ASSET PURCHASE AGREEMENT
DATED AS OF OCTOBER 12, 1995
AMONG
XXXX-XXXXX COMPANY,
MILITARY DISTRIBUTORS OF VIRGINIA, INC.,
XXXXX X. XXXXX,
XXXXX X. XXXXXX, XX.
AND
XXXX X. XXXXX III
TABLE OF CONTENTS
Page
1. Purchase of Assets......................................... 1
(a) Assets to be Purchased................................ 1
(b) Excluded Assets....................................... 3
(c) Liabilities to Be Assumed............................. 3
(d) Purchase Price........................................ 4
(e) Payment of Purchase Price............................. 4
(f) Allocation of Purchase Price.......................... 5
(g) No Other Liabilities to be Assumed.................... 5
(h) Closing............................................... 6
2. Representations and Warranties of Company and the
Shareholders............................................... 6
(a) Disclosure Schedule................................... 6
(b) Corporate Organization................................ 6
(c) Authorization......................................... 7
(d) Non-Contravention..................................... 7
(e) Consents and Approvals................................ 8
(f) Financial Statements.................................. 8
(g) Loss Contingencies; Other Non-Accrued Liabilities..... 9
(h) Absence of Certain Changes............................ 9
(i) Real Properties....................................... 10
(j) Machinery, Equipment, Vehicles and Personal
Property.............................................. 11
(k) Receivables and Payables.............................. 11
(l) Inventories........................................... 12
(m) Intellectual Property Rights.......................... 12
(n) Litigation............................................ 12
(o) Taxes................................................. 12
(p) Insurance............................................. 13
(q) Benefit Plans......................................... 14
(r) Bank Accounts; Powers of Attorney..................... 16
(s) Contracts and Commitments; No Default................. 17
(t) Orders, Commitments and Returns....................... 18
(u) Labor Matters......................................... 18
(v) Permits and Other Operating Rights.................... 19
(w) Compliance with Law................................... 20
(x) Assets of Business.................................... 20
(y) Business Generally.................................... 20
(z) Hazardous Substances and Hazardous Wastes............. 20
(aa) Brokers............................................... 21
(ab) Accuracy of Information............................... 22
3. Representations and Warranties of Purchaser................ 22
(a) Corporate Organization................................ 22
(b) Authorization......................................... 22
(c) Non-Contravention..................................... 22
(d) Ability to Pay Purchase Price......................... 23
4. Covenants.................................................. 23
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(a) Company's and the Shareholders' Agreements as to
Specified Matters..................................... 23
(b) Conduct of Company Business........................... 25
(c) No Solicitation of Alternate Transaction.............. 25
(d) Full Access to Purchaser.............................. 26
(e) Confidentiality....................................... 26
(f) Filings; Consents; Removal of Objections.............. 27
(g) Further Assurances; Notification...................... 27
(h) Supplements to Disclosure Schedule.................... 28
(i) Public Announcements.................................. 28
(j) Transactional Tax Undertakings........................ 28
(k) Bulk Transfers........................................ 28
(l) Employee Matters...................................... 28
(m) Accounts Receivable................................... 30
(n) Post-Closing Access to and Retention of Books and
Records of Company.................................... 30
(o) Real Estate Title Evidence............................ 31
5. Conditions to Obligations of Purchaser..................... 31
(a) Representations and Warranties True................... 32
(b) Performance........................................... 32
(c) Required Approvals and Consents....................... 32
(d) Adverse Changes....................................... 32
(e) No Proceeding or Litigation........................... 32
(f) Opinion of Company's and the Shareholders' Counsel.... 33
(g) Legislation........................................... 33
(h) Certificates.......................................... 33
(i) Due Diligence......................................... 33
(j) Environmental Audit................................... 34
(k) Estoppel Certificates................................. 34
(l) Documentation for Conveyance of the Assets............ 34
(m) HSR Filings........................................... 34
(n) Lease/Option to Purchase.............................. 34
(o) Management Agreement.................................. 35
(p) Right of First Refusal Agreement...................... 35
(q) Software License...................................... 35
6. Conditions to Company's and the Shareholders'
Obligations................................................ 35
(a) Representations and Warranties True................... 35
(b) Performance........................................... 35
(c) Corporate Approvals................................... 35
(d) No Proceeding or Litigation........................... 35
(e) Opinion of Purchaser's Counsel........................ 36
(f) Legislation........................................... 36
(g) Certificates.......................................... 36
(h) Documentation for Assumption of Assumed
Liabilities........................................... 36
(i) HSR Filings........................................... 36
(j) Management Agreement.................................. 37
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7. Termination and Abandonment................................ 37
(a) Methods of Termination................................ 37
(b) Procedure Upon Termination............................ 37
8. Survival and Indemnification............................... 38
(a) Survival.............................................. 38
(b) Company's and the Shareholders' Indemnification of
Purchaser............................................. 39
(c) Purchaser's Indemnification of Company and the
Shareholders.......................................... 39
(d) Indemnification Procedure............................. 39
9. Miscellaneous Provisions................................... 40
(a) Expenses.............................................. 41
(b) Amendment and Modification............................ 41
(c) Waiver of Compliance; Consents........................ 41
(d) No Third Party Beneficiaries.......................... 41
(e) Notices............................................... 41
(f) Assignment............................................ 42
(g) Governing Law; Jurisdiction........................... 43
(h) Severability.......................................... 43
(i) Counterparts.......................................... 43
(j) Headings.............................................. 43
(k) Entire Agreement...................................... 43
(l) Injunctive Relief and Specific Performance............ 44
(m) Attorneys' Fees....................................... 44
(n) List of Defined Terms................................. 44
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LIST OF EXHIBITS
NAME OF EXHIBIT NUMBER OF EXHIBIT
--------------- -----------------
Trade and Other Names to be Purchased................ Exhibit 1(a)(i)
Prepaid Expenses..................................... Exhibit 1(a)(iii)
Equipment............................................ Exhibit 1(a)(vi)
Real Estate.......................................... Exhibit 1(a)(vii)
Contracts............................................ Exhibit 1(a)(viii)
Excluded Assets...................................... Exhibit 1(b)
Promissory Notes Payable............................. Exhibit 1(d)(ii)
Liabilities Undertaking.............................. Exhibit 1(e)(ii)
Required Consents.................................... Exhibit 5(c)
Opinion of Company's and the
Shareholders' Counsel................................ Exhibit 5(f)
Lease/Option to Purchase............................. Exhibit 5(n)
Management Agreement................................. Exhibit 5(o)
Right of First Refusal Agreement..................... Exhibit 5(p)
Opinion of Purchaser's Counsel....................... Exhibit 6(f)
List of Defined Terms................................ Exhibit 9(m)
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of October 12, 1995, is by
and among Xxxx-Xxxxx Company, a Delaware corporation ("PURCHASER"),
Military Distributors of Virginia, Inc., a Virginia corporation
("COMPANY"), Xxxxx X. Xxxxx, an individual resident of the State of
Virginia, Xxxxx X. Xxxxxx, Xx., an individual resident of the State of
Virginia, and Xxxx X. Xxxxx III, an individual resident of the State of
Virginia, which individuals are the holders of all of the issued and
outstanding shares of the capital stock of Company (such individuals are
referred to in this Agreement individually as a "SHAREHOLDER" and
collectively as the "SHAREHOLDERS").
RECITALS
A. The parties hereto wish to provide for the terms and conditions
upon which Purchaser will acquire substantially all of the business and
assets of Company.
B. The parties hereto wish to make certain representations,
warranties, covenants and agreements in connection with the purchase of
the business and assets of Company and also to prescribe various
conditions to such transaction.
Accordingly, and in consideration of the representations, warranties,
covenants, agreements and conditions contained in this Agreement, the
parties hereto agree as follows:
SECTION 1
1. PURCHASE OF ASSETS.
(a) ASSETS TO BE PURCHASED. Upon satisfaction of all conditions to
the obligations of the parties contained in this Agreement (other than
such conditions as shall have been waived in accordance with the terms of
this Agreement), Company shall sell, transfer, convey, assign and deliver
to Purchaser, and Purchaser shall purchase from Company, at the Closing,
as defined in subsection 1(h), all of the business, assets, properties and
rights of Company, as a going concern, of every nature, kind and
description, tangible and intangible, insofar as they relate to the
conduct of the business of Company as presently conducted by Company,
wheresoever located and whether or not carried or reflected on the books
and records of Company (referred to in this Agreement collectively as the
"ASSETS"), but not including the "EXCLUDED ASSETS," as defined in
subsection 1(b). The Assets shall include, without limitation, the
following to the extent used or useful in the business of Company and not
constituting Excluded Assets:
(i) all rights to the use of the names and all variations
thereof, including all trade name or trademark rights with respect
thereto, listed on Exhibit 1(a)(i) hereto (PROVIDED, HOWEVER, that
Purchaser agrees that Company may use the name "Military Distributors of
Virginia Management Company" during the
term of the Management Agreement, as hereinafter defined, and solely for
the purposes of performing its obligations under the Management
Agreement);
(ii) all cash, cash equivalents, deposit accounts, certificates
of deposit and other investments or securities;
(iii) all prepaid expenses described on Exhibit 1(a)(iii)
hereto (the "PREPAID EXPENSES"), except that Purchaser may elect prior to
Closing to not take the prepaid expense relating to insurance, in which
event it will remain an asset of Company, (any prepaid expenses of Company
that are not purchased by Purchaser under this Agreement will be expensed
against income in Company's fiscal year ended December 31, 1995), and all
other prepaid expenses, including prepaid office supplies, pallets, and
computer forms, which will be transferred to Purchaser at Closing, and all
credit balances and deposits;
(iv) all accounts and notes receivable and trade notes and trade
accounts reflected as assets in the Latest Balance Sheet, as defined in
subsection 2(f), and those generated, purchased or otherwise acquired
after the date of the Latest Balance Sheet, and not including those paid
after the date of the Latest Balance Sheet and prior to the Closing (the
"RECEIVABLES");
(v) all of the items of merchandise, inventory and supplies
reflected in the Latest Balance Sheet and any merchandise, inventory and
supplies generated, purchased or otherwise acquired in the ordinary course
of business after the date of the Latest Balance Sheet and not including
any merchandise, inventory and supplies disposed of in the ordinary course
of business, in each case consistent with the terms of this Agreement,
after the date of the Latest Balance Sheet and prior to the Closing;
(vi) all personal property, including without limitation all
machinery, equipment, furniture, fixtures, data processing equipment and
peripheral equipment, vehicles and other similar personal property and
spare parts, including, but not limited to the items listed on Exhibit
1(a)(vi) hereto, and all such personal property subsequently acquired by
Company through the Closing (the "EQUIPMENT");
(vii) all real property ownership interests in the land and
buildings described on Exhibit 1(a)(vii) hereto (the "REAL ESTATE");
(viii) all of the rights of Company under contracts, leases,
agreements, unfilled customer purchase or sales orders, licenses, permits
and other governmental authorizations or approvals, including, but not
limited to, the contracts, leases, agreements, licenses and permits listed
on Exhibit 1(a)(viii) hereto (the "CONTRACTS"); and
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(ix) all of the inventions, know-how, trade secrets, logos and
other proprietary information or intellectual property rights of Company,
a perpetual, fully paid and royalty-free license to use all of the
computer software used in the business of Company, all telephone listings
and rights to use the telephone numbers used by Company, all of the
goodwill and going concern value of Company, and all choses in action and
other similar rights of Company.
(x) On the Closing Date, Company shall transfer to Purchaser
valid legal title to all of the Assets, other than the Excluded Assets, as
defined in subsection 1(b), free and clear of any Lien, as defined in
subsection 2(d)(ii), other than any Permitted Liens, as defined in
subsection 2(i), and except as described in the initial Disclosure
Schedule, as defined in subsection 2(a).
(b) EXCLUDED ASSETS. The Assets to be purchased under this
Agreement shall not include any of the assets listed on Exhibit 1(b)
hereto (the "EXCLUDED ASSETS"), which shall remain for all purposes the
properties and assets of Company.
(c) LIABILITIES TO BE ASSUMED. Upon satisfaction of all conditions
to the obligations of the parties contained in this Agreement (other than
such conditions as shall have been waived in accordance with the terms of
this Agreement), and subject to the consummation of the Closing, Purchaser
shall assume, and agree to pay, perform and discharge when due, only the
following obligations of Company (the "ASSUMED LIABILITIES"):
(i) all of the trade accounts payable (and all outstanding
checks that are written in the normal course of business consistent with the
terms of this Agreement on or before the Closing Date that have not cleared
the bank as of the Closing Date) of Company reflected in the Latest Balance
Sheet and those generated after the date of the Latest Balance Sheet in the
ordinary course of business consistent with the terms of this Agreement and
not including those accounts payable and outstanding checks paid after the
date of the Latest Balance Sheet and prior to the Closing;
(ii) all of the obligations of Company under Industrial
Development Authority of the City of Norfolk $815,000 Industrial
Development Revenue Refunding Bonds (Military Distributors of Virginia,
Inc. Project) Series 1990 (the "ARGONNE BONDS");
(iii) all of the obligations of Company arising in the
ordinary course of business from and after the Closing under the
Contracts, and specifically excluding any obligation arising from any
default or failure of performance of Company arising at any time prior to
the Closing; and
(iv) all of the obligations of Company with respect to all of
the accrued expenses of Company incurred in the ordinary
3
course of business, reported in accordance with generally accepted
accounting principles and expensed against income of Company in 1995,
except that the vacation accrual will not exceed $10,000 and there will be
no sick leave accrual.
