C.
(All of the Agreements contained in this Section 5
are hereinafter referred to collectively as "Related
Agreements.")
6. Delivery Free of Encumbrances. Seller Parties shall deliver good title
to the Purchased Assets free and clear of all mortgages, liens, claims,
demands, charges, options, equity interests, leases, tenancies,
easements, pledges, security interests, and other encumbrances
("Encumbrances"), except for any Assumed Liabilities that results in
any Encumbrance.
7. Preclosing Actions. Before the Closing:
a. Conduct of Business. Seller Parties shall carry on and conduct
the Business only in the ordinary course consistent with past
practices, without any change in the policies, practices, and
methods that Seller pursued before the date of this Agreement.
Seller Parties will use their best efforts to preserve the
Business organization intact; to preserve the relationships
with Seller's customers, suppliers, and others having business
dealings with it; and to preserve the services of Seller's
employees, agents, and representatives. Without limitation of
the foregoing, (i) Seller Parties shall not undertake any
action without the prior written consent of Buyer that, if
taken before the date of this Agreement, would have been
required to be disclosed on any Schedule to this Agreement;
and (ii) Seller Parties will not alter the physical content or
character of any of the Business's inventories so as to affect
the nature of the Business or result in a change in the total
dollar valuation of the inventories or otherwise take action
or refrain from taking action that would result in any change
in the Purchased Assets
or Assumed Liabilities, other than in the ordinary course of
business consistent with past practices.
b. Buyer's Access, Due Diligence Review. From the date of this
Agreement through the Closing, Seller Parties shall permit
Buyer and its representatives to make a full business,
financial, accounting, and legal audit of Seller, the
Business, the Purchased Assets and the Assumed Liabilities.
Seller Parties shall take all reasonable steps necessary to
cooperate with Buyer in undertaking this audit.
c. Accuracy of Representations and Warranties and Satisfaction of
Conditions. Seller Parties will immediately advise Buyer in
writing if (i) any of Seller Parties' representations or
warranties are untrue or incorrect in any material respect or
(ii) any of Seller Parties become aware of the occurrence of
any event or of any state of facts that results in any of the
representations and warranties of Seller Parties being untrue
or incorrect as if Seller Parties were then making them.
Seller Parties will not take any action, or omit to take any
action, that would cause any of Seller Parties'
representations and warranties set forth in this Agreement to
be untrue or incorrect as of the Closing Date. Seller Parties
will use their best efforts to cause all conditions within
their control that are set forth in Section 8 to be satisfied
as promptly as practicable under the circumstances.
8. Conditions Precedent to Buyer's Obligations. Buyer's obligation to
consummate the transactions contemplated by this Agreement is subject
to the fulfillment (or waiver by Buyer) before or at the Closing of
each of the following conditions:
a. Accuracy of Representations and Warranties. The
representations and warranties of Seller Parties contained in
this Agreement and all Related Agreements shall be true and
correct at and as of the Closing Date as though such
representations and warranties were made on that date.
b. Performance of Covenants. The Seller Parties shall have in all
respects performed and complied with all covenants,
agreements, and conditions that this Agreement and all related
documents require to be performed or complied with before or
on the Closing Date, specifically including all of the Related
Agreements referred to in Section 5.
c. Results of Due Diligence Review. Buyer shall be satisfied, in
its sole and absolute discretion, with the results of its due
diligence review of the Seller, the Business, the Purchased
Assets and the Assumed liabilities conducted as contemplated
in Section 7b, above.
d. Permits. Buyer shall have received all permits that in Buyer's
opinion are necessary to operate the Business after the
Closing.
e. No Casualty. Prior to the Closing Date, Seller shall not have
incurred, or be threatened with, a material liability or
casualty that would materially impair the value of the
Purchased Assets.
f. Opinion of Counsel. Buyer shall have received the favorable
opinion of Seller Parties' counsel dated the Closing Date and
in form and substance satisfactory to Buyer's counsel. The
opinion shall be in substantially the form attached as
Schedule 8.F.
g. Instruments of Transfer, etc. Seller shall have delivered to
Buyer, in form and substance satisfactory to Buyer, all bills
of sale, general instruments of transfer, conveyances,
assurances, transfers, assignments, approvals, consents, and
any other instruments and documents containing the usual and
customary covenants and warranties of title and that shall be
convenient, necessary, or required to effectively transfer the
Purchased Assets to Buyer with good title, free and clear of
all Encumbrances.
h. Certificates Regarding Conditions Precedent. Seller Parties
shall have delivered to Buyer certificates of the Seller
Parties, in form and substance satisfactory to Buyer,
certifying that as of the Closing Date all of the conditions
set forth in this Section, except those totally within the
Buyer's control, have been satisfied.
i. No Litigation. No action, suit, proceeding, or investigation
shall have been instituted before any court or governmental
body, or instituted by any governmental agency, (i) to
restrain or prevent the carrying out of the transactions
contemplated by this Agreement, or (ii) that might affect
Buyer's right to own, operate, and control the Purchased
Assets after the Closing Date.
x. Xxxx Search. Buyer shall have received UCC lien searches on
the Purchased Assets in form and content satisfactory to
Buyer, and all matters arising from such searches shall have
been resolved or addressed in a manner satisfactory to Buyer.
k. Consents. Seller shall have obtained, in writing, all consents
necessary or desirable to consummate or to facilitate
consummation of this Agreement and any related transactions.
The consents shall be delivered to Buyer before Closing and
shall be reasonably acceptable to Buyer in form and substance.
l. Environmental Investigation. Buyer shall have received, at its
cost and expense, a Phase I Environmental Site Assessment,
prepared by an independent, competent, and qualified
environmental consultant, that in its scope, form, and
substance is satisfactory to Buyer on all real estate being
either purchased or leased under the terms of this Agreement
or any Related Agreements. Buyer shall also receive, at its
cost and expense, any updates it deems necessary or
appropriate. Buyer shall be satisfied, in its sole and
absolute discretion, that there will not be at and after the
Closing any basis for the imposition on Buyer of any liability
under any Environmental Laws (as defined in Section 11.T.1).
m. Conditional Tax Clearance. Seller shall have provided to Buyer
a certificate of conditional tax clearance from the Revenue
Commissioner of the State of Michigan showing that Seller has
filed all tax returns and reports required to be filed before
Closing and that it has paid all taxes due pursuant to Section
27a of Act No. 58 of the Michigan Public Acts of 1986, MCLA
205.27a, MSA 7.657(27a).
n. MESC Contribution Liability. Seller shall have provided to
Buyer a statement from the Commissioner of the Michigan
Employment Security Commission certifying the status of
Seller's contribution liability under Section 15(g) of the
Michigan Employment Security Act, MCLA 421.15(g), MSA
17.515[g].
o. Board Approval. The Boards of Directors of the Seller and the
Buyer shall have taken the necessary Board action approving
this transaction.
p. Shareholder Approval. The Shareholder of the Seller shall have
taken the necessary action approving this transaction.
q. Other Documents and Instruments. Buyer shall have received
such other documents and instruments as it has reasonably
requested, in form and substance satisfactory to Buyer.
r. Approvals by Buyer's Counsel. Buyer's counsel shall reasonably
approve all legal matters and the form and substance of all
documents that Buyer or Seller Parties are to deliver at the
Closing.
s. Buyer's Financing. Buyer shall have obtained satisfactory
financing, as determined in Buyer's sole and absolute
discretion.
