Exhibit 10.2
ASSET PURCHASE
BY AND BETWEEN
CHAMPION TRAILER COMPANY, L.P.
AND
XXXXXX XXXX, XXXX XXXX,
CHAMPION TRAILER, LTD.
(F/K/A) CHAMPION TRAILER, L.L.C.,
CHAMPION COLLISION, LTD.
(F/K/A) CHAMPION COLLISION, L.L.C.
AND
BRANDONSON, INC.
ASSET PURCHASE BY AND BETWEEN
CHAMPION TRAILER COMPANY, L.P. AND
XXXXXX XXXX, XXXX XXXX
CHAMPION TRAILER, LTD. (F/K/A) CHAMPION TRAILER, L.L.C.,
CHAMPION COLLISION, LTD. (F/K/A) CHAMPION COLLISION, L.L.C.
AND BRANDONSON, INC.
TABLE OF CONTENTS
Purchase Agreement.......................................................1
Certificates of Good Standing for Trailer Collision,
Brandonson, Management, Operations.......................................2
Certificate of Representation and Warranties
of Trailer and Collision.................................................3
Resolutions of Collision L.L.C.
and Trailer L.L.C........................................................4
Agency Agreements for Collision
and Trailer..............................................................5
Consents for Trailer and Collision.......................................6
Bank One Landlord Waiver.................................................7
Markpoint Landlord Waiver................................................8
Opinion Letter of Counsel for Sellers....................................9
Lease Between H & M Xxxx Properties, Ltd and Purchaser...................10
Assignment of Contracts (3)..............................................11
Table of Contents
(Continued)
Assumption Agreement.....................................................12
Xxxx of Sale (3).........................................................13
Excluded Assets..........................................................14
Transferred Assets.......................................................15
Asset Purchase Price Allocation..........................................16
Assumed Liabilities......................................................17
Shareholders of Brandonson, Inc..........................................18
Membership Interest of Trailer, L.L.C.
& Collision, L.L.C.......................................................19
Collision, L.L.C. and Trailer, L.L.C..-
Articles of Organization and Regulations;
Brandonson-Certificate of Incorporation and Bylaws.......................20
Predecessors of Trailer L.L.C............................................21
Affiliate Relationships..................................................22
Title Exceptions.........................................................23
Other Mortgages, Liens, Pledges of Assets and Property...................24
Table of Contents
(Continued)
Debts and Liabilities....................................................25
Tax Returns for Brandonson, Trailer L.L.C.
and Collision L.L.C. for 1996, 1997, 19 98 & 19 99.......................26
Legal Actions............................................................27
Employee Benefits........................................................28
Environmental, Health and Safety Matters.................................29
Employee and Worker's Compensation Claims................................30
Finder or Broker.........................................................31
List of Products of the Companies........................................32
Employee Information.....................................................33
Real Property............................................................34
Inventory and Assets.....................................................35
List of Consigned or 3rd Party Owned Materials/Property..................36
Insurance................................................................37
List of Bank Accounts....................................................38
Table of Contents
(Continued)
Governmental Licenses and Permits........................................39
List of Debts and Obligations............................................40
Proprietary Rights.......................................................41
List of all Contracts....................................................42
Power of Attorney........................................................43
List of Obligations Covering any Companies' Employees....................44
List of All Plans........................................................45
Organizational Documents of Trailer, Ltd.................................47
Assignment Executed by Trailer, L.L.C.
to Trailer, Ltd..........................................................48
Assignment Executed by Collision, L.L.C.
to Collision, Ltd........................................................49
Amendment to Certificate of Limited Partnership
for Trailer, Ltd.........................................................50
Amendment to Certificate of Limited Partnership
for Collision, Ltd.......................................................51
Employment Agreement for Xxxxxx Xxxx.....................................52
PURCHASE AGREEMENT BY AND BETWEEN
CHAMPION TRAILER COMPANY, LP
AND
XXXXXX XXXX, XXXX XXXX,
CHAMPION TRAILER, LLC, CHAMPION COLLISION, LLC
AND BRANDONSON, INC.
THIS PURCHASE AGREEMENT is entered into by and between Champion Trailer
Company, LP, an Indiana limited partnership ("CTC"), and Xxxxxx Xxxx, an
individual resident of the State of Texas ("Xxxxxx"), Xxxx Xxxx, an individual
resident of the State of Texas ("Xxxx"), Champion Trailer, LLC, a Texas limited
liability company ("Trailers") or its assigns, Champion Collision, LLC, a Texas
limited liability company ("Collision") or its assigns, and Brandonson, Inc., a
Texas corporation ("Brandonson") or its assigns.
WHEREAS, Xxxxxx and Xxxx own all of the authorized, issued and outstanding
shares of the capital stock of Brandonson, and all of the outstanding membership
interests in Trailers and Collision; and
WHEREAS, CTC has agreed to purchase, and Trailers, Collision and Brandonson
have agreed to sell, substantially all of the assets of Trailers, Collision and
Brandonson, pursuant to the terms and conditions of this Agreement; and
WHEREAS, Xxxxxx has developed individual goodwill related to Trailers,
Collision and Brandonson through personal relationships, and CTC has agreed to
purchase, and Xxxxxx has agreed to sell such goodwill, pursuant to the terms and
conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises, representations
and undertakings set forth herein, and other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
In addition to those terms defined above or elsewhere in this Agreement,
the following terms shall have the meanings set forth below:
Section 1.1. "Actual Net Worth" means the Net Worth of the Companies as of
the Closing Date, as determined by the Companies' accountants in accordance with
the procedures employed by Xxxx Xxxx in his "Agreed Upon Procedures Report"
dated December 31, 1999, but subject to the provisions of Section 2.4.
Section 1.2. "Agreement" means this Purchase Agreement, including the
Schedules, Exhibits and any other documents delivered pursuant to this
Agreement.
Section 1.3. "Annual Financial Statement" means the compiled balance sheets
and consolidated statements of income, retained earnings, statement of cash
flows and notes thereto of the Companies dated December 31, 1999.
Section 1.4. "Asset Purchase Price" means the amount payable to Sellers for
the Assets, as provided in Section 2.2 of this Agreement.
Section 1.5. "Assets" means all of the assets and properties of the
Companies, including, but not limited to, the following:
(a) all equipment, trade fixtures, inventories, tools, supplies,
computer software programs and tangible personal property relating to, used
in or otherwise attributable to the operation of their businesses;
(b) all intangible assets, including, but not limited to, all cash and
cash equivalents, accounts receivable, notes receivable and other
indebtednesses owing to the Companies, all goodwill if any, all telephone
and fax numbers, and all Proprietary Rights;
(c) all marketing plans, catalogues, brochures, sales literature,
promotional material and other selling material relating to the operation
of their businesses;
(d) all books and records and all files, documents, papers,
agreements, books of account and other records pertaining to the Assets,
customers, employees and the businesses of the Companies, including their
respective predecessor companies;
(e) their rights under all Contracts;
(f) all security or other deposits under all leases;
(g) all policies of insurance and all prepaid insurance amounts;
(h) the assets set forth in Schedule 1.5; and
(g) any other assets or rights of every kind and nature, real or
personal, tangible or intangible, which are owned and used by the Companies
or useful in connection with the operation of their businesses.
The foregoing notwithstanding, the term "Assets" shall in no event include any
Excluded Assets.
Section 1.6. "Best Knowledge" means: (a) in the case of an individual,
facts or matters within the actual knowledge of such individual, and (b) in the
case of the Companies or CTC, facts or matters within the actual knowledge of
any of their respective management personnel.
Section 1.7. "Closing" means the execution of this Agreement or, if later,
the performance of such other acts as are necessary to effect the purchase and
sale of the Assets and Harold's Goodwill and the other transactions contemplated
by this Agreement, including, but not limited to the payment to Sellers of the
amounts described in Sections 2.2 and 2.3 of this Agreement.
Section 1.8. "Closing Date" means April 28, 2000, or such later date as the
parties may agree for the conduct of the Closing.
Section 1.9. "Companies" means Brandonson, Trailers and Collision,
collectively.
Section 1.10. "Contract" means each unexpired contract, lease, undertaking,
commitment, license and other agreement of the Companies in effect on the
Closing Date, to which any of the Companies are a party or by which any of the
Companies or any of their assets are bound.