(d) PURCHASE PRICE. The total purchase price for the Assets shall
be equal to the sum of (i) Fifty-Six Million Dollars ($56,000,000); (ii)
the outstanding balance immediately prior to the Closing of the promissory
notes of Company listed on Exhibit 1(d)(ii) hereto (the "PROMISSORY
NOTES"); (iii) the balance immediately prior to the Closing of the Prepaid
Expenses of Company (excluding insurance if Purchaser has elected to not
take such prepaid expense); and (iv) the outstanding balance immediately
prior to the Closing of the Assumed Liabilities (the "PURCHASE PRICE").
(e) PAYMENT OF PURCHASE PRICE. The Purchase Price shall be payable
as follows:
(i) By federal wire transfer in immediately available funds on the
Closing Date, or if the Closing Date is not a business day, on the first
business day following the Closing Date, of an amount equal to the sum of
(A) Fifty-Six Million Dollars ($56,000,000), less the amount withheld
pursuant to subsection 1(e)(iii) below; (B) the outstanding balance
immediately prior to the Closing of the Promissory Notes; and (C) the
balance immediately prior to the Closing of the Prepaid Expenses
(excluding insurance if Purchaser has elected to not take such prepaid
expense), PROVIDED, HOWEVER, that Purchaser agrees that if the Closing is
delayed beyond January 2, 1996 due to any failure by Purchaser to perform
or comply with any obligation of Purchaser in this Agreement, and all
conditions for the benefit of Purchaser set forth in Section 5 of this
Agreement have been satisfied or waived on or before January 2, 1996, then
Purchaser agrees to pay at the Closing, if and when it occurs, interest on
such amount from January 2, 1996 until the Closing Date at a rate of eight
percent (8%) per annum and in such event all earnings accruing to Company
after December 31, 1995 accrue to the benefit of Purchaser if the
transaction is consummated;
(ii) By the execution and delivery to Company at the Closing of a
Liabilities Undertaking in the form of Exhibit 1(e)(ii) hereto (the
"LIABILITIES UNDERTAKING"); and
(iii) By federal wire transfer in immediately available funds on the
date that is six (6) months after the Closing Date, or if such date is not
a business day, on the first business day following such date, of an
amount equal to Five Hundred Thousand Dollars ($500,000), PROVIDED,
HOWEVER, that Purchaser, in its sole discretion, may unilaterally increase
the amount to be so withheld from the portion of the Purchase Price to be
paid at Closing if Purchaser determines in its sole discretion based on
its due diligence investigation of Seller that any additional amount
should be so withheld to satisfy potential claims of Purchaser, PROVIDED
4
FURTHER, notwithstanding the foregoing, such funds shall constitute a
nonexclusive source of funds to satisfy any obligations of Company or the
Shareholders to indemnify Purchaser pursuant to Section 8 hereunder and
Purchaser shall be entitled to exercise all rights of offset against such
amount for any amount required to satisfy any claims for indemnification
asserted by Purchaser pursuant to Section 8 that are not otherwise
resolved or satisfied as of the time of the payment otherwise required to
be made by Purchaser to Company pursuant to this subsection 1(e)(iii).
(f) ALLOCATION OF PURCHASE PRICE. The parties hereto agree that
Purchaser may retain at its expense an independent appraiser to prepare
appraisals of the fair market value of the tangible Assets (other than
cash equivalents, accounts receivable, prepaid items and inventory).
Purchaser shall prepare an allocation of the Purchase Price among the
tangible Assets, based on the fair market values thereof, and the Software
License, as defined herein, to which the parties agree that $500,000 of
the Purchase Price shall be allocated, whether or not Purchaser obtains
any independent appraiser to appraise the fair market value of any of the
tangible Assets. Inventory will be valued on the "first-in, first-out"
method of inventory valuation for purposes of such allocation. Such
allocation will be made in accordance with the requirements of Section
1060 of the Internal Revenue Code of 1986, as amended, and the regulations
thereunder. Purchaser shall provide Company a reasonable opportunity to
review and comment upon the allocation prepared by Purchaser. If Company
disagrees with appraisal obtained by Purchaser, Company may retain at its
expense an independent appraiser to prepare appraisals of the fair market
value of the Assets (other than cash equivalents, accounts receivable,
prepaid items and inventory). If following Company's appraisals the
parties are unable to agree upon the fair market value of the appraised
Assets, then the appraiser appointed by Purchaser and the appraiser
appointed by Company shall agree upon a third independent appraiser to
appraise such Assets as to which the parties may disagree as to the fair
market value, and the fair market value shall be the average of
Purchaser's appraisal, Company's appraisal and the third independent
appraisal. To the extent that such revised appraisal differs from the
appraisal first obtained by Purchaser, the allocation of the Purchase
Price will be revised accordingly. The balance of the Purchase Price,
after allocation to the tangible Assets and the Software License, will be
allocated to goodwill. The parties to this Agreement agree that such
allocation as originally submitted by Purchaser or as revised as set forth
above shall be a fair and reasonable allocation of the Purchase Price, and
the parties to this Agreement shall file all applicable tax returns and
reports (including IRS Form 8594) in accordance with and based upon such
allocation, and shall not take any position in any tax return or report,
or any tax proceeding or audit, that is inconsistent with such allocation.
(g) NO OTHER LIABILITIES TO BE ASSUMED. Except with respect to the
Assumed Liabilities, it is expressly understood and agreed by the parties
that Purchaser has not and shall not assume, and
5
nothing contained in this Agreement shall be construed as an assumption by
Purchaser of, any liabilities, obligations, debts, payables or other
claims of any nature against Company of any kind whatsoever, whether fixed
or contingent and whether known or unknown. Company shall be responsible
for all of the liabilities, obligations, debts, payables or other claims
against Company not expressly assumed by Purchaser as Assumed Liabilities.
(h) CLOSING. Unless this Agreement shall have been terminated and
the transactions contemplated herein shall have been abandoned pursuant to
Section 7 hereof, a closing (the "CLOSING") will be held on January 2,
1996 at the offices of Wolcott, Rivers, Xxxxxx, Xxxxxxxx & Xxxxx, P.C.,
Virginia Beach, Virginia, or such other place as the parties may agree, at
9:00 a.m., local time or such other time or date as the parties may agree
upon in writing, at which time and place the documents and instruments
necessary or appropriate to effect the transactions contemplated herein
will be exchanged by the parties, provided, however, that if any of the
conditions provided for in Sections 5 and 6 hereof shall not have been
satisfied or waived by such date, then the party to this Agreement which
is unable to satisfy such condition or conditions, despite the reasonable
best efforts of such party, shall be entitled to postpone the Closing by
notice to the other parties until such condition or conditions shall have
been satisfied (which such notifying party will seek to cause to happen at
the earliest practicable date) or waived. The date on which the Closing
actually takes place is hereinafter referred to as the "CLOSING DATE." In
no event, however, shall the Closing occur later than January 31, 1996
(the "TERMINATION DATE").
SECTION 2
2. REPRESENTATIONS AND WARRANTIES OF COMPANY AND THE SHAREHOLDERS.
Company and the Shareholders hereby jointly and severally represent
and warrant to Purchaser as of the date hereof as follows:
(a) DISCLOSURE SCHEDULE. Simultaneously with the execution and
delivery of this Agreement, Company and the Shareholders shall execute and
deliver to Purchaser a disclosure schedule (the "DISCLOSURE SCHEDULE")
divided into sections which correspond to the subsections of this Section
2. The Disclosure Schedule is accurate and complete, subject to all of
the limitations set forth in this Section 2.
(b) CORPORATE ORGANIZATION. Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia, has full corporate power and authority to carry
on its business as it is now being conducted and to own, lease and operate
its properties and assets, is duly qualified or licensed to do business as
a foreign corporation in good standing in every other jurisdiction in
which the character or
6
location of the properties and assets owned, leased or operated by it or
the conduct of its business requires such qualification or licensing,
except in such jurisdictions in which the failure to be so qualified or
licensed and in good standing would not, individually or in the aggregate,
have a material adverse effect on the business of Company or the Assets.
The Disclosure Schedule contains a list of all jurisdictions in which
Company is qualified or licensed to do business, and complete and correct
copies of its articles or certificate of incorporation and bylaws, as
presently in effect.
(c) AUTHORIZATION. Company has full corporate power and authority
to enter into this Agreement and to carry out the transactions
contemplated herein. The Shareholders own all of the issued and
outstanding shares of the capital stock of Company. The Board of
Directors of Company and the Shareholders have taken all action required
by law, Company's articles or certificate of incorporation and bylaws and
otherwise to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein.
This Agreement has been duly authorized, executed and delivered by Company
and each of the Shareholders and no other corporate action is necessary
for the consummation by Company and the Shareholders of the transactions
contemplated herein. Assuming the due authorization, execution and
delivery hereof by Purchaser, this Agreement is the valid and binding
legal obligation of Company and each of the Shareholders, enforceable
against Company and each of the Shareholders in accordance with its terms.
(d) NON-CONTRAVENTION. Except as set forth in the Disclosure
Schedule, neither the execution, delivery and performance of this
Agreement nor the consummation of the transactions contemplated herein
will:
(i) violate or be in conflict with any provision of the
articles or certificate of incorporation or bylaws of Company; or
(ii) be in conflict with, or constitute a default, however
defined (or an event which, with the giving of due notice or lapse of
time, or both, would constitute such a default), under, or cause or
permit the acceleration of the maturity of, or give rise to any right
of termination, cancellation, imposition of fees or penalties under,
any debt, note, bond, lease, mortgage, indenture, license,
obligation, contract, commitment, franchise, permit, instrument or
other agreement or obligation to which Company or any Shareholder is
a party or by which Company or any Shareholder or any of their
properties or assets is or may be bound, which conflict, default or
other event could have a material adverse effect on the business of
Company or the Assets or on the ability of Company or any Shareholder
to consummate the transactions contemplated by this Agreement, or
result in the creation or imposition of any mortgage, pledge, lien,
security interest,
7
encumbrance, restriction, adverse claim or charge of any kind
(collectively, a "LIEN"), upon any of the Assets; or
(iii) violate any statute, treaty, law, judgment, writ,
injunction, decision, decree, order, regulation, ordinance or other
similar authoritative matters (sometimes hereinafter separately
referred to as a "LAW" and sometimes collectively as "LAWS") of any
foreign, federal, state or local governmental or quasi-governmental,
administrative, regulatory or judicial court, department, commission,
agency, board, bureau, instrumentality or other authority
(hereinafter sometimes separately referred to as an "AUTHORITY" and
sometimes collectively as "AUTHORITIES") which violation could have a
material adverse effect on the business of Company or the Assets or
on the ability of Company or any Shareholder to consummate the
transactions contemplated by this Agreement.
(e) CONSENTS AND APPROVALS. Except as set forth in the Disclosure
Schedule, with respect to Company and the Shareholders, no consent,
approval, order or authorization of or from, or registration,
notification, declaration or filing with (hereinafter sometimes separately
referred to as a "CONSENT" and sometimes collectively as "CONSENTS"), any
individual or entity, including without limitation any Authority, is
required in connection with the execution, delivery or performance of this
Agreement by Company or any Shareholder or the consummation by Company or
any Shareholder of the transactions contemplated herein.
(f) FINANCIAL STATEMENTS. The Disclosure Schedule contains (i) the
audited balance sheets, statements of income, statements of stockholders'
equity and statements of cash flows of Company as of and for each of the
fiscal years ended December 31, 1993 and 1994, together with the audit
report thereon of Xxxxxxx & Company, L.L.P., certified public accountants
(the "AUDITED FINANCIAL STATEMENTS"), and (ii) the unaudited balance
sheet, statement of income, statement of stockholders' equity and
statement of cash flows of Company as of and for the eight-month period
ended August 31, 1995 (the "UNAUDITED FINANCIAL STATEMENTS") (the latest
balance sheet included in the Unaudited Financial Statements is referred
to herein as the "LATEST BALANCE SHEET"). Between the date hereof and the
Closing Date, Company and the Shareholders will furnish to Purchaser as
soon as available and in any event within thirty (30) days after each
month-end, the balance sheet and statement of income of Company for each
of the fiscal months ended after August 31, 1995 prepared based on the use
of "first-in, first-out" method for valuation of inventory (the "INTERIM
FINANCIAL STATEMENTS"). Except as set forth in the Disclosure Schedule,
the Audited Financial Statements, the Unaudited Financial Statements and
the Interim Financial Statements (i) are or, in the case of the Interim
Financial Statements, will be prepared in conformity with the books and
records of Company; (ii) fairly present or, in the case of the Interim
Financial Statements, will fairly present, the financial position of
Company as of the respective dates thereof and the results of operations
of Company for the
8
periods then ended; and (iii) have been or, in the case of the Interim
Financial Statements, will be, prepared in conformity with generally
accepted accounting principles consistently applied for all periods,
subject in the case of the Unaudited Financial Statements and the Interim
Financial Statements to (A) year-end adjustments, which adjustments are
not expected to be material, and (B) information otherwise required for
presentation in accordance with generally accepted accounting principles
(such as footnotes).