9. Conditions Precedent to Seller Parties' Obligations. Seller Parties'
obligations to consummate the transactions contemplated by this
Agreement are subject to the fulfillment of each of the following
conditions before or at the Closing Date:
a. Accuracy of Representations and Warranties. Buyer Parties'
representations and warranties contained in this Agreement and
all Related Agreements shall be true and correct at and as of
the Closing Date as though such representations and warranties
were made at the Closing.
b. Performance of Covenants. Prior to and at the Closing Date,
Buyer shall have in all respects performed and complied with
its obligations under all the covenants, agreements, and
conditions that this Agreement and all Related Agreements
require.
c. Board Approval. The Boards of Directors of the Seller and the
Buyer shall have taken the necessary action approving this
transaction.
d. Shareholder Approval. The Shareholder of the Seller shall have
taken the necessary action approving this transaction.
e. Consents. Seller shall have obtained, in writing, all consents
necessary or desirable to consummate or to facilitate
consummation of the Agreement and any related transactions.
f. Opinion of Counsel. Seller Parties shall have received the
favorable opinion of Buyer's counsel dated the Closing Date
and in form and substance satisfactory to Seller Parties'
counsel. The opinion shall be in substantially the form
attached as Schedule 9.F.
g. Approvals by Seller's Counsel. Seller's counsel shall
reasonably approve all legal matters and the form and
substance of all documents that Buyer Parties or Seller
Parties are to deliver at the Closing.
10. Closing Matters.
a. Closing. The closing of the transactions contemplated in this
Agreement (the "Closing") shall take place at the offices of
Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxx, P.C. at 10:00 a.m. on October
31, 2002 or at such other place and/or on such other date as
the parties may agree upon (the "Closing Date").
b. Updated Schedules. At the Closing, certain Schedules will need
to be up-dated to the day of Closing. These shall include, but
not necessarily be limited to, Schedule 1.F.1 (Customer
Orders), Schedule 1.F.2 (Vendor Orders) and Schedule 11.W
(Progress Payments) and shall include only those changes that
have occurred in the ordinary course of business consistent
with past practices.
c. Certain Closing Expenses; Prorations. Seller Parties shall be
liable for and shall pay all federal, state, and local sales,
use, excise, and documentary stamp taxes and all other taxes,
duties, or other like charges properly payable on and in
connection with Seller's conveyance and transfer of the
Purchased Assets to Buyer. Personal property taxes, utility
charges (including electricity, gas, water, sewer, and
telephone), refuse collection, and other service contracts
assumed by Buyer shall be prorated ratably as of the Closing
Date. To the extent practicable, all such prorations shall be
computed and paid at the Closing, and to the extent not
practicable, as soon as practicable thereafter.
d. Further Assurances. Seller Parties shall cooperate with and
assist Buyer with the transfer of the Purchased Assets under
this Agreement and take all other reasonable actions to assure
that the Business is smoothly transferred to Buyer. From time
to time after the Closing Date, Seller Parties shall, at the
request of Buyer, execute and deliver such additional
conveyances, transfers, documents, instruments, assignments,
applications, certifications, papers, and other assurances
that Buyer requests as necessary, appropriate, convenient,
useful or desirable to effectively carry out the intent of
this Agreement and to transfer the Purchased Assets to Buyer.
11. Seller Parties' Representations and Warranties. As of the date of this
Agreement and as of the Closing, each of the Seller Parties, jointly
and severally, represent and warrant to Buyer, and acknowledges and
confirms, that Buyer is relying on these representations and warranties
in entering into this Agreement:
a. Organization and Standing. Seller is a corporation duly
organized, validly existing, and in good standing under the
laws of the State of Michigan, and Seller has all requisite
power and authority (corporate and otherwise) to own its
properties and conduct its business as it is now being
conducted. The nature of the business and the character of the
properties Seller owns or leases do not make the licensing or
qualification of Seller as a foreign corporation necessary
under the laws of any other jurisdiction except as may be
listed on Schedule 11.A. Seller has not used or assumed any
other name in connection with the conduct of the Business
during the last five years, except as provided in Schedule
11.A. Seller Shareholder is a corporation duly organized,
validly existing and in good standing under the laws of the
Sate of Michigan, and Selling Shareholder has all requisite
power and authority (corporate and otherwise) to own
properties and conduct its business as it is now being
conducted.
b. Authorization. Seller has all requisite power and authority
(corporate and otherwise), and the Seller Shareholder has all
requisite legal capacity (i) to execute, deliver, and perform
this Agreement and the Related Agreements to which each is a
party and (ii) to consummate the transactions contemplated
under this Agreement and the Related Agreements. Seller has
taken, or will have taken at the time of the Closing, all
necessary corporate action (including the approval of its
board of directors and shareholders, if necessary) to approve
the execution, delivery, and performance of this Agreement and
the Related Agreements to be executed and delivered by it and
the consummation of the transactions contemplated in this
Agreement. This Agreement is, and the Related Agreements when
executed and delivered by the parties to them, will be legal,
valid, and binding obligations of each of the Seller Parties,
that are a party to them, enforceable against each of them in
accordance with the Agreement and Related Agreement's
respective terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium, or similar laws relating
to the enforcement of creditors' rights and by general
principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in
equity). Seller Shareholder owns all of the issued and
outstanding capital and voting stock of Seller, and is the
only party required to authorize Seller's execution, delivery
and performance of this Agreement.
c. Existing Agreements and Governmental Approvals.
(i) Except as provided in Schedule 11.C, the execution,
delivery, and performance of this Agreement and the
Related Agreements and the consummation of the
transactions contemplated by them:
1. Do not and will not violate any provisions
of law applicable to any of Seller Parties,
the Business, or the Purchased Assets;
2. As of the Closing, does not and will not
conflict with, result in the breach or
termination of any provision of, or
constitute a default under (in each case
whether with or without the giving of notice
or the lapse of time or both) Seller's
Articles of Incorporation or Bylaws, or any
indenture, mortgage, lease, deed of trust,
or other instrument, contract, or agreement
or any order, judgment, arbitration award,
or decree to which any of Seller Parties is
a party or by which any of them or any of
their assets and properties are bound
(including, without limitation, the
Purchased Assets); and
3. Do not and will not result in the creation
of any Encumbrance on any of Seller Parties'
properties, assets, or Business (including,
without limitation, the Purchased Assets).
(ii) No approval, authority, or consent of, or filing by,
any Seller Party with, or notification to, any
federal, state, or local court, authority, or
governmental or regulatory body or agency or any
other corporation, partnership, individual, or other
entity is necessary:
1. To authorize the execution and delivery of
this Agreement or any of the Related
Agreements by any of the Seller Parties,
2. To authorize the consummation of the
transactions contemplated by this Agreement
or any of the Related Agreements by any of
the Seller Parties, or
3. To continue Buyer's use and operation of the
Purchased Assets after the Closing Date.
d. No Subsidiaries. Seller does not have any subsidiaries or
directly or indirectly own any interest or have any investment
in any other corporation, partnership, or other entity in
connection with the Business.
e. No Insolvency. No insolvency proceeding of any character,
including, without limitation, bankruptcy, receivership,
reorganization, composition, or arrangement with creditors,
voluntary or involuntary, affecting Seller or any of its
assets or properties is pending or, to the Best Knowledge of
Seller Parties, threatened. Seller Parties have not taken any
action in contemplation of, or that would
constitute the basis for, the institution of any such
insolvency proceedings. For the purposes of this Agreement,
the phrase "Best Knowledge of Seller Parties," or words of
similar import, mean such knowledge as any of the Seller
Parties would have after due inquiry into the matter in
question.
f. Permits and Licenses. Seller has all necessary permits,
certificates, licenses, approvals, consents, and other
authorizations required to carry on and conduct the Business
and to own, lease, use, and operate the Purchased Assets at
the places and in the manner in which the Business is
conducted, all of which to the extent transferable shall be
transferred or assigned to Buyer at the Closing, without
expense to Buyer. A complete list of such permits,
certificates, licenses, approvals, consents, and other
authorizations is included in Schedule 11.F.