Section 1.11. "Current Balance Sheet" means the compiled financial
statements of Companies for the _____ (___) month period ended as of the last
day of the month preceding the Closing Date.
Section 1.12. "Environmental Law" means any law, rule, regulation,
approval, decision, decree, ordinance, by-law having the force of law or order
of any federal, state or local executive, legislative, judicial, regulatory or
administrative agency, board or authority, which relate to (a) noise; (b)
pollution or protection of the air, surface water, ground water or land; (c)
solid, gaseous or liquid waste generation, treatment, storage, use, processing,
disposal or transportation; (d) exposure to hazardous or toxic substances; (e)
the safety or health of employees or (f) regulation of the manufacture,
processing, distribution in commerce, use, or storage of chemical substances,
applicable or related to the Companies' business, as conducted at any time, or
to their properties or assets.
Section 1.13. "Excluded Assets" means those assets listed in Schedule 1.13.
Section 1.14. "Exhibits" means the exhibits referenced in and attached to
this Agreement, all of which shall be deemed a part hereof.
Section 1.15. "Financial Statement Date" means December 31, 1999.
Section 1.16. "Financial Statements" means the Annual Financial Statement
and the Current Balance Sheet.
Section 1.17. "Harold's Goodwill" means the individual goodwill related to
the Companies developed by Xxxxxx through personal relationships.
Section 1.18. "Indemnified Party" means a Seller Indemnified Party, or a
CTC Indemnified Party, as defined in Article VIII.
Section 1.19. "Lenders" means Bank One Indianapolis, NA and The Markpoint
Company.
Section 1.20. "Material Adverse Effect" means an adverse effect on the
properties, assets, financial position, results of operations, indebtedness,
cash flows or contingent liabilities in excess of Thousand Dollars ($10,000.00).
Section 1.21. "Minimum Net Worth" means a Net Worth of Four Hundred Four
Thousand Three Hundred Fifty-Nine Dollars ($404,359.00), less the balance sheet
value of the Dodge Durango, the Dodge pick-up truck, and the Xxxxxx Xxxxxxxx
tractor.
Section 1.22. "Net Worth" means the. total assets of the Companies, less
their total liabilities.
Section 1.21. "Plan" means any plan, program, policy, agreement or
arrangement maintained by the Companies to provide compensation or benefits for
any current or former employee, officer, director, shareholder, or consultant,
or any dependent or beneficiary of any of the foregoing persons, including,
without limitation, any "employee welfare benefit plan" or "employee pension
benefit plan" as defined in the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and any other: (a) profit sharing, pension, ESOP, 401(k)
or other retirement plans or programs, (b) current and deferred compensation,
severance, vacation, stock purchase, stock option, bonus and incentive
compensation benefits, and (c) medical, hospital, life, health, accident,
disability, death and other fringe and welfare benefits, including any split
dollar life insurance policies.
Section 1.24. "Proprietary Rights" means all trade names, brand names,
trademarks, service marks, logos, copyrights, internet websites, internet domain
names, proprietary information, know-how, patented ideas, designs and
inventions, and other intellectual property, and the right to the use thereof.
Section 1.25. "Schedules" means the schedules referenced in and attached to
this Agreement, all of which shall be deemed a part hereof.
Section 1.26. "Sellers" means Harold, Mary, Trailers, Collision, and
Brandonson, jointly and severally.
Section 1.27. "Subsidiary" means any entity in which the Companies,
individually or collectively, directly or indirectly, own a controlling
interest.
Section 1.28. "Tax Returns" has the meaning set forth in Section 3.16.
ARTICLE II
PURCHASE AND SALE OF ASSETS AND GOODWILL
Section 2.1. Conveyance of Assets and Harold's Goodwill. Effective as of
the Closing Date, and subject to and in accordance with the terms and conditions
set forth in this Agreement: (a) the Companies hereby transfer, convey, assign
and deliver to CTC all of the Assets, and (b) Xxxxxx hereby transfers, conveys,
assigns and delivers to CTC all of Harold's Goodwill. The transfer of the Assets
and Harold's Goodwill shall be free and clear of all liens, encumbrances and
claims of any kind whatsoever. Sellers shall take such further actions and
execute such further documents as may be necessary to effectuate such
conveyances, including, but not limited to, the execution and delivery of any
xxxx of sale or documents of title.
Section 2.2. Asset Purchase Price. Subject to the adjustments and other
conditions set forth in this Agreement, CTC will pay to Sellers the sum of Three
Million Dollars ($3,000,000.00) in immediately available funds on the Closing
Date, in full and final payment for the Assets and other rights and benefits
conveyed to CTC by the Companies under this Agreement.
Section 2.3. Purchase Price for Harold's Goodwill. CTC will pay to Xxxxxx
the sum of Five Hundred Thousand Dollars ($500,000.00) in immediately available
funds on the Closing Date, in full and final payment for Harold's Goodwill.
Section 2.4. Adjustments to Asset Purchase Price. The Actual Net Worth
shall be determined by the Companies' accountants and delivered to CTC for
review by CTC's accountants within thirty (30) days after the Closing Date. The
parties shall confer in good faith to resolve any dispute that may arise with
respect to the calculation of the amount of the Actual Net Worth. CTC shall be
liable for the payment to Sellers, within thirty (30) days after the delivery of
the Actual Net Worth determination to CTC, of the undisputed amount, if any, by
which the Actual Net Worth exceeds the Minimum Net Worth. Sellers shall be
jointly and severally liable for the payment to CTC, within thirty (30) days
after the delivery of the Actual Net Worth determination to CTC, of the
undisputed amount, if any, by which the Minimum Net Worth exceeds the Actual Net
Worth. Any disputed amount with respect to the calculation of the Actual Net
Worth shall be resolved by an independent certified public accountant mutually
agreeable to Sellers and CTC, and the appropriate payment shall be made within
five (5) business days following the issuance of the written determination by
such independent certified public accountant. The fees and expenses of the
independent certified public accountant shall be borne one-half by Sellers and
one-half by CTC, unless the independent certified public accountant shall
conclude in its written determination that either Sellers or CTC acted in bad
faith, in which event the fees and expenses of the independent certified public
accountant shall be paid entirely by the party determined to have acted in bad
faith. All payments required to be made to any party under this Section shall be
made in immediately available funds.
Section 2.5. Allocation of Asset Purchase Price. CTC and Sellers agree that
the Asset Purchase Price shall be allocated as set forth in Schedule 2.5. Buyer
and Sellers will cooperate in the timely preparation of their respective IRS
Forms 8594 in connection with the transactions contemplated by this Agreement,
which shall reflect the above allocation of the Purchase Price.
Section 2.6. No Assumption of Liabilities. Any other provision of this
Agreement notwithstanding, CTC is not assuming, and shall not be deemed to have
assumed, any liabilities or obligations of the Companies of any kind or nature
whatsoever, except as expressly set forth in Schedule 2.6. In no event shall CTC
be deemed to have assumed or taken the Assets subject to any liabilities of the
Companies: (i) under any employee or retiree benefit plan of the Companies, (ii)
for any wages or benefits for the employees of the Companies prior to the
Closing Date, (iii) for any claims for personal injury or property damage, or
any claims relating to or arising out of a violation of any statute, regulation
or other rule of law, or (iv) for any taxes of the Companies, their Subsidiaries
or affiliates due and payable at any time.
Section 2.7. Closing. The Closing shall be held at the offices of
_______________ on ____________ ____, 2000 or at such later date, time and place
as the parties mutually agree. Unless otherwise agreed to by the parties in
writing, the execution of this Agreement shall constitute an express
acknowledgment by all parties that all conditions to Closing have either been
satisfied or waived.
ARTICLE III
WARRANTIES AND REPRESENTATIONS OF SELLERS
Sellers warrant, represent and affirm to CTC the truth and accuracy of the
following, both as of the date of execution of this Agreement and as of the
Closing Date:
Section 3. 1. Capacity. As of the Closing Date, Xxxxxx is the President of
Brandonson. Trailers and Collision, and Xxxx is the Secretary/Treasurer of
Trailers and Collision, and the Secretary of Brandonson. Sellers are legally
competent to make these warranties and representations in their individual
capacities as the owners of the shares and/or membership interests in the
Companies, and in their capacities as officers of Brandonson, Trailers and
Collision.