(g) LOSS CONTINGENCIES; OTHER NON-ACCRUED LIABILITIES. Except as
set forth in the Disclosure Schedule, Company does not have:
(i) any Loss Contingencies which are not required by generally
accepted accounting principles to be accrued;
(ii) any Loss Contingencies involving an unasserted claim or
assessment which are not required by generally accepted accounting
principles to be disclosed because the potential claimants have not
manifested to Company an awareness of a possible claim or assessment;
or
(iii) any categories of liabilities or obligations which are
not required by generally accepted accounting principles to be
accrued.
For purposes of this Agreement, "LOSS CONTINGENCY" shall have the meaning
accorded to it by generally accepted accounting principles.
(h) ABSENCE OF CERTAIN CHANGES. Except as set forth in the
Disclosure Schedule, since December 31, 1994, Company has owned and
operated its business and the Assets in the ordinary course of business
and consistent with past practices. Without limiting the generality of
the foregoing, Company has not, subject to the aforesaid exceptions:
(i) suffered any adverse change in its condition (financial or
otherwise), working capital, assets, properties, liabilities,
obligations, reserves, businesses, prospects, goodwill or going
concern value or experienced any event or failed to take any action
which reasonably could be expected to result in such an adverse
change;
(ii) suffered any loss, damage, destruction or other casualty
(whether or not covered by insurance), or suffered any loss of
officers, employees, dealers, distributors, independent contractors,
customers, or suppliers or other favorable business relationships, or
suffered any adverse change with respect thereto, which has had or
could have a material adverse effect on its business or the Assets;
(iii) mortgaged, pledged, or subjected to any Lien, any of
the Assets; or
9
(iv) entered into any commitment for capital expenditures for
additions to plant, property or equipment;
(v) declared, set aside, made or paid any dividend or other
distribution in respect of its capital stock, or purchased or
redeemed any shares of its capital stock;
(vi) issued or sold any shares of its capital stock, or any
options, warrants, conversion, exchange or other rights to purchase
or acquire any such shares or any securities convertible into or
exchangeable for such shares;
(vii) incurred any indebtedness for borrowed money;
(viii) acquired or disposed of any assets or properties;
(ix) forgiven or cancelled any debts or claims, or waived any
rights;
(x) entered into any material transaction;
(xi) granted to any officer or salaried employee or any other
employee any increase in compensation in any form or paid any
severance or termination pay; or
(xii) agreed, whether in writing or otherwise, to take any
action described in this subsection 2(h).
(i) REAL PROPERTIES. Except as set forth in the Disclosure
Schedule, Company has good and marketable fee simple record title in and
to, or a leasehold interest in and to, all of its real property assets and
fixtures reflected in the Latest Balance Sheet or acquired since the date
of the Latest Balance Sheet or otherwise used or useful in connection with
the business of Company (except for real property assets and fixtures sold
in the ordinary course of business since the date of the Latest Balance
Sheet). Except as set forth in the Disclosure Schedule, such leasehold
interests are valid and in full force and effect and enforceable in
accordance with their terms, and there does not exist any violation,
breach or default thereof or thereunder. Except as set forth in the
Disclosure Schedule, none of the real property assets or fixtures owned by
Company is subject to any mortgage, pledge, lien, security interest,
encumbrance, claim, easement, right-of-way, tenancy, covenant,
encroachment, restriction or charge of any kind or nature (whether or not
of record), except the following (herein called "PERMITTED LIENS"):
(i) liens securing specified liabilities or obligations shown on the
Latest Balance Sheet with respect to which no breach, violation or default
exists; (ii) mechanics', carriers', workers' and other similar liens
arising in the ordinary course of business; (iii) minor imperfections of
title which do not impair the fair market value or the existing use of
such real property assets or fixtures; and (iv) liens for current taxes
not yet due and payable or being contested in good faith by appropriate
proceedings. Except as set forth in the Disclosure Schedule, all
10
real properties owned by and leased to Company used in the conduct of its
business are free from structural defects, in good operating condition and
repair, with no material maintenance, repair or replacement having been
deferred or neglected, suitable for the intended use and free from other
material defects. Except as set forth in the Disclosure Schedule, each
such real property and its present use conform in all respects to all
occupational, safety or health, zoning, planning, subdivision, platting
and similar Laws, and there is, to the best knowledge of Company and the
Shareholders (which for all purposes of this Agreement shall be deemed to
include all facts within the actual knowledge of Company and the
Shareholders and such facts as would have come to the attention of the
Shareholders based on the conduct by them of the management of the
business and affairs of Company is a reasonable, prudent and businesslike
manner), no such Law contemplated that would affect adversely the right of
Company to own or lease and operate and use such real properties. Except
as set forth in the Disclosure Schedule, all public utilities necessary
for the use and operation of any facilities on the aforesaid real
properties are available for use or access at such properties and there is
no legal or physical impairment to free ingress or egress from any of such
facilities or real properties. Company is not a foreign person and is
not controlled by a foreign person, as that term is defined in Section
1445(f)(3) of the Code.
(j) MACHINERY, EQUIPMENT, VEHICLES AND PERSONAL PROPERTY. Except as
set forth in the Disclosure Schedule, Company has all right, title and
interest in and to, or a leasehold interest in and to, all of the
Equipment reflected in the Latest Balance Sheet or acquired since the date
of the Latest Balance Sheet or otherwise used or useful in connection with
the business of Company (except for such items sold or otherwise disposed
of in the ordinary course of business since the date of the Latest Balance
Sheet). Except as set forth in the Disclosure Schedule, each leasehold
interest in personal property reflected on Exhibit 1(a)(viii) hereto, is
valid and in full force and effect and enforceable in accordance with its
terms, and there does not exist any violation, breach or default thereof
or thereunder. Except as set forth in the Disclosure Schedule, none of
the Equipment is subject to any Lien of any kind or nature (whether or not
of record) except Permitted Liens. Except as set forth in the Disclosure
Schedule, the machinery, equipment, vehicles and other personal property
of Company which are necessary to the conduct of the business of Company
are in good operating condition and repair and adequate for the intended
purposes thereof and no material maintenance, replacement or repair has
been deferred or neglected.
(k) RECEIVABLES AND PAYABLES.
(i) Except as set forth on the Disclosure Schedule, (A) Company
has good right, title and interest in and to all of the Receivables;
(B) none of the Receivables is subject to any Lien, except Permitted
Liens; (C) all of the Receivables constitute valid and enforceable
claims arising from bona fide
11
transactions in the ordinary course of business, and there are no
claims, refusals to pay or other rights of set-off against any
thereof; (D) no account or note debtor whose account or note balance
exceeds $1,000 is delinquent in payment by more than ninety (90)
days; (E) the aging schedules of the Receivables previously furnished
by Company to Purchaser are complete and accurate; and (F) there is
no reason why any Receivable will not be collected in accordance with
its terms.
(ii) All accounts payable and notes payable by Company arose in
bona fide transactions in the ordinary course of business and no such
account payable or note payable is delinquent by more than ninety
(90) days in its payment.
(l) INVENTORIES. Except as set forth in the Disclosure Schedule,
all inventories of Company, whether reflected in the Latest Balance Sheet
or otherwise, were purchased in the ordinary course of business, consist
of a quality and quantities usable and salable in the ordinary course of
business, and the present quantities are reasonable in the present
circumstances of the business of Company as currently conducted and as
proposed to be conducted.
(m) INTELLECTUAL PROPERTY RIGHTS. Except as set forth on the
Disclosure Schedule, the rights owned by Company to use the names listed
on Exhibit 1(a)(i) constitute all of the intellectual property rights
necessary or required for the conduct of the business of Company as
presently conducted and as proposed to be conducted, and, to the best
knowledge of Company and the Shareholders, such rights do not and will not
infringe or violate or allegedly infringe or violate the intellectual
property rights of any person or entity.
(n) LITIGATION. Except as set forth in the Disclosure Schedule,
there is no legal, administrative, arbitration, or other proceeding, suit,
claim or action of any nature or investigation, review or audit of any
kind (including without limitation a proceeding, suit, claim or action, or
an investigation, review or audit, involving any environmental Law or
matter), judgment, decree, decision, injunction, writ or order pending,
noticed, scheduled or, to the best knowledge of Company or the
Shareholders, threatened or contemplated by or against or involving
Company, Company's Assets or its officers, agents or employees (but only
in their capacity as such), whether at law or in equity, before or by any
person or entity or Authority, or which questions or challenges the
validity of this Agreement or any action taken or to be taken by the
parties hereto pursuant to this Agreement or in connection with the
transactions contemplated herein.
(o) TAXES. Except as set forth in the Disclosure Schedule, Company
and the Shareholders have duly and timely filed all tax and information
reports, returns and related documents required to be filed by them with
any foreign or domestic governmental or taxing authority, including
without limitation all returns and reports of
12
income, franchise, gross receipts, sales, use, ad valorem, occupation,
employment, withholding, excise, transfer, real and personal property and
other taxes, charges and levies (collectively, the "TAX RETURNS") and,
except as set forth in the Disclosure Schedule, have duly paid, or made
adequate provision for the due and timely payment of all such taxes and
other charges, including without limitation interest, penalties,
assessments and deficiencies, due or claimed to be due from them by any
such governmental or taxing authorities; the reserves for all of such
taxes and other charges reflected in the Latest Balance Sheet are adequate
to meet the tax obligations of Company with respect to all periods ended
on or prior to the date of the Latest Balance Sheet; and there are no
liens for such taxes or other charges upon any property or assets of
Company. There is no omission, deficiency, error, misstatement or
misrepresentation, whether innocent, intentional or fraudulent, in any Tax
Return filed by Company, or in any Tax Return filed by any of the
Shareholders with respect to the income, business, assets, operations,
activities, status or other matters related to Company, for any period.
Except as set forth in the Disclosure Schedule, the Tax Returns of Company
have not been examined or audited by the Internal Revenue Service or any
other taxing authority for any period. Except as set forth in the
Disclosure Schedule, all deficiencies asserted as a result of any such
examination have been paid or finally settled and no issue has been raised
by the Internal Revenue Service or any other taxing authority in any such
examination or audit which, by application of similar principles,
reasonably could be expected to result in a proposed deficiency for any
other period not so examined. Except as set forth in the Disclosure
Schedule, there are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Return for any
period. Company has had in effect a valid election under Code Section
1362 to be treated as an "S corporation" for each of its taxable years
ended after the date set forth in the Disclosure Schedule, neither Company
nor any of its shareholders have taken any action to revoke that election,
neither Company nor any of its shareholders are aware of any basis or the
existence of any facts that would permit the Internal Revenue Service to
revoke that election for any period prior to the Closing Date, and, except
as described on the Disclosure Schedule, since the effective date of its
election as an S corporation to and including the Closing Date, Company
will not have incurred or become liable for the payment of any corporate-
level income tax, or any related penalties or interest. As of the Closing
Date, Company shall have paid over to the taxing authorities of each
jurisdiction to which it is subject all taxes that are due and payable for
periods ended as of or prior to the Closing Date and for which Purchaser
could have transferee liability or in respect of which the Assets could be
subjected to a lien therefor, including but not limited to sales taxes.
(p) INSURANCE. The Disclosure Schedule contains an accurate and
complete list of all policies of insurance, excluding life insurance
policies on the lives of the Shareholders, owned or held by Company and
covering the Assets or operations of Company,
13
specifying the types and amount of coverage. Except as set forth on the
Disclosure Schedule, all such policies are in full force and effect, all
premiums with respect thereto have been paid, and no notice has been
received of cancellation of, or intent to cancel or not renew any such
policies.