g. Financial Statements. Seller Parties have delivered to Buyer
the financial statements on the Business dated July 31, 2002,
as listed in Schedule 11.G, and Seller Parties shall deliver,
before the Closing, copies of all financial statements Seller
has prepared for the Business for each full month since July
31, 2002 to the Closing (together, the "Financial
Statements"). The Financial Statements do and will fairly and
accurately present Seller's financial position as of the dates
indicated and the results of its operations as of the dates
indicated and for the periods covered thereby, and are and
will be true and correct in all material respects, in
accordance with generally accepted accounting principles
consistently applied ; provided , however, that the Financial
Statements will consist of the Balance Sheet and Statement of
Operations only, excluding all notes. All inventories
reflected in the Financial Statements have been valued
according to the historical "first in first out" accounting
method of Seller; adequate provision has been and will be
timely made in the Financial Statements for doubtful accounts
or other receivables; sales are stated in the Financial
Statements net of discounts, returns, and allowances; all
Taxes (as defined in Section 11.Q.1) due or paid are and will
be timely reflected in the Financial Statements; and all Taxes
not yet due and payable are and will be fully accrued or
otherwise provided for. Any items of income or expense that
are unusual or of a nonrecurring nature during any such period
or at any such balance sheet date are and will be separately
disclosed in the Financial Statements. Except as otherwise
disclosed on Schedule 11.G, Seller's books, records, and work
papers are complete and correct; have been maintained on an
accrual basis; and accurately reflect, and will accurately
reflect, the basis for the financial condition and the results
of Seller's operations that are set forth in the Financial
Statements and are to be set forth in the Closing Balance
Sheet.
h. No Undisclosed Liabilities. Except as otherwise disclosed in
the Financial Statements, Seller does not have any liabilities
or obligations, whether accrued, absolute, contingent, or
otherwise, and there exists no fact or circumstance that could
give rise to any such liabilities or obligations in the
future.
i. Conduct of Business. Except as otherwise disclosed on attached
Schedule 11.I, or any Schedules in this Agreement, since the
date of the last of the Financial Statements attached as
Schedule 11.G, Seller has not:
(i) Declared or paid any dividend or made any other
payment from capital or surplus or other distribution
of any nature, or directly or indirectly redeemed,
purchased, or otherwise acquired, recapitalize, or
reclassified any of its capital stock;
(ii) Entered into, materially amended, or terminated any
contract, license, lease, commitment, or permit,
except in the ordinary course of business consistent
with past practices;
(iii) Experienced any labor disturbance;
(iv) Incurred or become subject to any obligation or
liability (absolute, accrued, contingent, or
otherwise), except (1) in the ordinary course of
business consistent with past practices and (2) in
connection with the performance of this Agreement;
(v) Discharged or satisfied any Encumbrance or paid or
satisfied other than (1) liabilities shown or
reflected in Seller's balance sheet included in
Schedule 11.g (2) liabilities incurred since the date
of the balance sheet, in each case only in the
ordinary course of business consistent with past
practices and in accordance with the express terms of
such obligation or liability;
(vi) Sold, transferred, or agreed to sell or transfer any
asset, property, or business; canceled or agreed to
cancel any debt or claim; or waived any right, except
in the ordinary course of business consistent with
past practices;
(vii) Disposed of or permitted to lapse any Intellectual
Property;
(viii) Has not entered into any employment agreements and
has not granted any abnormal increase in employee
rates of pay or in salary payable or to become
payable to any officer, employee, consultant, or
agent, or by means of any bonus or pension plan,
contract, or other commitment increased the
compensation of any officer, director, employee,
consultant, or agent, or hired any new officer,
employee, consultant, or agent;
(ix) Made or authorized any capital expenditures for
additions to plant or equipment accounts in excess of
an aggregate of $10,000.00;
(x) Entered into any transaction (including, without
limitation, any contract or other arrangement
providing for employment, furnishing of services,
rental of real or personal property, or otherwise
requiring payments) with any shareholder, officer, or
director of Seller; any member of their immediate
families; or any of their affiliates;
(xi) Experienced any material damage, destruction, or loss
(whether or not covered by insurance) affecting its
properties, assets, or Business;
(xii) Failed to regularly maintain and repair the Purchased
Assets in the ordinary course of business consistent
with past practices;
(xiii) Made any change in any method of accounting or any
accounting practice or suffered any deterioration in
accounting controls;
(xiv) Varied, canceled, or allowed to expire any insurance
coverage involving the Business;
(xv) Entered into any other transaction other than in the
ordinary course of business consistent with past
practices; and
(xvi) Agreed or committed to do any of the foregoing.
j. No Adverse Changes. Since the date of the last of the
Financial Statements attached as Schedule 11.G, there has not
been, to the Best Knowledge of any of the Seller Parties, any
occurrence, condition, or development that has adversely
affected, or is likely to adversely affect, the Business, or
the Purchased Assets.
k. Employees.
(i) Set forth on Schedule 11.K.1 is a complete and
accurate list of the following information for each
employee of Seller: name, date of hire, current rate
of pay and current position.
(ii) Seller is not a party to, and Seller or the Business
is not bound by, any collective bargaining agreement.
There is not now, nor has there been at any time
during the past five years, any strike, lockout,
grievance, other labor dispute, or trouble of any
nature pending or threatened against Seller or that
in any manner affects Seller. Seller is and has been
in compliance with all rules regulating employee
wages and hours. On or before the Closing Date,
Seller shall have paid or accrued all its obligations
relating to employees (whether arising by operation
of law, by contract, or by past service) or payments
to trusts or other funds, to any governmental agency,
or to any individual employee (or his or her legal
representatives) with respect to unemployment
compensation benefits, profit sharing, retirement
benefits, vacation pay or Social Security benefits.
(iii) Except as to employees specifically identified in
Schedule 11.K.3, all Seller's employees are
employees-at-will, may be terminated at any time in
accordance with the written policies (copies of which
have been provided to Buyer) of Seller for any lawful
reason or for no reason, and are not entitled to
employment by virtue of any oral or written contract,
employer policy, or otherwise.
(iv) No retired employees of Seller are receiving or are
entitled to receive any payments or health or other
benefits from Seller.
l. Employee Benefit Plans.
1. Attached as Schedule 11L is a true and
complete list of all plans, contracts,
programs, and arrangements (including, but
not limited to, collective bargaining
agreements, pensions, bonuses, deferred
compensation, retirement, severance,
hospitalization, insurance, salary
continuation, and other employee benefit
plans, programs, or arrangements) maintained
currently or under which Seller has had any
obligations with respect to an employee of
Seller (the "Plans").
2. Seller has performed all obligations
required to be performed by it under the
Plans (including, but not limited to, the
making or accruing of all contributions) and
is not in default under and has no knowledge
of any default by any other party to the
Plans.
