EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
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AGREEMENT (this "Agreement") made and entered into this 31st day of
July, 2002, by and among MORO/RADO ACQUISITION CORP., a Pennsylvania corporation
("NEW RADO"), RADO ENTERPRISES, INC., a Pennsylvania corporation ("OLD RADO"),
and XXXXXXX X. XXXX, an individual (hereinafter sometimes referred to as
"Shareholder").
BACKGROUND
OLD RADO is a mechanical contractor engaged in various plumbing,
heating, ventilation and air conditioning projects for commercial, industrial
and institutional buildings located in northeastern and central Pennsylvania.
The Shareholder is the owner of all of the shares of OLD RADO. OLD RADO desires
to sell to NEW RADO and NEW RADO desires to purchase substantially all of the
operating assets of OLD RADO, and to assume certain of the known operating
liabilities of OLD RADO, all as more fully set forth herein.
AGREEMENT
NOW THEREFORE, intending to be legally bound hereby, and in
consideration of the mutual agreements, covenants, warranties, representations
and undertakings of the parties hereto, the undersigned agree as follows:
I. Sale of Assets. Subject to the terms and conditions hereof, NEW RADO
hereby agrees to purchase, and OLD RADO hereby agrees to sell, assign, transfer,
set over, confirm, convey and deliver to NEW RADO at the closing herein
described in Article XI ("Closing"), title to and possession of, or, where
applicable, right of OLD RADO to, all of the assets of OLD RADO, whether
tangible, intangible, personal or otherwise, and wherever located, other than
Excluded Assets (as defined in Article III) (the "Assets"), to the extent that
such Assets may be assigned or transferred by OLD RADO to NEW RADO. The Assets
shall be conveyed and delivered to NEW RADO at the Closing free and clear of all
liens, security interests, claims, pledges, charges, agreements, encumbrances,
options, or any other adverse claims whatsoever, whether known or unknown,
whether arising before or after the date hereof or by reason of the consummation
of the transactions herein described or by reason of operation of law, or
otherwise, except to the extent that the Assets may not be assigned or
transferred by OLD RADO to NEW RADO.
Other than Excluded Assets, the Assets shall include all of OLD RADO's
project agreements, subcontracts, union agreements, customer proposals or open
orders, costs and estimated earnings in excess of xxxxxxxx on uncompleted
contracts, inventories, receivables, fixed assets, leasehold improvements,
supplies, deposits, warranties, indemnities, guaranties, purchase orders,
computers, corporate names, trade names, permits, licenses, books, computer
software, furniture, fixtures, machinery, equipment, and records, to the extent
that such Assets may be assigned or transferred by OLD RADO to NEW RADO, and
shall, without limitation, include the following, to the extent that such Assets
may be assigned or transferred by OLD RADO to NEW RADO:
A. Contracts, Purchase Orders. All of OLD RADO's right, title and
interest in and to any and all outstanding customer quotations and proposals,
unfilled and open customer orders, and all of the project contracts,
subcontracts, and union agreements set forth in Schedule I.A. hereto.
B. Trade names. All trade names or trademarks including, without
limitation, Rado Enterprises, Inc., and as soon as is reasonably practicable
after the Closing, OLD RADO shall have changed its corporate name to something
other than Rado Enterprises, Inc. or any name containing the word "Rado".
Notwithstanding the foregoing sentence and anything else contained herein, from
and after the Closing, NEW RADO shall be permitted to use any name which
includes "Rado Investments" or any derivation thereof.
C. Inventory. All of the inventory of OLD RADO ("Inventory").
D. Fixed Asset Leases. All of OLD RADO's right, title and interest in
and to the lease agreements for equipment or machinery leased from others by OLD
RADO and the security deposits paid to lessors by OLD RADO, set forth in
Schedule I.D. hereto.
E. Receivables. All of OLD RADO's accounts receivable.
F. Prepaid Expenses; Deposits. The prepaid expenses and deposits of OLD
RADO set forth in Schedule I.F. hereto.
G. Fixed Assets. All fixed assets owned by OLD RADO, including but not
limited to, the machinery and equipment set forth in Schedule I.G. hereto.
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II. Certain Consents. Nothing in this Agreement shall be construed as
an attempt to transfer the rights or obligations under any contract, agreement,
permit, license, approval, authorization, registration, certificate, franchise
or claim of OLD RADO included in the Assets that are by their terms or in law
nonassignable without the consent of the other party or parties thereto, unless
such consent shall have been given, or as to which all of the remedies for the
enforcement thereof enjoyed by OLD RADO would not, as a matter of law, pass to
NEW RADO as an incident of the assignments provided for by this Agreement or any
other document required under this Agreement. In order, however, to provide NEW
RADO with the full realization and value of every contract, agreement, permit,
license, approval, authorization, registration, certificate, franchise and claim
of the character described in the immediately preceding sentence, OLD RADO and
the Shareholder agree that on and after the Closing, it and he will, at the
request and under the direction of NEW RADO, take all reasonable action
(including without limitation the appointment of NEW RADO as attorney-in-fact or
agent for OLD RADO) and do or cause to be done all such things as shall be
reasonably necessary or proper (i) to assure that the rights of OLD RADO under
such contracts, agreements, permits, licenses, approvals, authorizations,
registrations, certificates, franchises and claims shall be preserved for the
benefit of NEW RADO, and (ii) to facilitate receipt of the consideration to be
received by OLD RADO in and under every such contract, agreement, permit,
license, approval, authorization, registration, certificate, franchise and
claim, which consideration shall be held for the benefit of, and shall be
delivered to NEW RADO.
III. Excluded Assets. The Assets which are not to be acquired by NEW
RADO hereunder ("Excluded Assets") are: (i) all cash, marketable securities
(including without limitation bonds, bearer bonds and stocks), brokerage
accounts (including all securities and investments contained therein), and cash
equivalents (including without limitation certificates of deposit) of OLD RADO
on hand or existing at Closing; (ii) all amounts due to OLD RADO from the
Shareholder as of the date of Closing; (iii) all prepaid expenses of OLD RADO
described in Schedule III hereto; (iv) all amounts due as of the date of Closing
to OLD RADO from RAM UYA Investment Company, a partnership owned 50% by Xxxxxxx
X. Xxxx ("RAM Buildings"); (v) any prepaid income taxes of OLD RADO; (vi) any
deferred taxes of OLD RADO and all tax refunds of OLD RADO (including without
limitation any and all refunds related to any and all federal, state, local or
foreign taxes of any kind); (vii) the fixed assets of OLD RADO listed in
Schedule III hereto, including the automobiles used by the Shareholder; (viii)
the life insurance policy owned by OLD RADO on the life of Xxxxxxx X. Xxxx; (ix)
any accounts receivable of OLD RADO that are more than ninety days past due from
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the invoice date as of the date of Closing (collectively, the "Excluded Deferred
Receivables"), a list of which Excluded Deferred Receivables shall be agreed to
and initialed by the parties as of the date of the Closing; (x) any leasehold
improvements that are used in connection with or as part of the Premises (as
defined below); (xi) any and all claims of OLD RADO against the Parkland School
District relating to the time period or accruing at any time prior to the
Closing Date, including the arbitration award in favor of OLD RADO and against
Parkland School District currently in the approximate amount of $1,283,596 as
well as any expenses associated therewith and interest accrued thereon; (xii)
all corporate and tax records of OLD RADO; (xiii) all payments due to OLD RADO
under this Agreement; and (xiv) any other assets of OLD RADO included on
Schedule III attached hereto.
IV. Liabilities of OLD RADO.
A. Except for the Assumed Liabilities (as defined in Article
IV.B. hereof), NEW RADO is not assuming and shall not pay or be liable for any
claims, demands, obligations, debts, liabilities, judgments, causes of action,
or damages whatsoever, of whatever nature, and whether known or unknown, against
or of OLD RADO, arising or incurred by OLD RADO, prior to or after the Closing
or arising in whole or in part by reason of the performance of the terms of this
Agreement by OLD RADO, or by reason of the sale of the Assets by OLD RADO, as
herein set forth. Specifically, but without limiting the foregoing, and except
for the Assumed Liabilities, NEW RADO shall not assume or be liable for the
following debts, liabilities and obligations of OLD RADO:
1. Contractual Obligations. Debts, obligations, or
liabilities relating to or arising out of any period prior to the date of
Closing under any customer agreement, project contract, subcontract, unfilled
order, union agreement, or any other contract, oral or written to which OLD RADO
is a party or is bound.
2. Long Term Debt. Any and all long term debt or
obligation of OLD RADO or any current portion thereof due by OLD RADO as of the
Closing, including the debt due to First Columbia Bank & Trust by OLD RADO.
3. Pension and Other Employee Plans. Debts,
obligations or liabilities relating to or arising out of any period prior to the
Closing under the Employee Retirement Income Security Act of 1974, as amended,
and the Multi-Employer Pension Plan Amendments Act of 1980, as amended
("MEPPAA"), including any withdrawal liability as defined thereunder in
connection with any Employment Benefit Plan (as defined in Section XII.L).
4. Violation of Representations. Debts, obligations
or liabilities which arise or exist in violation of any of the representations,
warranties, covenants or agreements of OLD RADO or the Shareholder contained in
this Agreement, or in any statement or certificate delivered to NEW RADO by or
on behalf of OLD RADO or the Shareholder on or before the Closing pursuant to
this Agreement, or in connection with the transactions contemplated hereby.
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5. Taxes. Liabilities for federal, state, county,
local, or other income, sales, use, real estate, excise, employee payroll or
other taxes or assessments (including interest and penalties) of any kind
whatsoever for periods prior to the Closing.
6. Taxes Due On Sale. Liabilities for federal, state,
county, local, or other income, use or other taxes or assessments (including
interest and penalties) of any kind whatsoever arising from, based upon, or
related to, the sale, transfer, or delivery of the Assets; provided, however,
that OLD RADO and NEW RADO shall each pay one-half of any transfer or sales
taxes incurred and paid in connection with the transfer of any titled vehicles
from OLD RADO to NEW RADO pursuant to this Agreement.
7. Personal Injury and Other Claims. Debts,
obligations or liabilities arising out of any claim for personal injury or
property damage arising prior to the Closing (whether or not then asserted) or
any pending or threatened litigation or actions.
B. Assumed Liabilities. The liabilities and obligations of OLD
RADO which are to be assumed by NEW RADO hereunder ("Assumed Liabilities") shall
be limited to and are solely the following: (i) all accounts payable of OLD RADO
which are reflected on the Closing Balance Sheet; and (ii) all accrued
liabilities of OLD RADO which are reflected on the Closing Balance Sheet; and
(iii) any and all liabilities or obligations reflected on the Closing Balance
Sheet and relating to xxxxxxxx in excess of costs and estimated earnings of
uncompleted contracts, any outstanding customer quotations and proposals, and
all unfilled and open customer orders, customer contracts, project agreements,
project subcontracts, union agreements, contracts, purchase orders or agreements
entered into in the ordinary course of business; (iv) the liability of OLD RADO
to pay for the health insurance premiums of, or provide health insurance
coverage for, Xxxxxxxxx X. Xxxx pursuant to that certain Agreement between Rado
Mechanical Corporation and Xxxxxx X. Xxxx and Xxxxxxxxx X. Xxxx dated as of
February 10, 1989, for period of two years following the Closing; (v) any and
all obligations or liabilities of OLD RADO to make contributions to the Employee
Benefit Plans of all unions covered by the Union Contracts with respect to the
operations of OLD RADO (the "Union Employee Benefit Plans"); and (vi) any
liabilities or obligations with respect to periods after the Closing relating to
the matters set forth in subsections C. or D. of this Article IV.
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At Closing, and as a condition thereof, NEW RADO shall execute
and deliver to OLD RADO an assumption agreement in the form reasonably
acceptable to OLD RADO which shall effect the assumption by NEW RADO of the
Assumed Liabilities.
C. Union Contracts. From and after the date of Closing, NEW
RADO shall assume any and all liabilities and obligations under and perform all
of the terms and conditions of each of the union agreements set forth in
Schedule I.A hereof (collectively, the "Union Contracts"), and shall recognize
the respective unions identified therein.
D. Pension Plans.
1. From and after the date of Closing, NEW RADO shall
assume all of the obligations of, and shall continue and sponsor, OLD RADO's
money purchase pension plan (the "Money Purchase Pension Plan") and retirement
savings plan (the "Profit Sharing Plan") covering non-union employees. For
calendar year 2002, NEW RADO shall (i) pursuant to the Money Purchase Pension
Plan, contribute 10% of eligible wages for all eligible employees, and (ii)
pursuant to the Profit Sharing Plan, contribute a minimum of 10% and a maximum
of 15% of eligible wages for all eligible employees. At the date of Closing, an
accrual for OLD RADO's share of the contributions shall be established and
reflected on the Closing Balance Sheet (as hereinafter defined) at the rate of
10% of eligible wages under the Money Purchase Pension Plan and at the rate of
10% of eligible wages under the Profit Sharing Plan through the date of Closing.
If the actual voluntary contribution to be made by NEW RADO under the Profit
Sharing Plan exceeds 10%, then OLD RADO shall reimburse NEW RADO for OLD RADO's
proportionate share of such increase.