(q) BENEFIT PLANS. Except as set forth in the Disclosure Schedule:
(i) Company does not sponsor, maintain or contribute to, and
has never sponsored, maintained, contributed to or been required to
contribute to any "employee pension benefit plan" ("PENSION PLAN") as
such term is defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), including without
limitation, solely for purposes of this subsection, a plan excluded
from coverage by Section 4(b)(5) of ERISA and, including without
limitation any such Pension Plan which is a "MULTIEMPLOYER PLAN"
within the meaning of Section 4001(a)(3) of ERISA. Each such Pension
Plan is in compliance with the applicable provisions of ERISA for
which deadlines for compliance have passed, the applicable provisions
of the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder (the "CODE") for which deadlines of compliance
have passed and all other applicable Law. No Pension Plan is subject
to Title IV of ERISA or to Section 412 of the Code.
(ii) Company has never ceased operations at any facility or
withdrawn from any Pension Plan or otherwise acted or omitted to act
in a manner which could subject it to liability under Section 4062,
Section 4063, Section 4064 or Section 4069 of ERISA and there are no
facts or circumstances which might give rise to any liability of
Company to the Pension Benefit Guaranty Corporation ("PBGC") under
Title IV of ERISA or which could reasonably be anticipated to result
in any claims being made against Purchaser or Company to the PBGC.
Company has not incurred any withdrawal liability (including without
limitation any contingent or secondary withdrawal liability) within
the meaning of Section 4201 and Section 4204 of ERISA to any
Multiemployer Plan. Company has not, with respect to any Pension
Plan which is a Multiemployer Plan, suffered or otherwise caused a
"complete withdrawal" or a "partial withdrawal," as such terms are
defined respectively in Sections 4201, 4203, 4204 and 4205 of ERISA.
Company had no liability to any such Multiemployer Plan in the event
of a complete or partial withdrawal therefrom as of the close of the
most recent fiscal year of any such Multiemployer Plan ended prior to
the date hereof.
(iii) Company does not sponsor, maintain, contribute to, and
has never sponsored, maintained, contributed to, or been required to
contribute to any "employee welfare benefit plan" ("WELFARE PLAN"),
as such term is defined in Section 3(1) of ERISA (including without
limitation a plan excluded from
14
coverage by Section 4(b)(5) of ERISA), whether insured or otherwise,
and any such Welfare Plan maintained by Company is in compliance with
the provisions of ERISA and all other applicable Laws, including
without limitation Code Section 162(k) and 162(i) and the related
provisions of ERISA and Code Section 4980B. Company has not
established or contributed to any "voluntary employees' beneficiary
association" within the meaning of Section 501(c)(9) of the Code.
(iv) Company does not maintain or contribute to any bonus plan,
incentive plan, stock plan or any other current or deferred
compensation agreement, arrangement or policy, or any individual
employment agreement ("COMPENSATION PLANS").
(v) To the best knowledge of Company and the Shareholders,
neither any of Pension Plans or Welfare Plans or Compensation Plans
nor any trust created or insurance contract issued thereunder nor any
trustee or administrator thereof nor any officer, director or
employee of Company, custodian or any other "disqualified person"
within the meaning of Section 4975(e)(2) of the Code, or "party in
interest" within the meaning of Section 3(14) of ERISA, with respect
to any such Pension Plans or Welfare Plans or Compensation Plans or
any such trust or insurance contract or any trustee, custodian or
administrator thereof, or any disqualified person, party in interest
or person or entity dealing with such Pension Plans or Compensation
Plans or any such trust, insurance contract or any trustee is subject
to a tax or penalty on prohibited transactions imposed by
Section 4975 of the Code or to a civil penalty imposed by Section 502
of ERISA. To the best knowledge of Company and the Shareholders,
there are no facts or circumstances which could subject Company to
any excise tax under Section 4972 or Sections 4976 through 4980, both
inclusive, of the Code.
(vi) Full payment has been made of all amounts which Company is
required, under applicable Law, with respect to any Pension Plan or
Welfare Plan or Compensation Plan, or any agreement relating to any
Pension Plan or Welfare Plan or Compensation Plan, to have paid as a
contribution thereto. No accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, exists with respect to any Pension Plan. Company does not
sponsor, maintain or contribute to, and has never sponsored,
maintained or contributed to or been required to contribute to, any
Pension Plan subject to Part 3 of Title I of ERISA or Section 412(n)
of the Code. Company has made adequate provisions for reserves to
meet contributions which have not been made because they are not yet
due under the terms of any Pension Plan or Welfare Plan or
Compensation Plan or related agreements. All Pension Plans which
Company operates as plans that are qualified under the provisions of
Section 401(a) of the Code satisfy the requirements of Section 401(a)
and all other sections of the Code incorporated therein, including
15
without limitation Sections 401(m) and 401(1) of the Code; and the
Internal Revenue Service has issued favorable determination letters
with respect to the current statement of all Pension Plans and, to
the best knowledge of Company and the Shareholders, nothing has
occurred since the issuance of any such letters that could adversely
affect such favorable determination. There will be no change on or
before Closing in the operation of any Pension Plan, Welfare Plan or
Compensation Plan or any documents with respect thereto which will
result in an increase in the benefit liabilities under such plans,
except as may be required by Law.
(vii) Company has complied with all reporting and disclosure
obligations with respect to the Pension Plans, Welfare Plans and
Compensation Plans imposed by Title I of ERISA or other applicable
Law.
(viii) There are no pending or, to the best knowledge of
Company and the Shareholders, threatened claims, suits or other
proceedings against Company or any other party by present or former
employees of Company, plan participants, beneficiaries or spouses of
any of the above, including without limitation claims against the
assets of any trust, involving any Pension Plan, Welfare Plan, or
Compensation Plan, or any rights or benefits thereunder, other than
the ordinary and usual claims for benefits by participants or
beneficiaries.
(ix) The transactions contemplated herein do not result in the
acceleration of accrual, vesting, funding or payment of any
contribution or benefit under any Pension Plan, Welfare Plan or
Compensation Plan.
(x) To the best knowledge of Company and the Shareholders, no
action or omission of Company or any director, officer, employee, or
agent thereof in any way restricts, impairs or prohibits Purchaser or
Company or any successor from amending, merging, or terminating any
Pension Plan, Welfare Plan or Compensation Plan in accordance with
the express terms of any such plan and applicable Law.
(xi) The sale of assets contemplated by this Agreement is a
disposition by Company of at least eighty-five percent (85%) of all
of the assets used by Company in a trade or business within the
meaning of Treasury Regulations under Code Section 401(k)(10)(A)(ii).
(r) BANK ACCOUNTS; POWERS OF ATTORNEY. The Disclosure Schedule sets
forth: (i) the names of all financial institutions, investment banking
and brokerage houses, and other similar institutions at which Company
maintains accounts, deposits, safe deposit boxes of any nature, and the
names of all persons authorized to draw thereon or make withdrawals
therefrom; (ii) the terms and conditions thereof and any limitations or
restrictions as to use,
16
withdrawal or otherwise; and (iii) the names of all persons or entities
holding general or special powers of attorney from Company and a summary
of the terms thereof.
(s) CONTRACTS AND COMMITMENTS; NO DEFAULT.
(i) Except as set forth in the Disclosure Schedule, Company:
(A) has no written or oral contract, commitment, agreement
or arrangement with any person which (1) requires payments
individually in excess of $10,000 annually or in excess of
$50,000 over its term (including without limitation periods
covered by any option to extend or renew by either party) and
(2) is not terminable on thirty (30) days' or less notice
without cost or other liability;
(B) does not pay any person or entity cash remuneration at
the annual rate (including without limitation guaranteed
bonuses) of more than $50,000 for services rendered;
(C) is not restricted by agreement from carrying on its
businesses or any part thereof anywhere in the world or from
competing in any line of business with any person or entity;
(D) is not subject to any obligation or requirement to
provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any person or entity;
(E) is not party to any agreement, contract, commitment or
loan to which any of its directors, officers or shareholders or
any "affiliate" or "associate" (as defined in Rule 405 as
promulgated under the Securities Act of 1933) (or former
affiliate or associate) thereof is a party;
(F) to the best knowledge of Company and the Shareholders,
is not subject to any outstanding sales or purchase contracts,
commitments or proposals which will result in any loss upon
completion or performance thereof;
(G) is not party to any purchase or sale contract or
agreement that calls for aggregate purchases or sales in excess
over the course of such contract or agreement of $25,000 or
which continues for a period of more than twelve (12) months
(including without limitation periods covered by any option to
renew or extend by either party) which is not terminable on
sixty
17
(60) days' or less notice without cost or other liability at or
any time after the Closing;
(H) is not subject to any contract, commitment, agreement
or arrangement with any "disqualified individual" (as defined in
Section 280G(c) of the Code) which contains any severance or
termination pay liabilities which would result in a disallowance
of the deduction for any "excess parachute payment" (as defined
in Section 280G(b)(1) of the Code) under Section 280G of the
Code; and
(I) has no distributorship, dealer, manufacturer's
representative, franchise or similar sales contract relating to
the payment of a commission.
(ii) True and complete copies (or summaries, in the case of
oral items) of all items disclosed pursuant to subsection 2(s)(i)
have been made available to Purchaser for review. Except as set
forth in the Disclosure Schedule, all such items, and all of the
Contracts, as defined in subsection 1(a)(viii), are valid and
enforceable by and against Company in accordance with their
respective terms; Company is not in breach, violation or default,
however defined, in the performance of any of its obligations
thereunder, and no facts or circumstances exist which, whether with
the giving of due notice, lapse of time, or both, would constitute
such a breach, violation or default thereunder or thereof; and, to
the best knowledge of Company and the Shareholders, no other parties
thereto are in a breach, violation or default, however defined,
thereunder or thereof, and no facts or circumstances exist which,
whether with the giving of due notice, lapse of time, or both, would
constitute such a breach, violation or default thereunder or thereof.
(t) ORDERS, COMMITMENTS AND RETURNS. Except as set forth in the
Disclosure Schedule, all accepted and unfulfilled orders for the sale of
products and the performance of services entered into by Company and all
outstanding contracts or commitments for the purchase of supplies,
materials and services were made in bona fide transactions in the ordinary
course of business. Except as set forth in the Disclosure Schedule, there
are no pending or, to the best knowledge of Company and the Shareholders,
threatened claims against Company to return products by reason of alleged
overshipments, defective products or otherwise, or products in the hands
of customers, retailers or distributors under an understanding that such
products would be returnable.
(u) LABOR MATTERS. Except as set forth in the Disclosure Schedule:
(i) Company is and has been in compliance in all material
respects with all applicable Laws respecting employment and
employment practices, terms and conditions of
18
employment and wages and hours, including without limitation any such
Laws respecting employment discrimination and occupational safety and
health requirements, and has not and is not engaged in any unfair
labor practice;
(ii) there is no unfair labor practice complaint against Company
pending or, to the best knowledge of Company and the Shareholders,
threatened before the National Labor Relations Board or any other
comparable Authority;
(iii) there is no labor strike, dispute, slowdown or
stoppage actually pending or, to the best knowledge of Company and
the Shareholders, threatened against or directly affecting Company;
(iv) no labor representation question exists and there is not
pending or, to the best knowledge of Company and the Shareholders,
threatened any activity intended or likely to result in a labor
representation vote;
(v) no grievance or any arbitration proceeding arising out of
or under collective bargaining agreements is pending and, to the best
knowledge of Company and the Shareholders, no claims therefor exist
or have been threatened;
(vi) no collective bargaining agreement is binding and in force
against Company or currently being negotiated by Company;
(vii) Company has not experienced any significant work
stoppage or other significant labor difficulty within the past five
years;
(viii) Company is not delinquent in payments to any persons
for any wages, salaries, commissions, bonuses or other direct or
indirect compensation for any services performed by them or amounts
required to be reimbursed to such persons, including without
limitation any amounts due under any Pension Plan, Welfare Plan or
Compensation Plan;
(ix) upon the termination of the employment of any person,
neither Company nor Purchaser will, by reason of anything done at or
prior to or as of the Closing Date, be liable to any of such persons
for so-called "severance pay" or any other payments; and
(x) within the 12-month period prior to the date hereof, to the
best knowledge of Company and the Shareholders, there has not been
any expression of intention to Company by any officer or key employee
of Company to terminate such employment.
(v) PERMITS AND OTHER OPERATING RIGHTS. Except as set forth in the
Disclosure Schedule, Company does not require the Consent of
19
any Authority to permit it to operate its business in the manner in which
it presently is being operated, and Company possesses all permits and
other authorizations from all Authorities presently required to permit it
to operate its business in the manner in which it presently is conducted.