Section 3.2. Ownership of Shares. The total authorized capital stock of the
Brandonson is five thousand (5,000) shares of no par value common stock, of
which three thousand (3,000) shares are issued and owned beneficially and of
record by Xxxxxx and Xxxx as set forth in Schedule 3.2. Such shares constitute
all of the authorized and issued capital stock of Brandonson, and are free and
clear of all liens, encumbrances and adverse claims whatsoever. Each of such
shares is duly and validly authorized and issued, fully paid and non-assessable,
and was not issued in violation of the preemptive rights of any past or present
shareholder. Except for such shares, there are no outstanding options, warrants,
rights or other agreements or commitments of any character relating to the
issuance or sale of any shares of capital stock of, or other equity ownership
interest in Brandonson.
.Section 3.3. Ownership of Membership Interests. Xxxxxx and Xxxx also own,
beneficially and of record, with full power to vote, the membership interests in
Trailers and Collision set forth beside their names on Schedule 3.3. The
membership interests so listed constitute all of the outstanding membership
interests of Trailers and Collision, and are free and clear of all liens.
encumbrances and adverse claims whatsoever. All such membership interests are
duly and validly authorized and issued, fully paid and non-assessable, and were
not issued in violation of the preemptive rights of any past or present member.
Except for the membership interests held by Xxxxxx and Xxxx, there are no
outstanding options, warrants, rights or other agreements or commitments of any
character relating to the issuance or sale of any membership interest, or other
equity ownership interest, in, Trailers or Collision.
Section 3.4. Authority for Transaction. Sellers have full and lawful right,
power, and authority to execute, deliver and perform this Agreement, and
consummate the transactions contemplated herein. This Agreement has been duly
executed and delivered by Sellers, and it and its provisions constitute legal,
valid and binding obligations of Sellers, enforceable against Sellers in
accordance with its terms and conditions, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity (whether applied in a proceeding at law or in equity). To
Sellers' Best Knowledge, there are no claims, lawsuits, actions, arbitrations,
administrative or other proceedings, governmental investigations, audits or
inquiries pending or threatened against Sellers that limit, impair or otherwise
affect, Sellers' right or authority to enter into this Agreement or the
performance by Sellers of their obligations hereunder.
Section 3.5. Organization. The Companies are duly organized, validly
existing and in good standing under the laws of the State of Texas, and each is
duly qualified or licensed as a foreign corporation authorized to do business in
all other states in which any of their assets or properties may be situated or
where their business is conducted except where the failure to obtain such
qualification or license will not have a Material Adverse Effect. Schedule 3.5
is (a) the Companies' Articles of Incorporation or Articles of Organization,
certified by the Secretary of State of Texas, (b) the Companies' By-Laws or
Operating Agreement, certified by its Secretary or Managing Member. Each and all
of such documents are complete and correct.
Section 3.6. Subsidiaries and Predecessors. Schedule 3.6 lists the names of
any Subsidiaries of the Companies and the securities of any other corporation,
partnership, firm, association or business organization, entity or enterprise
owned by the Companies or any of the Companies' Subsidiaries. Except as
disclosed in Schedule 3.6, all of the issued shares of the capital stock or
other equity interests of the Subsidiaries of the Companies are directly or
ultimately owned by the Companies, free and clear of all liens, encumbrances or
adverse claims of every kind. All such shares or other equity interests are duly
and validly authorized and issued, fully paid and nonassessable. Also set forth
in Schedule 3.6 is a listing of all names under which any of the Companies have
done business, as well as the names of all predecessors of the Companies,
including the names of any entities from which the Companies previously acquired
significant assets.
Section 3.7. Affiliate Relationships. Except as set forth in Schedule 3.7,
neither Sellers nor any affiliate of Sellers, nor any director, officer or
employee of the Companies owns, directly or indirectly, in whole or in part, any
property, asset or right, tangible or intangible, which is associated with any
property, asset or right owned by the Companies or which the Companies are
operating or using or the use of which is necessary for their business. Also
included in Schedule 3.7 is the disclosure of any relationships which Sellers or
any director, officer, or employee of the Companies have with any other
corporation, partnership, firm, association or business organization, entity or
enterprise which is a competitor, potential competitor (based upon the nature of
such potential competitor's business as of the Closing Date), supplier or
customer of any of the Companies. The term "affiliate" means with respect to any
person, any other person which directly or indirectly, by itself or through one
or more intermediaries, controls, or is controlled by, or is under direct or
indirect common control with, such person.
Section 3.8. Consents. No approval, consent, order or action of or filing
with any court, administrative agency, governmental authority or other third
party is required for the execution, delivery or performance by Sellers of this
Agreement.
Section 3.9. Proprietary Rights. The Companies have full and sufficient
rights to use all Proprietary Rights necessary for the present operation of
their businesses and the marketing, distribution, sale and use of the materials
used and the products sold by the Companies. None of the ownership, access to,
use or exercise of the Proprietary Rights by the Companies infringes on the
rights of any other party, and all Proprietary Rights are valid and enforceable.
All know-how or proprietary information in the Companies' possession has been
independently developed or is generally well known or has been disclosed to the
Companies by a third party without such third party having breached any
obligation to another person or entity.
Section 3.10. Title. The Companies owns outright, and have full legal and
beneficial title to all of their assets. free and clear of all liens, pledges,
mortgages, security interests, conditional sales contracts and encumbrances,
except as set forth in Schedule 3.10. Xxxxxx owns outright, and has full legal
and beneficial title to all of Harold's Goodwill, free and clear of all liens,
pledges, mortgages, security interests, conditional sales contracts and
encumbrances, except as set forth in Schedule 3.10.
Section 3.11. Defaults. Neither Mary, Harold, nor the Companies are in
default under or in violation of, and the execution and delivery of the
Agreement and the consummation of the transactions contemplated hereby will not
result in a default by Xxxx, Xxxxxx or the Companies under, or a violation of:
(a) any mortgage, indenture. charter or bylaw provision, provision of any Plan,
contract, agreement, lease, commitment or other instrument of any kind to which
Xxxx, Xxxxxx or the Companies are a party or by which Xxxx, Xxxxxx or the
Companies or any of their properties or assets may be bound or affected or (b)
any law, rule or regulation applicable to Xxxx, Xxxxxx or the Companies, or any
court injunction, order or decree, or any valid and enforceable order of any
governmental agency in effect having jurisdiction over Xxxx, Xxxxxx or the
Companies or any Plan.
Section 3.12 Investment Companies. None of the Companies is an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Companies Act of 1940, as amended, or a "holding company", a
"Subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Companies Act of 1935, as amended.
Section 3.13. Financial Statements. Sellers have delivered to CTC the
Financial Statements. Such Financial Statements present accurately and fairly,
in all material respects, the financial condition of the Companies as of the
dates indicated thereon, and present accurately and fairly in all respects the
results of the Companies' operations for the periods indicated thereon.