2. At the time of Closing, NEW RADO and OLD RADO
intend to comply with the provisions of 29 U.S.C.A. Section 1384 so that a
withdrawal of OLD RADO from the Multi-Employer Plans (as defined in Section
XII.L) to which it has contributed prior to the Closing shall not be deemed to
have occurred as a result of the transactions contemplated by this Agreement. In
this regard, and as required by 29 U.S.C.A. Section 1384(a)(1)(C), OLD RADO
agrees that if NEW RADO withdraws in a complete withdrawal, or a partial
withdrawal with respect to operations, during the first 5 plan years (as defined
in such Section), then OLD RADO shall be secondarily liable for any withdrawal
liability OLD RADO would have had to a Multi-Employer Plan with respect to the
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operations (but for 29 U.S.C.A. Section 1384) if the liability of NEW RADO with
respect to the Multi-Employer Plan is not paid. OLD RADO and NEW RADO shall each
pay one-half (1/2) of any and all costs and expenses for the bonds or other
security, if any, required to be posted by NEW RADO under 29 U.S.C.A. Section
1384(a)(1)(B) (the "Withdrawal Liability Bonds") to avoid the imputation of
withdrawal liability to OLD RADO under MEPPAA. NEW RADO agrees to obtain and
post the Withdrawal Liability Bonds, if any are required under 29 U.S.C.A.
Section 1384 to avoid the imputation of withdrawal liability to OLD RADO as a
result of the transactions contemplated by this Agreement, when necessary to do
so under MEPPAA. NEW RADO agrees and covenants that, from the Closing until the
fifth anniversary of the Closing NEW RADO: (i) shall not voluntarily take any
action which could result in withdrawal liability with respect to the Union
Employee Benefit Plans under MEPPAA, without the prior written consent of OLD
RADO and the Shareholder; (ii) shall provide immediate notice, upon NEW RADO's
first knowledge or notice thereof, to OLD RADO and the Shareholder of any
action, event or occurrence which could result in the imposition of withdrawal
liability, under MEPPAA, on OLD RADO; and (iii) shall maintain the Withdrawal
Liability Bonds in amounts sufficient to avoid the imputation of withdrawal
liability to OLD RADO.
V. Nonassignable Construction Contracts. From and after the date of
Closing, OLD RADO will remain obligated under the construction contracts of OLD
RADO identified in Schedule XII.C (the "Existing Nonassignable Construction
Contracts") to certain parties (including the other parties to the Existing
Nonassignable Construction Contracts and the surety to the related Existing
Contract Bonds (hereinafter defined) but excluding NEW RADO) which Existing
Nonassignable Construction Contracts (a) were entered into prior to the date of
Closing, (b) are not assignable without the prior written consent of the other
party(ies) thereto and such consent will not be obtained prior to the Closing,
and (c) may be subject to certain payment, performance and/or maintenance bonds
(the "Existing Contract Bonds") in which the surety thereto (Federal Insurance
Company) would not, in connection the transactions contemplated hereby, (i)
permit OLD RADO to transfer, assign or delegate its obligations or duties under
the Existing Contract Bonds to NEW RADO or (ii) release OLD RADO from any of its
duties or obligations under the Existing Contract Bonds. Although OLD RADO
remains obligated under the Existing Nonassignable Construction Contracts and
the Existing Contract Bonds following the date of Closing, NEW RADO shall from
and after the date of Closing, assume any and all obligations of OLD RADO under
the Existing Nonassignable Construction Contracts and the Existing Contract
Bonds, and at its cost and expense, perform all remaining construction work
under, and complete the Existing Nonassignable Construction Contracts. NEW RADO
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shall receive and be entitled to any and all payments due or to become due under
the Nonassignable Construction Contracts at any time on or after the date of
Closing. The foregoing sentence is subject to the provisions regarding the
Retainage Receivables and the costs and estimated earnings in excess of actual
xxxxxxxx relating to the Cumberland Project in Section VI.C.2. Notwithstanding
anything else to the contrary contained herein, NEW RADO agrees that OLD RADO
shall not be required to obtain consents for the assignment or delegation of any
rights, duties or obligations under the Existing Nonassignable Construction
Contracts or Existing Contract Bonds in order to consummate the transactions
contemplated or fulfill any conditions or obligations under this Agreement.
VI. Purchase Price.
A. The purchase price for the Assets shall be equal to the Net
Book Value of the Assets of OLD RADO as reflected on the Closing Balance Sheet
(the "Purchase Price").
The term "Net Book Value of the Assets" as used herein shall
mean the excess of (i) the aggregate net book value of the Assets as reflected
on the Closing Balance Sheet, over (ii) the aggregate amount of all Assumed
Liabilities reflected on the Closing Balance Sheet.
The "Closing Balance Sheet" shall mean a balance sheet of OLD
RADO as of the close of business on the business day immediately preceding the
date of Closing. The Closing Balance Sheet shall be prepared by OLD RADO from
the books and records of OLD RADO in accordance with generally accepted
accounting principles, consistently applied, and shall be accompanied by the
review report of OLD RADO's accountants. OLD RADO and its representatives shall
be afforded complete and unfettered access to the books and records of OLD RADO
after Closing to enable OLD RADO to prepare the Closing Balance Sheet. For
purposes thereof, the Inventory shall be valued at an amount equal to its net
book value as of the date of Closing valued in the manner OLD RADO historically
values its inventory. The Closing Balance Sheet shall not reflect any intangible
assets or goodwill. For purposes thereof, all of the fixed assets of OLD RADO
(which shall include the machinery and equipment, transportation equipment and
office furniture and fixtures of OLD RADO, except for any Excluded Assets
included therein) shall have a net book value of $506,000 plus the cost to OLD
RADO of all fixed assets from June 21, 2002 through the date of Closing.
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B. Within ninety days following the Closing, OLD RADO will
deliver to NEW RADO the Closing Balance Sheet as well as a computation of the
Purchase Price based thereon (the "Statement"). OLD RADO shall also furnish to
NEW RADO such financial schedules and information as NEW RADO and its
accountants shall reasonably require for the purposes of reviewing the
calculations. If within 30 days after delivery of the Closing Balance Sheet, NEW
RADO has not given written notice to OLD RADO (a "Dispute Notice") disputing
such Closing Balance Sheet (a "Dispute") and indicating the basis of such
Dispute and the Purchase Price claimed to be due by NEW RADO to OLD RADO, the
Closing Balance Sheet and the Purchase Price set forth in the Statement shall
become final and binding upon the parties. In the event that NEW RADO delivers
to OLD RADO a Dispute Notice within such 30-day period, OLD RADO and NEW RADO
shall use their best efforts to settle the Dispute within 30 days after the
giving of such notice. Any Dispute unresolved after such 30-day period may be
submitted by NEW RADO and OLD RADO to an independent accounting firm acceptable
to the parties ("Independent Accounting Firm"), which firm shall use the methods
and criteria and such procedures as it may deem necessary in its sole discretion
to decide the Dispute, and the Independent Accounting Firm shall choose either
the Purchase Price set forth in the Statement or the Purchase Price set forth in
the Dispute Notice. The decision of the Independent Accounting Firm shall be
final, conclusive and binding upon the parties and not subject to any appeal.
The fees and expenses of the Independent Accounting Firm shall be paid by the
non-prevailing party, not the prevailing party. If upon the determination of the
Purchase Price, any amount is due to OLD RADO, the amount shall be paid to OLD
RADO by NEW RADO within five days thereafter. If upon the determination of the
Purchase Price, any amount is to be returned to NEW RADO, then such amount shall
be paid by OLD RADO to NEW RADO within five days thereafter. Any such amounts
shall bear interest from and after the Closing until paid at the rate of six
percent (6%) per annum and shall be paid in immediately available funds.
C. The Purchase Price shall be payable by NEW RADO to OLD
RADO, as follows:
1. NEW RADO shall execute and deliver to OLD RADO at
the time of Closing a promissory note of NEW RADO in the principal amount of
$200,000, bearing interest at a rate of six percent (6%) per annum, in the form
attached hereto as Exhibit "A". The principal amount of the note shall be
payable in four (4) equal semi-annual installments, which shall be due on the
six (6), twelve (12), eighteen (18), and twenty four (24) month anniversaries of
the Closing.
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2. At any time from and after the date of Closing,
NEW RADO shall deliver to OLD RADO, upon receipt by NEW RADO, each of the
following: (i) payment of any of the retained portion of OLD RADO's accounts
receivable existing as of the date of Closing, a list of which shall be agreed
to and initialed by the parties at the time of Closing ("Retainage
Receivables"); and (ii) payment of any costs and estimated earnings in excess of
actual xxxxxxxx as of the Closing (the "Cumberland CAEEIEAB"), attributable to
or for the Cumberland Valley High School Project ("Cumberland Project"). The
amount of costs and estimated earnings in excess of actual xxxxxxxx for the
Cumberland Project, as of April 30, 2002, was $684,977.
3. Subject to the post-Closing adjustment pursuant to
Article VI.B., the balance of the Purchase Price shall be paid to OLD RADO by
NEW RADO at the Closing in immediately available funds. Because the Closing
Balance Sheet will not be available until after the Closing, NEW RADO shall
deliver to OLD RADO at Closing an amount estimated to be equal to the Purchase
Price as calculated by and agreed to by NEW RADO and OLD RADO based upon the
most recently available balance sheet of OLD RADO ("Estimated Purchase Price"),
currently contemplated to be the balance sheet dated April 30, 2002; provided,
however, that such balance sheet shall be updated on an estimated basis by NEW
RADO and OLD RADO as close as is possible to the date of Closing. NEW RADO and
OLD RADO agree that, if based upon the December 31, 2001 balance sheet of RADO,
a copy of which is attached as Schedule VI.C.3, the Estimated Purchase Price
would be $1,526,000 (less an appropriate amount for the Excluded Deferred
Receivables). The difference, if any, between the Estimated Purchase Price and
the Purchase Price as finally determined pursuant to Section VI.A shall be paid
as set forth therein.
D. The Purchase Price shall be allocated among the Assets as
set forth in the Closing Balance Sheet. NEW RADO, OLD RADO and the Shareholder
shall take all steps required to report the results of the transactions
contemplated hereby for tax purposes in a manner consistent with and utilizing
such allocations.
E. Cumberland Project Payment.
(i) In addition to the Purchase Price, NEW RADO shall
pay to OLD RADO the Cumberland Project Payment (hereinafter defined) on the
terms and conditions as hereinafter set forth in this Section VI.E.
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(ii) After completion of the Cumberland Project and
receipt of the final payment therefor, OLD RADO shall deliver to NEW RADO the
Cumberland Project Statement (hereinafter defined). OLD RADO shall also furnish
to NEW RADO such information as NEW RADO and its accountants shall reasonably
require for the purpose of reviewing the calculations of OLD RADO's accountants
included in the Cumberland Project Statement. If within fifteen (15) days after
delivery of the Cumberland Project Statement, NEW RADO has not given written
notice to OLD RADO (a "Cumberland Project Dispute Notice") disputing such
Cumberland Project Statement and the Actual Cumberland Project Profits
(hereinafter defined) and the Additional Cumberland Project Excess Profits
(hereinafter defined) claimed by OLD RADO therein (which Cumberland Project
Dispute Notice shall contain, at a minimum, NEW RADO's accountants' calculation
of the Actual Cumberland Project Profits and the Additional Cumberland Project
Excess Profits), the Cumberland Project Statement and the Actual Cumberland
Project Profits and Additional Cumberland Project Excess Profits set forth
therein shall become final and binding upon the parties. In the event that NEW
RADO delivers to OLD RADO a Cumberland Project Dispute Notice within such
fifteen (15) day period, OLD RADO and NEW RADO shall use their best efforts to
settle the Cumberland Project Dispute within five (5) days after the giving of
such Cumberland Project Dispute Notice. Any Cumberland Project Dispute
unresolved after such five (5) day period shall be submitted by NEW RADO and OLD
RADO to an independent accounting firm acceptable to both parties (a "Cumberland
Project Independent Accounting Firm"), which Cumberland Project Independent
Accounting Firm shall use the methods and criteria and such procedures as it may
deem necessary, subject to the definitions of and methodology for the Actual
Cumberland Project Profits and the Additional Cumberland Project Excess Profits
set forth in Section VI.E.4. hereof, to decide the Cumberland Project Dispute,
and the Cumberland Project Independent Accounting Firm shall choose either (i)
the Actual Cumberland Project Profits and the Additional Cumberland Project
Excess Profits set forth in the Cumberland Project Statement or (ii) the Actual
Cumberland Project Profits and the Additional Cumberland Project Excess Profits
set forth in the Cumberland Project Dispute Notice. The decision of the
Cumberland Project Independent Accounting Firm shall be final, conclusive and
binding upon the parties and not be subject to any appeal. The fees and expenses
of the Cumberland Project Independent Accounting Firm to decide any Cumberland
Project Dispute shall be paid by the non-prevailing party, not the prevailing
party.
(iii) Upon the final determination of the Actual
Cumberland Project Profits and the Additional Cumberland Project Excess Profits
under Section VI.E.2. hereof, NEW RADO shall pay to OLD RADO an amount equal to
eighty-five percent (85%) of the Additional Cumberland Project Excess Profits
(the "Cumberland Project Payment Base Amount") and interest, if any, required
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under this Section VI.E.3. (collectively, the "Cumberland Project Payment"),
within two (2) business days after the final determination of the Actual
Cumberland Project Profits and the Additional Cumberland Project Excess Profits
under Section VI.E.2. hereof. If (i) a Cumberland Project Dispute occurs and is
submitted to a Cumberland Project Independent Accounting Firm for determination
and (ii) the Cumberland Project Independent Accounting Firm determines the
Actual Cumberland Project Profits and the Additional Cumberland Project Excess
Profits to be the Actual Cumberland Project Profits and the Additional
Cumberland Project Excess Profits set forth in the Cumberland Project Statement,
then NEW RADO shall pay to OLD RADO interest on the Cumberland Project Payment
Base Amount at six percent (6%) per annum from (x) the date of delivery of the
Cumberland Project Statement by OLD RADO to NEW RADO to (y) the date of payment
of the Cumberland Project Payment.