(w) COMPLIANCE WITH LAW. Except as set forth in the Disclosure
Schedule, to the best knowledge of Company and the Shareholders, and
without limiting the scope of any other representations or warranties
contained in this Agreement, but without intending to duplicate the scope
of such other representations and warranties, Company is in compliance
with all Laws applicable to the ownership of the Assets and the conduct of
its business, including without limitation all franchising and similar
licensing Laws, all applicable rules of the Civil Rights Act of 1964, as
amended, Executive Order No. 11246, the Occupational Safety and Health Act
of 1970, as amended, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the Foreign Corrupt Practices Act, as amended, the boycott and
export control regulations promulgated by the U.S. Department of Commerce,
the boycott regulations promulgated by the Internal Revenue Service, the
Equal Employment Opportunity Act of 1974, as amended, the Clean Air Act as
amended, the Clean Water Act, as amended, the Resource Conservation and
Recovery Act, as amended, the Toxic Substances Control Act, as amended,
the Comprehensive Environmental Response, Liability and Compensation Act
of 1980, as amended, and the related employee and public right-to-know
provisions, and the Americans with Disabilities Act. Except as set forth
in the Disclosure Schedule, there are no outstanding and unsatisfied
deficiency reports, plans of correction, notices of noncompliance or work
orders relating to any Authorities, and no such discussions with any such
Authorities are scheduled or pending.
(x) ASSETS OF BUSINESS. The assets owned or leased by Company
constitute all of the assets held for use or used primarily in connection
with its business and are adequate to carry on such business as presently
conducted and as contemplated by Company to be conducted.
(y) BUSINESS GENERALLY. Except as set forth in the Disclosure
Schedule, since December 31, 1994, there has been no event, transaction or
information which has come to the attention of Company or any of the
Shareholders which, as it relates directly to the business of Company or
the Assets, could, individually or in the aggregate, reasonably be
expected to have a material adverse effect on such business or the Assets.
(z) HAZARDOUS SUBSTANCES AND HAZARDOUS WASTES. Except as set forth
in the Disclosure Schedule:
(i) There is not now, nor has there ever been, any disposal,
release or threatened release of Hazardous Materials (as defined
below) on, from or under properties now or ever owned or leased by or
to Company or by or to any former subsi-
20
diary (the "PROPERTIES"). There has not been generated by or on behalf of
Company or any former subsidiary (while owned by Company) any Hazardous
Material. No Hazardous Material has been disposed of or allowed to be
disposed of on or off any of the Properties which may give rise to a
clean-up responsibility, personal injury liability or property damage
claim against Company or, or Company being named a potentially responsible
party for any such clean-up costs, personal injuries or property damage or
create any cause of action by any third party against Company. For
purposes of this subsection, the terms "disposal," "release," and
"threatened release" shall have the definitions assigned thereto by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, and the term "Hazardous Material" means any hazardous or
toxic substance, material or waste or pollutants, contaminants or asbestos
containing material which is or becomes regulated by any Authority in any
jurisdiction in which any of the Properties is located. The term
"HAZARDOUS MATERIAL" includes without limitation any material or substance
which is (i) defined as a "hazardous waste" or a "hazardous substance"
under applicable Law, (ii) designated as a "hazardous substance" pursuant
to Section 311 of the Federal Water Pollution Control Act, (iii) defined
as a "hazardous waste" pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, or (iv) defined as a "hazardous substance"
pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
(ii) None of Properties is (or, with respect to past Properties
and Properties of former subsidiaries, was at the time of
disposition) in violation of any Law (with respect to past Properties
and Properties of former subsidiaries, Laws in effect at the time of
disposition) relating to industrial hygiene or to the environmental
conditions on, under or about such Properties, including without
limitation soil and ground water condition and there are (or at the
time of disposition were) no underground tanks or related piping,
conduits or related structures. During the period that Company and
its former subsidiaries owned or leased the Properties, neither
Company nor its former subsidiaries nor any third party used,
generated, manufactured or stored on, under or about such Properties
or transported to or from such Properties any Hazardous Materials and
there has been no litigation brought or threatened against Company or
any settlements reached by Company with any third party or third
parties alleging the presence, disposal, release or threatened
release of any Hazardous Materials on, from or under any of such
Properties.
(aa) BROKERS. Except as set forth in the Disclosure Schedule,
neither Company nor any of the Shareholders nor any of Company's
directors, officers or employees has employed any broker, finder or
financial advisor or incurred any liability for any brokerage fee or
commission, finder's fee or financial advisory fee, in
21
connection with the transactions contemplated hereby, nor is there any
basis known to Company or any of the Shareholders for any such fee or
commission to be claimed by any person or entity.
(ab) ACCURACY OF INFORMATION. No representation or warranty by
Company or any of the Shareholders in this Agreement contains or will
contain any untrue statement of material fact or omits or will omit to
state any material fact necessary in order to make the statements herein,
in light of the circumstances under which they were made, not misleading
as of the date of the representation or warranty.
SECTION 3
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to Company and the Shareholders as
of the date hereof as follows:
(a) CORPORATE ORGANIZATION. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware.
(b) AUTHORIZATION. Purchaser has full corporate power and authority
to enter into this Agreement and to carry out the transactions
contemplated herein. The Board of Directors of Purchaser has taken all
action required by law, its certificate of incorporation and bylaws or
otherwise to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein.
This Agreement has been duly authorized, executed and delivered by
Purchaser and no other corporate action is necessary for the consummation
by Purchaser of the transactions contemplated herein. Assuming the due
authorization, execution and delivery hereof by Company and the
Shareholders, this Agreement is the valid and binding legal obligation of
Purchaser enforceable against it in accordance with its terms.
(c) NON-CONTRAVENTION. Neither the execution, delivery and
performance of this Agreement nor the consummation of the transactions
contemplated herein will:
(i) violate or be in conflict with any provision of the
certificate of incorporation or bylaws of Purchaser; or
(ii) be in conflict with, or constitute a default, however
defined (or an event which, with the giving of due notice or lapse of
time, or both, would constitute such a default), under, or cause or
permit the acceleration of the maturity of, or give rise to any right
of termination, cancellation, imposition of fees or penalties under,
any debt, note, bond, lease, mortgage, indenture, license,
obligation, contract, commitment, franchise, permit, instrument or
other agreement or obligation to which Purchaser is a party, which
22
conflict or default would have a material adverse affect on the
ability of Purchaser to consummate the transactions contemplated by
this Agreement; or
(iii) violate any Law of any Authority, which violation
would have a material adverse affect on the ability of Purchaser to
consummate the transactions contemplated by this Agreement.
(d) ABILITY TO PAY PURCHASE PRICE. Purchaser currently has the cash
or credit resources necessary to enable Purchaser to pay the Purchase
Price called for in this Agreement.
SECTION 4
4. COVENANTS.
(a) COMPANY'S AND THE SHAREHOLDERS' AGREEMENTS AS TO SPECIFIED
MATTERS. Except as specifically set forth on the Disclosure Schedule, or
except in the ordinary course of business and consistent with past
practice, or except as may be otherwise agreed in writing by Purchaser,
from the date hereof until the Closing, Company shall not:
(i) Amend its articles or certificate of incorporation or bylaws;
(ii) Borrow or agree to borrow any funds;
(iii) Incur, assume, suffer or become subject to, whether
directly or by way of guarantee or otherwise, any claims,
obligations, liabilities or loss contingencies which, individually or
in the aggregate, are material to the conduct of the business of
Company or the Assets, or have or would have a material adverse
effect on the financial condition of Company or the Assets;
(iv) Pay, discharge or satisfy any claims, liabilities or
obligations;
(v) Permit or allow any of the Assets to be subjected to any
Lien, except Permitted Liens;
(vi) Write down the value of any inventory or write off as
uncollectible any notes or accounts receivable or any trade accounts
or trade notes;
(vii) Cancel or amend any debts, waive any claims or rights
or sell, transfer or otherwise dispose of any properties or assets,
other than for such debts, claims, rights, properties or assets
which, individually or in the aggregate, are not material to the
conduct of its business;
23
(viii) License, sell, transfer, pledge, modify, disclose,
dispose of or permit to lapse any right to the use of any
intellectual property rights other than such intellectual property
rights which, individually or in the aggregate, are not material to
the conduct of its business;
(ix) (A) Terminate, enter into, adopt, institute or otherwise
become subject to or amend in any material respect any collective
bargaining agreement or employment or similar agreement or
arrangement with any of its directors, officers or employees; (B)
terminate, enter into, adopt, institute or otherwise become subject
to or amend in any material respect any Compensation Plan; (C)
contribute, set aside for contribution or authorize the contribution
of any amounts for any such Compensation Plan except as required (and
not discretionary) by the terms of such Compensation Plan; or (D)
grant or become obligated to grant any general increase in the
compensation of any directors, officers or employees (including
without limitation any such increase pursuant to any Compensation
Plan);
(x) Make or enter into any commitment for capital expenditures
for additions to property, plant or equipment, except for capital
expenditures disclosed on the Disclosure Schedule;
(xi) (A) Declare, pay or set aside for payment any dividend or
other distribution in respect of its capital stock or other
securities (including without limitation distributions in redemption
or liquidation), except that Company may distribute dividends to the
Shareholders in 1995 in an aggregate amount, including all
distributions made in 1995 prior to the date hereof, equal to the
amount of net income generated by Company in 1995 in accordance with
generally accepted accounting principles applied on a consistent
basis, except that net income will be determined based on the "first-
in, first-out" method of valuing the beginning and ending inventory,
PROVIDED, HOWEVER, that the distribution to the Shareholders shall
only include one-half (1/2) of any increase in net income that
results for the year ended December 31, 1995 from the use of the
"first-in, first-out" method of valuing inventory versus the "last-
in, first-out" method of valuing inventory as historically used by
Company, plus the January 15, 1995 tax distribution of $1,300,000,
which represents taxes on 1994 income, or redeem, purchase or
otherwise acquire any shares of its capital stock or other
securities; (B) issue, grant or sell any shares of its capital stock
or equity securities of any class, or any options, warrants,
conversion or other rights to purchase or acquire any such shares or
equity securities or any securities convertible into or exchangeable
for such shares or equity securities; (C) become a party to any
merger, exchange, reorganization, recapitalization, liquidation,
dissolution or other similar corporate transaction; or (D) organize
any new
24
subsidiary, acquire any capital stock or other equity securities or
other ownership interest in, or assets of, any person or entity or
otherwise make any investment by purchase of stock or securities,
contributions to capital, property transfer or purchase of any
properties or assets of any person or entity;
(xii) Pay, lend or advance any amounts to, or sell,
transfer or lease any properties or assets to, or enter into any
agreement or arrangement with, any director, officer, employee or
shareholder;
(xiii) Terminate, enter into or amend in any material respect
any item identified in subsection 2(s) of the Disclosure Schedule, or
take any action or omit to take any action which will cause a breach,
violation or default (however defined) under any such items; or
(xiv) Agree, whether in writing or otherwise, to take any
action described in this subsection.
(b) CONDUCT OF COMPANY BUSINESS. Company and the Shareholders shall
maintain the Assets and carry on its businesses and operations only in
ordinary course in substantially the same manner as planned and previously
operated; and Company and the Shareholders shall preserve intact Company's
business organization, existing business relationships (including without
limitation its relationships with officers, employees, dealers,
distributors, independent contractors, customers and suppliers), goodwill
and going concern value.
(c) NO SOLICITATION OF ALTERNATE TRANSACTION. Company and the
Shareholders shall not, and will use their best efforts to ensure that
their directors, officers and employees, independent contractors,
consultants, counsel, accountants, investment advisors and other
representatives and agents shall not, directly or indirectly, solicit,
initiate or encourage discussions or negotiations with, provide any
nonpublic information to, or enter into any agreement with, any third
party concerning (or concerning the business of Company in connection
with) any exchange offer, merger, consolidation, sale of substantial
assets or a significant amount of assets, sale of securities, acquisition
of beneficial ownership of or the right to acquire or vote securities of
Company, liquidation, dissolution or similar transactions involving
Company, PROVIDED, HOWEVER, that Purchaser agrees that if the Closing is
delayed beyond January 2, 1996 due to any failure by Purchaser to perform
or comply with any obligation of Purchaser in this Agreement, and all
conditions for the benefit of Purchaser set forth in Section 5 of this
Agreement have been satisfied or waived on or before January 2, 1996, then
the obligations of Company and the Shareholders under this subsection 4(c)
shall terminate as of the close of business on January 2, 1996.
25
(d) FULL ACCESS TO PURCHASER. Company and the Shareholders shall
afford to Purchaser and its directors, officers, employees, counsel,
accountants, investment advisors and other authorized representatives and
agents free and full access to the facilities, properties, books and
records of Company in order that Purchaser may have full opportunity to
make such investigations as it shall desire to make of the affairs of
Company; PROVIDED, HOWEVER, that any such investigation shall be conducted
at reasonable times, upon reasonable notice and in such a manner as not to
interfere unreasonably with business operations; and Company shall furnish
such additional financial and operating data and other information as
Purchaser shall, from time to time, reasonably request, including without
limitation access to the working papers of its independent certified
public accountants relating to the business of Company or the Assets, and,
PROVIDED, FURTHER, that any such investigation shall not affect or
otherwise diminish or obviate in any respect any of the representations
and warranties of Company and the Shareholders in this Agreement.