3. Buyer acknowledges that the Plans are
administered by Shareholder for the benefit
of all of its subsidiary companies,
including Seller, and that Buyer will not be
able to continue or participate in the
Plans.
m. Contracts. Except for the contracts, commitments or leases
listed on Schedules 1.F.2, 1.F.3, and 11.M or any other
Schedule of this Agreement, Seller is not a party to nor bound
by any agreement or commitment that affects the Business, the
Purchased Assets, or the Assumed Liabilities which will result
in a liability or other cost to Buyer of more than $10,000 in
the aggregate or will last for more than one year from the
Closing Date (all these contracts and commitments referred to
as "Significant Contracts"). All Significant Contracts are
valid and binding obligations of the parties thereto in
accordance with their respective terms. No default or alleged
default exists on the part of Seller, nor, to the Best
Knowledge of Seller Parties, on the part of any other party,
under any of the Significant Contracts. True and complete
copies of all Significant Contracts have been delivered to
Buyer.
n. Title to Purchased Assets. Seller is the sole and absolute
owner of the Purchased Assets and has good title to all of the
Purchased Assets, which are, or will be at
the time of the Closing, free and clear of any and all
Encumbrances. Schedule 11.N lists or describes all property
used in the conduct of the Business that is owned by or an
interest in which is claimed by any other person (whether a
customer, supplier, or other person), together with copies of
all related agreements. All such assets are situated on the
Premises or other of Seller's facilities and is in such
condition that upon return to its owner, Buyer will not be
liable in any amount to the owner.
o. Condition of Purchased Assets. To the best of Seller's and
Shareholder's knowledge, except as disclosed in Schedule 11.O,
all equipment and buildings Seller owns or leases are, to the
best of Seller's and Shareholder's knowledge, structurally
sound, in good operating condition and repair, and adequate
for their current uses. To the best of Seller's and Seller
Shareholder's knowledge, no equipment needs maintenance or
repairs except for ordinary, routine maintenance and repairs
that are not material in nature or cost. The equipment owned
and building used by Seller are sufficient for the continued
operation of the Business after the Closing Date in
substantially the same manner as Seller operated the Business
before the Closing Date. The Inventory is in good condition,
not obsolete or defective (except as may have been so recorded
on the books and records of the Seller), and is usable or
saleable in the usual and ordinary course of business. Each
item is situated at the Seller's facilities unless
specifically disclosed to the Buyer on Schedule 11.O attached
to this Agreement.
p. Receivables. The Receivables are the result of bona fide sales
or other bona fide transactions. The Receivables will be paid
in full as they come due, except to the extent that a reserve
against the possible uncollectability of the Receivables has
been established and is reflected on the Financial Statements.
To the extent the reserve is exceeded, Seller Parties shall
repurchase from Buyer at face value any Receivable purchased
by Buyer under this Agreement that has not been paid by the
related-account debtor within 120 days of the Closing Date, on
Buyer's tender to Seller Parties of a reassignment (without
recourse) of the Receivable. Buyer shall have the right to set
off against amounts payable by Buyer under any Related
Agreement the amount of any liability of Seller Parties to
Buyer under this Section or under any other provisions of this
Agreement. Buyer shall also have the right to make a claim
against the Escrow Account for the amount of any liability of
the Seller Parties to Buyer under this section or, to the
extent such other liability exceeds $50,000 as provided in
Section 15.d, under any other provisions of this Agreement.
q. Taxes.
1. For the purposes of this Agreement, "Tax" or "Taxes"
shall mean all foreign, federal, state, county,
local, and other taxes (including, without
limitation, income taxes; premium taxes;
single-business taxes; excise taxes; sales taxes; use
taxes; value-added taxes; gross receipts taxes;
franchise taxes; ad valorem taxes; real estate taxes;
severance taxes; capital levy taxes; transfer taxes;
stamp taxes; employment, unemployment, and
payroll-related taxes; withholding taxes; and
governmental charges and assessments), and include
interest, additions to tax, and penalties.
2. Seller has filed on a timely basis all Tax returns it
is required to file under foreign, federal, state, or
local law and has paid or established an adequate
reserve with respect to all Taxes for the periods
covered by such returns. No agreements have been made
by or on behalf of Seller for any waiver or for the
extension of any statute of limitations governing the
time of assessment or collection of any Taxes. Seller
and its officers have received no notice of any
pending or threatened audit by the IRS or any
foreign, state or local agency related to Seller's
Tax returns or Tax liability for any period, and no
claim for assessment or collection of Taxes has been
asserted against Seller. To the Best of Seller's
Parties' Knowledge, no such claim is being considered
and there is no basis for any such claim. There are
no federal, state, or local tax liens outstanding
against any of Seller's assets (including, without
limitation, the Purchased Assets) or the Business.
3. The sale by Seller of the Purchased Assets and the
Buyer's acquisition of such assets will not result in
the imposition of or liability for any sales or use
taxes except in connection with the transfer of any
motor vehicles that are part of the Purchased Assets
which taxes will be paid for by Seller.
4. Pursuant to MCLA 205.27a, MSA 7.657(27a), 1986 PA 58,
Section 27a, Seller waives all confidentiality
regarding any Taxes that are payable to the State of
Michigan and agrees that the appropriate authorities
of the State of Michigan may release to Buyer
Seller's known Tax liability. Seller agrees to
execute any separate waivers of confidentiality that
Buyer or the appropriate authorities might require to
implement the terms of this paragraph.
5. The information contained on the Michigan Employment
Security Commission Form 1027, Business Transferor's
Notice to Transferee of Unemployment Tax Liability
and Rate, is correct and complete.
r. Litigation, Claims. Except as set forth on Schedule 11.R, (i)
there are no actions, suits proceedings, hearings,
investigations, charges, complaints, claims or demands of any
kind pending or, to the Best Knowledge of Seller Parties,
threatened against or affecting Seller, any of the Purchased
Assets or any aspect of the Business; (ii) there are no
injunctions, judgments, orders or decrees of any kind which
are outstanding against or unsatisfied by Seller or relating
to any of
the Purchased Assets or any aspect of the Business; and (iii)
Seller is not charged, or threatened with, or under
investigation with respect to, any alleged violation of any
provision of any law, constitution, code, statute or
ordinance, or any regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any
governmental authority relating to any of the Purchased Assets
or any aspect of the Business.
s. Products. Except as set forth on Schedule 11.S: (i) there are
no liabilities of Seller whether based on strict liability,
negligence, breach of contract or otherwise, with respect to
any product, component or other item designed, manufactured,
assembled, produced or sold by Seller to others; (ii) there
are no liabilities of Seller with respect to any claim for the
breach of any express or implied warranty or any other similar
claim with respect to any products designed, manufactured,
assembled, produced or sold by Seller to others, other than
standard warranty obligations (to replace, repair or refund)
made by Seller in the ordinary course of business consistent
with past practice to purchasers of its products, and which
are appropriately and adequately reserved for in the Financial
Statements; or (iii) Seller has not entered into, or offered
to enter into, any agreement, contract, commitment or other
arrangement (whether written or oral) pursuant to which Seller
is or will be obligated to make any rebates, discounts,
promotional allowances or similar payments or arrangements to
or with any customer ("Rebate Obligations"). Schedule 11.S
sets forth a true and correct listing of all warranty claims
with respect to the products of Seller made in connection with
the Business during the last 12 months and a true and correct
list of all contracts pursuant to which any purchaser may
return any products. All Rebate Obligations set forth on
Schedule 11.S are reflected in the Financial Statements or
have been incurred after the date thereof in the ordinary
course of business consistent with past practice.
t. Environmental Matters.
(i) Seller has not transported, stored, treated or
disposed, nor has it allowed or arranged for any
third parties to transport, store, handle, treat or
dispose of Hazardous Materials (as hereinafter
defined) to or at any location other than a site
lawfully permitted to receive such Hazardous
Materials for such purposes, nor has Seller
performed, arranged for or allowed by any method or
procedure such transportation, storage, treatment or
disposal in violation of any Environmental Laws (as
hereinafter defined). Seller has not stored, handled,
treated or disposed of, or allowed or arranged for
any third parties to transport, store, handle, treat,
dispose of, Hazardous Materials upon the Real Estate
or the Leasehold Premises, except as permitted by
law.
(ii) During Seller's ownership or occupancy of the Real
Estate or Leasehold Premises, there has not occurred,
nor is there presently occurring, a Release of any
Hazardous Material on, in or at the Real Estate or
the
Leasehold Premises. However, there are two
groundwater monitoring xxxxx located on the Real
Estate from which groundwater samples are obtained
and analyzed to determine whether the Real Estate or
Leasehold Premises has been impacted by a suspected
Release from property located across the street from
the Real Estate. For purposes of this Section, the
term "Release" shall have the meaning given it in
CERCLA.