(iv) For purposes of this Agreement, the "Cumberland
Project Statement" shall mean a statement, prepared by OLD RADO's accountants,
which includes the computation, in reasonable detail, of (A) the Actual
Cumberland Project Profits, which Actual Cumberland Project Profits are
calculated in accordance with (i) the prior practices of OLD RADO in calculating
gross profits less indirect costs on completed construction projects and (ii)
the methodology used by OLD RADO in calculating the Estimated Cumberland Project
Profits and (B) the Additional Cumberland Project Excess Profits. For purposes
of this Agreement, the "Actual Cumberland Project Profits" shall mean the actual
gross profits (which shall be based on amounts actually received on the
Cumberland Project) on the Cumberland Project less indirect costs, each as
determined in accordance with (x) the prior practices of OLD RADO in the
calculation thereof on completed construction projects and (y) the methodology
used by OLD RADO in calculating the Estimated Cumberland Project Profits. The
parties hereto agree and acknowledge that the "Estimated Cumberland Project
Profits" (i) represent the estimate of the total gross profits less indirect
costs on the Cumberland Project at the time of the bid (including change orders
through the date hereof) on the Cumberland Project, calculated in accordance
with the prior practices used by OLD RADO in calculating gross profits less
indirect costs on completed construction projects, and (ii) shall be $564,441
for the purposes of this Agreement. For purposes of this Agreement, the
"Additional Cumberland Project Excess Profits" shall mean the difference between
(aa) the Actual Cumberland Project Profits and (bb) the Estimated Cumberland
Project Profits. The parties hereto agree and acknowledge that, as of the date
hereof, it is estimated that, as of the date hereof, the final Additional
Cumberland Project Excess Profits will be between $500,000 and $700,000.
12
VII. Employment Agreements and Moro Guaranty.
A. At the time of Closing, NEW RADO and Xxxxxxx X. Xxxx shall
execute and deliver an employment agreement in the form attached hereto as
Exhibit "B". The employment agreement shall appoint him as President and Chief
Executive Officer of NEW RADO, provide for a salary of $150,000 per annum,
provide for company paid health insurance and inclusion in the company's 10%
defined contribution money purchase plan, provide for four weeks of paid
vacation per year, and cover a period of two (2) years subsequent to Closing.
Xxxxxxx X. Xxxx shall participate in NEW RADO's Profit Sharing Plan during years
2002 and 2003 and during the four month period ended April 30, 2004 and NEW
RADO's voluntary contribution thereunder shall be based upon his base salary at
the annualized rate of $150,000. The agreement shall also provide for (i) the
payment of a signing or deferred compensation bonus in the amount of $100,000 by
NEW RADO to Xxxxxxx X. Xxxx on each of the first, second and third annual
anniversaries of the Closing, which payments shall not be affected or modified
by the termination of Xxxxxxx Xxxx'x employment relationship with NEW RADO, and
(ii) an additional signing or deferred compensation bonus in the amount of
$300,000 to be paid by NEW RADO to Xxxxxxx X. Xxxx in three equal installments
of $100,000 on the fourth, fifth, and sixth annual anniversaries of the Closing,
which payments shall be evidenced by a non-interest bearing promissory note and
shall not be affected or modified by the termination of Xxxxxxx X. Xxxx'x
employment relationship with NEW RADO. The employment agreement shall also
contain provisions regarding the Profit Participation Payments (as defined
therein) to be paid by NEW RADO to Xxxxxxx X. Xxxx. At the time of Closing,
Xxxxx X. Xxxxxx and Xxxxxxxxxx X. Xxxxxx shall execute and deliver to Xxxxxxx X.
Xxxx the Limited Guaranty in the form of Exhibit "C" hereto pursuant to which
each of them shall jointly and severally guarantee the three annual payments of
$100,000 due by NEW RADO under the promissory note and the $100,000 payment of
the bonus due on the third annual anniversary of the Closing.
B. At the time of Closing, NEW RADO and Xxxx X. Xxxx shall
execute and deliver an employment agreement in the form attached hereto as
Exhibit "D". The employment agreement shall provide for a salary of $50,000 per
annum, provide for company paid health insurance and inclusion in the company's
10% defined contribution money purchase plan, provide for four weeks of paid
vacation per year, and cover a period of one (1) year subsequent to Closing.
Xxxx X. Xxxx shall participate in NEW RADO's Profit Sharing Plan during the
entire term of her employment under her employment agreement and NEW RADO's
voluntary contribution thereunder for each twelve (12) month period thereunder
shall be based upon her base salary at the annualized rate of $50,000.
13
C. At the time of Closing, Moro Corporation shall execute and
deliver a Guaranty Agreement in the form attached hereto as Exhibit "E" which
shall cover all of the monies owed or to be paid by and obligations of NEW RADO
to Xxxxxxx X. Xxxx, Xxxx X. Xxxx or OLD RADO under this Agreement and any other
agreement or transaction contemplated hereby.
VIII. Non-Compete Agreements. At the time of Closing, Xxxxxxx X. Xxxx
and Xxxx X. Xxxx shall each execute and deliver in favor of NEW RADO a
non-compete agreement in the forms attached hereto as Exhibit "F".
IX. Real Property Lease. At the time of Closing, and as a condition
thereof, each of NEW RADO and RAM Buildings shall execute and deliver a lease
agreement in form and substance reasonably acceptable to each of them ("Lease
Agreement"), covering the premises located at 00 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx ("Premises"). The Lease Agreement shall provide for an initial five
year term with a five year renewal option, plus an option to purchase the
property at fair market value exercisable at any time during the initial five
year term. The rent shall be $120,000 per year payable in monthly installments
and in addition, NEW RADO shall be responsible for real estate taxes, utilities
and customary insurance coverage. The Lease Agreement shall also provide for an
option in favor of Xxxxx X. Xxxxxx (or any of his affiliates) (i) to purchase
the Premises for the sum of $1,150,000 exercisable at any time during the first
120 days following the Closing; and (ii) to purchase that certain parcel of land
adjacent to the Premises and owned by RAM Buildings (the "Adjacent Property")
for $75,000 exercisable at any time within 120 days following the Closing. The
Lease Agreement shall provide for, and any option granted with respect to the
Premises shall be subject to, the agreement by NEW RADO or the purchaser, as
applicable, permitting OLD RADO or its affiliates or any assignee of such right
to pass through the parking lot of the Premises in order to have access to the
Adjacent Property.
X. Accounts Receivable and Excluded Deferred Receivables.
1. NEW RADO shall have the right to and authority to collect
for its own account all accounts receivable of OLD RADO and other items which
shall be transferred to NEW RADO as part of the Assets and to endorse with the
name of OLD RADO any checks received on account of any such receivable or other
14
items. Other than the Retainage Receivables which are described in Section
VI.C.2, OLD RADO shall promptly transfer and deliver to NEW RADO any cash or
other property which OLD RADO may receive following Closing in respect of such
receivable or other items. NEW RADO shall use its best efforts following Closing
to collect for the account of OLD RADO any Retainage Receivables, and shall
promptly transfer and deliver to OLD RADO any cash or other property which NEW
RADO may receive in respect of such Retainage Receivables ("Collections"),
provided that "promptly" in this case shall mean that the transfer and delivery
by NEW RADO to OLD RADO of any Collections shall be effected within fifteen (15)
days of NEW RADO's receipt thereof. All sums collected by NEW RADO from
customers who owe Retainage Receivables shall be applied first in payment of the
Retainage Receivables on a "FIFO" basis.
2. The parties hereto agree and acknowledge that the Excluded
Deferred Receivables are and shall remain the property of OLD RADO. NEW RADO
shall use its best efforts following the Closing to collect, for the account of
OLD RADO, any Excluded Deferred Receivables. In the event that NEW RADO receives
any payment of any kind or character (including without limitation cash and
other property) on any Excluded Deferred Receivables, NEW RADO will: (I) notify
OLD RADO immediately thereof; (ii) receive the same in trust for OLD RADO; and
(iii) will immediately pay, transfer and deliver the same to OLD RADO. NEW RADO
shall make any and all endorsements and assignments necessary or desirable, as
determined in the sole discretion of OLD RADO, to effect the payment, transfer
and delivery of the Excluded Deferred Receivables to OLD RADO. If NEW RADO fails
to make any such endorsements or assignments, OLD RADO is appointed attorney for
NEW RADO with full power of substitution to make any such endorsements or
assignments. Such power of attorney is coupled with an interest and irrevocable.
Notwithstanding anything to the contrary contained herein, any and all such cash
or other property received by NEW RADO following the Closing on account of
accounts receivables owed by customers which include Excluded Deferred
Receivables shall be applied first in payment on the Excluded Deferred
Receivables, and then to any remaining balance of the accounts receivables owed
by such customers.
XI. Closing. The Closing of all of the transactions under this
Agreement (the "Closing") will commence at 11:00 A.M., Philadelphia,
Pennsylvania time, on August 27, 2002, unless NEW RADO and OLD RADO shall have
agreed on another date and time in writing. In the event that either NEW RADO or
OLD RADO is entitled not to close on the scheduled date because a condition to
the Closing set forth in Articles XVI or XVII hereof has not been met (or waived
15
by the party or parties entitled to waive it), such party may postpone the
Closing from time to time, by giving at least five days notice to the other
party, until the condition has been met (which all parties will use their best
efforts to cause to happen), but in no event to a date later than August 31,
2002, unless extended by mutual agreement. The place of Closing will be at the
offices of Lurio & Associates, P.C., Xxxxx 0000, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxxxx, XX 00000, or such other place as NEW RADO and OLD RADO shall
mutually agree upon in writing. The sale of Assets hereunder shall be effective
as of the close of business on the day immediately prior to the date of Closing.
XII. Representations and Warranties of OLD RADO. OLD RADO and the
Shareholder, jointly and severally, hereby represent and warrant to NEW RADO, as
follows:
A. Corporate Organization. OLD RADO is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, with all requisite corporate power and authority
to own, operate and lease its properties and carry on its business as now being
conducted. OLD RADO is not required to be qualified to do business in any other
jurisdictions. OLD RADO has previously delivered to NEW RADO complete and
correct copies of the Articles of Incorporation and By-laws, including all
amendments to the date hereof, of OLD RADO. The Shareholder is the sole record
and beneficial owner of all of the issued and outstanding capital stock of OLD
RADO.
B. Authority. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of OLD RADO and by the Shareholder of OLD
RADO and no other corporate proceedings on the part of OLD RADO are necessary to
authorize this Agreement or to carry out the transactions contemplated hereby.
OLD RADO and the Shareholder have the right, power and authority to enter into
and perform this Agreement. This Agreement constitutes the valid and binding
agreement of OLD RADO and the Shareholder, assuming that this Agreement is the
valid and legally binding agreement of NEW RADO and all other parties hereto,
enforceable in accordance with its terms, except that such enforceability may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and subject to the discretion of a court in granting equitable
remedies.
C. Conflicts with Instruments. Neither the execution or
delivery of this Agreement by OLD RADO, or the consummation of the transactions
contemplated by this Agreement by OLD RADO, nor the compliance with the terms of
this Agreement by OLD RADO will: (i) conflict with or result in a breach of any
16
provision of the Articles of Incorporation or By-laws, as amended, of OLD RADO;
(ii) except for consents or waivers required under certain agreements, leases,
or other instruments or documents which are specifically set forth in Schedule
XII.C attached hereto, violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under or result in the termination,
give others a right of termination, acceleration or cancellation of, or
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties of OLD RADO,
or result in being declared void, voidable or without further binding effect any
of the terms, conditions or provisions of any material lease, material agreement
or other material instrument or commitment or obligation to which OLD RADO is a
party, or by which its properties may be bound or affected; or (iii) except for
violations which would not have a Material Adverse Effect, violate any order,
writ, injunction, decree, judgment or ruling of any court or administrative or
governmental body or agency or arbitration tribunal, or violate any material
provision of any material permit, license, certificate or registration to which
OLD RADO is subject or pursuant to which it conducts business, or any law, rule
or regulation. For purposes of this Agreement, a "Material Adverse Effect" shall
mean any material adverse change in, or effect on the financial condition,
business or the results of operations of OLD RADO.
D. No Violation. OLD RADO has not been given notice of, nor
does there exist, to the best of their knowledge, any outstanding violation of
any applicable law, statute, order, rule, regulation, policy or guideline
promulgated, or judgment entered by any federal, state or local court or
administrative or governmental authority or arbitration tribunal which would
materially adversely affect OLD RADO or its business, or any of its properties.
E. Financial Statements. OLD RADO has delivered to NEW RADO
its financial statements together with its accountant's audit report thereon as
of and for the fiscal years ended December 31, 1998, December 31, 1999, December
31, 2000 and December 31, 2001, and its unaudited financial statements as of and
for the four months ended April 30, 2002, all of which are attached hereto as
Schedule XII.E (the "Financial Statements"). The Financial Statements have been
prepared from and are in accordance with the books and records of OLD RADO and
present fairly the financial position of OLD RADO as of the dates indicated, and
the results of operations for the periods indicated, and are true and correct in
all material respects. The Financial Statements have been prepared in conformity
with generally accepted accounting principles, consistently applied. Except as
17
set forth in Schedule XII.E or in the Financial Statements, since April 30,
2002, OLD RADO has not incurred any cost, expense, obligation or liability,
whether accrued, absolute, contingent or otherwise, except obligations incurred
in the ordinary course of business. Except as reflected on the Financial
Statements or the Schedules hereto and except as incurred in the ordinary course
of business, OLD RADO has no liabilities or obligations of any kind, known or
unknown, whether accrued, absolute, contingent or otherwise.