(e) CONFIDENTIALITY. Each of the parties hereto agrees that it will
not use, or permit the use of, any of the information relating to any
other party to this Agreement furnished to it in connection with the
transactions contemplated in this Agreement ("INFORMATION") in a manner or
for a purpose detrimental to such other party or otherwise than in
connection with the transaction, and that they will not disclose, divulge,
provide or make accessible (collectively, "DISCLOSE"), or permit the
Disclosure of, any of the Information to any person or entity, other than
their responsible directors, officers, employees, investment advisors,
accountants, counsel and other authorized representatives and agents,
except as may be required by judicial or administrative process or, in the
opinion of such party's regular counsel, by other requirements of Law;
PROVIDED, HOWEVER, that prior to any Disclosure of any Information
permitted hereunder, the disclosing party shall first obtain the
recipient's undertaking to comply with the provisions of this subsection
with respect to such Information. The term "INFORMATION" as used herein
shall not include any information relating to a party which the party
disclosing such information can show:
(i) to have been in its possession prior to its receipt from
another party hereto;
(ii) to be now or to later become generally available to the
public through no fault of the disclosing party;
(iii) to have been available to the public at the time of
its receipt by the disclosing party;
(iv) to have been received separately by the disclosing party in
an unrestricted manner from a person entitled to disclose such
information; or
26
(v) to have been developed independently by the disclosing
party without regard to any information received in connection with
this transaction.
Each party hereto also agrees to promptly return to the party from whom
originally received all original and duplicate copies of written materials
containing Information should the transactions contemplated herein not
occur.
(f) FILINGS; CONSENTS; REMOVAL OF OBJECTIONS. Subject to the terms
and conditions herein provided, the parties hereto shall use their best
efforts to take or cause to be taken all actions and do or cause to be
done all things necessary, proper or advisable under applicable Laws to
consummate and make effective, as soon as reasonably practicable, the
transactions contemplated hereby, including without limitation obtaining
all Consents of any person or entity, whether private or governmental,
required in connection with the consummation of the transactions
contemplated herein. In furtherance, and not in limitation of the
foregoing, it is the intent of the parties to consummate the transactions
contemplated herein at the earliest practicable time, and they
respectively agree to exert their best efforts to that end, including
without limitation: (i) the filing with the Federal Trade Commission
("FTC") and the Antitrust Division of the Department of Justice (the
"ANTITRUST DIVISION") all requisite documents and notifications in
connection with the transactions contemplated hereby pursuant to the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX XXX") as soon as
practicable following the date hereof (the filing fee for which shall be
borne initially by Purchaser, PROVIDED, HOWEVER, that if the transactions
contemplated by this Agreement are not consummated for any reason, then
upon the termination of this Agreement the Company and the Shareholders
jointly and severally agree to reimburse Purchaser for one-half of the
filing fee), and to respond as promptly as practicable to all inquiries
from the FTC or the Antitrust Division in connection therewith; (ii) the
removal or satisfaction, if possible, of any objections to the validity or
legality of the transactions contemplated herein; and (iii) the
satisfaction of the conditions to consummation of the transactions
contemplated hereby.
(g) FURTHER ASSURANCES; NOTIFICATION.
(i) Each party hereto shall, before, at and after Closing,
execute and deliver such further instruments and take such other
actions as the other party or parties, as the case may be, may
reasonably require in order to carry out the intent of this
Agreement.
(ii) At all times from the date hereof until the Closing, each
party shall promptly notify the other in writing of the occurrence of
any event which it reasonably believes will or may result in a
failure by such party to satisfy the conditions specified in Section
5 and Section 6 hereof.
27
(h) SUPPLEMENTS TO DISCLOSURE SCHEDULE. Prior to the Closing,
Company and the Shareholders will supplement or amend the Disclosure
Schedule with respect to any event or development which, if existing or
occurring at or prior to the date of this Agreement, would have been
required to be set forth or described in the Disclosure Schedule or which
is necessary to correct any information in the Disclosure Schedule or in
any representation or warranty of Company and the Shareholders which has
been rendered inaccurate by reason of such event or development. Prior to
Closing, Company and the Shareholders will furnish to Purchaser the
Interim Financial Statements for periods ending on or after the date of
this Agreement. For purposes of determining the accuracy as of the date
hereof of the representations and warranties of Company and the
Shareholders contained in Section 2 hereof in order to determine the
fulfillment of the conditions set forth in subsection 5(a), the initial
Disclosure Schedule shall be deemed to exclude any information contained
in any supplement or amendment hereto delivered after the delivery of the
Disclosure Schedule.
(i) PUBLIC ANNOUNCEMENTS. None of the parties hereto shall make any
public announcement with respect to the transactions contemplated herein
without the prior written consent of the other parties; PROVIDED, HOWEVER,
that any of the parties hereto may at any time make any announcements
which are required by applicable Law so long as the party so required to
make an announcement promptly upon learning of such requirement notifies
the other parties of such requirement and discusses with the other parties
in good faith the wording of any such announcement.
(j) TRANSACTIONAL TAX UNDERTAKINGS. The parties hereto shall
cooperate to make any necessary filings with federal, state and local
taxing authorities and to furnish any required supplemental information to
any foreign, federal, state and local governmental or taxing authorities
resulting from the consummation of the transactions contemplated herein.
(k) BULK TRANSFERS. Company has requested that Purchaser waive, and
Purchaser hereby agrees to waive, the requirements of the Uniform
Commercial Code concerning bulk transfers, as in effect in the various
states in which Company has assets, including without limitation the
requirement of notice to creditors. It is expressly agreed by the parties
hereto that the obligation to indemnify Purchaser under subsection 8(e)
includes any claims by creditors of Company against Purchaser arising,
directly or indirectly, in connection with such request and waiver.
(l) EMPLOYEE MATTERS.
(i) EMPLOYEES. Purchaser shall have no liability or obligation
to employ or offer employment to any employee of Company in
connection with the transactions contemplated hereby. Company hereby
authorizes Purchaser to enter into discussions with any of such
employees concerning the future employment of such individual by
Purchaser; provided, however,
28
that (A) such discussions shall not be commenced prior to the giving
of notice by Company to the employees of Company of the transactions
contemplated by this Agreement; and (B) all such discussions shall be
conducted in such a manner as not to interfere unreasonably with the
business operations of Company.
(ii) SEVERANCE. Except as expressly provided in this subsection
4(l)(ii), Company shall be responsible for making any required
payment of severance compensation to any employee of Company who is
not offered employment by Purchaser or who refuses to accept any such
offer of employment by Purchaser. Not less than ten (10) calendar
days prior to the Closing Date, Purchaser shall furnish Company with
a list of all employees of Company to which it intends to offer
employment. If, within six (6) months after the Closing Date,
Purchaser employs any employee previously employed by Company
("REHIRED EMPLOYEE"), subject to the eligibility requirements of
Purchaser's group health plan, Purchaser shall provide the Rehired
Employee with group health plan coverage sufficient to terminate
Company's obligations under Internal Revenue Code Section 4980B to
provide the Rehired Employee with group health plan continuation
coverage, effective as of the date the Rehired Employee commences
employment with Purchaser; provided that Purchaser shall not be
obligated to provide such coverage to any Rehired Employee who is, or
who has a dependent who is, hospitalized as of the Closing Date, as
to which Rehired Employee, the coverage to be provided by Purchaser
shall commence after any such hospitalization ends. All Rehired
Employees will receive credit for prior service with Company for
eligibility purposes with respect to Purchaser's group health plan.
(iii) RETENTION OF EMPLOYEES. Neither Company nor any of
the Shareholders shall, for a period of three (3) years after the
Closing Date, take any action, other than with the written consent of
Purchaser, to induce any employee who accepts an offer pursuant to
subsection (i) above, while still employed by Purchaser or any
subsidiary of Purchaser, to enter into the employ of Company or any
affiliate of Company or the Shareholders.
(iv) NO ASSUMPTION OF COLLECTIVE BARGAINING AGREEMENTS OR
EMPLOYEE BENEFIT PLANS. Purchaser shall not be obligated under, and
hereby specifically disclaims any assumption or liability with
respect to, any collective bargaining agreement or employee benefit
plan, policy, practice or agreement to which Company is a party or
under which any of Company's employees or former employees is
covered. Purchaser agrees that it will allow Company employees who
are hired by Purchaser or an affiliate in connection with the
transactions contemplated by this Agreement credit for prior service
with Company for vesting and eligibility purposes with respect to
Purchasers' Profit Sharing Plan and the ability to roll over
29
into Purchaser's Profit Sharing Plan any eligible rollover
distribution, within the meaning of Code Section 402(c)(4), from
Company's Profit Sharing Plan; PROVIDED, HOWEVER, that no such
employee will be eligible to share in the profit sharing contribution
pursuant to Purchaser's Profit Sharing Plan for the year ending on or
about December 31, 1995. All contributions under Company's Profit
Sharing Plan relating to the fiscal year ended December 31, 1995 will
be paid and expensed in the fiscal year ended December 31, 1995.
(m) ACCOUNTS RECEIVABLE. Following the Closing Date, Purchaser
shall use its reasonable best efforts to collect in full all Receivables
of Company sold to Purchaser as part of the Assets. All monies received
by Purchaser after the Closing from a party from whom a Receivable is due
at the Closing Date shall first be applied to the specific invoice
identified by the manufacturer on the payment voucher. If the payment
voucher does not indicate the invoice to which it applies, then Purchaser
shall call the manufacturer to identify the invoice. If the invoice
cannot be identified through any such call, then it shall be applied
against the oldest invoice then outstanding for such manufacturer. Any
Receivables of Company sold to Purchaser hereunder that are not collected
on or before the one hundred eightieth (180th) day after the date of
delivery of the goods that gave rise to the Receivable shall be purchased,
at Purchaser's election, by Company from Purchaser for the amount of such
Receivable. However, such Receivables shall be reduced by (i) any credit
balance taken into income by Purchaser in 1996, consistent with Company's
past accounting policy of taking into income credits over one year old,
relating to (A) all credit balances of Company's vendors outstanding as of
December 31, 1995 or (B) credit balances that have arisen for payments by
such vendors for invoices that are dated prior to January 1, 1996; and
(ii) credits to Purchaser's income in 1996 relating to adjustments to
Company's accounts payable assumed by Purchaser under this Agreement,
PROVIDED, HOWEVER, that all such foregoing credits shall be reduced by any
disallowed credits and bad debt offsets that Purchaser is subject to
relating to the Receivables acquired under this Agreement. In addition,
Company shall not be required to repurchase any Receivables pursuant to
this subsection 4(m) until the cumulative amount subject to such
repurchase obligation is at least $20,000. Not later than the fifteenth
(15th) day of each full calendar month following the Closing Date, through
and including the sixth full calendar month subsequent to the Closing
Date, Purchaser shall provide Company with a schedule of all of the
Receivables of Company sold to Purchaser as part of the Assets, showing
the outstanding balance of each such Receivable. If, after the Closing
Date, Purchaser shall be notified of any dispute as to the amount or
payment of any such Receivable, Purchaser shall furnish prompt notice
thereof to Company.
(n) POST-CLOSING ACCESS TO AND RETENTION OF BOOKS AND RECORDS OF
COMPANY. From and after the Closing Date, Company shall provide to the
authorized representatives of Purchaser, during normal
30
business hours and in accordance with mutually reasonably satisfactory
prior arrangements, reasonable access to all records, books of account,
files, documents and correspondence relating to the operations of Company
prior to the Closing Date, to the extent such access is reasonably
necessary by Purchaser with respect to litigation, taxation, accounting,
and other reasonable business matters, including the collection of
Receivables contemplated by subsection 4(m), which Company retains in its
possession after the Closing Date. From and after the Closing Date
Company agrees to maintain all of such books and records relating to the
operations of Company prior to the Closing Date in such manner and for
such minimum periods of time as are specified by Purchaser's document
retention policies.
(o) REAL ESTATE TITLE EVIDENCE. Within thirty (30) days after the
date of this Agreement, Company shall provide Purchaser with reasonable
and customary evidence of title to any real property assets included among
the Assets, including without limitation:
(i) A survey of the real property certified by a registered
land surveyor to Company certifying the legal description,
delineating lot lines, means of access, easements, dedicated streets
adjacent to the real property, improvements, if any, encroachments
and physical matters affecting the real property.
(ii) A commitment for an ALTA Form B Extended Coverage Owner's
Policy written by a title insurer acceptable to Purchaser agreeing to
issue an owner's policy to Purchaser upon payment of premium. The
commitment shall be accompanied by copies of all title exceptions.
(iii) Uniform Commercial Code searches in the name of
Company from the appropriate filing office for the location of the
real property.
Purchaser shall be allowed thirty (30) days after receipt of such title
evidence for examination of such title and the making of any objections
thereto. In the event that title to any such real property premises is
found unmarketable and cannot be made marketable within thirty (30) days
after notice thereof to Company, then at the sole election of Purchaser,
Purchaser may elect to exclude such real estate from the Assets and the
Purchase Price will be reduced by One Million Eight Hundred Thousand
Dollars ($1,800,000) less the liability under the Argonne Bonds, which
liability will be retained by the Company.