(iii) Seller has not shipped or transported for treatment
or disposed, nor has it allowed or arranged, by
contract, agreement or otherwise, for any third
parties to ship or transport for treatment or
dispose, any Hazardous Materials to or at a site
which, pursuant to CERCLA or any similar state law,
has been placed on or has been proposed to be placed
on the National Priorities List or its state
equivalent. Seller has not received notice, nor does
it have knowledge of any facts which could give rise
to any notice, that the Seller is a liable party for
any environmental remediation or corrective action
under CERCLA or any other Environmental Laws. Seller
has not submitted nor was required to submit any
notice pursuant to Section 103(c) of CERCLA with
respect to the Real Estate or Leasehold Premises. The
Seller has not received any written or oral request
for information in connection with any environmental
remediation or corrective action. Seller has not been
required to or has not undertaken any response or
remedial actions or clean-up actions of any kind at
the request of any federal, state or local
governmental entity, or at the request of any other
person or entity.
(iv) Seller does not use, or has not used, any Underground
Storage Tanks, and there are not now nor, to the best
of Seller's knowledge, have there ever been any
Underground Storage Tanks on the Real Estate or the
Leasehold Premises. For purposes of this Section
4.19, the term "Underground Storage Tanks" shall have
the meaning given it in the Resource Conservation and
Recovery Act (42 U.S.C. Sections 6901 et seq.) or
similar state statute.
(v) There are no laws, regulations, ordinances, licenses,
permits or orders relating to environmental
remediation, corrective action or worker safety
matters requiring any work, repairs, construction or
capital expenditures with respect to the assets or
properties of the Seller.
(vi) Schedule 11.T identifies (i) all environmental
audits, site assessments or occupational health
studies undertaken by the Seller or its agents or
known to be taken by governmental agencies; (ii) the
results of any groundwater, soil, air or asbestos
sampling or monitoring undertaken with respect to the
Real Estate or the Leasehold Premises; (iii) all
written communications between the Seller and any
environmental agencies; and (iv) all citations issued
under the Occupational Safety and Health Act (29
U.S.C. Sections 651 et seq.) or similar state
statute.
(vii) As used herein, the term "Environmental Law" shall
mean any applicable federal, state, or local
statutory or common law, ordinance, rule, or
regulation relating to: (i) pollution or protection
of the environment; (ii) nuisance or trespass; (iii)
emissions, discharges, releases, or threatened
releases of any Hazardous Material into the
environment (including, without limitation, ambient
air, surface water, groundwater, land surface, or
subsurface strata); or (iv) the manufacture,
processing, distribution, use, treatment, storage,
disposal, transportation, or handling of Hazardous
Materials. The term "Environmental Laws" shall
include, but shall not be limited to: the Clean Air
Act; the Clean Water Act; the Occupational Safety and
Health Act; the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980; the Resource
Conservation and Recovery Act; the Toxic Substances
Control Act, and any amendments thereto and any
similar state or local law or ordinance. For purposes
of this Agreement, the term "Environmental Laws" also
shall mean, to the extent any of the following have
the force and effect of law, any regulation, code,
plan, order, decree, judgment, injunction, notice, or
demand letter issued, entered, or approved under any
law, ordinance, rule, or regulation referred to in
the preceding sentence.
(viii) As used herein, the term "Hazardous Material" shall
mean any pollutant, contaminant, chemical, toxic, or
hazardous substance or material, or industrial waste
that is included within the definitions of the terms
"solid waste", "pollutant or contaminant", "hazardous
substance," "hazardous chemical," or "hazardous
waste," including petroleum and any fraction thereof,
asbestos, mold or radionuclide, under any
Environmental Law. The term "Hazardous Materials"
shall mean all or some of the foregoing.
u. Compliance with Laws. At all times prior to the Closing Date,
Seller has, complied with all laws, orders, regulations,
rules, decrees, and ordinances affecting to any extent or in
any manner any aspects of the Business or the Purchased
Assets.
v. Suppliers and Customers.
(i) A complete and accurate list of the 25 largest
suppliers or vendors of products or services to
Seller in connection with the Business (measured
according to dollar purchases made from such
suppliers or vendors during Seller's last fiscal
year), and the address of each such supplier or
vendor and the amount sold to Seller during that
period, is set forth in Schedule 11.V.1. The names of
any suppliers of goods or services with respect to
which practical alternative sources of supply are not
available on comparable terms and conditions are
separately listed in Schedule 11.V.1.
(ii) A complete and accurate list of each of Seller's
largest 25 customers (based on revenues to Seller
annually during the last fiscal year) in connection
with the Business, the address of each such customer,
and the amount each customer purchased from Seller
during the last fiscal year is set forth in Schedule
11.V.2.
(iii) Except as disclosed on Schedule 11.V.3, Seller
Parties have no information that might indicate that
any customer, supplier or vendor of Seller intends to
cease purchasing from, selling to, or dealing with
Seller. No information has been brought to the
attention of any of Seller Parties that might lead
any of them to believe that any customer or supplier
intends to alter, in any material respect, the amount
of its purchases or sales or the extent of its
dealings with Seller, or would alter in any material
respect its purchases from, sales to, or dealings
with Buyer following the purchase by Buyer of the
Purchased Assets under this Agreement .
w. Progress Payments. The attached Schedule 11.W contains a true
and complete list and description of all security deposits,
progress payments, and the like that Seller has received
relating in any way to any purchase orders, leases, or other
agreements that are part of the Purchased Assets.
x. [INTENTIONALLY OMITTED]
y. No Brokers. Seller has not engaged, and is not responsible for
any payment to, any finder, broker, or consultant in
connection with the transactions contemplated by this
Agreement.
z. Transactions with Certain Persons. Except as set forth on
Schedule 11.Z attached hereto, no shareholder, officer,
director or employee of Seller, nor any member of any such
person's family, nor any corporation, partnership, trust or
other entity in which any such person has a substantial
interest as a shareholder, officer, director, trustee or
partner (each, an "Affiliate"), owns any assets used in or
relating to the Business or is presently a party to any
material transaction with Seller relating to the Purchased
Assets or the Business (including, but not limited to, any
contract, agreement or other arrangement (a) providing for the
furnishing of material services or supplies by, (b) providing
for the rental of material real or personal property from, or
(c) otherwise requiring material payments to (other than for
services as officers or directors of Seller) such Affiliate.
aa. Intellectual Property. Schedule 11.AA lists all Intellectual
Property of the Seller that Seller directly or indirectly
owns, licenses, uses, requires for use, or controls in whole
or in part and all licenses and other agreements allowing
Seller to use the intellectual property of third parties in
connection with the Business, except for commercially
available computer software such as word processing,
spreadsheet and similar applications. Seller does not own,
directly or indirectly, or use any
patents, copyrights, trademarks, or service marks in the
Business except as listed. Except as set forth in Schedule
11.AA, Seller is the sole and exclusive owner of the
Intellectual Property, free and clear of all Encumbrances.
Except as set forth in Schedule 11.AA, none of the Seller's
Intellectual Property infringes on any other person's
intellectual property and no activity of any other person
infringes on any of the Intellectual Property. Seller's
manufacturing and engineering drawings, process sheets,
specifications, bills of material, trade secrets, "know-how,"
and like data are in such form and of such quality that they
can, following the Closing Date, be used in the process of
designing, producing, manufacturing, assembling, and selling
the products and providing the services previously provided by
Seller so that such products and services meet applicable
specifications and conform with all applicable quality
standards that Buyer will be required to meet at the date of
the Closing.
bb. Insurance. All insurance policies covering Seller's real and
personal property or providing for business interruption,
personal and product liability coverage, and other insurance
are described in Schedule 00.XX (which specifies the insurer,
policy number, type of insurance, and any pending claims).