F. Legal Proceedings. Except as set forth in Schedule XII.F,
OLD RADO has not received written notice of any claim or proceeding (including
any arbitration proceeding) pending against, relating to or affecting OLD RADO
(or any of its officers or directors in connection with the business or affairs
of OLD RADO). To the best of their knowledge, there are no such claims or
proceedings pending challenging the validity or propriety of the transactions
contemplated by this Agreement. Except as set forth in Schedule XII.F, OLD RADO
is not subject to any judgment, order, decree, administrative ruling or other
judicial or administrative mandate or arbitration proceeding specifically
directed against OLD RADO. Except as set forth in Schedule XII.F, OLD RADO has
not received written notice from any governmental or administrative authority
contending that OLD RADO has not conducted, and, to the best of their knowledge,
OLD RADO has conducted, its business in all material respects, in accordance
with all applicable material federal, state and local laws and regulations
including any Environmental Laws (as defined in Article XII.P), except for any
noncompliance therewith that would not have a Material Adverse Effect.
G. Licenses and Trademarks. OLD RADO (i) has all permits,
approvals, authorizations, consents, licenses, certificates and registrations
which are material to the conduct of its business, all of which are valid and in
full force and effect in accordance with their terms and all of which are set
forth in Schedule XII.G, and (ii) owns or possesses adequate rights to use all
trade names, trademarks, and copyrights and all technology, processes, computer
programs, know-how and formulae which are material to the conduct of its
business and to their knowledge, the use thereof does not violate or infringe
upon the rights of any other party.
H. Title to Properties and Related Matters. OLD RADO has
title, leasehold and license rights, as applicable, to each and every Asset.
Except as set forth in Schedule XII.H, all such Assets are held free and clear
of liens, pledges, claims, charges, security interests or other encumbrances and
are not subject to any rights of way, building or use restrictions, exceptions,
18
variances, or reservations. Except as set forth in Schedule XII.H, all of the
accounts receivables of OLD RADO have been incurred in the ordinary course of
business. The Assets, including the equipment, fixtures, machinery, and personal
property, together with the real estate lease covering the Premises, comprise
substantially all of the operating assets used in the conduct of the business as
currently conducted.
I. Taxes and Tax Returns. OLD RADO has duly filed, or obtained
extensions to file, all federal, state, county, and local tax returns required
to be filed by it (the "Tax Returns") and has duly paid all taxes (including
required estimated taxes), assessments and other governmental charges or
impositions (including any interest or penalties) which are due and payable (the
"Taxes"). Except as set forth in Schedule XII.I, and to the best of their
knowledge, there are no claims asserted for Taxes, nor are there outstanding
agreements or waivers extending the statutory period of limitation applicable to
any Tax Return for any period. Except as set forth in Schedule XII.I, and to the
best of their knowledge, OLD RADO has withheld proper and accurate amounts from
its employees' compensation in substantial compliance with all withholding and
similar provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), and any and all other applicable laws, statutes, codes, ordinances,
rules and regulations. Except as set forth in Schedule XII.I, and to the best of
their knowledge, OLD RADO has not received any notice of assessment or proposed
assessment by the Internal Revenue Service or any other taxing authority in
connection with any Tax Returns and there are no pending tax examinations of or
tax claims asserted against OLD RADO. Complete copies of the income tax returns
of OLD RADO for the five fiscal years ending December 31, 2001, as filed with
the Internal Revenue Service ("IRS") and all state taxing authorities, signed by
an officer of OLD RADO, and all audit reports received by OLD RADO during the
last five years and issued by the IRS or state taxing authorities and all
consents and agreements entered into during the last five years with the IRS or
state taxing authorities, are attached hereto as Schedule XII.I.
J. Agreements. Except for this Agreement and the transactions,
instruments, agreements, and documents contemplated under this Agreement and as
listed in Schedule XII.J or any other Schedule attached hereto, OLD RADO is not
a party to any written or oral: (a) contract with any labor union; (b) contract
for the future purchase of fixed assets other than in the ordinary course of
business; (c) contracts for the future purchase of materials, supplies or
equipment other than in the ordinary course of business; (d) contract for the
employment of any officer, individual employee or other person on a full-time
19
basis or any contract with any person on a consulting basis; (e) bonus, pension,
profit-sharing, retirement, stock purchase, stock option, hospitalization,
medical insurance or similar plan, contract or understanding in effect with
respect to employees or any of them or the employees of others; (f) agreement or
indenture relating to the borrowing of money or to the mortgaging, pledging or
otherwise placing of a lien on any Assets; (g) guaranty of any obligation for
borrowed money or otherwise; (h) material lease or agreement under which OLD
RADO is lessee of or holds or operates any property, real or personal, owned by
any other party; (i) material lease, license or other agreement under which OLD
RADO is lessor of, or permits any third party to hold or operate any property,
real or personal, owned or controlled by it; (j) agreement or other commitment
for capital expenditures in excess of normal operating requirements; (k)
contract, agreement or commitment under which OLD RADO is obligated to pay any
broker's fees, finder's fees or any such similar fees; (l) contract, agreement,
or commitment under which OLD RADO is required to supply goods or products to
any customer or other person other than in the ordinary course of business; or
(m) any other contract, agreement, arrangement or understanding which is
material to the business of OLD RADO (each of the foregoing being referred to
collectively herein as "Contracts"). OLD RADO has furnished or made available to
NEW RADO true and correct copies of all such written Contracts. To the best of
their knowledge, all Contracts are valid and in full force and effect on the
date hereof, and OLD RADO has not breached any material provision of, or is in
default under any material provisions of, any Contract.
K. Absence of Changes. Except as set forth in Schedule XII.K
and the transactions contemplated by this Agreement, since April 30, 2002, there
has not been: (a) any material adverse change in the financial condition,
results of operations, assets, liabilities or business of OLD RADO; (b) any
material liability or obligation of any nature whatsoever (contingent or
otherwise) incurred by OLD RADO, other than current liabilities or obligations
incurred in the ordinary course of business; (c) any Asset made subject to a
lien of any kind; (d) any waiver of any valuable and material right of OLD RADO,
or the cancellation of any material debt or claim held by OLD RADO; (e) any
mortgage, pledge, sale, assignment or transfer of Assets except in the ordinary
course of business; (f) any damage, destruction or loss (whether or not covered
by insurance) which materially adversely affects or may materially adversely
affect the Assets; (g) any change in the accounting methods or practices
followed by OLD RADO; or (h) any other event, development or condition, of any
character, or threat of the same (excluding macro economic conditions generally
affecting the business), which materially adversely affects the business or
business prospects of OLD RADO.
20
L. Employee Benefit Plans.
(i) Except as set forth on Schedule XII.L, OLD RADO
does not sponsor, maintain, administer or contribute to: (i) any employee
pension benefit plan (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974 ("ERISA")) (a "Retirement Plan"), (ii) any plan or
arrangement providing health (medical, dental or vision), disability, life,
accident, legal aid, dependent care, supplemental unemployment or education
benefits; any plan or contract providing for benefits on severance or
termination of employment, reduction of hours, change in employment category or
similar event; any program providing for paid time off (including holiday pay,
sick leave, vacation, leave of absence, disability); any fringe benefit
(including company cars); or any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) not included in the foregoing categories (a "Welfare
Plan"), and (iii) any contract, policy or practice relating to employment; any
contract, policy or practice providing payments or benefits upon a change in
control, management or ownership; any stock option, stock purchase, stock
appreciation or stock ownership plan; any bonus, performance or incentive
compensation plan; or any contract, policy or practice providing compensation or
benefits not included in the foregoing categories or in subsections (i) or (ii)
above (a "Benefit Arrangement"). All Retirement Plans, Welfare Plans and Benefit
Arrangements sponsored, maintained, administered or contributed to by OLD RADO
are hereinafter collectively referred to as "Employee Benefit Plans."
(ii) Except for Employee Benefit Plans with respect
to unions and union employees, with respect to each Employee Benefit Plan, OLD
RADO has delivered or made available to NEW RADO true, correct and complete
copies, including any and all amendments thereto, of the following (to the
extent applicable): (i) the Plan document and amendments of the Plan document
(or, if no written plan document exists, a description thereof), (ii) the
current and all prior Summary Plan Descriptions and any employee communications
describing the terms or operations of the Plan, (iii) the three most recently
filed Form 5500s including all schedules thereto and any related accountant's
reports, (iv) the determination letters issued by the IRS, (v) the three most
recent actuarial valuations (in the case of a defined benefit plan) or most
recent allocation reports (in the case of a defined contribution plan), (vi) any
current or prior collective bargaining agreements or other contracts requiring
contributions to such Plan, and (vii) any current or prior employee handbooks or
policy manuals which refer to such Plan.
21
(iii) Except as set forth in Schedule XII.L, the
assets of OLD RADO are not subject to any liens under ERISA or the Internal
Revenue Code, and no event has occurred, and no condition exists, which could
subject OLD RADO or its assets to a future liability, obligation or lien on
account of any Controlled Group Benefit Plan. For purposes of this subsection, a
Controlled Group Benefit Plan means any Employee Benefit Plan which OLD RADO
maintains or at any time maintained, or to which OLD RADO has at any time
contributed or been obligated to contribute.
(iv) OLD RADO contributes only to those multi-
employer pension plans ("Multi-Employer Plans") identified in Schedule XII.L.
Except as set forth in Schedule XII.L., with respect to each such Multi-Employer
Plan (A) all required contributions have been paid to date and (B) OLD RADO has
not incurred any partial or total withdrawal liability thereunder as defined in
MEPPAA.
(v) To OLD RADO's knowledge, each Employee Benefit
Plan is, and has at all times been, administered, maintained and operated in
compliance with its terms and in compliance with the applicable provisions of
the Internal Revenue Code, ERISA and all other federal, state and local laws
(and all rules and regulations promulgated or proposed thereunder).
(vi) To its knowledge, OLD RADO has performed all
material obligations required to be performed by it by the terms of each
Employee Benefit Plan (including, but not limited to, filing all governmental
returns or reports on a timely basis), and all contributions or payments
deducted by OLD RADO for tax purposes were properly deductible in the year for
which such deductions were claimed. To its knowledge, OLD RADO has made no
non-deductible contributions (within the meaning of Code Section 4972) to any
Employee Benefit Plan.
(vii) To OLD RADO's knowledge, there are no actions,
proceedings, investigations or claims of any kind (other than routine benefit
claims made in the ordinary course), including claims for civil penalties,
pending or threatened, against any person or entity with respect to any aspect
of the terms or operations of any Employee Benefit Plan, and no events or
omissions have occurred which could give rise to any such actions, proceedings,
investigations or claims. To OLD RADO's knowledge, there have been no audits or
investigations of any Employee Benefit Plan by any governmental agency.
22
(viii) To OLD RADO's knowledge, each Retirement Plan
that is or was intended to constitute a qualified plan under Section 401(a) of
the Code is, and has at all times been, qualified, in form and operation, under
Section 401(a) of the Code and is the subject of a favorable determination
letter from the IRS.
(ix) To OLD RADO's knowledge, except as set forth in
Schedule XII.L, with respect to any Retirement Plan (whether or not terminated)
which is a defined benefit plan (as defined in Section 3(35) of ERISA)
(including, for this purpose, any Controlled Group Benefit Plan which is a
Retirement Plan): (i) OLD RADO has not incurred or would not incur any liability
to the Pension Benefit Guaranty Corporation ("PBGC"), the Retirement Plan, Plan
participants or any other person or entity on account of the termination of such
Retirement Plan or a withdrawal therefrom, (ii) the fair market value of the net
assets of such Plan equal or exceed both the "benefit liabilities" of the Plan
for purposes of ERISA Section 4041 and the present value of all projected
benefit obligations (including, but not limited to, any early retirement or
other subsidy) calculated in accordance with Statement No. 87 of the Financial
Accounting Standards Board, based on the actuarial methods, tables and
assumptions that are no more favorable to the Plan than the actuarial methods,
tables and assumptions that would be used by the PBGC in terminating an
underfunded single employer plan on the date of such calculation, (iii) there
have not been any "reportable events" (as defined in Section 4043 of ERISA) with
respect to which the 30 day notice requirement has not been waived, (iv) the
funding method for such Plan and the actuarial assumptions used in connection
with the funding of such Plan satisfy the requirements of Section 412 of the
Internal Revenue Code and Section 302 ERISA, and (v) such Plan does not have any
unfunded past service liabilities.
(x) With respect to any Retirement Plan which is
unfunded (but not underfunded), and except for Multi-Employer Plans included
therein, OLD RADO has adequately provided for, and its financial statements
accurately reflect (in accordance with generally accepted accounting principles
consistently applied), the amount of all accrued benefits under such Plan, and
such accrued benefits were computed based on actuarial methods, tables and
assumptions, each of which is itself reasonable.
(xi) Except as set forth in Schedule XII.L and to OLD
RADO's knowledge, no Controlled Group Benefit Plan provides health, medical or
similar benefits to retirees or other former employees or their beneficiaries
(except to the extent required under ERISA Sections 601-608).