Section 3.14. No Material Adverse Change. Since December 31, 1999 there has
not been: (a) any change in the Companies' organizational documents, (b) any
material adverse change of any nature whatsoever in the financial condition,
assets, liabilities (contingent or otherwise), income, business or prospects of
the Companies; (c) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of the
Companies; (d) any change in the authorized capital of the Companies or in their
securities outstanding or any change in their ownership interests; (e) any
declaration or payment of any dividend or distribution in respect of equity
ownership interests in the Companies or any direct or indirect redemption,
purchase or other acquisition of such equity ownership interests; (f) any
contract or commitment entered into by the Companies or any agreement by the
Companies to incur any liability or make any capital expenditures in excess of
Ten Thousand Dollars ($10,000.00), except in the normal course of business; (g)
any increase in the compensation, bonus, sales commissions or fee arrangement
payable or to become payable by the Companies to any of their officers,
directors, stockholders, employees, consultants or agents; (h) to Sellers' Best
Knowledge, any work interruptions, labor grievances or claims filed, proposed
law or regulation enacted (the existence of which is known, or under the normal
course of business should be known, to Sellers) or the occurrence of any event
or condition of any character adversely affecting the business of future
prospects of the Companies; (i) any creation, assumption or permitting to exist
any mortgage, pledge or other lien or encumbrance upon any assets or properties
of the Companies, whether now owned or hereafter acquired, except as set forth
in Schedule 3.14(i); (j) any sale or transfer, or any agreement to sell or
transfer, any assets with a collective value in excess of Ten Thousand Dollars
($10,000.00), properties or rights of the Companies to any person, including,
without limitation, Sellers and their respective affiliates; (k) any
cancellation, or agreement to cancel, any indebtedness or other obligation owing
to the Companies, including, without limitation, any indebtedness or obligation
of Sellers or any of their affiliates; (l) any plan, agreement or arrangement
granting any preferential rights to purchase or acquire any interest in any of
the assets, properties or rights of the Companies or requiring consent of any
party to the transfer and assignment of any such assets, properties or rights;
(m) any purchase or acquisition, or agreement, plan or arrangement to purchase
or acquire, any property, rights or assets of the Companies; (n) any negotiation
for the acquisition of any business or start-up of any new business; (o) any
merger or consolidation or agreement to merge or consolidate with or into any
other corporation; (p) any waiver of any material rights or claims of the
Companies; (q) any breach, amendment or termination of any material contract,
agreement, license, permit, permit application or other right to which the
Companies are a party; (r) any discharge, satisfaction, compromise or settlement
of any claim, lien, charge or encumbrance or payment of any obligation or
liability, contingent or otherwise, other than current liabilities as of the
Financial Statement Date, current liabilities incurred since the Financial
Statement Date in the ordinary course of business and prepayments of obligations
in accordance with normal and customary past practices; or (s) any material
transaction by the Companies outside the ordinary course of their business, or
any transaction prohibited hereunder.
Section 3.15. Undisclosed Liabilities. The Companies do not have any debts
or liabilities, whether accrued or contingent, due or not yet due, liquidated,
unliquidated, or otherwise, except as and to the extent disclosed or reflected
in the Financial Statements or as set forth in Schedule 3.15. In the case of any
liabilities which are not fixed, an estimate of the maximum amount which may be
payable is set forth in Schedule 3.15.
Section 3.16. Taxes. The Companies have filed all requisite federal, state,
local and other tax returns, information returns, declarations and reports for
all fiscal periods ended on or before the Closing Date; and there are no claims
(nor is there any matter pending which may result in a claim) against the
Companies for federal, state or local income, sales, use, franchise or other
taxes for any period or periods prior to and including the Closing Date and no
notice of any claim, whether pending or threatened, for taxes has been received
which would create a lien on the Companies' assets or adversely affect the
Companies or the Assets. The amounts shown as accruals for taxes on the
Financial Statements are sufficient for the payment of all taxes of any kind or
nature whatsoever for all fiscal periods ended on or before the date of the
Current Balance Sheet. Copies of the federal, state and local income tax returns
and franchise tax returns of the Companies (collectively, "Tax Returns") for
their last three fiscal years are attached as Schedule 3.16. The Companies have
not obtained any extensions of time in which to file any Tax Returns that have
not yet been filed. The Companies have not waived any statute of limitations
with respect to federal, state, or local income, sales, use, franchise or other
taxes or agreed to any extensions of time with respect to a tax assessment or
deficiency, except for such waivers or extensions which, by their terms, have
lapsed as of the date hereof
Section 3.17. Accounts Receivable and Payable: Customer and Supplier
Relations. The accounts receivable reflected on the Financial Statements arose
in the ordinary course of the Companies' business and, except as reserved
against on the Financial Statements, are collectible in the ordinary course of
business and free of any claims, rights or defenses of any account debtor. All
accounts payable reflected on the Financial Statements arose from good faith
arms-length transactions in the ordinary course of business. Sellers further
warrant, represent, and affirm that:
(a) none of the Companies' customers or suppliers have canceled or
substantially reduced or, to Sellers' Best Knowledge, are currently
attempting or threatening to cancel or substantially reduce, service or
products;
(b) the Companies have complied with all commitments and obligations
and are not in default under any contracts and agreements with customers or
suppliers, no notice of default has been received by the Companies and, to
Sellers' Best Knowledge, there are no defaults by customers, suppliers and
other parties to such contracts and agreements;
(c) the Companies have never been a party to any governmental
contracts subject to price redetermination or renegotiation; and
(d) there are no debts or other obligations or liabilities of Sellers
of any kind that will be binding upon or chargeable against CTC or its
assets by reason of the transactions contemplated by this Agreement, except
as set forth in Schedule 2.6.
Section 3.18. Authority to Operate. The Companies have full power,
authority and legal right and have all licenses, permits, qualifications. and
other documentation (including permits required under applicable Environmental
Law) necessary to own and/or operate their businesses, properties and assets and
to carry on their businesses as being conducted on the Closing Date; and such
businesses are now being conducted and such assets and properties are being
owned and/or operated in compliance with all applicable laws (including
Environmental Law), ordinances, rules and regulations of any governmental agency
of the United States, any state or political subdivision thereof, any foreign
jurisdiction, all applicable court or administrative agency decrees, awards and
orders and all such licenses, permits, qualifications and other documentation,
except where the failure to comply will not have a Material Adverse Effect, and
there is no existing condition or state of facts which would give rise to a
violation thereof or a liability or default thereunder, except where a
violation, liability or default will not have a Material Adverse Effect.
Section 3.19. Legal Actions. Except as described in Schedule 3.19, no legal
action, suit, audit, investigation, unfair labor practice charge, complaint,
claim, grievance, or proceeding by or before any court, arbitration panel,
governmental authority or third party is pending or threatened which involves or
may involve the Companies or their now or previously owned or operated assets,
operations, properties or businesses, or the Sellers' interests in the
Companies.
Section 3.20. Assets and Inventory. To Sellers' Best Knowledge, all of the
Companies' inventory is of good and merchantable quality, free from defects, and
all other tangible assets are in good working order and condition, ordinary wear
and tear excepted.
Section 3.21. Employee Benefit Matters. The Plans listed in Schedule 3.21
are the only employee benefit plans and agreements maintained by the Companies
for the benefit of their shareholders, members, officers, directors, employees,
former employees, or independent contractors. Except as disclosed in Schedule
3.21, there are no contributions or payments due with respect to any of the
Plans, nor will any such contributions or payments be due or required to be paid
on or prior to the Closing Date. Each Plan has been operated and administered in
compliance with the provisions of the Employee Retirement Income Security Act of
1974 ("ERISA"), and the provisions of the Internal Revenue Code ("Code")
applicable to it. No Plan that is subject to the minimum funding standards of
ERISA or the Code, if any, has incurred any accumulated funding deficiency
within the meaning of ERISA or the Code. The contributions with respect to a
Plan that is subject to Code Section 412 or ERISA Section 302 have been timely
made and there is no lien or expected to be a lien under Code Section 412(n) or
ERISA Section 302(f) or tax under Code Section 4971. No Plan has a "liquidity
shortfall" as defined in Code Section 412(m)(5). The Companies are not subject
to and cannot reasonably be expected to become subject to a lien under Code
Section 401(a)(29). No event has occurred in connection with a Plan that could
result in liability to the Companies under Title IV of ERISA. The Companies have
not incurred any liability to the Pension Benefit Guaranty Corporation in
connection with any Plan that is subject to Title IV of ERISA, if any. The
assets of each Plan that is subject to Title IV of ERISA, if any, are sufficient
to provide all "benefit liabilities" (as defined in ERISA) under such Plan if
such Plan terminated, and are also sufficient to provide all other benefits due
under the Plans (including, but not limited to, ancillary, disability, shutdown,
early retirement and welfare benefits). The Companies have not had an
"obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer pension plan" (as defined in ERISA Sections 4001(a)(3) and
3(37)(A)) at any time. No event that constitutes a reportable event as defined
in Section 4043 of ERISA has occurred or is continuing with respect to any Plan
covered by ERISA. No facts exist which will result in a material increase in the
premium costs of any Plan for which benefits are insured or a material increase
in benefit costs of any Plan which provides self-insured benefits. No
"prohibited transaction" (as defined in ERISA Section 406 or Code Section 4975)
has occurred with respect to any Plan. None of the Plans has any current or
projected liability in respect of post-employment or post-retirement health or
medical or life insurance benefits for former or retired employees of the
Companies, except as required to avoid excise taxes under Code Section 4980B.