Such insurance is in amounts Seller deems sufficient with
respect to its assets, properties, business, operations,
products, and services as the same are presently owned or
conducted, and all such policies are in full force and effect
and the premiums have been paid. There are no claims, actions,
suits, or proceedings arising out of or based on any of these
insurance policies, and no basis for any such claim, action,
suit, or proceeding exists. Seller is not in default with
respect to any provisions contained in any such insurance
policies and has not failed to give any notice or present any
claim under any such insurance policy in due and timely
fashion.
cc. Sales Representatives, Dealers and Distributors. Except as set
forth on Section 00.XX, Seller is not a party to any contract
or agreement with any person or entity under which such other
person or entity is a sales agent, representative, dealer or
distributor of any of Seller's products or services, and which
by its terms cannot be terminated at will or on not more than
30 days' prior notice and there has been no change in the rate
of compensation paid or payable to any such person or entity
since the date of the most recent Financial Statements.
dd. Product Warranties. Except as disclosed on Section 11DD, the
Seller has not extended to its customers any product
warranties, indemnifications or guarantees.
ee. Computer Programs. Seller owns all right and title to and
interest in, or has valid licenses for the use of, all
computer programs used in the Business, and all such computer
programs are assignable to Buyer, except as set forth in
Schedule 00.XX.
ff. Capital Stock of the Seller. The authorized capital stock of
the Seller consists solely of 5,000 shares of common stock,
$10.00 par value, of which 3,768 shares are issued and
outstanding. There are no shares of Seller's capital stock
held in its
treasury.All voting rights in the Seller are vested
exclusively in its shares of common stock. All of the issued
and outstanding shares of common stock of the Seller are
validly authorized and issued and are fully paid and
non-assessable. There are no outstanding warrants, options or
rights of any kind to acquire from the Seller any shares of
its common stock or securities of any kind. The Seller does
not have any obligation to acquire any of its issued and
outstanding shares of common stock or any other security
issued by it from any holder thereof.
gg. Accuracy of Information Furnished to Buyer. No representation,
statement or information made or furnished by the Seller or
the Seller Shareholder to the Buyer, including but not limited
to those contained in this Agreement and the various schedules
and exhibits attached hereto and the other information and
statements referred to herein and previously furnished by the
Seller or the Seller Shareholder to the Buyer, contains or
shall contain any untrue statement of a material fact or omits
or shall omit any material fact necessary to make the
information contained therein not false or misleading.
12. Buyer Parties' Representations and Warranties. Buyer Parties represent
and warrant to Seller that:
a. Organization and Standing. BusinessCo is a corporation duly
organized and validly existing under the laws of the State of
Michigan, and BusinessCo has all the requisite power and
authority (corporate and otherwise) to own its properties and
to conduct its business as it is now being conducted. Real
EstateCo is a limited liability company duly organized and
validly existing under the laws of the State of Michigan, and
Real EstateCo has all the requisite power and authority to own
its properties and to conduct its business as it is now being
conducted. Guarantor is a corporation duly organized and
validly existing under the laws of the State of Illinois, and
Guarantor has all the requisite power and authority (corporate
and otherwise) to own its properties and to conduct its
business as it is now being conducted.
b. Authorization. Buyer has taken all necessary corporate or
limited liability company action, as the case may be (i) to
duly approve the execution, delivery, and performance of this
Agreement and the Related Agreements and (ii) to consummate
any related transactions. Buyer has duly executed and
delivered this Agreement. This Agreement is, and the Related
Agreements when executed and delivered by the parties to them
will be, legal, valid, and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective
terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium, or similar laws relating
to the enforcement of creditor's rights and by general
principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in
equity).
c. Existing Agreements and Governmental Approvals. The execution,
delivery, and performance of this Agreement and the Related
Agreements and the consummation of the transactions
contemplated by them:
(i) Do not and will not violate any provisions of the law
applicable to Buyer;
(ii) Do not and will not conflict with, result in the
breach or termination of any provision of, or
constitute a default under (in each case whether with
or without the giving of notice or the lapse of time,
or both) Buyer's Articles of Incorporation, Articles
of Organization, Bylaws or Operating Agreement, as
the case may be, or any indenture, mortgage, lease,
deed of trust, or other instrument, contract, or
agreement or any order, judgment, arbitration award,
or decree to which Buyer is a party or by which it or
any of its assets and properties are bound; and
(iii) No approval, authority, or consent of, or filing by
Buyer with, or notification to, any federal, state,
or local court, authority, or governmental or
regulatory body or agency or any other corporation,
partnership, individual, or other entity is necessary
(iv) to authorize Buyer's execution and delivery of this
Agreement and Related Agreements; or
(v) to authorize Buyer's consummation of the transactions
contemplated by this Agreement and the Related
Agreements.
13. Employees.
a. Buyer shall have no obligation to hire any of Seller's
employees in the Business; provided, however, that Buyer shall
be free to negotiate with and hire any of such Seller's
employees, and Seller shall cooperate and encourage such
employees to accept employment with Buyer. To the extent
reflected on the Financial Statements included as Schedule
11.G, as adjusted, Buyer shall be responsible and liable for
any salary, wages, bonuses, commissions, accrued vacations,
sick-leave time, profit sharing , pension benefits and any
other compensation or benefits, but excluding any employee
severance payments. Buyer agrees to make all such payments on
a timely basis, including payments due to any of Seller's
terminated employees not hired by Buyer, which payments will
be due at Closing. At the election of any of Seller's
employees that Buyer has hired, Seller shall fully cooperate
with Buyer in rolling over the account balances of Seller's
Profit Sharing and 401(k) Plan into Buyer's comparable plan.
b. Seller Parties agree that they will not, directly or
indirectly, for a period of one (1) year following the Closing
Date, employ, or solicit or seek or cause or assist to employ,
any person who is employed by the Seller at the Closing Date
and who
becomes an employee of Buyer pursuant to the transaction
within thirty (30) days following Closing.
14. Postclosing Receipts. After the Closing, Seller will immediately notify
and transfer to Buyer any payments or other receipts it receives with
respect to any of the Purchased Assets. Pending any such transfer,
Seller will segregate any such payments from its other assets and will
clearly xxxx or designate them as the property of Buyer.
15. Indemnification.
a. Seller Parties. Seller Parties, jointly and severally, shall
defend, indemnify, and hold harmless Buyer and its directors,
officers, shareholders, successors, and assigns from and
against any and all costs, losses, claims, suits, actions,
assessments, diminution in value, liabilities, fines,
penalties, damages (compensatory, consequential, and other),
and expenses (including reasonable legal fees) in connection
with or resulting from:
Except as otherwise expressly assume by Buyer in the
Agreement, all debts, liabilities, and obligations of Seller,
whether accrued, absolute, contingent, known, unknown, or
otherwise, but excluding any Assumed Liabilities.
Any inaccuracy in any representation or breach of any warranty
of Seller Parties contained in this Agreement or any Related
Agreement.
Any failure by any Seller Parties to perform or observe in
full, or to have performed or observed in full, any covenant,
agreement, or condition to be performed or observed by any of
the Seller Parties under this Agreement or any Related
Agreement. Notwithstanding the foregoing, there shall be no
limitation on the indemnification by Seller for claims based
on a breach of Seller's warranties and representations set
forth under Sections 11.a (Organization and Standing), 11.b
(Authorization), 11.n (Title to Purchased Assets), 11.q
(Taxes), or 11.t (Environmental Matters).