23
(xii) The consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or former
employee or officer of OLD RADO to severance pay, unemployment compensation or
any other payment, except as expressly provided in this Agreement or any other
transaction or document contemplated hereby, including the Schedules attached
hereto, (ii) accelerate the time of payment or vesting or increase the amount of
compensation due any such employee or officer except as expressly provided in
this Agreement or in any other transaction or document contemplated hereby,
including the Schedules attached hereto, or (iii) result in any prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code for
which an exemption does not apply.
M. No Defaults. OLD RADO is not in default in any material
respect beyond applicable grace, notice and cure periods under any material
lease agreement, contract, purchase order or other instrument or agreement to
which it is a party or by which it or any of its property is bound or affected,
except for defaults which would be caused as a result of the transactions
contemplated under this Agreement or which would not have a Material Adverse
Effect. To the best of their knowledge, there exists no condition, event or act
which constitutes, or which after notice, lapse of time or both could
constitute, a default by OLD RADO under any of the foregoing, except for
defaults which would be caused as a result of the transactions contemplated by
this Agreement or which would not have a Material Adverse Effect.
N. Compensation Arrangements.
(i) Schedule XII.N contains a correct list setting
forth the names of all persons who are employed by OLD RADO, together with (i) a
statement of the current rate of pay (to the extent ascertainable) to or in
respect of each such person for services rendered or to be rendered in the
current year and the basis therefor, (ii) an indication of the method by which
each is compensated (e.g. salary plus commission, straight commission, draw
against commission), (iii) their job descriptions, union affiliation, and a list
of any employment or other agreements pursuant to which such compensation was or
is to be paid (copies of which have been made available to NEW RADO), and (iv)
the names and titles of all directors and officers of OLD RADO.
(ii) Except as set forth in Schedule XII.N hereto,
OLD RADO is not a party to any representation or labor contract. Except as set
forth in Schedule XII.N, OLD RADO is not in breach of any provision of any such
contract and to their knowledge, no strike or work interruption by any of its
24
employees is planned, under consideration, threatened or imminent. Complete and
correct copies of any labor or representation contract to which OLD RADO is a
party have been heretofore delivered or made available to NEW RADO. Except as
set forth in Schedule XII.N, at no time during the past five (5) years has OLD
RADO experienced any threats of strikes, work stoppages or demands for
collective bargaining by any union or labor organization or any other group or
other organization of employees, and grievances, disputes or controversies with
any union or any other group or any other organization of employees or any
pending or threatened court or arbitration proceedings involving an employment
grievance, dispute or controversy.
O. Consents, etc.. Except as described in Schedule XII.C and
subject to Section XII.C, no consent, authorization, order or approval of, or
filing or registration with, any governmental commission, board or other
regulatory body or any other person or entity is required for or in connection
with the execution or delivery of this Agreement by OLD RADO or the consummation
by OLD RADO of the transactions contemplated hereby, except for those consents,
authorizations, orders, approvals, filings or registrations which would not have
a Material Adverse Effect on the transactions contemplated by this Agreement.
P. Environmental Laws. Any and all material permits, licenses
and other authorizations which are required under federal, state, local, or
other laws relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes ("Environmental Laws") have been obtained by OLD RADO in
respect of the business currently conducted by it. To their knowledge, OLD RADO
is in compliance, in all material respects, with all terms and conditions of the
required material permits, licenses and authorizations in connection with the
business conducted by it, and is also complying, in all material respects, with
all other material limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
those laws or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder. To
their knowledge, there have been no past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans of OLD RADO
25
which would interfere with or prevent continued compliance, or which may give
rise to any material common law or statutory legal liability or obligation, or
otherwise form the basis of any material claim, action, suit, proceeding,
hearing or investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or the
emission, discharge, release or threatened release into the environment, of any
pollutant, contaminant, or hazardous or toxic material or waste material.
Q. Insurance. Schedule XII.Q contains a true, complete and
correct list of all insurance policies in force in which OLD RADO is named as an
insured, and for which OLD RADO has paid any premium, and which insure any of
the Assets or the Premises, or cover any liabilities of the business, and states
for each such policy the name of the insurer, type and amount of coverage,
deductible amounts, if any, expiration date and the annual premium amount. Such
policies are in full force and effect and all premiums with respect to such
policies are currently paid.
R. Related Party Obligations. Except as set forth on Schedule
XII.R, OLD RADO has no obligation, liability or commitment (contingent or
otherwise) to or from any past or present officer, director, or shareholder or
any party related to, controlling, controlled by or under common control with
any of the foregoing.
S. Books and Records. OLD RADO has made available to NEW RADO
and its representatives all of its tax, accounting, corporate and financial
books and records, whether in written, electronic or other form. All such books
and records are materially complete and materially correct, have been maintained
on a current basis, and fairly reflect the basis for OLD RADO's financial
condition and results of operations.
For the purposes hereof, the knowledge of OLD RADO shall mean the actual
knowledge of either Xxxxxxx X. Xxxx or Xxxx X. Xxxx. For purposes hereof, the
knowledge of the Shareholder shall mean the actual knowledge of Xxxxxxx X. Xxxx.
XIII. Covenants of OLD RADO and the Shareholder.
A. Each of OLD RADO and the Shareholder covenants and agrees
that from the date of the execution and delivery of this Agreement, to the date
of the Closing:
1. OLD RADO shall continue to conduct its business in
the ordinary course and in the same manner as heretofore, and will use
reasonable, diligent commercial efforts to preserve its business organization
26
intact and keep available to NEW RADO the services of its present employees and
preserve the goodwill of customers and suppliers and others having business
relations with OLD RADO. OLD RADO shall maintain the Assets in their condition
as of the date hereof, subject to ordinary wear and tear. It is the intent of
NEW RADO and NEW RADO agrees to extend employment offers, such that after
Closing all of the present employees of OLD RADO would continue to be employees
of NEW RADO at their present pay scales and employee benefits (including without
limitation the benefits under OLD RADO's Blue Cross Plan, the OLD RADO Money
Purchase Pension Plan, and the OLD RADO Profit Sharing Plan (as such terms are
defined in the Schedules to this Agreement).
2. OLD RADO shall give to NEW RADO and its
representatives full access during normal business hours, and on reasonable
prior notice, to all of the Assets, books, records, employees and payroll lists
and records, agreements, and documents of OLD RADO, including, without
limitation, all of the books of account and business records or other writings,
computer data and information, computer programs, sales invoices and credit
memos, ledgers, journals, bank statements, canceled checks, deposit slips, tax
returns, tax assessments and notices, claims by or against OLD RADO, judgments,
financing statements, security agreements, liens, computer runs, marketing and
promotional plans, promotional or pricing allowances, price lists, credits,
rebates, and/or discounts, payment and credit terms with suppliers and
customers, customer complaints and claims, and insurance claims, wherever
located (collectively hereinafter the "Books and Records"). OLD RADO will
furnish to NEW RADO all information with respect to the affairs of OLD RADO
which NEW RADO may from time to time reasonably request, and NEW RADO and its
representatives may, prior to the Closing, make such examination and
investigation of said Books and Records and of its properties, assets, and
business, as NEW RADO deems necessary or advisable, and examining the Premises,
and may examine any financial statements, including without limitation,
internally prepared financial statements or management reports, and the work
papers of the accountant or accountants employed by or servicing the Books and
Records and business of OLD RADO for all periods prior to the Closing. The mere
fact of such examination or investigation by NEW RADO or its representatives,
however, shall not, of itself, affect the representations, warranties or
covenants hereunder of either OLD RADO or the Shareholder, unless NEW RADO has
(a) obtained actual knowledge as a result of such investigation or examination
which is contrary to any such representation, warranty, or covenant and (b)
discloses such actual knowledge to OLD RADO and the Shareholder. From and after
the date hereof, NEW RADO shall have the right, on reasonable prior notice, to
have one or more of its representatives present on the business premises of OLD
RADO during normal business hours.
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3. OLD RADO shall not, without first obtaining the
written consent of NEW RADO: (1) make any commitment, or enter into any
transaction, which materially and adversely affects the Assets; (2) enter into
any agreement with respect to or affecting the Assets, other than in the
ordinary and usual course of its business, which does not terminate or is not
terminable without penalty by OLD RADO prior to the Closing; (3) further
encumber, lien or grant a security interest in any of the Assets; (4) make any
loans or advances or assume, guarantee, endorse or otherwise become responsible
for the obligations of any other person or entity which would affect in any
manner the Assets; (5) cancel, amend or terminate any existing agreement
relating in any manner to the business, except in the ordinary and usual course
of its business or as otherwise required by this Agreement; (6) enter into or
terminate any contract, agreement, plan, or lease, or make any change in any of
its contracts, agreements, plans or leases, other than in the ordinary and usual
course of its business; (7) make any changes in its authorized, issued or
outstanding capital stock, and make no material amendment to or change its
Articles of Incorporation or By-laws; (8) not dispose of or agree to dispose of,
any assets, real, personal, or intangible, except in the ordinary course of
business; and (9) make no change to any of its contracts with, nor enter into
any agreements granting any additional benefits to, any director, employee,
shareholder, or consultant, except in the ordinary course of business.
4. OLD RADO will, through the date of Closing, keep
in force and undiminished its existing insurance in connection with the Assets
and in connection with the Premises. Prior to Closing, all risk of loss, damage
or destruction to all or part of the Assets or such Premises shall be borne
exclusively by OLD RADO.
5. OLD RADO shall carry on its business substantially
in the same manner as heretofore and will make or institute no unusual or novel
methods of distribution, purchase, sale, management or operation of its
business, including but not limited to the payment or non-payment of its debts
or liabilities, other than in the ordinary course of its business.
6. The Shareholder shall not transfer, assign,
encumber, hypothecate, sell, or transfer any interest whatsoever in any of the
capital stock of OLD RADO.
B. From and after the Closing, OLD RADO shall, at no cost or
expense to OLD RADO, furnish all financial information reasonably necessary for,
and shall cooperate with NEW RADO with respect to, the preparation after the
date of Closing of such financial statements relating to the Assets as NEW RADO
is required to prepare.
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C. Prior to or immediately after the execution of this
Agreement, OLD RADO shall, at its sole cost and expense, cause a reputable
search company to issue and deliver to NEW RADO prior to twenty days after the
date hereof, a certificate of such search company or other evidence reasonably
satisfactory to NEW RADO that a central and local search has been made of the
records wherein financing statements and security agreements, or the local
equivalents thereof, are filed under the applicable Uniform Commercial Code or
comparable local law, as well as for judgments, judgment liens and all tax
liens. Such certificate shall identify all security interests and liens of any
kind or nature whatsoever and wherever located that are claimed by any person
against any of the Assets.
D. Phase One Audit. Prior to or promptly after the execution
and delivery hereof, OLD RADO shall, at its sole cost and expense, obtain a
current phase one environmental audit ("Phase One Audit") of the Premises. The
results of such Phase One Audit, including a copy of any and all reports,
letters, or other documents produced in connection therewith, shall be delivered
to NEW RADO.
XIV. Representations and Warranties of NEW RADO to OLD RADO and the
Shareholder. NEW RADO hereby represents and warrants to OLD RADO and the
Shareholder, as follows:
A. Corporate Organization. NEW RADO is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania with all requisite corporate power and authority to
own, operate and lease its properties and carry on its business as now being
conducted. Moro Corporation is the sole record and beneficial owner of all of
the issued and outstanding capital stock of NEW RADO.
B. Authority. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors and, if necessary, the sole shareholder, of
NEW RADO and no other corporate proceedings on the part of NEW RADO are
necessary to authorize this Agreement or to carry out the transactions
contemplated hereby. NEW RADO has the right, power and authority to enter into
and perform this Agreement. This Agreement constitutes the valid and binding
agreement of NEW RADO enforceable in accordance with its terms, except that such
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and subject to the discretion of a court
in granting equitable remedies.
29
C. Conflicts with Instruments. Neither the execution or
delivery of this Agreement by NEW RADO, or the consummation of the transactions
contemplated by this Agreement by NEW RADO, nor the compliance with the terms of
this Agreement by NEW RADO will: (i) conflict with or result in a breach of any
provision of the Articles of Incorporation or By-laws, as amended, of NEW RADO;
or (ii) violate any order, writ, injunction, decree, judgment or ruling of any
court or administrative or governmental body or agency or arbitration tribunal,
or violate any material provision of any permit, license, certificate or
registration to which NEW RADO is subject or pursuant to which it conducts
business, or any law, rule or regulation.
D. No Violation. NEW RADO has not been charged with or given
notice of, nor does there exist, to the best of its knowledge, any outstanding
violation of any applicable law, statute, order, rule, regulation, policy or
guideline promulgated, or judgment entered by any federal, state or local court
or administrative or governmental authority or arbitration tribunal which would
materially adversely affect NEW RADO or its business, or any of its properties
or the consummation of the transactions contemplated by this Agreement.
E. Legal Proceedings. NEW RADO has not received written notice
of any claim or proceeding (including any arbitration proceeding) pending
against, relating to or affecting NEW RADO (or any of its officers or directors
in connection with the business or affairs of NEW RADO). To the best of its
knowledge, there are no such claims or proceedings pending challenging the
validity or propriety of the transactions contemplated by this Agreement. NEW
RADO is not subject to any judgment, order, decree, administrative ruling or
other judicial or administrative mandate or arbitration proceeding specifically
directed against NEW RADO. NEW RADO has not received written notice from any
governmental or administrative authority contending that NEW RADO has not
conducted, and, to the best of its knowledge, NEW RADO has conducted, its
business in all material respects, in accordance with all applicable material
federal, state and local laws and regulations including any Environmental Laws
(as defined in Article XII.P).