SECTION 5
5. CONDITIONS TO OBLIGATIONS OF PURCHASER.
Notwithstanding any other provision of this Agreement to the
contrary, the obligation of Purchaser to effect the transactions
31
contemplated herein shall be subject to the reasonable satisfaction at or
prior to the Closing of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Company and the Shareholders contained in this Agreement,
including without limitation in the Disclosure Schedule initially
delivered to Purchaser pursuant to Section 2 (before any changes or
additions delivered to Purchaser pursuant to subsection 4(h)), shall be in
all material respects true, complete and accurate as of the date when made
and at and as of the Closing as though such representations and warranties
were made at and as of such time, except for changes specifically
permitted or contemplated by this Agreement, and except insofar as the
representations and warranties relate expressly and solely to a particular
date or period, in which case they shall be true and correct in all
material respects at the Closing with respect to such date or period.
(b) PERFORMANCE. Company and the Shareholders shall have performed
and complied in all respects with all agreements, covenants, obligations
and conditions required by this Agreement to be performed or complied with
by Company and the Shareholders on or prior to the Closing.
(c) REQUIRED APPROVALS AND CONSENTS.
(i) All action required by law and otherwise to be taken by
Company and the Shareholders to authorize the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby by Company and the Shareholders
shall have been duly and validly taken.
(ii) All Consents listed on Exhibit 5(c) hereto, and Consents to
the transaction contemplated hereby from vendors representing not
less than ninety percent (90%) of the volume of Company's revenues
for the ten-month period ended October 31, 1995, in each case in form
and substance satisfactory to Purchaser, shall have been delivered,
made or obtained, and Purchaser shall have received copies thereof.
(d) ADVERSE CHANGES. No material adverse change, whether or not
covered by insurance, shall have occurred in the business of Company or
the Assets since the date hereof.
(e) NO PROCEEDING OR LITIGATION. No suit, action, investigation,
inquiry or other proceeding by any Authority or other person or entity
shall have been instituted or threatened which questions the validity or
legality of the transactions contemplated hereby or which, if successfully
asserted, would individually or in the aggregate, otherwise have a
material adverse effect on the conduct of the business of Company or the
Assets following the Closing Date.
32
(f) OPINION OF COMPANY'S AND THE SHAREHOLDERS' COUNSEL. Purchaser
shall have received an opinion of counsel to Company and the Shareholders,
dated the Closing Date, in the form set forth as Exhibit 5(f) hereto.
(g) LEGISLATION. No Law shall have been enacted which prohibits,
restricts or delays the consummation of the transactions contemplated
hereby or any of the conditions to the consummation of such transactions.
(h) CERTIFICATES. Company shall have furnished Purchaser with the
following certificates:
(i) GOOD STANDING CERTIFICATES. Certificates, executed by the
proper official of each jurisdiction, as to the good standing and
qualification to do business of Company in Virginia;
(ii) SECRETARY'S CERTIFICATE. A certificate from the Secretary
of Company confirming the existence, incorporation and good standing
of Company on the Closing Date, and attaching copies of the
certificate or articles of incorporation and bylaws, and resolutions
authorizing the execution, delivery and performance of this Agreement
and all other documents and the taking of all action required
thereunder or in connection therewith on behalf of Company;
(iii) INCUMBENCY CERTIFICATE. A certificate of the
Secretary of Company certifying the incumbency of officers of Company
and their genuine signatures, with a cross certification of such
Secretary's incumbency and genuine signature; and
(iv) COMPANY'S AND THE SHAREHOLDERS' CERTIFICATE. A certificate
of Company and the Shareholders confirming that the representations
and warranties set forth in Section 2 hereof are true and correct in
all respects as of the Closing Date with the same force and effect as
if they had been made thereon except for changes contemplated or
permitted by this Agreement.
(v) TAX CLEARANCE CERTIFICATES. Tax clearance certificates
from applicable taxing authorities as Purchaser may reasonably
request indicating that the Assets are not subject to any pending or
levied tax liens, to the extent that applicable taxing authorities
provide such tax clearance certificates as a governmental function.
(i) DUE DILIGENCE. Purchaser shall have received all information
requested by it pursuant to subsection 4(d) and Purchaser shall be
satisfied in its sole discretion that such due diligence investigation
shall not have revealed any material adverse issues or concerns not
disclosed by Company or the Shareholders to Purchaser on or prior to the
date hereof.
33
Purchaser acknowledges that its decision to purchase the assets of Company
pursuant to the terms of this Agreement was based largely on the audited
December 1993 and December 1994 financial statements and proforma
adjustments to cash flow of Company for those years and the interim
balance sheet and income statement as of and for the 8-month period ended
August 31, 1995 prepared by Company on a "first-in, first-out" basis. If
for any reason the foregoing financial statements are found to be
materially inaccurate, then at Purchaser's option, in its sole discretion,
Purchaser may terminate this Asset Purchase Agreement and the transactions
contemplated hereby.
(j) ENVIRONMENTAL AUDIT. Purchaser shall have received an
environmental audit, in scope reasonably satisfactory to Purchaser, of the
real estate included in the Assets and the operations of Company, which
audit shall not have revealed any contamination or pollution or other
environmental or regulatory problems or violations of any Laws. For
purposes of the foregoing environmental audit, Purchaser and its
representatives may make inquiry of all sources, public and private, they
deem necessary to conduct the audit; and Company and the Shareholders
shall reasonably cooperate with Purchaser and its representatives in the
audit. The results of or disclosures made during the course of such audit
shall not relieve Company or the Shareholders from their obligations under
subsection 2(z) and Section 8. The cost of such audit shall be borne by
Purchaser.
(k) ESTOPPEL CERTIFICATES. Company shall have provided to Purchaser
estoppel certificates from the lessors under all of the leases for real
estate and personal property to which Company is a party included among
the Assets in form and substance reasonably satisfactory to Purchaser,
specifying that Company is not in default under any such leases and
specifying Company's rental obligations under such leases.
(l) DOCUMENTATION FOR CONVEYANCE OF THE ASSETS. Purchaser shall
have received, in form and substance reasonably satisfactory to Purchaser,
dated the Closing Date, all of the bills of sale, deeds, assignments and
other conveyance and transfer documentation reasonably required to
transfer valid legal title to the Assets to Purchaser, including without
limitation a General Warranty Deed accompanied by an ALTA Owner's Policy
issued in the name of the Purchaser together with such resolutions,
affidavits and certificates as are reasonably necessary and customary in
the conveyance of fee simple title to real property.
(m) HSR FILINGS. Company and Purchaser shall have made all required
filings under, and there shall be no impediments to the Closing hereunder
relative to the HSR Act.
(n) LEASE/OPTION TO PURCHASE. Purchaser and Colonial Warehouse
Associates L.C. shall have executed and delivered that certain
Lease/Option to Purchase in the form of Exhibit 5(n) hereto (the "LEASE
AMENDMENT").
34
(o) MANAGEMENT AGREEMENT. Purchaser, Company and the Shareholders
shall have executed and delivered that certain Management Agreement in the
form of Exhibit 5(o) hereto (the "MANAGEMENT AGREEMENT").
(p) RIGHT OF FIRST REFUSAL AGREEMENT. Purchaser, the Shareholders
and David Jared shall have executed and delivered that certain Right of
First Refusal Agreement in the form of Exhibit 5(p) hereto (the "RIGHT OF
FIRST REFUSAL AGREEMENT").
(q) SOFTWARE LICENSE. Company shall have executed and delivered to
Purchaser a software license agreement in form and substance satisfactory
to Purchaser providing Purchaser with a perpetual, fully paid and royalty-
free license to use the proprietary software developed by Company and used
in the conduct of Company's business prior to the Closing Date (the
"SOFTWARE LICENSE").
SECTION 6
6. CONDITIONS TO COMPANY'S AND THE SHAREHOLDERS' OBLIGATIONS.
Notwithstanding anything in this Agreement to the contrary, the
obligation of Company and the Shareholders to effect the transactions
contemplated herein shall be subject to the satisfaction at or prior to
the Closing of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Purchaser contained in this Agreement shall be in all
respects true, complete and accurate as of the date when made and at and
as of the Closing, as though such representations and warranties were made
at and as of such time, except for changes permitted or contemplated in
this Agreement, and except insofar as the representations and warranties
relate expressly and solely to a particular date or period, in which case
they shall be true and correct in all material respects at the Closing
with respect to such date or period.
(b) PERFORMANCE. Purchaser shall have performed and complied in all
respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by Purchaser
at or prior to the Closing.
(c) CORPORATE APPROVALS. All action required to be taken by
Purchaser to authorize the execution, delivery and performance of this
Agreement by Purchaser and the consummation of the transactions
contemplated hereby shall have been duly and validly taken.
(d) NO PROCEEDING OR LITIGATION. No suit, action, investigation,
inquiry or other proceeding by any Authority or other person or entity
shall have been instituted or threatened
35
which questions the validity or legality of the transactions contemplated
hereby.
(e) OPINION OF PURCHASER'S COUNSEL. Company and the Shareholders
shall have received an opinion of counsel to Purchaser, dated the Closing
Date, in the form set forth as Exhibit 6(e) hereto.
(f) LEGISLATION. No law shall have been enacted which prohibits,
restricts or delays the consummation of the transactions contemplated
hereby or any of the conditions to the consummation of such transactions.
(g) CERTIFICATES. Purchaser shall have furnished Company with the
following certificates:
(i) GOOD STANDING CERTIFICATE. Certificates, executed by the
proper official of each jurisdiction, as to the good standing and
qualification to do business of Purchaser in the States of Delaware
and Virginia;
(ii) SECRETARY'S CERTIFICATE. A certificate from the Secretary
of Purchaser confirming the existence, incorporation and good
standing of Purchaser on the Closing Date, and attaching copies of
its certificate of incorporation and bylaws, and resolutions
authorizing the execution, delivery and performance of this Agreement
and all other documents and the taking of all action required
thereunder or in connection therewith on behalf of Purchaser;
(iii) INCUMBENCY CERTIFICATE. A certificate of the
Secretary of Purchaser certifying the incumbency of officers of
Purchaser and their genuine signatures, with a cross certification of
such Secretary's incumbency and genuine signature; and
(iv) PURCHASER'S CERTIFICATE. A certificate of Purchaser
confirming that the representations and warranties set forth in
Section 3 hereof are true and correct in all respects as of the
Closing Date with the same force and effect as if they had been made
thereon, except for changes contemplated or permitted by this
Agreement.
(h) DOCUMENTATION FOR ASSUMPTION OF ASSUMED LIABILITIES. Company
shall have received, in a form and substance reasonably satisfactory to
Company, dated the Closing Date, such instruments of assumption reasonably
required to evidence the assumption by Purchaser of the Assumed
Liabilities.
(i) HSR FILINGS. Company and Purchaser shall have made all required
filings under, and there shall be no impediments to the Closing hereunder
relative to the HSR Act.
36
(j) MANAGEMENT AGREEMENT. Purchaser, Company and the Shareholders
shall have executed and delivered that certain Management Agreement in the
form of Exhibit 5(o) hereto.
SECTION 7
7. TERMINATION AND ABANDONMENT.
(a) METHODS OF TERMINATION. This Agreement may be terminated and
the transactions contemplated herein may be abandoned at any time, but not
later than the Closing:
(i) By mutual written consent of Purchaser, Company and the
Shareholders; or
(ii) By Purchaser on or after the Termination Date, if any of
the conditions provided for in Section 5 of this Agreement shall not
have been satisfied (other than through the failure of Purchaser to
comply with its obligations under this Agreement) or waived in
writing by Purchaser prior to such date; or
(iii) By Company and the Shareholders on or after the
Termination Date if any of the conditions provided for in Section 6
of this Agreement shall not have been satisfied (other than through
the failure of Company or the Shareholders to comply with their
obligations under this Agreement) or waived in writing by Company and
the Shareholders prior to such date; or
(iv) By any party if the Closing shall not have occurred on or
before February 1, 1996.
(b) PROCEDURE UPON TERMINATION. In the event of termination and
abandonment pursuant to subsection (a), written notice thereof shall
forthwith be given to the other party or parties, and the provisions of
this Agreement shall terminate, and the transactions contemplated herein
shall be abandoned, without further action by any party hereto. If this
Agreement is terminated as provided herein:
(i) each party will, upon request, redeliver all documents,
work papers and other material of any other party (and all copies
thereof) relating to the transactions contemplated herein, whether so
obtained before or after the execution hereof, to the party
furnishing the same;
(ii) the confidentiality obligations of subsection 4(e) shall
continue to be applicable;
(iii) the provisions of subsection 9(a) shall continue to be
applicable; and
37
(iv) except as provided in this subsection, no party shall have
any liability for a breach of any representation, warranty,
agreement, covenant or other provision of this Agreement, unless such
breach was due to a willful or bad faith action or omission of such
party or any representative, agent, employee or independent
contractor thereof.