Provided, however, such indemnification shall be limited to
the total of the Purchase Price plus all monies paid by Buyer
under any Related Agreement.
b. Buyer Parties. Buyer Parties shall defend, indemnify, and hold
harmless Seller Parties and its directors, officers,
shareholders, successors, and assigns from and against any and
all costs, losses, claims, suits, actions, assessments,
diminution in value, liabilities, fines, penalties, damages
(compensatory, consequential, and other), and expenses
(including reasonable legal fees) in connection with or
resulting from:
All debts, liabilities, and obligations of Buyer, whether
accrued, absolute, contingent, known, unknown, or otherwise.
Any inaccuracy in any representation or breach of any warranty
of Buyer contained in this Agreement or any Related Agreement.
Any failure by Buyer to perform or observe in full, or to have
performed or observed in full, any covenant, agreement, or
condition to be performed or observed by the Buyer under this
Agreement or any Related Agreement.
c. Notice of Claim. Each person entitled to indemnification under
this Section 15 (the "Indemnified Party") shall give notice to
the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be
available or sought, and shall permit the Indemnifying Party
to participate in the defense of any such claim or any
resulting litigation, and the Indemnifying Party may
participate in such defense at such party's expense. The
failure of any Indemnified Party to give the notice required
by this Agreement shall not relieve the Indemnifying Party of
its obligations unless such failure results in actual
detriment to the Indemnifying Party. In the event that a claim
or litigation is partially, but not wholly covered by an
indemnity set forth in this Section 15 the Indemnified and the
Indemnifying Parties shall share in the resulting losses in
proportion to their respective liabilities. Except with the
consent of each Indemnified Party, which consent shall not be
unreasonably withheld, no Indemnifying Party shall consent to
the entry of any judgment or enter into any settlement which
does not include a release of such Indemnified Party from all
liability in respect to such claim or litigation to the extent
it is covered by the indemnity in this Section 15.
d. Limit of Liability. Neither party shall have any liability
(for indemnification or otherwise) under this Section 15
except to the extent that the total of all Damages exceeds
Fifty Thousand and No/100 Dollars ($50,000.00). It is agreed,
however, that this section shall not apply to Seller Parties'
liability under Section 11.p to reimburse Buyer dollar for
dollar for any Receivables which may be uncollectible in
excess of the reserve reflected on the Financial Statements.
16. Expenses. Each of the parties shall pay all of the costs that it incurs
incident to the preparation, execution, and delivery of this Agreement
and the performance of any related obligations, whether or not the
transactions contemplated by this Agreement shall be consummated,
except that all such costs and all liabilities of Seller other than the
Assumed Liabilities, including, without limitation, Tax liabilities,
shall be paid out of the proceeds of the Purchase Price (which shall in
no case increase the Purchase Price) and shall not be charged to the
Business as an expense.
17. Risk of Loss. The risk of loss of or damage to the Purchased Assets
from fire or other casualty or cause shall be on Seller at all times up
to the Closing, and it shall be the responsibility of Seller to repair,
or cause to be repaired, and to restore the property to the condition
it was before the loss or damage.
18. Seller's Name. Seller agrees that from and after the Closing Date,
Buyer shall have all of the right's of Seller to use in or in
connection with the conduct of any business (whether carried on by it
directly or through any related corporation) the name "Pak-Sak
Industries, Inc." ("Name"); any part or portion of the Name, either
alone or in combination with one or more other words; or any variation
of the Name. It is contemplated that on or as soon as practicable after
the Closing Date, Seller will change its name to some name which is
different from Pak-Sak Industries, Inc. and will not be confused with
that Name. After the Closing Date, Seller agrees that it will not use
either directly or indirectly the Name or any name that may be confused
with the Name.
19. Termination.
a. This Agreement may be terminated at any time before the
Closing Date as follows:
(i) By Buyer and Seller Parties in a written instrument.
By either Buyer or Seller Parties if the Closing does not
occur on the Closing Date.
By Buyer or Seller Parties if there has been a material breach
of any of the representations or warranties set forth in this
Agreement on the part of the other, and this breach by its
nature cannot be cured before the Closing.
By Buyer or Seller Parties if there has been a breach of any
of the covenants or agreements set forth in this Agreement on
the part of the other, and this breach is not cured within ten
(10) business days after the breaching party or parties
receives written notice of the breach from the other party.
b. If terminated as provided in Section 19, this Agreement shall
forthwith become void and have no effect, except for Sections
19.C and except that no party shall be relieved or released
from any liabilities or damages arising out of the party's
breach of any provision of this Agreement.
c. Buyer Parties jointly and severally warrant and agree, on the
one hand, and the Seller Parties jointly and severally, on the
other hand, warrant and agree that if this Agreement is
terminated pursuant to Section 19, each party will not, during
the six (6) month period following the termination, directly
or indirectly solicit any employee of the other party to leave
the other party's employment.
d. Confidentiality. Each of Buyer and Guarantor hereby covenants
and agrees that, at all times from the date of this Agreement
until the Closing Date (and in the event this Agreement is
terminated, indefinitely from the date of this Agreement) it
shall keep secret and maintain in strictest confidence, and
shall not use for their benefit or for the benefit of other,
and shall not cause or allow any of Buyer's or Guarantor's
agents, officers, directors, members or employees to so
disclose or
use, any Confidential Information (as hereinafter defined)
relating to Seller or the Business or otherwise pertaining to
this Agreement or the transactions contemplated hereby. As
used in this Agreement, "Confidential Information" shall have
the meaning as defined in Section 21.c. In no way shall the
provisions of this Section be deemed to impose liability upon
Buyer for, or to prevent Buyer from, hiring any employee of
Seller, or Seller Shareholder, provided that Buyer otherwise
complies with the time limitation set forth in Section 19c.
above.
20. Miscellaneous Provisions.
a. Representations and Warranties. All representations,
warranties, and agreements made by the parties pursuant to
this Agreement shall survive the consummation of the
transactions contemplated by this Agreement for three (3)
years after the Closing Date. Notwithstanding the foregoing,
the representations and warranties made by Seller under
Section 11.a (Organization and Standing), Section 11.b
(Authorization) and Section 11.n (Title to Purchased Assets)
shall survive forever. Also, the representations and
warranties made by Seller under Section 11.q (Taxes) shall
survive for any and all applicable statute of limitation
periods and the representations and warranties made by Buyer
Parties under Section 12.a (Organization and Standing) and
Section 12.b (Authorization) shall survive forever and the
representations and warranties made by Seller under Section
11.t (Environmental Matters) shall survive for the shorter of
any applicable statute of limitations periods or five (5)
years after the Closing Date.
b. Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement
shall be in writing and shall be deemed given (i) when
personally delivered or sent by facsimile transmission to the
party to be given the notice or other communication or (ii) on
the business day following the day such notice or other
communication is sent by overnight courier to the following:
if to Seller: Pak-Sak Industries, Inc.
0000 Xxxxxxxxxx Xxx
Xxxxxxx, XX 00000
(000) 000-0000 Phone Number
(000) 000-0000 Fax Number;
with a Copy to: J. Xxxxxxx Xxxxxx
Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxx, P.C.
X.X. Xxx 00000
Xxxxxxx, XX 00000
(000) 000-0000 Phone Number
(000) 000-0000
if to Buyer: Xxxxxxx Xxxxxxxx
Packaging Personified, Inc.
000 Xxxxx Xxxx.
Xxxxx Xxxxxx, XX 00000
(000) 000-0000 Phone Number
(000) 000-0000 Fax Number;
with a copy to: Xxxx X. Xxxxxxx
Holland & Knight LLC
Xxx XxxXxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxx Xxxxxxx, XX 00000
(000) 000-0000 Phone Number
(000) 000-0000 Fax Number
if to Shareholder: Maxco, Inc.