F. Consents, etc.. No consent, authorization, order or
approval of, or filing or registration with, any governmental commission, board
or other regulatory body or any other person or entity is required for or in
connection with the execution or delivery of this Agreement by NEW RADO or the
consummation by NEW RADO of the transactions contemplated hereby.
30
X. Xxxx Financial Statements. Moro Corporation's consolidated
financial statements (including, in each case, any notes thereto) for the twelve
months ended December 31, 2001 (audited) and for the three months ended March
31, 2002 (unaudited), copies of which are attached hereto as Schedule XIV.G,
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each presents fairly, in all material
respects, the consolidated financial position of Moro Corporation and its
consolidated subsidiary as of the respective dates thereof and for the
respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments). Since December 31, 2001, there has been no material adverse change
in the consolidated financial position of Moro Corporation.
H. NEW RADO Pro Forma Balance Sheet. At the time of Closing,
NEW RADO shall deliver to OLD RADO a pro forma balance sheet of NEW RADO as of
the date of Closing and after giving effect to all of the transactions
contemplated by this Agreement. The pro forma balance sheet shall reflect the
assets, liabilities and balance sheet of NEW RADO as of the consummation of the
transactions contemplated herein and to the extent required, shall incorporate
the most recently available balance sheet of OLD RADO used to determine the
Estimated Purchase Price in Section VI.C.3 ("Incorporated Financial
Information"). The NEW RADO pro forma balance sheet was prepared in accordance
with generally accepted accounting principles applied on a consistent basis
(except as may be indicated in the notes thereto) and presents fairly, in all
material respects, the pro forma financial position of NEW RADO as at the date
hereof (after giving effect to the transactions contemplated hereby), except as
otherwise noted therein subject to normal and recurring year-end adjustments.
The foregoing representation and warranty shall not cover any of the
Incorporated Financial Information.
XV. Non-Competition.
A. From the date of Closing until the seventh (7th)
anniversary of the Closing, OLD RADO shall not act as a stockholder, agent,
lessor, sublessor, partner or consultant of, or otherwise participate in or
assist, any enterprise or organization which is or which becomes engaged in the
business, or similar type business, presently carried on or engaged in by OLD
RADO as of the Closing; provided, however, that notwithstanding the foregoing,
31
OLD RADO shall be permitted to (i) act as an agent for NEW RADO from time to
time at the request of NEW RADO; (ii) perform any and all Existing Nonassignable
Construction Contracts; (iii) own, purchase, sell or otherwise transfer
investments in securities of any entity which is not engaged in the business of
providing mechanical contracting services for plumbing, heating, ventilation and
air conditioning projects (the "Restricted Business"); and (iv) own, purchase,
or otherwise transfer investments representing less than a 5% percent interest
in the securities of an entity in the Restricted Business if such securities are
included in the National Market Securities list of the National Association of
Securities Dealers, Inc. Automated Quotation System or listed on any national
securities exchange.
B. From the date of Closing until the seventh (7th)
anniversary of the Closing, OLD RADO shall not solicit, interfere with or
endeavor to entice away from NEW RADO, any customer, supplier, or any person,
firm or corporation dealing with NEW RADO, or interfere with or employ or induce
to leave the employment of NEW RADO, any employee of NEW RADO; provided,
however, that the foregoing shall not (i) prohibit any activities of either the
Shareholder or Xxxx X. Xxxx at any time following the Closing permitted under
their respective employment agreements with NEW RADO, and (ii) apply to any
activities of OLD RADO in connection with the performance of any Existing
Nonassignable Construction Contract.
C. In the event of a breach of any of the terms of this
Article, NEW RADO shall be entitled to apply for and obtain injunctive relief in
any court of competent jurisdiction, without limitation as to any other or
further remedies which may be available to NEW RADO. Notwithstanding anything to
the contrary contained in this Agreement, in any action to enforce the covenants
contained in this Article, the non-prevailing party in any such action shall
reimburse the prevailing party for any and all costs and expenses incurred in
prosecuting or defending, as applicable, such action.
XVI. Conditions to Closing by NEW RADO. The obligation of NEW RADO to
close under this Agreement is subject to the satisfaction of the following
conditions precedent (all or any of which may be waived, in whole or in part, in
writing by NEW RADO in its sole discretion) on or prior to the date of Closing:
A. Covenants, Agreements. OLD RADO, the Shareholder, RAM
Buildings, and Xxxx X. Xxxx shall have performed all covenants and agreements to
be performed by each of them on or before Closing pursuant to the terms of this
Agreement.
32
B. Authorizations. OLD RADO shall have delivered to NEW RADO:
(1) a certified copy of a resolution or resolutions unanimously adopted by the
Board of Directors and Shareholder of OLD RADO authorizing OLD RADO to execute,
deliver and fully perform this Agreement and approving same; and (2) such other
instruments, documents and certificates as NEW RADO or its counsel may
reasonably request for the purpose of consummating the transactions contemplated
herein; and (3) a certificate signed by the President and Secretary of OLD RADO,
dated the date of Closing, to the effect that all representations and warranties
of OLD RADO and the Shareholder are true and correct on and as of the Closing,
with the same effect as though such representations and warranties had been made
on and as of such date and time and that the agreements, covenants and
obligations to be performed by OLD RADO and the Shareholder pursuant to this
Agreement shall have been so performed in all material respects (together with
an incumbancy and signature certificate regarding the officer(s) signing on
behalf of OLD RADO).
C. Representations, Warranties. The representations and
warranties of OLD RADO and the Shareholder contained in this Agreement shall be
true and correct, in all material respects, on and as of the Closing, with the
same effect as though such representations and warranties had been made on and
as of such date and time; provided, however, that OLD RADO and the Shareholder
shall have the right, at any time prior to the Closing, to update the Schedules
for events which occur between the date hereof and the Closing and to amend the
Schedules for any errors, omissions or inaccuracies with respect to all
representations and warranties made by OLD RADO and the Shareholder of which OLD
RADO and the Shareholder are required to be notified pursuant to Section XVII.C
hereof. OLD RADO and the Shareholder shall have notified NEW RADO of any and all
errors, omissions or inaccuracies discovered or known by OLD RADO or the
Shareholder as of the Closing with respect to all representations and warranties
made by NEW RADO which are contained in this Agreement (including the Schedules
hereto) or under any document or agreement contemplated hereunder.
D. Destruction of Assets. There shall have been no fire or
other damage to any material portion of the Assets or a substantial portion of
the Premises.
E. Phase One Audit. OLD RADO shall have delivered to NEW RADO,
at no cost or expense to NEW RADO, the Phase One Audit which is satisfactory to
NEW RADO, its bank, and its legal advisors.
33
F. Financing Commitment. NEW RADO shall have received its
financing commitments in an amount, form, and substance reasonably acceptable to
NEW RADO and these commitments shall have actually been funded as of the
Closing.
G. Bonding Commitment. NEW RADO shall have received its
insurance bonding commitment in an amount, form, and substance reasonably
acceptable to NEW RADO.
H. Opinion of Counsel. NEW RADO shall have received the
written opinion, dated the date of Closing, and as of such date, of White &
Xxxxxxxx LLP, counsel to NEW RADO and the Shareholder, in form and substance
reasonably satisfactory to NEW RADO or its counsel.
I. Transfer of Title. OLD RADO shall deliver to NEW RADO bills
of sales, assignments and other appropriate instruments of transfer effective to
vest in NEW RADO title (and all of OLD RADO's right, title and interest) in and
to the Assets (free and clear of liens, security interests, claims or other
encumbrances of every nature), to the extent that title in and to the Assets may
be vested in NEW RADO in each case in form and substance reasonably satisfactory
to NEW RADO and counsel for NEW RADO.
J. Consents, Authorizations. OLD RADO shall deliver to NEW
RADO the consents set forth in Schedule XII.C. hereto, except for the consents
which are waived by NEW RADO and consents for the Existing Nonassignable
Construction Contracts and the Existing Contract Bonds. OLD RADO shall have
obtained all permits, consents, waivers from and approvals of, and made filings
and registrations with any federal, state and local governmental board,
commission, authority or any other regulatory body, which are required for the
consummation by OLD RADO of the transactions contemplated on its part hereby,
except for the permits, consents, waivers, or approvals which are waived by NEW
RADO.
XVII. Conditions to Closing by OLD RADO. The obligation of OLD RADO to
close under this Agreement is subject to the satisfaction of the following
conditions precedent (all or any of which may be waived, in whole or in part, in
writing by OLD RADO), on or prior to the date of Closing:
34
A. Covenants. NEW RADO, Xxxxx X. Xxxxxx, Xxxxxxxxxx X. Xxxxxx,
and Xxxx Corporation shall have performed all covenants and agreements to be
performed by each of them on or before the Closing pursuant to the terms of this
Agreement.
B. Authorizations. NEW RADO shall have delivered to OLD RADO:
(1) a certified copy of a resolution or resolutions unanimously adopted by its
Board of Directors authorizing NEW RADO to make, deliver and perform this
Agreement and approving same; (2) such other instruments, documents and
certificates as OLD RADO or its counsel may reasonably request for the purpose
of consummating the transactions contemplated herein; (3) a certificate signed
by the President and Secretary of NEW RADO dated the date of Closing, to the
effect that all representations and warranties of NEW RADO are true and correct
on and as of the Closing, with the same effect as though such representations
and warranties had been made on and as of such date and time and that the
agreements, covenants and obligations to be performed by NEW RADO pursuant to
this Agreement shall have been so performed in all material respects (together
with an incumbancy and signature certificate regarding the officer(s) signing on
behalf of NEW RADO).
C. Representations, Warranties. The representations and
warranties of NEW RADO contained in this Agreement shall be true and correct in
all material respects on and as of the date of Closing, with the same effect as
though such representations and warranties had been made on and as of the time
and date of the Closing. NEW RADO shall have notified OLD RADO and the
Shareholder of any and all errors, omissions or inaccuracies discovered or known
by NEW RADO as of the Closing with respect to all representations and warranties
made by OLD RADO or the Shareholder which are contained in this Agreement
(including the Schedules hereto) or under any document or agreement contemplated
hereunder.
D. Opinion of Counsel. OLD RADO shall have received the
written opinion, dated the date of Closing, and as of such date, of Lurio &
Associates, P.C., counsel to NEW RADO, in form and substance reasonably
satisfactory to OLD RADO or its counsel.
E. Bonding Commitment. OLD RADO shall have made appropriate
arrangements with its bonding company in connection with the Existing Contract
Bonds as shall be reasonably acceptable to OLD RADO.
35
XVIII. Termination.
-----------
Anything herein or elsewhere to the contrary notwithstanding,
this Agreement may be terminated (i) by NEW RADO if the conditions set forth in
Section XVI hereof shall not have been complied with or performed in all
material respects and such noncompliance or nonperformance shall not have been
cured or eliminated (or by its nature cannot be cured or eliminated) by OLD
RADO, RAM Buildings, Xxxx X. Xxxx, or the Shareholder on or before 5:00 p.m.,
Philadelphia time, on August 31, 2002; or (ii) by OLD RADO if the conditions set
forth in Section XVII hereof shall not have been complied with or performed in
all material respects and such noncompliance or nonperformance shall not have
been cured or eliminated (or by its nature cannot be cured or eliminated) by NEW
RADO or Xxxxx X. Xxxxxx on or before 5:00 p.m., Philadelphia time, on August 31,
2002; or (iii) by NEW RADO if any time prior to the consummation of Closing if
it is not reasonably satisfied with its due diligence investigation of the
Assets, or the business of OLD RADO, or the Premises; or (iv) by NEW RADO if a
material adverse change shall have occurred to the business of OLD RADO, or to
the Assets, or to the Premises, at any time after the date hereof; or (v) by NEW
RADO, if it is not reasonably satisfied with any update to the Schedules made by
OLD RADO or the Shareholder pursuant to Section XVI.C. hereof. It is understood
and agreed that (i) any such termination shall not in and of itself be a breach
of this Agreement, and (ii) any such termination shall not limit, extinguish or
modify any claim or cause of action which may otherwise exist for a breach of
any covenant, warranty, representation or obligation contained herein.
XIX. Indemnification.
---------------
A. From and after the date hereof, and subject to the
limitations set forth in Article XIX.G. below, OLD RADO and the Shareholder,
jointly and severally, agrees to indemnify against, and to protect, save and
keep NEW RADO and Moro Corporation, their officers, directors, shareholders,
agents, employees, and affiliates and their successors and assigns (jointly and
severally, an "OLD RADO/Shareholder Indemnified Party") harmless from, and to
assume liability for, payment of all liabilities, obligations, losses, damages,
penalties, interest, claims, actions, suits, judgments, settlements, charges,
out-of-pocket costs, expenses and disbursements (including reasonable costs of
investigation, and reasonable fees of attorneys, accountants and expert
witnesses) of whatsoever kind and nature (collectively referred to as "NEW RADO
Damages") that may be imposed on or incurred by an OLD RADO/Shareholder
Indemnified Party as a consequence of or in connection with any claims, suits,
demands, threats, causes of actions, obligations, debts, liability, or damages
whatsoever, (i) arising or incurred by OLD RADO prior to or after the Closing
unless NEW RADO has assumed such obligation or liability in this Agreement or in
the Assumption Agreement, or (ii) arising in whole or in part by reason of the
performance or non-performance of the terms of this Agreement or any breach of
any representation, warranty, or covenant in this Agreement or any certificate
or document furnished pursuant hereto by OLD RADO, the Shareholder, or Xxxx X.