All Plans subject to Code Section 4980B or Part 6 of Title I of ERISA have been
maintained in compliance with the requirements of Code Section 4980B and Part 6
of Title I of ERISA. There is no contract, agreement, plan or arrangement
covering any employee or former employee of the Companies that could result in
the payment of any amount that would not be deductible under Code Sections
162(m) or 280G. As of the Closing Date, the Companies have no material
liabilities under any Plan that are not reflected in the Financial Statements.
Section 3.22. Environmental, Health and Safety Matters. Except as set forth
in Schedule 3.22:
(a) The Companies are in full compliance in all material respects with
all Environmental Laws.
(b) The Companies have taken all actions reasonably necessary to
permit the Companies to remain in compliance with all Environmental Laws,
as now in effect.
(c) To Sellers' Best Knowledge, there are no claimed violations or
citations, nor any pending or threatened claims or complaints, against the
Companies relating to Environmental Laws.
(d) None of the Companies has received notification that it is a
potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA), administrative proposals
to list property owned or operated by Companies on the National Priorities
List under CERCLA, or the state-equivalent thereto, demand letters, notices
of violations, or the like.
(e) No equipment, hazardous waste, building materials, toxic waste,
hazardous substances, petroleum products, or any other regulated substances
have been, directly or indirectly, disposed or, leaked, buried, or
deposited in or on the ground or within the boundaries of the properties
now or previously owned or leased by Companies in any manner which violated
in any material respect any Environmental Laws.
(f) Nothing other than permitted waste has been discharged into the
sanitary waste disposal system of the properties now or previously owned or
leased by Companies.
(g) There are no underground storage tanks, active or abandoned,
located on or under any proper-ties now or previously owned or leased by
Companies, except for septic tanks not in violation of any Environmental
Law.
(h) The Companies have not directly transported or directly arranged
for the transportation of any hazardous material to any location listed or
proposed for listing on the National Priorities List pursuant to any
Environmental Law, or an any federal or state list or which is the subject
of federal, state or local enforcement actions or other investigations
which may lead to claims against the Companies for any remedial work,
damage to natural resources or personal injury, including claims under any
Environmental Law.
(i) There are no materials containing urea formaldehyde, asbestos,
radioactive materials or polychlorinated biphenyl on or in the properties
owned or leased by Companies.
(j) No condition exists at, on or under any property now or previously
owned or leased by Companies which, with the passage of time, or the giving
of notice or both, would give rise to liability under any Environmental Law
that, singly or in the aggregate, have, or may reasonably be expected to
have, a Material Adverse Effect.
Section 3.23. Employee and Worker's Compensation Claims. The Companies have
not experienced labor interruptions over the past three years and the
relationship between the Companies and their employees is good. Except as set
forth in Schedule 3.23:
(a) neither the Companies nor any employee of the Companies is in
violation of any term of any express or implied employment contract, patent
disclosure agreement, secrecy agreement, or any other contract or agreement
relating to the relationship of any such employee with the Companies;
(b) the Companies are not in violation of any federal, state or local
wage and hour, employment discrimination, occupational safety, or other
labor or employment statutes or regulations, nor have the Companies
received notice of a claim of any such violation;
(c) during the three (3) year period preceding the Closing Date, the
Companies have received no claims for worker's compensation benefits;
(d) no union has ever been certified, nor have the Companies ever
recognized any union, as the collective bargaining representative of any of
the employees of the Companies, and the Companies are not now and have
never been parties to any collective bargaining agreement;
(e) to Sellers' Best Knowledge, no union organizing activity has
occurred or is now occurring with respect to any of the employees of the
Companies.
Section 3.24. Finder or Broker. Except as set forth in Schedule 3.24, there
is no firm, corporation, agency, or other person that is entitled to a finder's
fee or any type of brokerage commission in relation to or in connection with the
transactions contemplated by this Agreement as a result of any agreement or
understanding with Sellers or the Companies, or any entity or person affiliated
with Sellers or the Companies.
Section 3.25. Other Disclosures. Sellers further warrant, represent and
affirm that:
(a) Schedule 3.25(a) is a list of the products of the Companies, all
product registrations used by the Companies, , toxicology studies and
environmental studies of the Companies. All material safety data sheets
shall be made available at CTC's request for inspection and copying on or
before the Closing Date.
(b) Schedule 3.25(b) is a list of the names, start dates and current
annual wage rates of all salaried and hourly regular full-time and
part-time employees of the Companies as of the Closing Date, together with
a summary of the bonuses, additional compensation and other like benefits,
if any, paid or payable to each employee and the last date, if any, on
which each employee received a raise in compensation, or a bonus.
(c) Schedule 3.25(c) contains a diagram of all real property owned or
leased by the Companies, and a list of documents reflecting any other real
property interests owned of record or beneficially or leased as lessee by
the Companies.
(d) Schedule 3.25(d) is a list, as of the Closing Date, showing
itemized values of: (1) all inventory, and (2) all other assets owned or
leased by the Companies which have been capitalized and have an unamortized
or undepreciated value of One Thousand Dollars ($1,000.00) or more,
including machinery, equipment, vehicles and rolling stock.
(e) Schedule 3.25(e) is a list of raw materials or other property
located at any property owned or leased by the Companies that has been
consigned to the Companies, or is otherwise owned by a third party, and has
a market value exceeding One Thousand Dollars ($1,000.00).
(f) Schedule 3.25(f) is each policy of insurance maintained by the
Companies (to the extent available) together with a description of the
premiums, coverages, insurers, expiration dates and deductibles, an
accurate list of all workers' compensation and other insurance claims
(other than health insurance claims) received for the past three policy
years. Such insurance is currently in full force and effect, the Companies'
insurance has never been canceled, the Companies have never been denied
coverage or experienced a substantial increase in premiums or a substantial
reduction in coverage from one policy period to the next policy period,
such coverage is adequate in character and amount, and such coverage is
placed with financially sound and reputable insurers unaffiliated with
either Sellers or the Companies.
(g) Schedule 3.25(g) is a list of each bank, brokerage firm, trust
company or other financial institution in which the Companies have an
account and the identity of each such account, and each bank in which the
Companies have a safe deposit box, together with the names of all persons
authorized to draw on any such account or have access to any such safe
deposit box.
(h) Schedule 3.25(h) is a list and summary description of, or copies
of, all governmental licenses and permits of the Companies.
(i) Schedule 3.25(i) is a list of each debt, note, mortgage, security
agreement, pledge agreement. guaranty, bond, letter of credit, lease or
other instrument creating any debt or contingent obligation of the
Companies, or a lien or claim on any of their assets (other than unsecured
trade accounts payable and incurred in the ordinary course of business).
(j) Schedule 3.25(j) is a list of all of the Companies' Proprietary
Rights, indicating the registered and beneficial owner and the date of
grant thereof, and a description of all license fees and royalties (or the
basis of calculation thereof) required to be paid now or in the future by
the Companies for the use and practice of their Proprietary Rights.
(k) Schedule 3.25(k) is a list of all Contracts.
(l) Schedule 3.25(l) is a list of all powers of attorney presently in
effect granted by the Companies.
(m) Schedule 3.25(m) is a list of all obligations, contingent or
otherwise, covering any of the Companies' employees under any employment or
consulting agreement, and copies of any document memorializing any such
obligations.
(n) Schedule 3.25(n) is a list of all Plans, a description of each
such Plan, and a description of the cost to the Companies of funding and
administering each such Plan.
Section 3.26. Insolvency. Upon the closing of the transactions contemplated
by this Agreement, none of the Sellers will be insolvent.
Section 3.27. Full Disclosure. No representation or warranty by Sellers in
the Agreement, and no statement made or delivered by the Companies or Sellers to
CTC in or in connection with the Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit any material fact necessary
in order to make the statements herein or therein, in light of the circumstances
under which they are or were made, not misleading.
Section 3.28. Survival and Expiration of Sellers' Representations and
Warranties. The warranties and representations set forth in Sections 3.6, 3.7,
3.8, 3.9, 3.11, 3.12, 3.14, 3.17, 3.18, 3.20, 3.24, 3.25 and 3.26 shall survive
for a period of one (1) year following the Closing Date. and shall be of no
further force or effect thereafter, except as to any claim of a breach of any
such warranty or representation presented to Sellers during such one (1) year
period. All other warranties and representations made by Sellers under this
Agreement shall survive for the duration of the applicable statute of
limitations.