0000 Xxxxxxxxxx Xxx
Xxxxxxx, XX 00000
(000) 000-0000 Phone Number
(000) 000-0000 Fax Number
or to such other address or facsimile number that the
parties may designate in writing.
c. Assignment. Neither Seller Parties nor Buyer shall assign this
Agreement, or any interest in it, without the prior written
consent of the other.
d. Parties in Interest. This Agreement shall inure to the benefit
of, and be binding on, the named parties and their respective
successors and permitted assigns, but not any other person.
e. Choice of Law. This Agreement shall be governed, construed,
and enforced in accordance with the laws of the State of
Michigan.
f. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each
counterpart were on the same instrument.
g. Entire Agreement. This Agreement, all Related Agreements and
all related documents, schedules, exhibits, or certificates
represent the entire understanding and agreement between the
parties with respect to the subject matter and supersede all
prior agreements or negotiations between the parties. This
Agreement may be amended, supplemented, or changed only by an
agreement in writing that makes specific reference to this
Agreement and that is signed by the party against whom
enforcement of any such amendment, supplement, or modification
is sought.
h. Arbitration.
(i) Any dispute, controversy, or claim arising out of or
relating to this Agreement or relating to the breach,
termination, or invalidity of this Agreement, whether
arising in contract, tort, or otherwise, shall at the
request of any party be resolved in binding
arbitration. Any arbitration shall proceed in
accordance with the current Commercial Arbitration
Rules (the "Arbitration Rules") of the American
Arbitration Association ("AAA") to the extent that
the Arbitration Rules do not conflict with any
provision of this Section.
(ii) No provision of or the exercise of any rights under
this Section shall limit the right of any party to
seek and obtain provisional or ancillary remedies
(such as injunctive relief, attachment, or the
appointment of a receiver) from any court having
jurisdiction before, during, or after the pendency of
an arbitration proceeding under this Section. The
institution and maintenance of any such action or
proceeding shall not constitute a waiver of the right
of any party (including the party taking the action
or instituting the proceeding) to submit a dispute,
controversy, or claim to arbitration under this
Section.
(iii) Any award, order, or judgment made pursuant to
arbitration shall be deemed final and may be entered
in any court having jurisdiction over the enforcement
of the award, order, or judgment.
(iv) The arbitration shall be held before one arbitrator
knowledgeable in the general subject matter of the
dispute, controversy, or claim and selected by AAA in
accordance with the Arbitration Rules.
(v) The arbitration shall be held at the office of AAA as
chosen by the party requesting arbitration, or at
another place the parties agree on.
(vi) In any arbitration proceeding under this Section,
subject to the award of the arbitrator(s), each party
shall pay all its own expenses and an equal share of
the fees and expenses of the arbitrator. The
arbitrator shall have the power to award recovery of
costs and fees (including reasonable attorney fees,
administrative and AAA fees, and arbitrator's fees)
among the parties as the arbitrator determine to be
equitable under the circumstances.
21. Non-Competition and Confidentiality by Seller and Shareholder.
a. Non-Competition. From and after the Closing Date until the
fifth (5th) anniversary thereof, neither Seller nor Seller
Shareholder shall organize, invest in, own, manage, operate,
control or participate in, or be associated in any manner
whatsoever, directly or indirectly, with or have any financial
interest in, or aid or
assist anyone in the conduct of, or otherwise engage in,
whether for compensation or otherwise, any business (whether
it be a sole proprietorship, joint venture, business trust,
partnership, corporation or other entity) located anywhere
within the United States (the "Territory"), that directly or
indirectly competes with the Business being acquired by Buyer
pursuant hereto; provided, however, that the foregoing shall
not be deemed to prohibit Seller or Seller Shareholder from
owning shares of stock in any publicly-owned corporation so
long as such ownership, directly or indirectly, does not
exceed five percent (5%) of the total outstanding stock of
such publicly-owned corporation, measured by reference to
either market value or voting power.
b. Blue-Penciling. If any provision or part of this Section 21 is
held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties hereto
agree to modify such provision, or that the court making such
determination shall have the power to modify such provision,
to reduce the duration or area of such provision, or both, or
to delete specific words or phrases herefrom
("blue-penciling"), and, in its reduced or blue-penciled form,
such provision shall then be enforceable and shall be
enforced.
c. Confidentiality. Each of Seller and Seller Shareholder hereby
covenants and agrees that, at all times from and after the
Closing Date, it shall keep secret and maintain in strictest
confidence, and shall not use for their benefit or for the
benefit of others, and shall not cause or allow any of
Seller's or Seller Shareholder's agents, officers, directors
or employees to so disclose or use, any Confidential
Information (as hereinafter defined) relating to Seller or the
Business or otherwise pertaining to this Agreement or the
transactions contemplated hereby. As used in this Agreement,
"Confidential Information" shall mean any and all information,
in whatever form, relating to Seller, the Business or the
Purchased Assets, including, without limitation, any
Intellectual Property, which information is sufficiently
secret to derive economic value, actual or potential, from not
being generally known to other persons who can obtain economic
value from its disclosure or use and is the subject of efforts
that are reasonable under the circumstances to maintain its
secrecy or confidentiality.
d. Equitable Remedies. Seller and Seller Shareholder recognize
and agree that Buyer conducts its business throughout the
Territory and elsewhere, and, therefore, the geographical
scope of the non-competition covenants contained in the above
Section is reasonable. It is further recognized and agreed
that Buyer would not have entered into or consummated the
transaction contemplated by this Agreement without the
covenants contained in this Section, and that irreparable
injury will result to Buyer and its businesses and properties
in the event of a breach of any covenant contained herein by
Seller or Shareholder, that such injury would be difficult if
not impossible to ascertain and, therefore, that any remedy at
law for any such breach will be inadequate. As a result, Buyer
shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damage to Buyer by
reason of any such breach. In the event that an enforcement
action is brought by Buyer pursuant hereto, Buyer shall be
entitled to recover from Seller and Seller Shareholder the
reasonable costs and attorneys' fees incurred in connection
therewith. Nothing contained in this Section shall prevent
Buyer from electing to seek any monetary or other relief in
addition to or in lieu of any equitable relief for breach of
any of the covenants contained herein. Whenever used in this
Section, the term "Buyer" shall be deemed to include any
successor or any other person or entity that may hereafter
acquire all or any portion of the aforesaid Business being
acquired by Buyer hereunder during the period of this covenant
not to compete.
e. Independent Covenants. The covenants contained n this Section
21 shall be construed and enforced independently of any other
provision of this Agreement or any other understanding or
agreement between the parties, and the existence of any claim
or cause of action of Seller or Shareholder against Buyer, of
whatever nature, shall not constitute a defense to the
enforcement of the covenants contained herein against Seller
or Seller Shareholder.
f. Schedules and Exhibits. This Agreement shall be valid and
enforceable upon execution, whether or not all or any of the
Schedules and Exhibits referred to herein are completed and
attached hereto. Once completed, the Schedules and Exhibits
shall be attached hereto and shall become a part hereof.
The parties have executed this Agreement on the date
set forth on the first page of this Agreement.
SELLER
Pak-Sak Industries, Inc.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Xxxxxxx X. Xxxxx
Its: President
SELLER SHAREHOLDER
Maxco, Inc.
By: /s/ Xxx X. Xxxx
-----------------------------------
Xxx X. Xxxx
Its: President
BUYER
P-S Business Acquisition, Inc., a corporation
to be formed
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxx
Its: President
P&D Real Estate, LLC , a limited liability
company to be formed
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxx
Its: Manager
GUARANTOR
Packaging Personified, Inc.
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxx
Its: President