SECTION 8
8. SURVIVAL AND INDEMNIFICATION.
(a) SURVIVAL. The representations and warranties of each of the
parties hereto shall survive the Closing.
38
(b) COMPANY'S AND THE SHAREHOLDERS' INDEMNIFICATION OF PURCHASER.
After the Closing Date, Company and the Shareholders shall jointly and
severally indemnify and hold harmless Purchaser and its affiliates from
and against any damage, liability, loss or expense (including reasonable
attorneys' fees and other reasonable costs and expenses incident to, and
amounts paid or required to be paid in settlement of, any claim, suit,
action or proceeding) (a "LOSS") sustained, incurred, paid or required to
be paid by Purchaser or its affiliates which arises out of (i) any untrue
representation of, or breach of warranty by, Company or the Shareholders
in any part of this Agreement or in any of the documents or agreements
required to be executed and delivered by or on behalf of any of them
pursuant to this Agreement, PROVIDED, HOWEVER, that no claim for indemnity
may be made pursuant to this subsection after the sixth (6th) anniversary
of the Closing Date; (ii) any nonfulfillment of any covenant, agreement or
undertaking of Company or any of the Shareholders in any part of this
Agreement or in any of the documents or agreements required to be executed
and delivered by or on behalf of any of them pursuant to this Agreement;
(iii) any failure by Company to comply with Article 6 of the Uniform
Commercial Code of Virginia; (iv) any of the Excluded Liabilities or any
of the Excluded Assets; or (v) any distribution of assets of Company prior
to the Closing in excess of distributions expressly permitted by
subsection 4(a).
(c) PURCHASER'S INDEMNIFICATION OF COMPANY AND THE SHAREHOLDERS.
After the Closing Date, Purchaser shall indemnify and hold harmless
Company and the Shareholders and their affiliates from and against any
Loss sustained, incurred, paid or required to be paid by Company or the
Shareholders or their affiliates which arises out of (i) any untrue
representation of, or breach of warranty by, Purchaser in any part of this
Agreement or in any of the documents or agreements required to be executed
and delivered by or on behalf of Purchaser pursuant to this Agreement,
PROVIDED, HOWEVER, that no claim for indemnity may be made pursuant to
this subsection after the sixth (6th) anniversary of the Closing Date or
until such final payment as obligated under the Management Agreement is
paid to Company, whichever is later; (ii) any nonfulfillment of any
covenant, agreement or undertaking of Purchaser in any part of this
Agreement or in any of the documents or agreements required to be executed
and delivered by or on behalf of Purchaser pursuant to this Agreement; or
(iii) any of the Assumed Liabilities.
(d) INDEMNIFICATION PROCEDURE.
(i) If at any time a party entitled to indemnification
hereunder (the "INDEMNITEE") shall receive notice of any state of facts
that may result in a Loss, the Indemnitee shall promptly give written
notice (a "NOTICE OF CLAIM") to the party obligated to provide
indemnification (the "INDEMNITOR") of the discovery of such potential or
actual Loss. A Notice of Claim shall set forth (i) a brief description of
the nature of the potential or actual Loss, and (ii) the total amount of
Loss anticipated (including any costs
39
or expenses which have been or may be reasonably incurred in connection
therewith). Upon receipt of a Notice of Claim, Indemnitor may elect to
cure the Event of Loss within thirty (30) days after the date of receipt
of the Notice of Claim, or if such cure cannot be effected within such
thirty (30) day period, diligently proceed to effect such cure. If such
cure cannot be effected, payment of the amount of Loss due the Indemnitee
as set forth in a Notice of Claim shall be made by Indemnitor no later
than the thirtieth (30th) day after the date of the Notice of Claim (or
such later date as the Indemnitor receives written notice that an actual
Loss has occurred) unless the provisions of subsection 8(d)(iii) are
applicable thereto. Except as provided in subsections 8(b) and 8(c), the
Indemnitee's failure to give prompt notice or to provide copies of
documents or to furnish relevant data, shall not constitute a defense (in
whole or in part) to any claim by the Indemnitee against the Indemnitor
for indemnification, except and only to the extent that such failure shall
have caused or increased such liability or adversely affected the ability
of the Indemnitor to defend against or reduce its liability.
(ii) If the Indemnitor shall reject any Loss as to which a
Notice of Claim is sent by the Indemnitee, the Indemnitor shall give
written notice of such rejection to the Indemnitee within thirty (30) days
after the date of receipt of the Notice of Claim.
(iii) If any Notice of Loss relates to any claim made against
an Indemnitee or by any third person, the Notice of Loss shall state the
nature, basis and amount of such claim. The Indemnitor shall have the
right, at its election, by written notice given to the Indemnitee, to
assume the defense of the claim as to which such notice has been given.
Except as provided in the next sentence, if the Indemnitor so elects to
assume such defense, it shall diligently and in good faith defend such
claim and shall keep the Indemnitee reasonably informed of the status of
such defense, and the Indemnitee shall cooperate fully with the Indemnitor
in the defense of such claim, provided that in the case of any settlement
providing for remedies other than monetary damages for which
indemnification is provided, the Indemnitee shall have the right to
approve the settlement, which approval shall not be unreasonably withheld
or delayed. If the Indemnitor does not so elect to defend any claim as
aforesaid or shall fail to defend any claim diligently and in good faith
(after having so elected), the Indemnitee may assume the defense of such
claim and take such other action as it may elect to defend or settle such
claim as it may determine in its reasonable discretion, provided that the
Indemnitor shall have the right to approve any settlement, which approval
will not be unreasonably withheld or delayed.
40
SECTION 9
9. MISCELLANEOUS PROVISIONS.
(a) EXPENSES. Except as otherwise provided in this Agreement,
Purchaser shall bear its, and the Shareholders shall bear their and
Company's, costs, fees and expenses in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including without
limitation fees, commissions and expenses payable to brokers, finders,
investment bankers, consultants, exchange or transfer agents, attorneys,
accountants and other professionals, whether or not the transactions
contemplated herein are consummated. If any of such costs, fees or
expenses are to be paid by Company, they shall be paid or accrued during
1995 and shall reduce the amount of Company's income in 1995 and the
amount distributable to the Shareholders with respect thereto pursuant to
this Agreement.
(b) AMENDMENT AND MODIFICATION. Subject to applicable Law, this
Agreement may be amended or modified by the parties hereto at any time
prior to the Closing with respect to any of the terms contained herein;
PROVIDED, HOWEVER, that all such amendments and modifications must be in
writing duly executed by all of the parties hereto.
(c) WAIVER OF COMPLIANCE; CONSENTS. Any failure of a party to
comply with any obligation, covenant, agreement or condition herein may be
expressly waived in writing by the party entitled hereby to such
compliance, but such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition shall not operate
as a waiver of, or estoppel with respect to, any subsequent or other
failure. No single or partial exercise of a right or remedy shall
preclude any other or further exercise thereof or of any other right or
remedy hereunder. Whenever this Agreement requires or permits the consent
by or on behalf of a party, such consent shall be given in writing in the
same manner as for waivers of compliance.
(d) NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall
entitle any person or entity (other than a party hereto and its respective
successors and assigns permitted hereby) to any claim, cause of action,
remedy or right of any kind.
(e) NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be made in writing
and shall be deemed to have been duly given and effective:
(i) on the date of delivery, if delivered personally;
(ii) on the date of receipt if sent by reputable nation-wide
overnight courier; or
41
(iii) on the date such transmission is made and confirmation
of receipt obtained, if sent by facsimile, telecopy, telegraph, telex
or other similar telegraphic communications equipment:
If to Company or the Shareholders:
To: Military Distributors of Virginia, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Vice President
Fax No. (000) 000-0000
With a copy to:
Wolcott, Rivers, Xxxxxx, Xxxxxxxx and
Xxxxx, P.C.
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esquire
Fax No. (000) 000-0000
or to such other person or address as Company or the Shareholders shall
furnish to the other parties hereto in writing in accordance with this
subsection.
If to Purchaser:
To: Xxxx-Xxxxx Company
0000 Xxxxxx Xxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, CEO
Fax No. (000) 000-0000
With a copy to:
Xxxx-Xxxxx Company
0000 Xxxxxx Xxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, General
Counsel
Fax No. (000) 000-0000
or to such other person or address as Purchaser shall furnish to the other
parties hereto in writing in accordance with this subsection.
(f) ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned (whether
42
voluntarily, involuntarily, by operation of law or otherwise) by any of
the parties hereto without the prior written consent of the other parties,
PROVIDED, HOWEVER, that Purchaser may assign this Agreement, in whole or
in any part, and from time to time, to a wholly owned, direct or indirect,
subsidiary of Purchaser, but any such assignment shall not relieve
Purchaser of its obligations hereunder.
(g) GOVERNING LAW; JURISDICTION. This Agreement and the legal
relations among the parties hereto shall be governed by and construed in
accordance with the internal substantive laws of the State of Minnesota
(without regard to the laws of conflict that might otherwise apply) as to
all matters, including without limitation matters of validity,
construction, effect, performance and remedies. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of Minnesota or the
United States of America located in the State of Minnesota for any action,
suit or proceeding arising out of or relating to this Agreement and the
transactions contemplated hereby (not including any agreement referred to
herein), and agrees not to commence any action, suit or proceeding
relating thereto except in such courts, and further agrees that service of
any process, summons, notice or document by United States registered or
certified mail shall be effective service of process for any action, suit
or proceeding brought in any such court. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to personal
jurisdiction and the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby (not
including any agreement referred to herein), in the courts of the State of
Minnesota or the United States of America located in the State of
Minnesota, and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such action, suit
or proceeding brought in any such court has been brought in an
inconvenient forum.
(h) SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to
be unenforceable, the provision shall be interpreted to be only so broad
as is enforceable.
(i) COUNTERPARTS. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
(j) HEADINGS. The table of contents and the headings of the
sections and subsections of this Agreement are inserted for convenience
only and shall not constitute a part hereof.
43
(k) ENTIRE AGREEMENT. The exhibits and other writings incorporated
in this Agreement or any such exhibit or other writing are part of this
Agreement, together they embody the entire agreement and understanding of
the parties hereto in respect of the transactions contemplated by this
Agreement and together they are referred to as "THIS AGREEMENT" or the
"AGREEMENT". However, if there is a conflict between the terms,
conditions, representations, warranties and covenants contained in this
Agreement and the Disclosure Schedule or any exhibit or other writing
referred to in this Agreement, then the provisions in this Agreement shall
control. There are no restrictions, promises, warranties, agreements,
covenants or undertakings, other than those expressly set forth or
referred to in this Agreement. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the
transaction or transactions contemplated by this Agreement. Provisions of
this Agreement shall be interpreted to be valid and enforceable under
applicable Law to the extent that such interpretation does not materially
alter this Agreement; PROVIDED, HOWEVER, that if any such provision shall
become invalid or unenforceable under applicable Law such provision shall
be stricken to the extent necessary and the remainder of such provisions
and the remainder of this Agreement shall continue in full force and
effect.
(l) INJUNCTIVE RELIEF AND SPECIFIC PERFORMANCE. It is expressly
agreed among the parties hereto that monetary damages would be inadequate
to compensate a party hereto for any breach by any other party of its
covenants and agreements herein. Accordingly, the parties agree and
acknowledge that any such violation or threatened violation will cause
irreparable injury to the other and that, in addition to any other
remedies which may be available, such party shall be entitled to
injunctive relief against the threatened breach of this Agreement or the
continuation of any such breach without the necessity or proving actual
damages and may seek to specifically enforce the terms of this Agreement.
(m) ATTORNEYS' FEES. The prevailing party or parties in any legal
action commenced to (i) enforce the terms and conditions of this Agreement
or (ii) recover damages or any other relief for the breach by another
party or parties of this Agreement, shall be entitled to recover such
prevailing party's or parties' reasonable attorneys' fees, including
expenses of such attorneys, from the non-prevailing party or parties in
any such legal action.
(n) LIST OF DEFINED TERMS. Reference is made to Exhibit 9(m) for a
listing and location of terms defined in this Agreement.
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
XXXX-XXXXX COMPANY
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Its: President
----------------------------------
MILITARY DISTRIBUTORS OF
VIRGINIA, INC.
By: /s/ Xxxx X. Xxxxx
------------------------------------
Its: Treasurer
----------------------------------
By: /s/ Xxxxx X. Jared
------------------------------------
Xxxxx X. Xxxxx
By: /s/ Xxxxx X. Xxxxxx, Xx.
------------------------------------
Xxxxx X. Xxxxxx, Xx.
By: /s/ Xxxx X. Xxxxx III
------------------------------------
Xxxx X. Xxxxx III
45