Xxxx, or (iii) by reason of or the result of the operation by any person or
entity of the business of OLD RADO prior to the Closing unless assumed by NEW
RADO, or (iv) by reason of or the result of any asserted or actual violation by
OLD RADO of any Environmental Law with respect to facts or circumstances
existing as of Closing in connection with the business of OLD RADO or the
Assets, or in connection with the Premises.
36
B. From and after the date hereof, and subject to the
limitations set forth in Article XIX.G. below, NEW RADO and Moro Corporation,
jointly and severally, agrees to indemnify against, and to protect, save and
keep OLD RADO, the Shareholder and their officers, directors, shareholders,
agents, employees, and affiliates and their successors and assigns (jointly and
severally, a "NEW RADO Indemnified Party") harmless from, and to assume
liability for, payment of all liabilities, obligations, losses, damages,
penalties, interest, claims, actions, suits, judgments, settlements, charges,
out-of-pocket costs, expenses and disbursements (including reasonable costs of
investigation, and reasonable fees of attorneys, accountants and expert
witnesses) of whatsoever kind and nature (collectively referred to as "OLD
RADO/Shareholder Damages") that may be imposed on or incurred by a NEW RADO
Indemnified Party as a consequence of or in connection with any claims, suits,
demands, threats, causes of actions, obligations, debts, liability, or damages
whatsoever, (i) arising or incurred by a NEW RADO Indemnified Party prior to or
after the Closing solely to the extent, if any, that NEW RADO has expressly
assumed such obligation or liability in this Agreement or in the Assumption
Agreement, or (ii) arising in whole or in part by reason of the performance or
non-performance of the terms of this Agreement or any breach of any
representation, warranty, or covenant in this Agreement or any certificate or
document furnished pursuant hereto by NEW RADO, Moro Corporation, Xxxxx X.
Xxxxxx, or Xxxxxxxxxx X. Xxxxxx, or (iii) any liability arising from events or
circumstances relating to the Assets arising from and after the date of Closing
or the conduct of business of NEW RADO from and after the date of Closing, or
(iv) any liability with respect to any Existing Contract Bond or Existing
Nonassignable Construction Contract in the event that any such Existing Contract
Bond is called, or any such Existing Nonassignable Construction Contract is
breached, in connection with or attributable to any action of NEW RADO occurring
on or after the date of Closing.
37
C. Any party entitled, or seeking to assert rights to
indemnification under this Section XIX ("Indemnified Party") shall give written
notification to the party from whom indemnification is sought (an "Indemnifying
Party") of the commencement of any suit or proceeding relating to a third party
claim for which indemnification pursuant to this Section XIX may be sought. Such
notification shall be given within 20 business days after receipt by the
Indemnified Party of notice of such suit or proceeding, and shall describe in
reasonable detail (to the extent known by the Indemnified Party) the facts
constituting the basis for such suit or proceeding and the amount of the claimed
damages; provided, however, that no delay on the part of the Indemnified Party
in notifying the Indemnifying Party shall relieve the Indemnifying Party of any
liability or obligation hereunder except to the extent of any damage or
liability caused by or arising out of such failure. Within 20 days after
delivery of such notification, the Indemnifying Party may, upon written notice
thereof to the Indemnified Party, assume control of the defense of such suit or
proceeding with counsel reasonably satisfactory to the Indemnified Party;
provided that (i) the Indemnifying Party may only assume control of such defense
if (A) the Indemnifying Party acknowledges in writing to the Indemnified Party
that any damages, fines, costs or other liabilities that may be assessed against
the Indemnified Party in connection with such suit or proceeding constitute NEW
RADO Damages or OLD RADO/Shareholder Damages, as applicable ("Damages"), for
which the Indemnified Party shall be indemnified pursuant to this Section XIX
and (B) the amount of Damages claimed due are less than or equal to the amount
of Damages for which the Indemnifying Party is liable under this Section XIX,
and (ii) the Indemnifying Party may not assume control of the defense of a suit
or proceeding involving criminal liability or in which equitable relief is
sought against the Indemnified Party. If the Indemnifying Party does not so
assume control of such defense, the Indemnified Party shall control such
defense. The party not controlling such defense (the "Non-controlling Party")
may participate therein at such party's own expense; provided that if the
Indemnifying Party assumes control of such defense and the Indemnified Party
reasonably concludes that the Indemnifying Party and the Indemnified Party have
conflicting interests or different defenses available with respect to such suit
or proceeding, the reasonable fees and expenses of counsel to the Indemnified
Party shall be considered "Damages" for purposes of this Agreement. The party
controlling such defense (the "Controlling Party") shall keep the
Non-controlling Party advised of the status of such suit or proceeding and the
defense thereof and shall consider in good faith recommendations made by the
Non-controlling Party with respect thereto. The Non-controlling Party shall
furnish the Controlling Party with such information as it may have with respect
to such suit or proceeding (including copies of any summons, complaint or other
pleading which may have been served on such party and any written claim, demand,
invoice, billing or other document evidencing or asserting the same) and shall
otherwise cooperate with and assist the Controlling Party in the defense of such
suit or proceeding. The Indemnifying Party shall not agree to any settlement of,
or the entry of any judgment arising from, any such suit or proceeding without
the prior written consent of the Indemnified Party, which shall not be
unreasonably withheld or delayed; provided that the consent of the Indemnified
Party shall not be required if the Indemnifying Party agrees in writing to pay
any amounts payable pursuant to such settlement or judgment and such settlement
or judgment includes a complete release of the Indemnified Party from further
liability and has no other adverse effect on the Indemnified Party. The
Indemnified Party shall not agree to any settlement of, or the entry of any
judgment arising from, any such suit or proceeding without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld or
delayed.
38
D. In order to seek indemnification under this Section XIX, an
Indemnified Party shall give written notification (a "Claim Notice") to the
Indemnifying Party which contains (i) a description and the amount (the "Claimed
Amount") of any Damages incurred or reasonably expected to be incurred by the
Indemnified Party, (ii) a statement that the Indemnified Party is entitled to
indemnification under this Section XIX for such Damages and a reasonable
explanation of the basis therefor, and (iii) a demand for payment (in the manner
provided in paragraph E below) in the amount of such Damages.
E. Within 20 days after delivery of a Claim Notice, the
Indemnifying Party shall deliver to the Indemnified Party a written response
(the "Response") in which the Indemnifying Party shall elect one of the
following: (i) agree that the Indemnified Party is entitled to receive all of
the Claimed Amount (in which case the Response shall be accompanied by a payment
by the Indemnifying Party to the Indemnified Party of the Claimed Amount; or
(ii) agree that the Indemnified Party is entitled to receive part, but not all,
of the Claimed Amount (the "Agreed Amount") (in which case the Response shall be
accompanied by a payment by the Indemnifying Party to the Indemnified Party of
the Agreed Amount; or (iii) dispute that the Indemnified Party is entitled to
receive any of the Claimed Amount. If the Indemnifying Party in the Response
disputes its liability for all or part of the Claimed Amount, the Indemnifying
Party and the Indemnified Party shall follow the procedures set forth in Section
XIX.F. for the resolution of such dispute (an "Indemnification Dispute").
39
F. During the 20-day period following the delivery of a
Response that reflects an Indemnification Dispute, the Indemnifying Party and
the Indemnified Party shall use good faith efforts to resolve the
Indemnification Dispute. If the Indemnification Dispute is not resolved within
such 20-day period, the Indemnifying Party and the Indemnified Party shall
discuss in good faith the submission of the Indemnification Dispute to a
mutually acceptable alternative dispute resolution procedure (which may be
non-binding or binding upon the parties, as they agree in advance) (the "ADR
Procedure"). In the event the Indemnifying Party and the Indemnified Party agree
upon an ADR Procedure, such parties shall, in consultation with the chosen
dispute resolution service (the "ADR Service"), promptly agree upon a format and
timetable for the ADR Procedure, agree upon the rules applicable to the ADR
Procedure, and promptly undertake the ADR Procedure. The provisions of this
Section XIX.F. shall not obligate the Indemnifying Party and the Indemnified
Party to pursue an ADR Procedure or prevent either such party from pursuing the
Indemnification Dispute in a court of competent jurisdiction; provided that, if
the Indemnifying Party and the Indemnified Party agree to pursue an ADR
Procedure, neither the Indemnifying Party nor the Indemnified Party may commence
litigation or seek other remedies with respect to the Indemnification Dispute
prior to the completion of such ADR Procedure. Any ADR Procedure undertaken by
the Indemnifying Party and the Indemnified Party shall be considered a
compromise negotiation for purposes of federal and state rules of evidence, and
all statements, offers, opinions and disclosures (whether written or oral) made
in the course of the ADR Procedure by or on behalf of the Indemnifying Party,
the Indemnified Party or the ADR Service shall be treated as confidential and,
where appropriate, as privileged work product. Such statements, offers, opinions
and disclosures shall not be discoverable or admissible for any purposes in any
litigation or other proceeding relating to the Indemnification Dispute (provided
that this sentence shall not be construed to exclude from discovery or admission
any matter that is otherwise discoverable or admissible). The fees and expenses
(including any advances thereof) of any ADR Service used by the Indemnifying
Party and the Indemnified Party shall be shared equally by the Indemnifying
Party and the Indemnified Party.
40
G. Notwithstanding the other provisions of this Section XIX,
if a third party asserts (other than by means of a lawsuit) that an Indemnified
Party is liable to such third party for a monetary or other obligation which may
constitute or result in Damages for which such Indemnified Party may be entitled
to indemnification pursuant to this Section XIX, and such Indemnified Party
reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) such Indemnified Party shall be entitled to satisfy such
obligation after consultation with the Indemnifying Party but without consent
from the Indemnifying Party, (ii) such Indemnified Party may subsequently make a
claim for indemnification in accordance with the provisions of this Section XIX,
and (iii) such Indemnified Party shall be reimbursed by the Indemnified Party,
in accordance with the provisions of this Section XIX, only for the Damages for
which the Indemnified Party is entitled to indemnification pursuant to this
Section XIX (subject to the right of the Indemnifying Party to dispute the
Indemnified Party's entitlement to indemnification, or the amount for which it
is entitled to indemnification, under the terms of this Section XIX).
H. Except as provided in Section XIX.J. below, (i) the total
liability of NEW RADO and MORO for Damages under this Section XIX shall be
limited to an amount equal to the Purchase Price, (ii) the total liability of
OLD RADO and the Shareholder for Damages under this Section XIX shall be limited
to the Purchase Price, (iii) NEW RADO and MORO shall be liable under this
Section XIX for only that portion of the aggregate Damages for which they would,
jointly and severally, otherwise be liable which exceeds $50,000, and (iv) OLD
RADO and the Shareholder shall be liable under this Section XIX for only that
portion of the aggregate Damages for which they would, jointly and severally,
otherwise be liable which exceeds $50,000.
I. After the Closing, except as provided in Section XIX.J.
below, the rights of the Indemnified Parties under this Section XIX shall be the
exclusive remedy of the parties with respect to all claims resulting from or
relating to any of the matters referred to in Sections XIX.A or XIX.B of this
Agreement, as the case may be.
J. Notwithstanding anything in this Section XIX to the
contrary, the limitations contained in Section XIX.H. shall not apply to any
claims by any Indemnified Party based on any fraud or intentional
misrepresentation; and neither OLD RADO's, the Shareholder's, MORO's, nor NEW
RADO's liability for any such claims shall be limited to the amounts set forth
in Section XIX.H., and this Section XIX shall not be the exclusive means for the
Indemnified Party to enforce such rights.
41
K. If on the date of any scheduled payment of any funds
collected by NEW RADO under Section VI.C., or under the note referred to in
Section VI.C., or of any other amounts due by NEW RADO to OLD RADO or the
Shareholder, any indemnification claims under Section XIX.A. which have been
finally judicially determined or settled and agreed upon by the parties thereto
or have been determined by the Independent Accounting Firm pursuant to Section
VI.B ("Finally Determined Claims"), then NEW RADO shall (x) retain a portion of
such scheduled payments equal to the judicially determined, Independent
Accounting Firm determined, or agreed or settled amount, as applicable, of any
such Finally Determined Claims until such time as the Finally Determined Claims
are paid, and (y) disburse or pay the remainder of the scheduled payments, if
any, to NEW RADO or the Shareholder, as the case may be.
L. Any representations and warranties of OLD RADO, the
Shareholder, or NEW RADO otherwise set forth in Sections XII or XIV, as
applicable, which are made to their respective knowledge or best knowledge shall
not affect or alter in any manner whatsoever any of OLD RADO's, the
Shareholder's, or NEW RADO's, as applicable, indemnification obligations to any
Indemnified Party under Section XIX hereof, and solely for the purposes thereof
the knowledge qualification of OLD RADO, the Shareholder, or NEW RADO, as
applicable, shall not be applied; provided, however, that the foregoing shall
not apply to any knowledge qualification of OLD RADO or the Shareholder
contained in the representations and warranties of OLD RADO and the Shareholder
in Section XII.L. hereof pertaining solely to Multi-Employer Plans, and such
knowledge qualification shall be taken into account for indemnification purposes
under this Section XIX. For purposes solely of this Section XIX, all
representations and warranties of OLD RADO, the Shareholder, or NEW RADO, as
applicable, in Sections XII or XIV, as applicable, shall be construed as if the
terms "material" or "Material Adverse Effect" (or any variation thereof) were
omitted from such representations and warranties, and solely for the purposes
thereof, the "material" or "Material Adverse Effect" qualification of OLD RADO,
the Shareholder, or OLD RADO, as applicable, shall not be applied or affect or
alter in any manner whatsoever any of OLD RADO's, the Shareholder's, or NEW
RADO's, as applicable, indemnification obligations to any Indemnified Party
under Section XIX.