ARTICLE IV
WARRANTIES AND REPRESENTATIONS OF CTC
CTC warrant, represent and affirm to Sellers the truth and accuracy of the
following, both as of the date of execution of this Agreement and as of the
Closing Date:
Section 4.1. Authority for Transaction. CTC has full right, power, and
authority to execute, deliver and perform this Agreement, and consummate the
transactions contemplated herein. This Agreement has been duly executed and
delivered by CTC, and it and its provisions constitute, legal, valid and binding
obligations of CTC, enforceable against it in accordance with its terms and
conditions, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether applied
in a proceeding at law or in equity). To the Best Knowledge of CTC, there are no
claims, lawsuits, actions, arbitrations, administrative or other proceedings,
governmental investigations, audits or inquiries pending or threatened against
CTC, Durham or Xxxxxxxxx that limit, impair or otherwise affect, its right or
authority to enter into this Agreement or the performance by CTC of its
obligations hereunder.
Section 4.2. Organization. CTC is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Indiana,
and is duly qualified or licensed to do business in all other states in which
any of its assets or properties may be situated or where its business is
conducted, except where the failure to obtain such qualification or license will
not have a Material Adverse Effect. Schedule 4.2 is: (a) CTC's certificate of
limited partnership certified by the Secretary of State of Indiana, and (b)
CTC's partnership agreement, certified by its general partner. Each and all of
such documents are complete and correct.
Section 4.3. Consents. No approval, consent, order or action of, or filing
with, any court, administrative agency, governmental authority or other third
party is required for the execution, delivery or performance by CTC of this
Agreement.
Section 4.4. Defaults. CTC is not in default under or in violation of, and
the execution and delivery of the Agreement and the consummation of the
transactions contemplated hereby will not result in a default by CTC under or a
violation of: (a) any mortgage, indenture, charter or bylaw, provision,
contract, agreement, lease, commitment or other instrument of any kind to which
CTC is a party or by which CTC or any of its properties or assets may be bound
or affected, or (b) any law, rule or regulation applicable to CTC or any court
injunction, order or decree, or any valid and enforceable order of any
governmental agency in effect having jurisdiction over CTC, which default or
violation could adversely affect the ability of CTC to consummate the
transactions contemplated hereby or will have a Material Adverse Effect.
Section 4.5. Investment Companies. CTC is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Companies Act of 1940, as amended, or a "holding company", a
"Subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Companies Act of 1935, as amended.
Section 4.6. Finder or Broker. Except as set forth in Schedule 4.6, there
is no firm, corporation, agency, or other person that is entitled to a finder's
fee or any type of brokerage commission in relation to or in connection with the
transactions contemplated by this Agreement as a result of any agreement or
understanding with CTC, or any entity or person affiliated with CTC.
Section 4.7. Insolvency. Upon the closing of the transactions contemplated
by this Agreement, CTC will not be insolvent.
Section 4.8. Disclosure. No representation or warranty by CTC in the
Agreement or made or delivered to Sellers in or in connection with the Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit any material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they are or were made, not
misleading.
Section 4.9. Survival and Expiration of Representations and Warranties of
CTC. The warranties and representations set forth in Sections 4.3, 4.4, 4.5, 4.6
and 4.7 shall survive for a period of one (1) year following the Closing Date,
and shall be of no further force or effect thereafter, except as to any claim of
a breach of any such warranty or representation presented to CTC during such one
(1) year period. All other warranties and representations made by CTC under this
Agreement shall survive for the duration of the applicable statute of
limitations.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
Section 5.1. Nondisclosure and Non-Piracy Agreement. Sellers acknowledge
and agree that they have developed and maintained information regarding the
customers of the Companies that is unique and valuable in servicing such
customers, and that the names, addresses, sales history, and other information
and records regarding the Companies' customers, as well as the Companies'
pricing information, manufacturing methods, and other methods and procedures
utilized in the Companies' business, are a unique and valuable asset, are not
readily available from other sources. Sellers further acknowledge and agree that
the foregoing constitute trade secrets and goodwill of Xxxxxx and the Companies
(all of which is hereinafter referred to as "Trade Secrets"), the conveyance of
which was a material inducement to CTC to enter into and perform this Agreement.
In recognition of the foregoing, Sellers agree to keep all such Trade Secrets
confidential, and further agree that for a period of five (5) years following
the Closing Date, Sellers shall not (except in the proper performance of their
duties under any employment or consulting agreements with CTC), directly or
indirectly:
(a) disseminate or disclose to any person or firm, or use in any
commercial manner, any Trade Secret;
(b) advise or in any way solicit or encourage any of the Companies'
customers to discontinue or curtail their business with CTC; or
(c) assist or encourage any person or firm engaged in whole or in part
in any business that is substantially similar to the business of the
Companies to solicit the Companies' customers.
Sellers agree that in the event of any breach of the restrictions imposed under
this Section with respect to any customer, the restrictive period described in
this Section, as it relates to such customer, shall be extended for a like
period beginning on the date on which each and all of Sellers cease the conduct
which gives rise to such breach. For purposes of this Section, the term
"customer" shall mean only such customers with which the Companies transacted
business during the three (3) year period immediately preceding the Closing
Date, and shall also include any business or company which acquires, is acquired
by, or merges with any such customer (whether in a transaction involving stock
or assets) during the period that the restrictions imposed by this Section
remain in effect and for the duration of such period.
Section 5.2. Noncompetition Agreement. In order to protect the Companies'
Trade Secrets, and as a further inducement for CTC to enter into this Agreement,
Sellers agree that, for a period of five (5) years following the Closing Date,
they shall not (except in the proper performance of their duties under any
employment or consulting agreements with CTC) operate, manage, own any interest
in, or be employed by any person or firm engaged in whole or in part in a
business substantially the same as the business of the Companies, anywhere in
the United States of America. Sellers agree that in the event of any breach of
the restrictions imposed under this Section, the restrictive period described in
this Section shall be extended for a like period beginning on the date on which
each and all of Sellers cease the conduct which gives rise to such breach.
Section 5.3. Enforcement of Restrictive Provisions. Sellers, jointly and
severally, acknowledge and agree that:
(a) The restrictions set forth in Sections 5.1 and 5.2, including, but
not limited to, the time periods and geographic limitations, are reasonable
and appropriate. The parties further acknowledge that such restrictions are
necessary for the protection of the Trade Secrets acquired by CTC under
this Agreement.
(b) In the event that any of the provisions of Section 5.1 or 5.2
relating to the geographic area of restriction, the period of restriction
or the scope of such restriction shall be determined by any court of
competent jurisdiction to exceed the maximum enforceable area, period or
scope, the geographic area of restriction, the period of restriction, and
the scope of the restriction, as applicable, shall be deemed to be the
maximum enforceable area, period and scope, and such court is expressly
authorized by the parties to reform this Agreement to so provide.
(c) In the event that any provision of Section 5.1, 5.2 or 5.3 is held
to be unenforceable or invalid by any court of competent jurisdiction, and
not subject to reformation under subsection (b), such provision shall be
deemed severed from this Agreement and the remaining provisions shall
continue in full force and effect to the same extent as if such invalid or
unenforceable provision had not been included in this Agreement.
(d) In the event of a breach by Sellers of any of the provisions of
Section 5.1 or 5.2 of this Agreement, the damages sustained by CTC would be
impossible to ascertain with certainty, and by CTC would have no adequate
remedy at law. CTC shall, therefore, be entitled to injunctive relief,
without bond, to restrain any such breach or threatened breach by Sellers;
provided, however, that nothing contained in this Agreement shall operate
to preclude CTC from pursuing any other lawful remedies available in the
event of any actual or threatened breach of any provision of this
Agreement. The costs, expenses and attorneys' fees incurred in any action
brought to enforce the provisions of Section 5.1 or 5.2, including any
action for injunctive relief, shall be awarded to the prevailing party in
such action.
(e) The provisions of Sections 5.1, 5.2 and 5.3 shall be deemed
independent of any other provision of this Agreement, and the existence of
any claim or cause of action by Sellers against CTC shall not constitute a
defense to the enforcement of said sections by CTC and Brandonson.
(f) The provisions of Sections 5.1, 5.2 and 5.3 shall inure to the
benefit of the successors of CTC.