42
M. Notwithstanding anything else set forth herein, the
indemnification provisions of this Section XIX shall not apply to and not be
subject to any and all Damages relating to or arising from the Lease Agreement,
and in such event the parties shall pursue any and all rights and remedies
available under the Lease Agreement.
XX. Brokers and Finders. OLD RADO, Xxxx X. Xxxx, RAM Buildings, and the
Shareholder, and NEW RADO, Moro Corporation, and Xxxxx X. Xxxxxx, hereby
severally represent to each other that except for Xxxxxxxxxx & Xxxx, Inc., no
broker or finder has been employed or engaged by any of them in connection with
the transactions contemplated in this Agreement and that all negotiations
relative to this Agreement have been carried on directly between the parties
hereto without the intervention of any other person. OLD RADO and the
Shareholder shall be solely responsible for, and shall indemnify and hold
harmless NEW RADO or any other OLD RADO/Shareholder Indemnified Party from the
brokerage fees, costs, or commissions due to Xxxxxxxxxx & Xxxx, Inc.
XXI. No Shop Provision. From and after the date hereof and until the
Closing or earlier termination of this Agreement, other than with NEW RADO,
neither OLD RADO nor the Shareholder, shall solicit, encourage, or initiate any
discussions, negotiations, or agreements for the purpose of disposing of or
transferring all or any portion of the Assets, or the merger, consolidation,
liquidation, sale of stock, or any similar transactions involving OLD RADO. From
and after the date hereof and until the Closing or earlier termination of this
Agreement, OLD RADO, and the Shareholder shall negotiate exclusively with NEW
RADO and shall not discuss with any third parties in any manner whatsoever any
of the matters referred to in the prior sentence. From and after the date hereof
and until the Closing or earlier termination of this Agreement, OLD RADO shall
promptly communicate to NEW RADO the terms of any acquisition proposal or offer
that OLD RADO or the Shareholder receives from any person or entity other than
NEW RADO.
XXII. Survival of Representations, Warranties, Covenants, Agreements
and Remedies.
All representations, warranties and covenants contained in
this Agreement shall (a) survive the Closing and any investigation at any time
made by or on behalf of any party and (b) shall expire on the date two years
following the Closing (except for Sections IV, V, VI.C.2, VI.E., X, XV, and XIX
which shall survive in accordance with their terms). If an Indemnified Party
delivers to an Indemnifying Party before expiration of a representation or
warranty, either a Claim Notice based upon a breach of such representation or
warranty, or a notice that, as a result of a legal proceeding instituted by or
written claim made by a third party, the party reasonably expects to incur
Damages as a result of a breach of such representation or warranty (an "Expected
Claim Notice"), then such representation or warranty shall continue to survive,
but only for purposes of the matter(s) specified in such notice, beyond the date
which is two years following the Closing until the resolution of the matter(s)
covered by such notice, provided that such notice specifies in reasonable detail
each alleged breach of representation or warranty. If the legal proceeding or
written claim with respect to which an Expected Claim Notice has been given is
definitively withdrawn or resolved in favor of the Indemnified Party, the
Indemnified Party shall promptly so notify the Indemnifying Party.
43
XXIII. Entire Agreement. This Agreement together with all Exhibits and
Schedules (as amended or updated pursuant to Section XVI.C.) thereto,
constitutes the entire understanding and agreement between the parties hereto
with respect to the transactions contemplated herein, supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, including but not limited to the letter
of intent between NEW RADO, OLD RADO, the Shareholder, Xxxx X. Xxxx, and RAM
Buildings, dated April 30, 2002, and there have been no warranties,
representations or promises, written or oral, made by any of the parties hereto
except as herein expressly set forth herein.
XXIV. Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, as well as their respective heirs,
personal representatives, successors and assigns but no party may assign its
rights, duties or obligations hereunder without the prior written consent of all
other parties hereto.
XXV. Waiver, Modification, etc.. Any party to this Agreement may waive
any of the terms or conditions of this Agreement or agree to an amendment or
modification to this Agreement by an agreement in writing executed in the same
manner (but not necessarily by the same persons) as this Agreement. No amendment
or modification of this Agreement shall be binding unless in writing executed by
all of the parties to this Agreement. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall any waiver constitute a continuing
waiver unless otherwise expressly provided.
44
XXVI. Notice. Any notice or other communications required or permitted
hereunder shall be sufficiently given: (i) three (3) business days after if sent
by certified mail, return receipt requested, postage prepaid, or (ii) one (1)
business day after sent by Federal Express or other overnight courier providing
delivery confirmation for next business day delivery, or (ii) when delivered by
personal delivery, in any event delivered to or addressed as follows:
If to RADO, or the Shareholder:
Xx. Xxxxxxx Xxxx
0000 Xxxxx Xxxxx 000
Xxxxxxxxxx, XX 00000
With copy to:
Xxxxxx X. Xxxxxxxx, Esquire
White and Xxxxxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
If to NEW RADO:
MORO/RADO Acquisition Corp.
000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, President
With copy to:
Xxxxxxx X. Xxxxx, Esquire
Lurio & Associates, P.C.
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
XXVII. Pennsylvania Law Controls. This Agreement shall be construed in
accordance with and shall be governed by the laws of the Commonwealth of
Pennsylvania without regard to its conflicts of law rules.
45
XXVIII. Consent to Jurisdiction. Except as specifically provided
otherwise in Section VI.B., Section VI.E. or Article XIX hereof, each of the
parties hereto irrevocably consents and agrees that any legal action or
proceeding whatsoever arising out of or in any way connected with this Agreement
or the transactions contemplated hereby may be commenced, filed, instituted or
brought in the state or federal courts of the Commonwealth of Pennsylvania, and
each of the parties hereto irrevocably submits and accepts with regard to any
such legal action or proceeding to the jurisdiction of such courts. Each of the
parties irrevocably consents to service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the parties hereto,
such service to become effective upon mailing. Each of the parties hereto hereby
irrevocably waive, to the fullest extent permitted by law, any objection which
any of them may now or hereafter have to the laying of the venue of any suit,
action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby, brought in such Pennsylvania courts, and
hereby further irrevocably waives any claim, that any such suit, action or
proceeding brought in such courts, has been brought in an inconvenient forum.
XXIX. Counterparts. This Agreement may be signed in two or more
counterparts which counterparts shall constitute a single, integrated agreement
binding upon all the signatories to such counterparts. Delivery of an executed
counterpart of this Agreement by facsimile shall be equally as effective as
delivery of a manually executed counterpart of this Agreement.
XXX. Expenses. Except as specifically provided otherwise herein, each
party hereto shall pay its own expenses arising from this Agreement and the
transactions contemplated hereby, including, without limitation, all legal and
accounting fees and disbursements; provided, however, that nothing herein shall
limit or otherwise modify any right of the parties to recover such expenses from
the other in the event any party hereto breaches this Agreement.
46
XXXI. Further Assurances. Each of the parties hereto shall hereafter
execute and deliver such further documents and instruments and do such further
acts and things as may be required or useful to carry out the intent and purpose
of this Agreement and as are not inconsistent with the terms hereof. In the
event any consent required for the transfer of all or any part of the Assets to
NEW RADO is waived by NEW RADO, then OLD RADO and the Shareholder shall use each
of their best efforts to see that NEW RADO receives the benefit of all or part
of the Assets to which NEW RADO has waived the obtaining of such consents.
XXXII. Consents. OLD RADO and the Shareholder, shall use their
reasonable commercial best efforts to obtain, at the earliest possible date and
prior to the Closing, and at their sole cost and expense, the consents described
in Schedule XII.C. hereof (other than in connection with the Existing
Nonassignable Construction Contracts, the Existing Contract Bonds and the other
consents which have been waived by NEW RADO). The parties expressly waive
compliance with any applicable bulk sales clearance requirements.
47
IN WITNESS WHEREOF, the parties hereto have caused this
agreement to executed as of the day and year first above written.
MORO/RADO ACQUISITION CORP.,
a Pennsylvania corporation
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
--------------------------------- ------------------------------
Xxxxx X. Xxxxxx, Xxxxx X. Xxxxxx, President
Secretary
(Corporate Seal)
RADO ENTERPRISES, INC.
Attest: /s/ Xxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxx
--------------------------------- ------------------------------
Xxxx X. Xxxx, Secretary Xxxxxxx X. Xxxx, President
(Corporate Seal)
Witness: /s/ Xxxxxx Xxxxxxxxxx /s/ Xxxxxxx X. Xxxx
-------------------------- ---------------------------------
XXXXXXX X. XXXX, individually
48
LIMITED JOINDER OF MENARDS
--------------------------
The undersigned, Xxxxx X. Xxxxxx and Xxxxxxxxxx X. Xxxxxx, hereby join
in this Agreement solely for the purpose of agreeing to execute and deliver to
Xxxxxxx X. Xxxx the Limited Guaranty in the form of Exhibit "D" hereto at the
time of Closing pursuant to Section VII.A. hereof, and to the terms and
conditions of Section XX hereof.
Witness: /s/ Xxxxxxx X. Xxxxx /s/ Xxxxx X. Xxxxxx
-------------------------------- ---------------------------------
XXXXX X. XXXXXX
Witness: /s/ Xxxxxxx X. Xxxxx /s/ Xxxxxxxxxx X. Xxxxxx
-------------------------------- ---------------------------------
XXXXXXXXXX X. XXXXXX
LIMITED JOINDER OF MORO CORPORATION
-----------------------------------
The undersigned, Moro Corporation, hereby joins in this Agreement
solely for the purpose of agreeing (i) to execute and deliver the Guaranty in
the form of Exhibit "E" hereto at the time of Closing pursuant to Section VII.C.
hereof, and (ii) to join in and be legally bound by the terms and conditions of
Sections XIX and XX hereof.
MORO CORPORATION
Witness: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- ---------------------------------
Xxxxx X. Xxxxxx, President
49
LIMITED JOINDER OF XXXX X. XXXX
-------------------------------
The undersigned, Xxxx X. Xxxx, hereby joins in this Agreement solely
for the purpose of agreeing to execute and deliver to NEW RADO the Employment
Agreement in the form of Exhibit "D" hereto at the time of Closing pursuant to
Section VII.B. hereof, and to execute and deliver to NEW RADO the
Non-Competition Agreement in the form of Exhibit "F" hereto at the time of
Closing pursuant to Section VIII hereof, and to the terms and conditions of
Section XX hereof.
Witness: /s/ Xxxxxx Xxxxxxxxxx /s/ Xxxx X. Xxxx
------------------------------- -----------------------------
XXXX X. XXXX
LIMITED JOINDER OF RAM UYA INVESTMENT COMPANY
---------------------------------------------
The undersigned, RAM UYA Investment Company, a partnership, hereby
joins in this Agreement solely for the purpose of agreeing to execute and
deliver to NEW RADO the lease agreement covering the Premises at the time of
Closing pursuant to Section IX hereof, and to the terms and conditions of
Section XX hereof.
RAM UYA INVESTMENT COMPANY, a
partnership
Witness: /s/ Xxxxxx Xxxxxxxxxx By: /s/ Xxxxxxx X. Xxxx
------------------------------- -----------------------------
Title:
50
The following exhibits to this Asset Purchase Agreement have been omitted and
will be provided to the Commission upon request to the Company:
EXHIBITS TO ASSET PURCHASE AGREEMENT
------------------------------------
Exhibit "A" - $200,000 Promissory Note from NEW RADO to RADO
Exhibit "B" - Employment Agreement between NEW RADO and Xxxxxxx X. Xxxx
Exhibit "C" - Xxxxxx Limited Guaranty Agreement
Exhibit "D" - Employment Agreement between NEW RADO and Xxxx X. Xxxx
Exhibit "E" - Moro Corporation Guaranty Agreement
Exhibit "F" - Non-Compete Agreement between each of Xxxxxxx X. Xxxx and
Xxxx X. Xxxx and NEW RADO
51
The following schedules to this Asset Purchase Agreement have been omitted and
will be provided to the Commission upon request to the Company:
SCHEDULES TO ASSET PURCHASE AGREEMENT
-------------------------------------
Schedule I.A. - Contracts Assumed by NEW RADO
Schedule I.D. - Fixed Asset Leases of OLD RADO Assumed by NEW RADO
Schedule I.F. - Prepaid Expenses and Deposits of OLD RADO Assumed by NEW RADO
Schedule I.G. - Fixed Asset List of OLD RADO
Schedule III. - Excluded Assets
Schedule VI.C.3 - December 31, 2001 Balance Sheet of OLD RADO
Schedule XII.C.- Required Third Party Waivers or Consents of OLD RADO
Schedule XII.E. - Financial Statements of OLD RADO
Schedule XII.F. - Legal Proceedings
Schedule XII.G. - Permits and Approvals of OLD RADO
Schedule XII.H. - Liens and Encumbrances on OLD RADO Assets
Schedule XII.I. - Tax Returns of OLD RADO
Schedule XII.J. - List of OLD RADO Contracts
Schedule XII.K - Changes
Schedule XII.L. - Employee Benefit Plans
Schedule XII.N. - List of OLD RADO Employees and Compensation Arrangements
Schedule XII.Q. - List of OLD RADO Insurance Policies
Schedule XII.R. - Related Party Obligations
Schedule XIV.G. - Moro Corporation Financial Statements
Schedule XIV.H. - Pro Forma Closing Balance Sheet of NEW RADO
52