Section 5.4. Employment of Xxxxxx. CTC shall continue to employ Xxxxxx on
the terms and conditions set forth in Exhibit 5.4.
Section 5.5. Employment of Xxxx. CTC shall continue to employ Xxxx for a
period of ninety (90) days following the Closing Date, on the same terms and
conditions as she was employed as of April 1, 2000.
ARTICLE VI
SELLERS' CONDITIONS TO CLOSING
The obligation of Sellers to proceed with the Closing shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
Section 6.1. Representations and Warranties. The representations and
warranties of CTC set forth herein shall be true and correct in all material
respects as of the Closing Date.
Section 6.2. Performance and Document Delivery. CTC shall have performed in
all material respects, at or prior to the Closing Date, all acts in accordance
with its covenants set forth herein, including, but not limited to, delivery to
Sellers of the following documents:
(a) A certificate of good standing regarding CTC certified by the
Secretary of State of Indiana dated within thirty (30) days prior to
Closing;
(b) A certificate dated as of the Closing Date signed by the general
partner of CTC certifying that the representations and warranties of CTC
set forth herein are true and correct in all material respects as of the
Closing Date and that CTC has fulfilled all of the conditions of this
Article VI;
(c) Resolutions adopted by the general partner of CTC approving the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby, certified by the general partner
of CTC; and
(d) An incumbency certificate, executed by the general partner of CTC,
certifying the identity of the individuals with authority to execute this
Agreement on behalf of CTC.
Section 6.3. Opinion of Counsel. CTC shall have delivered to Sellers an
opinion of counsel to Sellers, dated the Closing Date, in a form reasonably
acceptable to counsel for Sellers.
Section 6.4. No Injunction. No action proceeding, investigation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain, prohibit or obtain
substantial damages in respect of, or which is related to or arises out of, this
Agreement or the consummation of the transactions contemplated hereby, or which
is related to or arises out of the business or operations of CTC, if such
action, proceeding, investigation or legislation, in the reasonable judgment of
Sellers or their counsel, would make it inadvisable to consummate such
transactions.
ARTICLE VII
CTC'S CONDITIONS TO CLOSING
The obligations of CTC to proceed with the Closing shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
Section 7.1. Due Diligence Review; Delivery of Exhibits. CTC shall have
completed, and in its sole discretion be satisfied with the results of, its due
diligence review of the operations and financial condition of the Companies.
Sellers shall have delivered to CTC the Schedules referenced in Article III of
this Agreement, and such Schedules shall be satisfactory to CTC in its sole
discretion.
Section 7.2. Representations and Warranties. The representations and
warranties of Sellers contained in this Agreement, or any document or instrument
delivered to CTC hereunder, shall be true and correct in all material respects
as of the Closing Date.
Section 7.3. Performance and Document Delivery. Sellers shall have
performed in all material respects, at or prior to the Closing Date, all acts in
accordance with their covenants herein, including, but not limited to, delivery
to CTC of the following documents:
(a) Good standing certificates regarding each of the Companies,
certified by the Secretary of State of Texas, dated within thirty (30) days
prior to Closing;
(b) A certificate dated as of the Closing Date signed by Sellers,
certifying that the representations and warranties of Sellers and the
Companies set forth herein are true and correct in all material respects as
of the Closing Date and that Sellers have fulfilled all of the conditions
of this Article VII;
(c) Resolutions adopted by the board of directors of Brandonson, and
the members of Trailers and Collision, approving the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby, certified by a duly authorized officer or member; and
(d) An incumbency certificate, executed by an executive officer of the
Companies, certifying the identity of the individuals with authority to
execute this Agreement on behalf of the Companies.
(e) All books and records of the Companies (but excluding their
organizational records, minute books, stock record books, and stock
registers), including all books of accounts, contracts, agreements and such
other documents as shall be reasonably requested by CTC.
Section 7.4. No Adverse Change. There shall not have been any change
between the Financial Statement Date and the Closing Date which has had or will
have a Material Adverse Effect on the business, operations, financial condition,
assets or prospects of the Companies, and a certificate shall have been
delivered to CTC to such effect signed by Sellers.
Section 7.5. Opinion of Counsel. CTC shall have been furnished with an
opinion of counsel to Sellers, dated the Closing Date, in a form reasonably
satisfactory to counsel for CTC. Such opinion shall also be addressed to the
Lenders.
Section 7.6. Consents and Approvals. Sellers shall have obtained all
necessary consents and approvals, in form and substance satisfactory to CTC,
required under all leases and other material contracts pertaining to the assets
or the business of the Companies and satisfying any approval or permit or
licensing requirements for consummation of this transaction and necessary to
carry on the business of the Companies as it is currently being conducted.
Section 7.7. No Injunction. No action, proceeding, investigation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain, prohibit or obtain
substantial damages in respect of, or which is related to or arises out of, this
Agreement or the consummation of the transactions contemplated hereby, or which
is related to or arises out of the business or operations of the Companies, if
such action, proceeding, investigation or legislation, in the reasonable
judgment of CTC or its counsel, would make it inadvisable to consummate such
transactions.
Section 7.8. Financing. CTC shall have secured financing in such amounts
and upon such terms as CTC reasonably determines, and the Lenders shall have
released to CTC the proceeds of such financing.
ARTICLE VIII
INDEMNIFICATION
Section 8. 1. Indemnification of CTC. Sellers agree to indemnify and hold
harmless CTC (and each shareholder officer, director, employee or agent of CTC),
and their respective estates, successors, and assigns (each a "CTC Indemnified
Party"), from and against any and all claims, losses, damages, liabilities and
expenses (including, without limitation, settlement costs and any legal or other
expenses for investigating or defending any actions or threatened actions) (the
"Losses") reasonably incurred by such CTC Indemnified Party as a result of:
(a) the untruth, inaccuracy or breach of any representation or
warranty made by the Sellers in the Agreement;
(b) the nonfulfillment or breach of any covenant, agreement or
obligation of Sellers contained in the Agreement;
(c) any and all amounts of federal, state, and/or local income,
franchise, property, and/or sales and use taxes that may be assessed
against CTC with respect to any taxable period ending on or before the date
of this Agreement for which adequate provisions therefor has not been made
through the Closing Date, as reflected on the Companies' books of account
and in the Companies' Financial Statements as of the Closing Date; and the
amount of any interest and/or penalties that may be assessed with respect
to said tax assessments. The amount of any indemnification arising under
this Agreement is to be computed net of any and all tax benefits received
by CTC as a result of the tax assessment; or
(d) any claim demand, action, damages, costs, expenses or other
liabilities of any kind relating to or arising out of any product
manufactured or sold by any of the Companies on or before the Closing Date,
including, but not limited to, any claim alleging negligence, strict
liability or breach of contract.
Any other provision of this Article notwithstanding, Sellers indemnity
obligations to the CTC Indemnified Parties shall be subject to the following
limitations: (1) Sellers shall not be obligated to indemnify any CTC Indemnified
Party unless and until the total of all Losses incurred by the CTC Indemnified
Parties exceeds the sum of Ten Thousand Dollars ($10,000.00), and (2) Sellers
shall have no obligation to indemnify any CTC Indemnified Party for Losses
sustained by the CTC Indemnified Parties for such portion of the aggregate
amount of all such Losses as exceeds the sum of Two Hundred Thousand Dollars
($200,000.00); provided, however, that in the case of Losses relating to Section
3.22 of this Agreement the forgoing limitation shall be Four Hundred Thousand
Dollars ($400,000.00), and provided further, that no limitation will apply with
respect to Losses relating to or arising under Section 3.16 or 3.17(d) of this
Agreement. No indemnity shall be required with respect to any breach or alleged
breach of any warranty or representation arising or occurring after such
representation or warranty has expired pursuant to the terms of Section 3.28,
except as to claims presented prior to such expiration.
Section 8.2. Indemnification of Sellers. CTC shall indemnify and hold
harmless Sellers (and each shareholder officer, director, employee or agent of
the Companies), and their respective estates, successors, and assigns (each a
"Seller Indemnified Party") from and against any and all Losses reasonably
incurred by such Seller Indemnified Party as a result of:
(a) the untruth, inaccuracy or breach of any representation or
warranty made by the CTC in the Agreement;
(b) the nonfulfillment or breach of any covenant, agreement or
obligation of CTC contained in the Agreement; and
(c) any debts or other liabilities owed to any person or firm with
respect to goods or services ordered or purchased by CTC after the Closing
Date.
Any other provision of this Article notwithstanding, CTC's indemnity obligations
to the Seller Indemnified Parties shall be subject to the following limitations:
(1) CTC shall not be obligated to indemnify any Seller Indemnified Party unless
and until the total of all Losses incurred by the Seller Indemnified Parties
exceeds the sum of Ten Thousand Dollars ($10,000.00), and (2) CTC shall have no
obligation to indemnify any Seller Indemnified Party for Losses sustained by the
Seller Indemnified Parties for such portion of the aggregate amount of all such
Losses as exceeds the sum of Two Hundred Thousand Dollars ($200,000.00);
provided, however, that no limitation will apply with respect to Losses relating
to or arising under Section 8.2(c) of this Agreement. No indemnity shall be
required with respect to any breach or alleged breach of any warranty or
representation arising or occurring after such representation or warranty has
expired pursuant to the terms of Section 4.9, except as to claims presented
prior to such expiration.
Section 8.3. Notification. Whenever any claim shall arise for
indemnification hereunder, the Indemnified Party shall notify the indemnifying
party promptly after such Indemnified Party has actual knowledge of the facts
constituting the basis for such claim, except that, in the event of any claim
for indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third party, such Indemnified Party shall give prompt
notice to the indemnifying party of such claim or the commencement of legal
proceedings in respect of which recovery may be sought against the indemnifying
party pursuant to the provisions of this Article. The notice to the indemnifying
party shall specify, if known, the amount or an estimate of the amount of the
liability arising therefrom. The Indemnified Party shall not settle or
compromise any such claim without the prior written consent of the indemnifying
party unless suit shall have been instituted against the Indemnified Party and
the indemnifying party shall have failed, within fifteen (15) days after notice
of institution of the suit, to take control of such suit as provided in Section
8.4.
Section 8.4. Defense of Actions. In connection with any claim giving rise
to indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the indemnifying
party, at its sole cost and expense, may, upon written notice to the Indemnified
Party, assume the defense of such claim or legal proceeding, to the extent that
the indemnifying party admits in writing its liability to the Indemnified Party
with respect to all material elements thereof. If the indemnifying party assumes
the defense of any such claim or legal proceeding, the obligations of the
indemnifying party hereunder as to such claim or legal proceeding shall be
limited to taking all steps necessary in the defense or settlement thereof and
to holding the Indemnified Party harmless from and against any losses, damages,
expenses, or liability caused by or arising out of any settlement approved by
the indemnifying party or any judgment in connection with such claim or legal
proceeding. Each Indemnified Party agrees that it will cooperate with the
indemnifying party in the defense of any such action, the defense of which is
assumed by the indemnifying party. Except with the consent of the Indemnified
Party, the indemnifying party shall not consent to the entry of any judgment
arising from any such claim or legal proceeding which, in each case, does not
include as an unconditional term thereof the delivering by the claimant or the
plaintiff to the Indemnified Party of a release from all liability in respect
thereof, unless the indemnifying party has actually paid to the Indemnified
Party the full amount of such judgment or settlement. If the indemnifying party
does not assume the defense of any claim or litigation, any Indemnified Party
may defend against such claim or litigation in such mariner as it may deem
appropriate, including, but not limited to, settling such claim or litigation,
after giving notice of the same to the indemnifying party, on such terms as the
indemnified Party may deem appropriate. The indemnifying party will promptly
reimburse the Indemnified Party in accordance with the provisions hereof.
Section 8.5. Payment. All indemnification under this Article shall be
effected by payment of cash or delivery of a certified or official bank check in
the amount of the indemnification liability, or by set-off against any amounts
otherwise owed by CTC to Sellers or by Sellers to CTC, as the case may be.
ARTICLE IX
ADDITIONAL PROVISIONS
Section 9. 1. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be personally delivered,
mailed by first-class registered or certified mail, postage prepaid., return
receipt requested or delivered by an overnight courier service, delivery charge
prepaid:
(a) If to CTC, to:
Xxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
with a copy to:
Xxxx X. Xxxxxx
Xxxxx Xxxxxxx & Xxxxxx
Box 82035
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
(a) If to Sellers, to:
Xxxxxx Xxxx
0000 Xxxxxxx Xxxx Xxxx Xxxx
Xxxxxx, Xxxxx 00000
with a copy to:
Xxxxxx Xxxxxx, Xx.
Banks Xxxxxx & Xxxxxxx
000 Xxxx Xxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
or such other addresses as may be furnished to the parties by written notice
given as provided in this Section.
Section 9.2. Severability. Should any one or more of the provisions of this
Agreement or any agreement entered into pursuant hereto be determined to be
illegal or unenforceable, all other provisions of this Agreement and such other
agreements shall be given effect separately from the provision or provisions
determined to be illegal or unenforceable and shall not be affected thereby.
Section 9.3. Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Texas, without regard to its
conflicts of law principles.
Section 9.4. Further Assurances. Each party covenants that at any time, and
from time to time, after the Closing, it will execute such additional
instruments and take such actions as may be reasonably requested by the other
parties to confirm or perfect or otherwise to carry out the intent and purposes
of this Agreement.
Section 9.5 Modifications; Waiver. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated, except in writing
signed by the parties hereto. No waiver of any provision of this Agreement shall
be deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver.
Section 9.6 Assignment. CTC may assign its rights under this Agreement
to any affiliated entity, and may collaterally assign to its Lenders its rights
with respect to the representations, warranties, covenants and indemnities made
or granted to CTC under this Agreement. Any or all of the Companies may assign
its rights under this Agreement to any successor in interest which results
solely from a change in the form of entity in which any of the Companies
currently transacts business. Except as provided in the preceding provisions of
this Section, this Agreement shall not otherwise be assignable by any of the
parties hereto without the written consent of all other parties.
Section 9.7 Binding Effect. All of the terms of this Agreement, whether so
expressed or not, shall be binding upon the respective personal representatives,
successors and assigns of the parties hereto and shall inure to the benefit of
and be enforceable by the respective personal representatives, successors and
assigns of the parties hereto.
Section 9.8 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
Section 9.8 Counterparts. This Agreement may be executed in two or more
counterparts. each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 9.10 Survival of Representations and Warranties. The
representations and warranties of the parties contained in the Agreement shall
survive the Closing and shall not be extinguished thereby notwithstanding any
investigation or other examination by any party.
Section 9.11 Construction of Terms. The language used in the Agreement
shall be construed, in all cases, according to its fair meaning, and not for or
against either party hereto. The parties acknowledge that each party has
reviewed this Agreement and that normal rules of construction to the effect that
any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement. Whenever the masculine gender
is used herein, it shall be deemed to include the feminine and the neuter.
Section 9.12. Mediation. Prior to the instituting suit in any court of
competent jurisdiction, the parties shall, in good faith, attempt to settle any
controversy or claim arising out of or relating to this Agreement by mediation
in accordance with the laws and rules, then obtaining, of the State of Texas;
provided, however, that this provision shall not prevent, hinder or delay the
filing of any claim for injunctive relief by CTC under the provisions of Section
5.3 of this Agreement.
Section 9.13. Entire Agreement. THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ
THIS AGREEMENT, UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS TERMS. The parties
further acknowledge that this Agreement and the other documents delivered
pursuant hereto constitute the entire agreement and understanding between
Sellers and CTC, superseding and canceling all prior agreements and
understandings relating to the subject matter hereof, whether written or oral.
Each party has had adequate opportunity to consult with legal, financial, tax
and other advisors prior to its execution of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of this
20th day of April, 2000.
/s/ Xxxxxx Xxxx /s/ Xxxx Xxxx
Xxxxxx Xxxx Xxxx Xxxx
Champion Trailer, LLC Champion Collision, LLC
By: /s/ Xxxxxx Xxxx, President By: /s/ Xxxxxx Xxxx, President
(Signature and Title) (Signature and Title)
Brandonson, Inc.
By: /s/ Xxxxxx Xxxx, President
(Signature and Title)
Champion Trailer Company, LP
By: /s/ Xxxxxxx X. Xxxxxx
(Signature and Title)
